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IBM’s Latest Filing Regarding SCO Bankruptcy Mentions “Fraud”

Posted in Courtroom, Fraud, GNU/Linux, IBM, Microsoft, Novell, Patents, SCO, UNIX at 10:29 am by Dr. Roy Schestowitz

Summary: SCO bankruptcy gets a lot more interesting and serves as a reminder of patent trolls

THE MOST recent SCO scandals [1, 2, 3] showed that funds had arrived rather mysteriously and pushed to create a company whose domain names SCO staff had registered.

In the legal procedures, Novell and IBM take the stand and present documents that further complicate things for SCO, at one stage bringing “fraud” into it. Groklaw has a new article about it.

We’re in OMG territory now, y’all. Let’s continue:

14. Of course, the very involvement of Mr. Robbins in introducing Mr. McBride to Mr. Norris calls into question the good faith of the contemplated transaction. In its January 8, 2009, disclosure to the Court, the Debtors represented that Mr. Robbins — Mr. Norris’s “partner” — had “extensive experience in structured finance and private equity as co-founder and managing partner of Peninsula Advisors” and “served as Investment Director and lead negotiator with several leading financial institutions.”… And Mr. Robbins first introduced Mr. Norris to the Debtors, laying the foundation for the PSA…. But both Mr. McBride and Mr. Norris have testified that they believe Mr. Robbins to be involved in fraud. … Mr. Norris “had come to find out and pretty definitively that Robbins had been lying to everyone and misrepresenting essentially everything to everyone and had probably engaged in a whole variety of frauds.”

This proposed deal is dead in the water, methinks. It turns out, according to IBM’s filing, that there is no one actually committed to invest in this deal:

15. Financing for the PSA Transaction. Mr. Norris claimed that he had fairly firm plans to line up capital for the transaction proposed under the PSA, but he did not provide particulars…. He admitted, however, that he has no executed agreements from anyone to invest in this transaction, that there are no written commitments to back up either the Letter of Credit-Balance or the Letter of Credit-Sun and that he has no scheduled meetings over the next two weeks with any potential investors…. He claimed to have a variety of interested bidders, but did not clearly explain his solicitation process and, apparently on the advice of counsel, refused to identify any of the potential bidders


Now that the word “fraud” has entered this bankruptcy, we find ourselves in a new universe. Bankruptcies spin the other way, once there is fraud in the picture. And it’s about time, too, I know you are thinking. If I had to read the judge say one more time that SCO was doing its very best, I was in danger of becoming a cynic. Why doesn’t someone tell this judge what is *really* going on? That was what I was thinking about over the weekend. And now someone has.

In a separate context — one that relates to trust in Microsoft — Jason has just reiterated the fact that Microsoft gave money to SCO and it can also fund patent trolls like Acacia or Intellectual Ventures to attack Linux. Microsoft's patent troll recently extorted a Microsoft rival ($120 million in ‘protection money’) and this troll would never do this to Microsoft. The founder, Nathan Myhrvold, dislikes GNU/Linux, obviously.

Food for thought there, especially considering the proxy battles Microsoft has waged against Linux in the past; $86M to SCO, for one example.

Maybe it’s worth explictly telling those people that say things like: “Microsoft would be suicidal to sue” that that is simply not true. Microsoft could easily sell off one patent to any patent troll company to attack Linux with – then what? It’s not like Microsoft doesn’t spawn patent troll companies.

The SCO case is very relevant to us because there are parallels and future lessons at stake.

Other new Groklaw articles:

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