Harold Murphy of Hanify & King, the RAT that sold out Mourad to the Jewish takeover. To The Right of Murphy is Bankruptcy Court Appointed Trustee Stephen S. Gray.


C.A. No. 99-1470-C



(A Law Partnership


1. Alphonse Mourad complains against attorneys Harold H. Murphy and Donald E. Farrell, and the law firm/partnership of Hanify & King for professional malpractice, negligence, failure of representation, failure to appeal the Bankruptcy Court's April 1, 1996 appointment of Chapter 11 Trustee over V&M Management, Inc., breach of duty, breach of contract, fraud, excessive fee charging and conspiring, with Stephen Gray, the Court-appointed Chapter 11 Trustee, to deprive Mourad of his property and rights to have reorganized his solely owned subchapter S corporation, V&M Management, Inc. and come out of Chapter 11 bankruptcy, free of its mortgaged corporate debts and the unfair, excessive urban G.L. c.121A excise tax. As a result of the (mis)representation, negligence, and breach of duties, and conspiracy with Stephen Gray, Mourad lost his and his family's fifteen year, $20 million investment in V&M Management, Inc.
2. Mourad seeks $20 million in damages jointly and severally against Murphy, Farrell, Hanify & King, and Gray for their breaches, misrepresentations, negligence, fraud, conspiracy, and deliberate disregard of Mourad's rights and interests.

3. Plaintiff, Alphonse Mourad, is an individual residing at 125 West Street, Hyde Park, Massachusetts 02136. Mourad was the President, Owner, Chief Operating Officer, and Sole Stockholder of a Subchapter S. Corporation known as V&M Management, Inc., the former owner of the Mandela Development, a Roxbury, Section 8 project housing 1,500 low income minority tenants. Mourad was the first Middle-Eastern developer to own 276 units and maintain affordability from 1981 to 1996 of Section 8 housing in Roxbury, Massachusetts. Born in Lebanon, Mourad moved to the United States in 1958 and became an American citizen by 1965.

4. Defendant Harold H. Murphy is an attorney licensed to practice law in the Commonwealth of Massachusetts, with a usual place of business at the law firm of Hanify & King, at One Federal Street, Boston, MA, 02110, where Murphy is a shareholder and partner. Murphy claims to have substantial experience in and specializes in bankruptcy law, and once served as Clerk to the U.S. Bankruptcy Court, District of Massachusetts.
5. Defendant Donald F. Farrell, Jr. is an attorney licensed to practice law in the Commonwealth of Massachusetts, with a usual place of business at the law firm of Hanify & King, at One Federal Street, Boston, MA, 02110. Farrell also claims to specialize in bankruptcy law.
6. Defendant Stephen S. Gray is a businessman and President and Chief Executive Officer of The Recovery Group, located at 270 Congress St. Boston, MA, 02210. Stephen Gray makes his living off of failed and bankrupt business entities. He is a favorite with The U.S. Bankruptcy Court and Judges, and gets himself appointed as trustee over bankrupt businesses. Stephen Gray, in his capacity as Trustee, has been represented by Murphy and Hanify & King. Gray was appointed the Chapter 11 Trustee over V&M Management, Inc. on April 2, 1996 by Chief Judge Carol J. Kenner.

7. In the early fall of 1981, Craig Inge, a housing manager certified by HUD, and a manager of the Franklin Park Development, and Felix Vazquez, Jr., a former Boston Housing Court Clerk, asked Alphonse Mourad if he was willing to become an investor in the purchase of the Westminster-Willard housing project then up for HUD auction.
8. Mourad agreed and provided about $200,000 in seed money towards a $1,260,000 bid and purchase price. Mourad, Inge and Vazquez purchased the property with the expectation of managing of it.
9. HUD initially advised Inge and Vazquez that, as qualified minority owners, they would be able to own and manage the property. HUD later reversed itself and disqualified the Inge-Vazquez Development Company from being the managing agent, because of Craig Inge's involvement (questions were raised about Inge's management at the Franklin Park Development). Abrams Management, a company acceptable to HUD, was then selected as manager.
10. On December 1, 1981, Inge & Vazquez Development Co., Inc., the predecessor of V&M Management Co., Inc., purchased the Westminster-Willard Place complex from HUD at a foreclosure for $1.26 million.
11. At the time of this transfer, HUD knew that the property was subject to being taxed under G.L. c.121A,and the BRA approval process, but failed to advise or inform Mourad, or Inge & Vazquez. HUD did not notify the BRA or obtain BRA approval for the sale to Inge & Vazquez.
12. By denying the property's c.121A status, HUD was able to unload the troubled property without notification to or approval by the BRA, despite letters from the BRA to HUD so advising HUD to provide prior notification of any sale to the BRA. Part of the BRA approval process is to ensure the property is up to State Codes, and the BRA disapproves transfer of properties not in compliance with the State Codes, and requires the transferor to bring the property up to Code to obtain BRA approval of the transfer.
13. By denying c.121A status, HUD skirted the BRA approval process, transferred the property without incurring the several million dollars in repair expenses to bring the property up to Code, and was able to based the federal rent subsidy upon the then lower c.59 tax rates rather than the higher c.121A urban excise tax.
14. By failing to notify the BRA or obtain BRA approval, HUD could not validly transfer the property without BRA notification and approval, and HUD may well have had continuing obligations to pay for any c.121A taxes.
15. In 1982, after Inge-Vasquez took title, no City or State tax bills were forwarded to Inge-Vasquez. In 1982, Inge-Vasquez retained the law firm of Brown & Brown to investigate Inge-Vasquez's tax status. By a letter dated June 29,1983 HUD advised V&M's attorney that HUD's sale of Westminster-Willard and Inge-Vasquez did not require BRA approval or c.121A tax status. After a July 7, 1983 meeting with Boston City Assessing Officials, the City of Boston agreed that the Westminster-Willard property was subject to c.59 tax, not c.121A tax.
16. The City of Boston issued a determination following a July 7, 1983 meeting that the Westminster-Willard property was subject to c.59, and that its 1983 tax bill would be $40,278.72. The letter also referred to HUD's tax liability. That July 13, 1983 determination was followed up with a July 19, 1983 Memorandum specifying that the Westminster-Willard property was taxable under c.59.
17. Between 1982 and 1984, the DOR however continued to send the c.121A tax bills to HUD; and HUD never forwarded the c.121A bills to V&M. The City agreed to bill and tax V&M under the lower c.59 tax, and V&M's mortgagor continued to pay those city c.59 taxes until 1985. But, the DOR billed the property as c. 121A
18. By failing to accord Westminster-Willard c.121A tax status, HUD underbudgeted the rents and the rent subsidy was based upon the lower c.59 taxes.
19. By underbudgeting the property from day one, HUD failed to properly base V&M's rent upon market value and failed to afford V&M proper rent adjustments.
20. After Inge-Vazquez took title, Abrams Management managed the property. Serious questions were raised about Abrams' mismanagement of the property, and misappropriation of funds. An Inspector General's report of June 28, 1983 recommended termination of Abrams.
21. After the problems with Abrams Management were disclosed in the Inspector General's Report, Mourad asked Ken Salk, HUD's Director of Management, if V&M Management could take over the management of the property. Salk advised that since V&M was not a certified HUD manager, V&M could not manage the property unless the HUD mortgage was paid off. Salk insisted that another HUD approved manager take over in the interim between the removal of Abrams and the pay-off of the HUD Mortgage. After Abrams was replaced, State Management took over.
22. In late 1983, Mourad sought and obtained from the Winter Hill Federal Savings Bank, of Somerville, MA, a $2 million loan for V&M. Winter Hill referred the loan to Commonwealth Mortgage corporation to close, because of the $500,000 loan was more than Winter Hill's limit.
23. Winter Hill did not inquire whether V&M was subject to G.L. c.121A or c.59 taxes. Winter Hill was more interested in the points and in helping Winter Hill's President, Leroy Keihn's partner, Broker Andronica, than in determining the true tax status of the property. Keihn approved the loan without first seeking Board of Director approval.
24. On January 30, 1984, Commonwealth Mortgage Corp. closed the $2 million loan. Neither Winter Hill nor Commonwealth Mortgage investigated the property's tax status, nor cared about the back taxes owed by HUD from 1972 to 1981.
25. In 1984,V&M Management Co., Inc. paid off the HUD mortgage and took out a first mortgage of $2 million dollars from Winter Hill Federal Savings Bank. Westminster-Willard became the first privately owned Section 8, housing project in Boston.
26. Commonwealth closed the loan, and assigned the mortgage to Winter Hill, without first having obtained the Title Insurance Policy, which would have disclosed all the liens on the property. By granting the mortgage without first acknowledging that V&M's property was subject to G.L. c. 121A's restrictions (which needs BRA approval for any transfer), the Bank , in effect, put V&M's property into default from day 1, because the HUD budget and rental subsidy only covered c.59 taxes, and not the higher (more than double) c.121A excise tax. Since Proposition 21/2 came into effect in 1981, c.121A excise taxes are more than double c.59 real estate taxes. Therefore, the loan to V&M should never have been made, as there was insufficient rental income to be generated from the property to support the loan.
27. In October 1984, V&M and Shamir Construction Corporation (controlled by Ed Shamsi) entered into an agreement to sell Westminster-Willard Place to Shamir for $3,700,000. On November 27, 1984, V&M secured a $800,000 second mortgage from Winter Hill Bank, based upon the $3.7 million dollar sale price. V&M was unable to close on the scheduled closing date due to outstanding taxes owed on the property by HUD, which held title from 1977 to 1981.
28. In November 1984, V&M borrowed an additional $800,000 from Winter Hill and said sums were secured by a second mortgage on V&M's property. At no time did Winter Hill require or obtain a Chapter 121A Certificate or section 6A Agreement with the BRA.
29. On March 7, 1986, a new P & S Agreement for $5,500,000 was executed between V&M and Shamir.
30. As the property was subject to G.L. c.121A, change in ownership required BRA approval, and, as V&M was under a Section 8 housing assistance contract with HUD, the transfer required HUD approval of the new owner.
31. In April 1986, V & M and Shamir approached the BRA to determine the steps to obtain approval for the sale.
32. BRA Housing Director Peter Dreier met secretly with Edmund Shamsi, principal stockholder of Shamir Construction Corp., and represented that before the sale of Westminster-Willard Place to Shamir would be approved, Shamsi would have to meet certain demands. These conditions/concessions included:
a) Selling the Buckminster Apartments, 645 Beacon Street, Boston (in part owned by Shamsi) to a non-profit organization chosen by the City of Boston.
b) Placing the Shamsi-controlled Back Bay Manor Apartments, 75 St. Alphonsus Street, under the jurisdiction of the Boston Rent Equity Board.
c) Correcting all code-violations in all properties owned in whole or in part by Shamsi.

33. Because the BRA was not acting upon the V&M-Shamir request for approval of the sale, on August 6, 1986, V&M filed suit against the BRA, its Director, Coyle, and Dreier in the Boston Housing Court, V&M Management Co., Inc. v. The Boston Redevelopment Authority, Director Stephen Coyle and Peter Dreier, C.A. No. 86-21269, seeking an order requiring the BRA to act upon the transfer request.
34. V & M was experiencing severe financial problems, and the longer the approval process took, the less likely the sale would take place and the lower the proceeds from any sale.
35. On September 2, 1986, V & M and Shamir filed a joint application for the transfer of Westminster-Willard Place to Shamir Construction Corp.
36. On December 11, 1986, the BRA granted conditional approval of the V&M-Shamir sale, on these conditions:
a) that Shamsi place $488,000 in escrow to cover costs of repair and capital improvements;
b) that Shamsi personally guarantee any cash shortfalls in the operation of the development;
c) that Shamsi enter into a management contract for the project and negotiate same with tenant representatives;
d) that the Mayor approve the sale.

37. Rather than act upon the BRA-approved application, Mayor Flynn appointed Attorney Vincent McCarthy to advise him (Flynn) on whether the sale should be approved. McCarthy recommended approval as the only way to ensure continued affordable housing for the tenants, as a sale or foreclosure would jeopardize the property's continued c.121A status and continued maintenance of the property for low income tenants.
38. On March 17, 1987, Flynn signed the approval of the sale from V&M to Shamir, Shamsi having met the required conditions.
39. It was not until July 24, 1987 that the BRA gave its final approval of the sale. All during this time, V&M was paying exorbitant interest rates to keep afloat.
40. Given the lengthy, 18 month BRA approval process, V&M lacked sufficient cash to clear title and close on the extended closing date of October 1, 1987.
41. The DOR refused to forgive any interest and penalties, even though V&M had already paid the DOR $265,725.25 and was prepared to pay an additional $350,000 upon closing for a $615,725 total, which constituted total payment of the taxes due. The DOR's refusal to forgive the $200,000 in interest and penalties killed the V&M-Shamir deal and deprived the DOR of that money.
42. Earlier that same year, on April 22, 1987, the DOR sought and obtained the Attorney General's approval to settle with HUD for $1,200,000 out of a $2,627,868 total tax liability or 46%. The DOR was unwilling to afford V&M the same favorable discounted tax consideration DOR gave HUD. V&M would have paid 75% of its total tax liability (inclusive of interest and penalties). Had the V&M-Shamir deal closed, after all of V&M's debts being satisfied, Mourad would have received a $1.3 million dollar note and second mortgage from Shamir Construction.
43. Shamsi declined to go forward with the transaction and was ultimately found to have breached the Agreement, obligating Shamsi to return the $50,000 deposit.
44. The BRA's delay and unconstitutional, onerous and extortionist conditions and back room deals between the BRA, Director Coyle, Mayor Flynn and Dreier killed the $5.5 million sale of Westminster-Willard to Shamsi. This is recounted in the September 9, 1986 Affidavit of Attorney Glenn Frank and Judge King's June 29, 1988 Findings in Shamsi v. V&M Management, Inc., Suffolk Superior Court, C.A. No. 87-5547, showing the BRA "hostility" to the transfer and the imposition of "onerous" conditions.
45. When V&M Management dropped its $7 million personal liability lawsuit against Dreier and Coyle, Boston Housing Court, C.A. No. 21269, the BRA, contrary to its stated intentions of moving toward tenant ownership of Westminster-Willard Place, in bad faith, went for receivership. The tragic circumstances here is that the BRA diverted funds (in excess of $400,000) allocated for tenant ownership of Westminster-Willard Place to Attorney Saul Schapiro to defend the extortionist practices of the BRA. Because Westminster-Willard place was not subject to c.121A taxes, there was no 6A agreement negotiated between V&M and the BRA and therefore had no way of knowing what the proper tax base is. A 6A agreement determines the property's tax base.
46. In the summer and fall of 1989, V&M sought to refinance $3 million of its secondary mortgages to avoid a scheduled foreclosure. V&M secured $3 million in junior mortgage refinancing from Greystone Mortgage Funding Corp. of NY. In an August 23, 1989 commitment letter, Greystone was prepared to pay the DOR $500,000 upon closing, and an additional $500,000 to be escrowed pending the outcome of the appeal in Shamir Corp. v. V&M. The DOR was at risk only $200,000. At foreclosure, the DOR would have lost everything, as the taxes are only junior liens. Both the taxes as well as the c.121A status would have been wiped out at foreclosure. The DOR was prepared to accept $500,000 cash, and subordinate the $700,000 balance of its tax liens, to Greystone, as per the December 20, 1989 letter by Tax Examiner Chipouras.
47. On the day before the scheduled December 21, 1989 closing, the DOR changed its mind at the last minute, refused to agree to Greystone's subordination and the refinancing failed. This was a clear political decision to assassinate the deal and retaliate against Mourad.
48. In May of 1987, HUD settled its $2,627,868 tax liability with the Commonwealth of Massachusetts for a discounted $1,200,000.
49. Massachusetts refused to make a similar arrangement with V&M by not agreeing to subordinate a portion of the contested tax liability (V&M agreed to pay $500,000). The City and the Commonwealth discounted HUD's taxes by 54%, but was unwilling to provide an even lesser tax break to V&M.
50. Between 1984 and 1995, Mourad devoted his full time and energies to the operation of Mandela. To meet his living needs, Mourad borrowed funds from the company, and signed notes to that effect. Since 1985, the aggregate amount of these loans are not substantially different from what Mourad would otherwise be entitled to receive for his services in either the form of management fees and/or salary. Unfortunately, due to the history of disputes with the governmental agencies, and the previous refinancings and sales derailed by the BRA, DOR and City of Boston, Mourad exhausted all his personal resources in an effort to bring Mandela forward.
51. HUD subsidies to V&M have been 30% blow market rent and therefore insufficient. The subsidies were not based upon c.121A taxes but rather c.59 taxes. There were insufficient funds to properly maintain and operate the property. The cash flow shortages resulting from this underfunding required numerous borrowings from Mourad's relatives and business acquaintances, to fund needed and necessary expenses. These transactions often occurred monthly with a number of individuals, as Mandela lived from subsidy to subsidy. Typically, V&M would borrow from an individual, and repay them the following month, and they would lend V&M the next month, as cash flow dictated. Frequently, Mourad borrowed money from V&M and subsequently repaid it to meet needed expenses. These transactions provided essential services for the residents of Mandela, and, given the lack of funding from any other institutional source other than Winter Hill, they were justified under the circumstances.
52. Between December 21, 1984 and March 18, 1986, V&M Management, Inc. and Alphonse Mourad, its President and sole stockholder, borrowed funds and executed a series of nine notes and mortgages in favor of Lender Jason Long, then a high interest lender at 631 Tremont Street, Boston, MA. Two notes were satisfied.
53. On December 2, 1986, Jason Long sued Mourad and V&M Management, Inc. in the Boston Housing Court, C.A. No. 21912, on the seven remaining notes, claiming a principal indebtedness of $355,000.
Date of Note Exh. Amount Rates
12/21/84 A $50,000 24%
03/29/85 B 55,000 (sic) 18%
05/09/85 C 55,000 24%
08/14/85 D 60,000 24%
12/13/85 E 100,000 18%
01/23/86 F 25,000 24%
03/18/86 G 15,500 24%
total $360,500
54. On March 4, 1987, Jason Long assigned the notes and mortgages to The L&N First Mortgage Realty Trust, of which Mario Nicosia was a Trustee.
55. On November 4, 1988, Mourad and V&M Management, Inc. sued Jason Long, Mario Nicosia and L&N First Mortgage Realty Trust in Middlesex Superior Court, C.A. No. 88-6837. This complaint claimed that the seven notes contained late charges and penalty provisions constituting usury and violations of the Massachusetts criminal usury statute, G.L. c.271, sec.49, and G.L. c. 93A, sec.11. This lawsuit was dismissed by the Plaintiffs on December 12, 1988.
56. On May 24, 1989, Mourad Enterprises, Inc. and V&M Management sued Nicosia and Sosin, Trustees of L&N First Mortgage Realty Trust, in Suffolk Superior Court, C.A. No. 89-2962B. On June 6, 1989, a Preliminary Injunction was denied, and the December 13, 1985 $100,000 Note and mortgage were paid and discharged, and the foreclosure was stopped.
57. On February 14, 1990, V&M Management, Inc. sued Nicosia and Sosin, as Trustees of L&N Realty Trust, in Suffolk Superior Court C.A. No. 90-0928C, to enjoin a scheduled foreclosure.
58. On September 11, 1995, V&M Management, Inc. and Mourad sued Mario Nicosia, Judith Moriarty, and L&N First Mortgage Realty Trust in Middlesex Superior Court, C.A. No. 95-5267. This complaint sought injunctive relief against a scheduled September 28, 1995 foreclosure.
59. At a September 15, 1995 hearing before Judge Catherine White, the Court (White, J.), inquired of the Defendants' counsel, Albert Farrah, as to which of the six notes were in front of the Court that day, upon which the advertised foreclosure was based.
60. Attorney Farrah stated, in open Court, that the March 29, 1985 Note, carrying an 18% interest rate, was the only note at issue, and since that note carried an interest rate less than the prohibited rate of twenty percent (20%), G.L. c.271, sec.49, the Court should permit the foreclosure to take place.
61. Sitting with Attorney Farrah was Attorney Roger Lehrberg, the attorney who initiated and advertised the foreclosure process. Lehrberg did not dispute Farrah's admission that the March 29, 1985 Note carried an 18% rate.
62. On September 15, 1995, Judge White enjoined the foreclosure, ordered an accounting, and transferred this Middlesex case (No.95-5267) to Suffolk and consolidated it with two pending Suffolk Superior Court Cases, C.A. Nos. 89-6500E and 90-5433D.
63. On September 25, 1995, the Middlesex action was transferred to the Suffolk Superior Court, C.A. No. 95-5243. On October 17, 1995, third party defendants, the department of Housing and Urban Development ("HUD"), removed the civil action No. 89-6500-D to the U.S. District Court. This removal should have removed the entire transferred and consolidated case to the U.S. District Court.
64. On November 21, 1995, the Defendants, L&N Realty Trust, filed an Emergency Motion for Dissolution of the Preliminary Injunction.
65. On November 29, 1995, Judge Lopez dissolved the injunction against the foreclosure. This dissolution occurred notwithstanding the fact that the case had been removed to the U.S. District Court, by HUD, on October 17, 1995, and there was a serious question whether the Suffolk Superior Court (Lopez, J.) even had jurisdiction to entertain, much less grant, dissolution of an injunction, absent a federal court remand, 28 U.S.C. sec. 1446(1).
66. On January 2, 1996, V&M Management, Inc. and Mourad sued Mario Nicosia, Judith Moriarty, and L&N First Mortgage Realty Trust, in Suffolk Superior Court, C.A. No. 96-0036D, seeking to restrain a scheduled January 9, 1996 foreclosure of a mortgage securing the March 29, 1985 Note. V&M's accountant calculated and offered $13,511 to pay off the Note. Nicosia and Moriarty refused V&M's tender.
67. Just prior to the January 5, 1996 hearing on V&M's preliminary injunction request, the Defendants offered the January 3, 1996 Affidavit of Roger Lehrberg. For the first time, and in contradiction of his own drafted 1986 Housing Court lawsuit, C.A. No. 21912, and in the face of his September 15, 1995 silence when Attorney Farrah acknowledged the 18% rate of the March 29, 1985 Note, Lehrberg swore that the March 29, 1985 Note was a 24%, and not an 18% note, and attached that note as Exh."A" to his Affidavit. This January 3, 1996 Affidavit contradicts Lehrberg's witnessing of Mourad's signature on the 18% March 29, 1985 Note.
68. Mourad has no memory of signing a 24% note on March 29, 1985. Mourad says and believes that the 24% March 29, 1985 Note is a forged or altered instrument that was introduced minutes before the January 5, 1996 hearing for the sole purpose of defeating V&M's request for an injunction, and the ploy worked.
69. Judge Spurlock denied V&M an injunction against the scheduled January 9, 1996 foreclosure.
70. On January 8, 1996 V&M filed for bankruptcy, Chapter 11, Case No. 96-10123-CJK.
71. According to certified forensics hand-writing expert, Ronald H. Rice, in a May 27, 1997 Affidavit, says that the hand printed initials on the 24% March 29, 1985 Note are not the same as the hand printed initials on the other known Mourad signed and initialed Notes, and that the Mourad signatures on the 24% March 29, 1985 Note contain noticeable letter stroke dissimilarities when compared against the known Mourad exemplars, see May 27, 1997 Rice Affidavit attached as Exhibit "A."
72. On February 1, 1996, three governmental entities, the BRA, the DOR, and the City of Boston joined together and filed a motion to have a trustee appointed for V&M.
73. During the first month of V&M's bankruptcy, V&M operated as a debtor of possession, under strict budgetary controls. After the BRA Motion was filed, an Examiner was appointed to investigate V&M's finances.
74. Due to the alleged and possibly feigned illness of V&M's attorney, Frank Kirby, in the first month of V&M's bankruptcy, V&M's President, Mourad, knew he had to secure new counsel for V&M. Mourad had previously (in the fall of 1995) spoken to Harold Murphy about representing V&M, but Murphy wanted a $25,000 retainer. Mourad could only manage to secure $14,000; and so he retained the cheaper Kirby.
75. Kirby proved to be an ineffective and negligent advocate, and could not stand up to the Court or provide effective representation, and failed to secure service upon L&N Realty Trust , thus precluding effective Court action on V&M's Adversary Complaint against L&N, No. 96-1040, challenging L&N's Notes.
76. Mourad knew that Kirby could not effectively or vigorously perform or defend against the BRA's Motion For a Trustee.
77. Mourad heard that Murphy had a good reputation, and that he was well liked by Chief Judge Carol Kenner, to whom V&M's chapter 11 bankruptcy case, No. 96-10123-CJK, had been assigned. Murphy further told Mourad, as an inducement to Mourad to retain Murphy and Hanify King, that he (Murphy) could win before Kenner, and that Mourad's and V&M's interests were in good hands at Hanify & King.
78. Relying upon Murphy's (mis)representations, Mourad retained Murphy, and fellow partner, Donald Farrell and the firm of Hanify & King to take over from Kirby.
79. On February 8, 1996, Harold Murphy and his firm, Hanify & King, filed an application to be employed as successor counsel to V&M Management in its bankruptcy case, and to authorize payment of a $25,000 retainer. The Court allowed the application and $25,000 retainer. Within days of Harold Murphy's employment, Mourad, Attorney Kirby and V&M Attorney, Victor Aronow, sat down with Murphy and Farrell and explained the history leading to the bankruptcy filing, and the perjury, fraud and forgery committed on January 5, 1996, when Attorney Roger Lehrberg submitted a March 29, 1985 note for $50,000 in a Suffolk State Court Action. The March 29,1985 Note for $50,000 filed by L&N and its attorneys claimed to have a 24% interest rate. This was not true. The authentic and original Note bore an 18% interest rate, and not a 24% interest rate. Attorney Kirby had prepared an (unserved) adversary complaint, No 96-1040, that was pending and sought disallowance of the Notes assigned to Moriarty and Nicosia. Mourad, Kirby and Aronow urged and instructed Murphy and Farrell to pursue the adversary proceeding.
80. On February 29, 1996, Harold Murphy's assistant, Eddirland Duncan, of Hanify & King, prepared a Memorandum for Murphy. The Memorandum discussed the March 29, 1985 $50,000 note with a 24% interest rate, its forgery or alteration, and stated that the original 18% March 29, 1985 note for $50,000 was used by Attorney Lehrberg as the basis in a 1986 Boston Housing Court case, C.A. No. 21912, and that the 24% note was never mentioned in that suit.
81. Attorney Michael Altman, of Rubin & Rudman, the attorney representing V&M in the January 2, 1996 filed V&M and Mourad v. L&N & Nicosia action in the Suffolk Superior Court, C.A. No. 96-0036D, advised Murphy to retain a hand-writing expert to examine the March 29, 1985 24% Note to verify its authenticity.
82. In V&M's bankruptcy case, Murphy failed to use any of the research and information presented to him by his assistant, Eddirland Duncan, failed to acknowledge the information given to him by Attorneys Aronow and Kirby, failed to obtain a hand-writing expert to determine the authenticity of the note, and failed to obtain service or bring forward V&M's adversary complaint against L&N Realty Trust.
83. In a May 27, 1997 sworn affidavit, Ronald H. Rice, a certified hand-writing forensics examiner, concluded that there are ..."stroke dissimilarities between Mourad's signature on the 24% March 29, 1985 Note, and the known Mourad signatures on the other notes".
84. Had Harold Murphy taken action and presented the true facts to the Bankruptcy Court concerning the actions taken by L&N and Mario Nicosia, the Debtor, V&M, would not have remained in bankruptcy, for it was the foreclosure of a bogus, forged and fraudulent note by L&N and Nicosia that precipitated the filing of V&M's bankruptcy to seek federal protection from said foreclosure. At the very least, the Court would not have accepted Nicosia's proof of claim for approximately $1.4 million.
85. Hanify & King's representation of Mourad and V&M brought no benefit to the V&M estate, or its creditors. The Court scheduled an evidentiary hearing on April 1, 1996 for hearing the BRA Motion for a trustee.
86. At the April 1, 1996 hearing in the Bankruptcy Court Harold Murphy failed to rebut or challenge Examiner Alan Braunstein's conclusion that Mourad took $923,000 in 1995, and failed to object to the Court's refusal to allow Examiner Braunstein to finish his investigation.
87. As a result of Murphy, Farrell's and Hanify & King's negligence and (mis)representation of V&M Management, and failure to obtain necessary discovery, the Bankruptcy Court made erroneous, unsupportable findings that Mourad had mismanaged V&M during the years of 1983 and 1984 when in fact, Mourad did not manage the property at that time. Abrams Management and State Street Management managed the property from 1982-1987 and were responsible for any losses accumulated during that time period. Murphy, Farrell, and Hanify & King failed to correct, or object to these findings, in that Mourad did not manage V&M during this 1983-1984 period of mismanagement, and the statue of limitations had expired for any inquiry into this period, much less judicial reliance to support a Trustee appointment.
88. The Court's finding that Mourad was guilty of gross mismanagement, and the Court's appointment of a Trustee, were appealable issues that Hanify & King had an obligation to appeal or secure other counsel to appeal. Mourad asked Murphy and Hanify & King to appeal the Bankruptcy Court's April 1, 1996 allowance of the Motion to appoint a chapter 11 Trustee. Murphy and Hanify & King refused to timely notice an appeal. Hanify & King failed to advise Mourad to retain new counsel to appeal. Counsel must take all reasonable steps to ensure that a client's rights are properly protected, and the proper and timely filing of a notice of appeal within ten days of the Court's April 1, 1996 order under Bankruptcy Rule 8002 was a required action to protect V&M's and Mourad's rights. Hanify & King refused to appeal because they did not want to offend Judge Kenner who appointed the firm and its partners to lucrative Trusteeships. Hanify & King should have filed the appeal (to timely protect V&M's rights), then sought permission to withdraw, and not done so until successor counsel was retained.
89. Hanify & King negligently refused to notice an appeal and failed to take all necessary and timely steps to protect Mourad's and V&M's rights, because the Court (Kenner, C.J.), on April 2, 1996, approved the U.S. Trustee's recommendation to appoint Stephen Gray as Chapter 11 Trustee. Murphy and Hanify & King had previously represented and continued to represent Stephen Gray in an ongoing bankruptcy case, In Re Patriot Paper Corp., Chapter 7, Case No. 93-12482-CJK, yet failed to disclose this representational connection to the U.S. Trustee, Mourad or the Court.
90. Murphy and Hanify and King refused to appeal Judge Kenner's appointment of Gray, a Chapter 11 Trustee, because Murphy and Hanify & King knew that a successful appeal would dislodge Gray from a lucrative trusteeship appointment.
91. Harold Murphy did not object to the Court's erroneous findings and conclusions, and failed to preserve Mourad's right to an appeal by not doing so. Also, after the Trustee was appointed, Murphy refused to file a Motion For Reconsideration to the appointment of a Trustee, as was requested by Mourad.
92. Attorneys Murphy and Farrell and Hanify & King committed professional negligence and failed to represent V&M Management zealously, in violation of DR 7-101(A)(1); failed to represent the client (V&M) within the bounds of the law, in violation of DR 7-102; failed to refute and dispute the factual and legal basis for the BRA Motion For the Appointment of a Trustee; failed to litigate the issues addressed in Mourad's Affidavit; failed to obtain discovery against the three moving governmental entities; failed to litigate the issues addressed in Duncan's February 29, 1996 Memorandum; failed to object to the introduction of stale (1983-1984) evidence at the April 1, 1996 hearing on the Motion to appoint a Trustee; and failed to object to Attorney Saul Schapiro's appearance, who had submitted an Affidavit, in support of the BRA Motion For the Appointment of a Trustee, and spoke on behalf of the three governmental moving parties as its lead counsel at the April 1, 1996 hearing while simultaneously testifying and representing the BRA in the same case. Here, BRA attorney Saul Schapiro breached this most basic of evidentiary and ethical rules (DR 5-101(B), DR 5-102). Schapiro should not have simultaneously represented the governmental entities while testifying, and Murphy negligently made no objection to Schapiro's appearance as a witness, as well as his tainting statements.
93. Rather than file the notice of appeal themselves as counsel to V&M, Murphy had Farrell draft a Notice of Appeal for Mourad to sign and file. Mourad was not advised that he, a non lawyer, could not sign and prosecute an appeal on behalf of a corporation, or that only a licensed attorney could represent a corporation, or that Mourad did not have standing to appeal because Mourad was not a party opposing the Motion For Appointment of a Trustee, or that Mourad himself did not personally oppose the appointment of a Trustee. Mourad testified against and opposed the Appointment of a Trustee at the April 1, 1996 hearing. Murphy negligently allowed Farrell to draft an appeal Notice for Mourad to sign,(See Exhibit "B"), knowing that Mourad lacked standing to file the Notice Pro Se. It was not until after Mourad timely prosecuted and filed his statement of issues, Appendix and 44 page brief with the U.S. District Court that three Governmental entities jointly moved, on August 5, 1996, to dismiss Mourad's appeal on the alleged ground that Mourad lacked standing.
94. Murphy violated DR 3-101(A) by aiding a non-lawyer in the unauthorized practice of law.
95. Hanify & King remained in the bankruptcy case as counsel for V&M Management until October 10, 1996.On October 10, 1996, Attorney Leonard Krulewhich called and faxed Murphy an October 10, 1996 letter (See Exhibit "C"), asking Murphy to assist in protecting Mourad's appeal or substituting V&M as the appellant. Also see Attorney Krluwhich's Affidavit attached as Exhibit "D."
96. Rather than help, Murphy and Hanify & King filed a Motion to Withdraw from the case on the same- October 10, 1996 date as Krulewich's letter, and the Bankruptcy Court promptly allowed that Withdrawal Motion on the same October 10, 1996 day, See Exhibit "E", without an opportunity for V&M or anyone to file an opposition, without an opportunity for V&M to secure successor counsel, and without further explanation of its actions by Hanify & King. Murphy violated D.R. 2-110(A)(2) by seeking to withdraw from employment before he took reasonable steps to avoid foreseeable prejudice to his clients rights.
97. Had Murphy, Farrell and Hanify & King obtained the requested discovery against the BRA, DOR, and City of Boston; had they argued and presented the points researched and set forth in their Memorandum; had they argued the point set forth in Mourad's March 30, 1996 Affidavit that they had filed; had they argued the point set forth in their own Memorandum prepared by Edderiland Duncan (See Exhibit "F"); had they objected to and disqualified BRA Attorney Saul Schapiro from offering an Affidavit, and simultaneously being a witness and attorney advocate in the same case; had they introduced the December 1989 Greystone Financing Commitment and shown how the DOR refused to accept $1,000,000; had they properly defended V&M and Mourad from false accusations of mismanagement; had they moved for alternation, amendment and for reconsideration of the Court's erroneous April 1, 1996 findings and conclusions; and had they timely taken an appeal on behalf of the Corporation, the Court would not have appointed a Trustee, or said appointment would have been reversed on appeal.
98. Furthermore, Murphy and Farrell consciously advised Mourad not to file his proof of claim as a creditor for the approximate amount of $130,000 in the Bankruptcy Court for the reason , as stated by Murphy, that "Judge Kenner would be biased to Mourad." Murphy recommended that Mourad wait, and file his claim in State Court. As a result of following Murphy's negligent, poor advice, Mourad had no standing as a creditor to the Debtor, V&M Management, and lost his right to participate in, and file Motions in the V&M bankruptcy.
99. Hanify & King, Murphy, and Farrell clearly delivered a political victory to the three governmental agencies (BRA, DOR and City of Boston) at the expense of V&M Management, Mourad and his family, V&M's creditors, the residents, and the administration of justice.
100. Murphy and Hanify & King also filed an excessive fee application with the Bankruptcy Court for its negligent representation providing no benefit to V&M Management.
101. Murphy and Hanify & King later filed an application for additional fees of approximately $104,000 (Hanify & King was paid a Court-authorized $25,000 retainer). Such a fees request was unreasonable and excessive for the less than two months of work devoted to the case that failed to benefit the Debtor's estate or the creditors interests'. Furthermore, Hanify & King refused to appeal the Court's April 1, 1996 order appointing a Trustee, thus leaving the Mourad family and V&M's creditors to hang in the wind, and then drafted a notice of appeal for Alphonse Mourad to sign, file, and prosecute when the non-lawyer (Mourad) had no standing to represent the interests of the corporate debtor, V&M Management. Hanify & King's representation fell far below acceptable standards of nonnegligent advocacy, much less the vigorous degree of advocacy ethically required of counsel, particularly in a case involving many public entities, and with clear political features involving a Debtor battling the BRA, DOR, and The City of Boston.
102. Murphy and Hanify & King further committed fraud and deceit in representing to Mourad that they could win a reorganization before Judge Kenner for V&M, a corporation with a steady cash flow of tenants' rents and a HUD Subsidy, but with too much debt and inappropriately taxed.
103. Murphy and Hanify & King further failed to disclose their prior representation of Stephen Gray, the appointed Chapter 11 Trustee for V&M to Mourad, the U.S. Trustee Office and the Court, and continued to represent Gray in the Patriot Paper case, and in June 1997, came to represent Gray as the Court Appointed Trustee in the In Re, American Shipyard Corp., Case No. 11-96-11753, in the U.S. Bankruptcy Court in Rhode Island.
104. Murphy, Farrell, and Hanify & King's actions constitute fraud, deceit, breaches of professional, ethical, and fiduciary duty, and of contract.
105. Murphy, Farrell, and Hanify & King owed Mourad and V&M Management duties of due and professional care, and failed to fulfill those duties.
106. As a result of Murphy's, Farrell's, and Hanify & King's actions, negligence, breaches, deceit, and fraud, Mourad and the Mourad family suffered the loss of their fifteen year,$20 million investment in V&M Management.
107. Murphy and Hanify & King further conspired with Gray to deprive Mourad of his rights and investment in V&M Management, Inc.
108. As the Court appointed Chapter 11 Trustee of V&M Management, Stephen Gray committed fraud and (perjury), and violated 11 U.S.C. §101 (14), and Bankruptcy Rule 2007.1 by failing to disclose his representational connection to V&M's counsel, Murphy and Hanify & King, in his (Gray's) two sworn disclosure statements dated April 5 and 10, 1996, see Exhibit "G."
109. Stephen S. Gray, the Chapter 11 Trustee appointed on April 2, 1996 to oversee V&M Management, Inc., failed to disclose to the U.S. Trustee's Office prior to his April 2, 1996 recommended and judicially approved appointment, or, in his April 5, 1996 Verified Statement, or, in his April 10, 1996 Amended Verified Statement, that he, Trustee Gray, at the very time of his April 2, 1996 appointment in this case, was being simultaneously represented by V&M's counsel, Harold Murphy of Hanify & King, in another pending bankruptcy, In re: Patriot Paper Corporation, Chapter 7, Case No. 93-12482-CJK.
110. Gray falsely, (and therefore perjuriously), and in violation of Bankruptcy Rule 2007.1, stated, twice, under oath, that he had no connection to the debtor, V&M Management, Inc., or its counsel, Harold Murphy and Hanify & King, when, in fact, he had a very significant connection, that of having Attorney Harold Murphy and Hanify King, V&M's counsel, represent Gray at the very same time of Gray's appointment in this case.
. Furthermore, Gray is currently under investigation by the Internal Revenue Service (IRS) to determine whether or not he (Gray) legally qualifies for the State Tax Credits he received to help reorganize the Mandela Apartments, see Exhibit "H."
111. This conflict and simultaneous representation of diverse interests went undisclosed and undiscovered, as the V&M bankruptcy proceeded to become one of the most contested and contentious bankruptcy proceedings in the Eastern District of Massachusetts. This conflict was not discovered until the end of October 1997, when Murphy's representation of Gray in the Rhode Island bankruptcy came to light.
112. That is, Trustee Gray, two months into V&M's affairs, retained V&M's counsel, Harold Murphy and Murphy's firm, Hanify & King, to represent Gray in the Rhode Island Bankruptcy proceeding entitled In re American Shipyard Corporation, Chapter 11, Case No. 11,96-11752 (R.I. Bank.) again, at the same time Murphy and Hanify & King continued to be the counsel of record for V&M Management in this case, see Exhibit "I."
113. At no time, prior to the Motion filed by the Nine Creditors' on October 31, 1997, did either Trustee Gray or Attorney Murphy disclose to Mourad, the Court or to the parties their "representational connection." Please see the November 30, 1998 Transcript of Nine Creditors Motion, attached as Exhibit "J."
114. Mourad only came to know about the relationship between Murphy and Gray when Attorney David Lipton informed Mourad in October of 1997 that Murphy had been representing Gray in the case of In re: American Shipyard Corporation, Case No.11-96-11753, in the Rhode Island Bankruptcy Court. See Attorney Lipton's Affidavit attached as Exhibit "K." Mourad obtained the Rhode Island Bankruptcy Court papers in the American Shipyard case. Sure enough, Stephen Gray's June 14, 1996 application to employ Harold Murphy was granted on July 15, 1996, while Murphy was still the counsel of record for V&M Management, and after Gray had been appointed as Chapter 11 Trustee to V&M, on April 2, 1996.
115. Mourad had also discovered that Murphy and Hanify & King represented Stephen S. Gray, in his capacity as Trustee, in the case of In re: Neponset River Paper Company f/k/a, Patriot Paper Corporation, Case No. 93-12482-CJK, before Judge Kenner, who appointed Gray as V&M's Trustee, see Exhibit "L."
116. This case had been ongoing before Mourad hired Harold Murphy to represent V&M in February of 1996, and Murphy proceeded to represent Gray in the Patriot Paper case and V&M simultaneously, without notifying Mourad of his dual, conflict-ridden relationship with Gray.
117. The Murphy and Gray failure to disclose the Gray-Murphy representation and connection is fraud upon the Court and a violation of Murphy's and Gray's duties under Bankruptcy Rule 2007.1 to make continuing disclosure of any conflicts, connections, or adverse interests.
118. As part of the Trustee appointment process, Gray was required to make certain disclosures according to Bankruptcy Rule 2007.1. Gray submitted an April 5, 1996 Verified Statement and an April 10, 1996 Amended Verified Statement, that he (Gray) had no connection to V&M or V&M's attorneys. Gray's verified statements are obviously false and perjurious, but only Murphy knew that, and he failed to disclose the Murphy-Gray connection and prior representation, or to object to Gray's appointment.
119. Only a "disinterested person" can be appointed or serve as a Trustee, and Stephen S. Gray was not disinterested, 11 U.S.C. §101(14) and §1104.
120. Gray was not 'disinterested' within 11 U.S.C. § 101 (14) or § 1104 or 11 U.S.C. § 1144, and Gray should not have been recommended or appointed as V&M's Trustee, and he should not have taken this assignment. His 'interested' activities throughout this case casts a dark cloud over these proceedings.
121. Murphy had an obligation to represent his client, V&M Management, with due care and diligence, and in accordance with the law and ethics. He failed to do so. His refusal to appeal the appointment of a Trustee, in a case that also had many other appealable issues, lead to the loss of Mourad's rights and fifteen year investment.
122. Murphy and Hanify & King's failure to take an appeal from the appointment of the Trustee was negligent, and in the advice to Mourad that Mourad prosecute the appeal pro se was also negligent.
123. Murphy's recommendation that Mr. Mourad not file a proof of claim, especially after counsel failed to take an appeal, is grossly negligent and represents a deprivation of Mourad's rights.
124. Murphy's failure to disclose his representation and prior and continuing relationships with Gray violated bankruptcy law, rule and ethics. As a result of all that Murphy, Farrell, Hanify & King and Gray did in the V&M bankruptcy case, Mourad and his family suffered stress, pain and damages.

Mourad claims a trial by jury on all issues.
WHEREFORE, Plaintiff, Alphonse Mourad demands judgment jointly and/or severally against Harold Murphy, Donald Farrell, Hanify & King, and Stephen Gray for damages, costs and interest, in the amount of $20 million.
Verified and signed under the penalties of perjury this March 31, 1999.


Alphonse Mourad
125 West Street
Hyde Park, MA 02136

March 31, 1999