William D. Chapman <wchapman@smithchapman.com> To: "Elisa Wolfe-Donato (elisa.wolfe@doj.ca.gov)" <elisa.wolfe@doj.ca.gov> Cc: Dolores Cerecedes <dcerecedes@smithchapman.com>, Robert Hadlock <rhadlock@smithchapman.

com>

Tue, Sep 22, 2009 at 6:06 PM

Elisa: Thank you for your letter dated September 2, 2009 regarding Michael Grissom v. Preston DuFauchard, et al., Los Angeles County Superior Court, Case Nos: BS121077 (mandate) and BC415375 (civil). Unfortunately, I left the country that day and did not return until September 14. Since then, I have been climbing out of the avalanche of materials that collected in my absence. Although your letter covered a lot of ground, I would like to focus on what I believe are the most critical and time sensitive issues: Timing of Production of Documents. DOC implies that the subject requests created "unusual circumstances," permitting the DOC to extend the statutory 10 days within which to respond. However, the DOC has not identified the basis for its claim of "unusual circumstances," as set forth in Government Code 6253 (c) (1)-(4). Furthermore, although you stated that the DOC is making a second search for the documents requested after we created a list of references to documents that were clearly not produced, you gave us no time frame in which additional documents would be produced, if any. Lack of a Privilege Log. As you know, pursuant to Government Code 6255 (a), the DOC has the burden of demonstrating that any records not produced are exempt. Furthermore, exemptions are construed narrowly and the burden is on the DOC to demonstrate that the public interest served by not making the records public would "clearly outweigh" the public interest served by the disclosure. New York Times Co. v. Superior Court (App. 2 Dist 1990) 218 Cal.App.3d 1579. By asserting a laundry list of boilerplate objections and without producing any "privilege log," the DOC is further stonewalling and preventing plaintiff from ascertaining whether any of the exemptions claimed has any merit. For example, your citation to the California Constitution, Article I, 1, without anything further, is meaningless. That section reads as follows: All people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy. How is a citizen supposed to know whether the unidentified documents you claim to be exempt are protecting some individuals right to some unidentified right? Without more, your decision to withhold documents without providing a privilege log and explaining the basis for the claimed exemption, appears to us to be nothing more than

a continuing abuse of power. Judgment Against DSC for Conversion. Although we believe that DOC's withholding of documents hampered our ability to prosecute a conversion claim against DSC, DSC has been found liable for conversion. One would hope that a governmental agency which granted a license to a Corporation to loan money to consumers would have some questions for that Corporation after a Superior Court has found that Corporation to have converted five vehicles from innocent consumers. This is especially true where DSC claimed throughout the trial that the basis for its right to steal the cars was its lending activities, which the DOC has apparently found were completely appropriate (or didnt care whether they were or not). These conversions included creating counterfeit titles through the state of Indiana for the purpose of stealing cars in the state of California. Far from failing to "please everyone," as you characterize it, the DOC is condoning DSCs flagrant and repeated commission of criminal acts in the state of California. DSC's Violation of Law AFTER It Became Licensed. Your position is that as long as the DOC was aware only of criminal conduct by DSC PRIOR to DOC granting DSC a license, DOC is "carrying out its legislatively-prescribed mission." I cannot envision a more corrupt vision of an organizations mission. Don't you think that part of the DOC's mission is to see that criminals are not issued licenses to prey upon innocent victims in the state of California? With respect to your request that we provide you only with information demonstrating that DSC had violated the law AFTER it became licensed, attached are transcripts of the trial where DSC ratified, condoned and defended its theft. Would it be your position that as long as DSC committed these crimes PRIOR to its licensure and defended them in a trial AFTER was licensed, the DOC has fulfilled its mission to protect the public against unscrupulous lenders? If that is your position, we would like to hold a press conference and make sure that the citizens of this state are aware of how the DOC sees its own mission. We would be happy to hold such a press conference at a time and place that is convenient to you and your client. DSC's Perjurious Application Should Be Grounds for Revoking Its License. In its application for a lenders license, DSC answered negatively to question seven which inquired as to whether DSC had been subject to, among other things, any civil action involving a claim of fraud in California. The application was filed in April of 2008 and yet DSC had been sued for fraud in at least the following cases:

07/21/2006

Dealer Services Corporation

CrossDefendant CrossDefendant CrossDefendant CrossDefendant

Fraud,

GIC869520

San Diego County Superior Orange County Superior Orange County Superior Orange County Superior

Dealer Services Corporation 12-26-2007 Dealer Services Corporation 02/13/2008 Dealer Services Corporation

7-27-2007

Conversion Fraud 07CC08336 Fraud Fraud 30-200700100716 30-200800102624

$60,000 Settlement. Just to confirm, you see nothing wrong with the DOC accepting $60,000 in exchange for forgiving DSCs obvious prior criminal conduct in operating as a finance lender without a license. We see that as undue influence peddling that has no place in a free government. Smoking Guns. The attached transcripts and closing argument briefs constitute "smoking guns" as to DSC's criminal conduct and intent to continue to engage in such criminal conduct. DSC brought out its "big gun" General Counsel from Indiana to justify, defend and confirm that DSC had in the past and has every intention of continuing the conduct of claiming that a generic UCC-1 filing against one debtor allows it to steal cars belonging to someone else on the grounds that in the judgment of their shady repossession firm the cars had crossed over a line dividing the property of the debtor from an adjoining dealer. DSC does not want to see the title or ownership evidence at all. That is not necessary. Please consider the attached documents as submission of the "smoking guns" you requested. Of course, there may be other smoking guns in the possession of the DOC which it is withholding from us as "exempt" or privileged. However, we would never know whether those documents are smoking guns because they have been withheld from our view. Conflict of Interest. Although we have not concluded our evaluation of a potential conflict of interest where Mr. Gillette both represents the DOC and clients seeking licenses from the DOC, on its face, it appears that Mr. Gillette may suffer from an inability to serve "two masters" and may favor one over the other, especially where one is paying him hefty legal fees and the other is a government entity which you admit "cannot please everyone." Wouldn't you agree that under these circumstances, the DOC may be more inclined to please Mr. Gillette's private client and then claim that incriminating evidence is "exempt," without specifying the basis for those exemptions than to protect the public that has no effective representation at the table? Reassignments of Financial Services Division Employees. Just to reiterate, you are correct that we are concerned, in light of all of the above, that DOC chose to reassign certain individual employees who were raising concerns and questions

about issuing a license to DSC. Again, does the DOC believe that this type of reassignment of employees is part of its legislatively mandated mission? Is removing the individuals who are the only ones representing the interests of the public part of the mission of the DOC? You stated that you would "relay our concerns" to the DOC management about Mr. Gillette and the reassignment of employees. How nice. Are you going to report back to us what action is going to be taken in that regard? Or, shall we just say that it has now been swept under the rug? Attorneys Fees and Costs. Please be aware that the longer the DOC takes the type of untenable positions set forth above, my client must incur additional attorney's fees and costs for which we will be requesting reimbursement at the close of this case. We urge you to take a hard look at these issues and help us "stop the bleeding." We look forward to your response to the above concerns in fulfilling your desire to continue to "work with (us) toward a mutually agreeable resolution of these matters." Thanks. Bill

William D. Chapman, Esq. Smith, Chapman & Campbell A Professional Law Corporation 1800 North Broadway, Suite 200 Santa Ana, CA 92706 Direct Phone: 714.689.2141| Fax: 714.550.1251 webpage: Civil Litigation Attorney email: wchapman@smithchapman.com