Role in Monster Magazine Drama May Haunt Lawyers

A lengthy legal dispute between former partners in a fantasy world of vampires and ghouls has spun off an unusual bankruptcy case that could haunt a Beverly Hills law firm.

A U.S. Bankruptcy Court trustee has filed a lawsuit against the firm representing monster magazine editor Ray Ferry, accusing its lawyers of helping him fraudulently transfer property to dodge creditors.

Freund & Brackey LLC is an entertainment law boutique whose clients include Ozzy Osbourne’s former band members and the rap duo Tha Dogg Pound. It is accused of advising Ferry with “the actual intent to hinder, delay or defraud any entity to which [Ferry] was or became indebted to.” The allegations are contained in a complaint filed by David K. Gottlieb, a trustee appointed by the San Fernando Valley branch of the U.S. Bankruptcy Court.

The law firm has denied engaging in any wrongdoing and intends to zealously fight the allegations, said Ray Aver, an attorney defending Freund & Brackey against the trustee’s action. “We do not believe the complaint has merit,” he said. Ferry declined to comment.

The case is raising eyebrows in legal circles. Such allegations by a bankruptcy court trustee against a law firm are extremely rare, according to experts.

“Law firms get paid to work around the rules; that’s the nature of the business,” said Jesse Fried, a professor specializing in bankruptcy law at UC Berkeley’s Boalt Hall law school. “But what’s unusual here is [the allegation] that the law firm is . . . involved in the chain of transfers and effectively got into business with their client.”

The trustee is seeking up to $750,000 plus punitive damages from the firm.

The allegations against Freund & Brackey, along with related legal actions against Ferry and his friends and family, grew out of a Los Angeles County Superior Court case last year.

Ferry, the editor of Famous Monsters of Filmland, was represented in a civil trial by Freund & Brackey partner Thomas Brackey II and associate Greg Marcot. Ferry lost the case to Forrest Ackerman, the writer and horror memorabilia maven also known to legions of the genre’s fans as Dr. Acula.

Bad Blood Over Use of Pen Name ‘Dr. Acula’

Ackerman, the former literary agent for Ray Bradbury, Isaac Asimov and L. Ron Hubbard, was the original editor of Famous Monsters. But a few years ago, Ackerman had a falling-out with Ferry, who was publisher at the time, and left the magazine.

He sued Ferry over unauthorized use of his Dr. Acula pen name and over failing to share profits from fan conventions.

Ackerman “is generous to a fault. He’s been ripped off repeatedly,” said director John Landis, who, like fellow filmmakers Steven Spielberg and George Lucas, counts the 84-year-old as a creative influence. Landis, who testified for Ackerman during his trial, said he is glad to see him finally fight back.

Last year, after the jury trial, Ackerman was ultimately awarded rights to the Dr. Acula trademark and a judgment of $518,000. Los Angeles County Superior Court Judge Stephen Petersen also voided a contract that Ackerman signed when he was ill, which gave Ferry the option to buy millions of dollars worth of Ackerman’s assets for $1. Ferry has appealed.

Though Ackerman got his pen name back, he said little else has come from his years of litigation against Ferry.

“It cost me four years of my life. I’ve spent over $100,000,” he said. “It was a year ago that I got that wonderful judgment . . . and I haven’t recovered one penny.”

That’s because shortly after the trial, Ferry declared himself broke and filed for Chapter 7 bankruptcy protection. But not before lawyers at Freund & Brackey helped Ferry give away big chunks of his property, the trustee alleges.

Ferry transferred the physical assets of the magazine to a company called Gothix, which was incorporated by the law firm and whose president and sole shareholder was Gene Reynolds, Ferry’s close friend and housemate, according to court documents.

Ferry also transferred the Famous Monster trademark, which the trustee has valued at $500,000, to Esketores Systems--a company formed and owned by Freund & Brackey--for a $10,000 credit toward Ferry’s alleged $170,000 legal debt to the law firm, the documents show.

On the same day in June 2000 that Esketores received the Famous Monsters trademark, the law firm in turn licensed the name to Gothix for a nominal $100 a month, according to the documents. The firm also gave Gothix an option to buy the trademark for $50,000.

“The transfers don’t make sense--unless there was a scheme to defraud. There’s certainly something rotten in Denmark here,” said Wesley H. Avery, the attorney representing Gottlieb, the Bankruptcy Court trustee. “I think there was a scheme here between Ferry and the law firm to defraud Ackerman and other creditors.”

Suit Claims Transfers Mask Business as Usual

The lawsuit alleges that the transfers have not changed the operations of the ghoulish glossy--or Ferry’s role at the magazine, whose recent covers featured Bela Lugosi, King Kong and a horned Cyclops. The publication is run essentially the same way it was before Ferry filed for bankruptcy, with Ferry writing and producing the issues and Reynolds helping fill mail orders, the suit contends.

Reynolds said Gothix is now the publisher of the magazine, and that Ferry is only an editor. Reynolds, whose past titles at the magazine included “secrescary to the publisher” when Ferry was publisher, declined further comment.

Avery said the court has already voided another transfer that Ferry made, of a second trust deed to his house, to Ferry’s father.

The trustee is seeking to void other transfers that Freund & Brackey helped Ferry make to others close to him, including the conveyance of the Famous Monsters trademark to the law firm itself.

In a statement released by its publicist, the firm said it “defended Mr. Ferry at trial as the firm was obligated to do. When Mr. Ferry lost that case, the firm filed an appeal on his behalf. . . . [The firm] does not have, and has never had, any other association with Mr. Ferry.”

Mark S. Scarberry, a bankruptcy law professor at Pepperdine Law School, said: “It sounds like the law firm wanted to get its bills paid.” But now, Scarberry added, “the trustee has the law firm in a box. It’s a very tough position for that law firm to be in.”

Ackerman said he’s also in a bind, with his four-year legal battle against Ferry, his $100,000 in legal bills, and his inability so far to collect any of the judgment he won.

In the meantime, Ackerman said he had to take out a second mortgage on his home and auction off some of his memorabilia collection.

“I’m pretty depressed,” he said. “It just seems there is such unscrupulousness . . . going on behind the scenes.”