Impact Forensics Awarded Default Judgment for Client
July 1st, 2008
Impact Forensics Awarded Default Judgment for Client in Bankruptcy Case
Computer Forensic Expert Report Showing Spoliation Leads to Adverse Inference In re: Jeffrey Eckert, Debtor, David Grochocinski Trustee, Plaintiff, vs. Schlossberg, et al., Defendants. April 11, 2008
“…the expert’s report indicates that somebody has basically shredded or destroyed the relevant and other data on the three computers under Mr. Schlossberg’s control or direction for which he should be held responsible…”
- Judge John H. Squires
Referring extensively to Impact’s expert report, Judge John H. Squires sanctioned defendants with an adverse inference, default judgment, and expert’s fees in an action in the United States Bankruptcy Court for the Northern District of Illinois Eastern Division, reinforcing the current trend of levying harsh penalties for parties destroying Electronically Stored Information (ESI) that is subject to litigation.
The defendant, a financial planner, was accused of assisting the debtor in hiding assets in a bankruptcy matter. Under an agreed order, Impact Forensics experts imaged a number of the defendant’s computers and file servers at his place of business immediately prior to a scheduled trial. Impact’s experts discovered the existence of “nCleaner” a software utility designed to perform, among other things, the destruction of data by engaging a “Free Space Shredder” that effectively overwrites the deleted data which resides in a computers unallocated or “free space”. In one case, the program was run at 11:18 pm the night before Impact’s experts were scheduled to perform the computer examinations.
Acknowledging that the defendant’s actions essentially made it impossible to recover and produce electronic data into evidence, Judge Squires stated,
“I’m going to invoke 7037 (b) (2) (A) (i) that the designated facts alleged against him (the defendant) be taken as established…”
Judge Squires also referred to the New Federal Rules, Crabtree vs National Steel Corp.[1], Cohn vs. Taco Bell[2], and China Ocean Shipping Group vs. Simone Metals[3] drawing defendant’s attention to the demonstrated obligation of parties to preserve ESI and the adverse consequences of deliberate destruction.
[1] Crabtree vs. National Steel Corp., 261 F. 3d 715 at 721.
[2] Cohn vs. Taco Bell. Westlaw 519968. Northern District of Illinois
[3] China Ocean Shipping Group vs. Simone Metals. Westlaw 966443. Northern District of Illinois.