IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

Norfolk Division 

________________________________ 

 ) 

IN RE: ) Misc. Proceeding 16-00703-SCS 

 ) 

EDRIE A. PFEIFFER, ESQUIRE ) 

 ) 

 ) 

________________________________) 

MEMORANDUM IN SUPPORT OF EDRIE PFEIFFER’S MOTION TO CONTINUE 

THE FINAL HEARING IN THIS MATTER PENDING 

THE RESOLUTION OF TWO CASES PENDING IN THE WESTERN DISTRICT 

 The Court convened a Preliminary Hearing on December 1, 2016 in this matter which 

involves an Order to Show Cause issued on September 27, 2016 against Edrie A. Pfeiffer, 

Esquire (“Ms. Pfeiffer”), a member of the bar of this Court (“the Show Cause Order”). The Court 

sought counsel’s view on the period of time needed to prepare for the final hearing. In response, 

counsel asked whether the Court would consider delaying the resolution of this matter until two 

adversary proceedings pending in the U.S. Bankruptcy Court for the Western District of Virginia 

were resolved. The Court requested that Ms. Pfeiffer file a motion in support of the request. 

A. The Pending Cases in the Western District 

There are two adversary cases pending in the U.S. Bankruptcy Court for the Western 

District of Virginia which were filed by United States Trustee; i.e., Robbins v. Morgan, et. al., 

Case No. 16-5014 and Robbins v. Delafield, et al., Case No. 16-7024 (collectively “the Western 

District Cases”). The complaints are attached as Exhibit Nos. 1 & 2.1

 The complaints seek to 

have the court (1) order that the defendants disgorge all monies paid for attorney’s fees, (2) 

 

1

 The Robbins v. Morgan matter and the Robbins v. Delafield matter are related respectively to 

the Chapter 7 bankruptcy proceedings of (1) Jessica Scott and (2) Timothy and Andrian 

Williams. 

Case 16-00703-SCS Doc 16 Filed 12/14/16 Entered 12/14/16 12:33:19 Desc Main

 Document Page 1 of 10
2 

enjoin defendants from advising debtors to participate in what the U.S. Trustee refers to as the 

“Sperro scheme,” (3) order civil penalties, and (4) bar the lawyer defendants from practicing 

before the Court. 

The complaint in each of the Western District Cases names the counsel for the debtor(s) 

in the lead bankruptcy case as defendants; i.e., John C. Morgan, Jr. and his law firm in the 

Robbins v. Morgan matter and Darren Delafield in the Robbins v. Delafield matter.2

 Each 

complaint also names several common defendants; i.e., Law Solutions Chicago, LLC, (“LSC”), 

Upright Law LLC, Jason Allen, Kevin Chern and Edmund Scanlan.3 All of these defendants 

refer to themselves as the “Upright Defendants” which we will use as well. “Upright” apparently 

refers to the assumed name, Upright Law, LLC, under which LSC is authorized to transact 

business in Illinois. Exhibit 1, ¶ 9. Sperro LLC also is named as a common defendant. Exhibit 1, 

¶ 19 and Exhibit 2, ¶ 19. 

1. The Relationships of the Upright Defendants 

 Each complaint alleges a similar set of facts concerning the relationships of the Upright 

Defendants which are admitted in all material respects by the Upright Defendants’ answers.4

 

Those facts are as follows. 

LSC is an Illinois limited liability company that solicits bankruptcy clients over the 

internet.5

 Chern and Allen are listed on documents filed with the Illinois Secretary of State as 

 

2

 Exhibit 1, ¶ 18 and Exhibit 2, ¶ 17. 

3 Exhibit 1, ¶¶ 7-9, 15, 17 and Exhibit , ¶¶ 7-9, 15, 16. 

4

 The answers filed jointly by the Upright Defendants re-state the complaints’ allegations before 

giving a response. See Exhibits 3 & 4. 

5 Exhibit 1, ¶¶ 9-10 and Exhibit 2, ¶¶ 9-10. Admitted by answers, Exhibits 3 & 4. 

Case 16-00703-SCS Doc 16 Filed 12/14/16 Entered 12/14/16 12:33:19 Desc Main

 Document Page 2 of 10
3 

managers of LSC and also are members of LSC.6

 Scanlan is listed on LSC’s website as the chief 

executive officer of “Upright Law”.7

 

 Both Morgan and Delafield are members of the bar of the U.S. Bankruptcy Court for the 

Western District of Virginia.8 Upright Law, LLC is a Virginia limited liability company.9 Both 

Morgan and Delafield are limited partners in Upright Law, LLC. 10

2. Allegations Regarding Referral of Clients and the New Car Custody Program 

Each complaint alleges that clients who sign up with Upright Law (or LSC) and require debt 

relief services in the Western District are ultimately assigned to attorneys who are licensed in the 

Western District.11 Here, the clients (debtors) were referred to Morgan and Delafield, who are 

partners in Upright Law, LLC a Virginia company.12 

The complaints allege that in or about May 2015, LSC began advising the lawyers with 

whom it worked to participate in the New Car Custody Program by referring clients to Sperro 

 

6

 Exhibit 1, ¶¶ 13-14 and Exhibit 2, ¶¶ 13-14. Admitted by answers, Exhibits 3 & 4. 

7

 Exhibit 1, ¶ 15 and Exhibit 2 ¶ 15. Admitted by answers, Exhibits 3 & 4. 

8

 Exhibit 1, ¶ 18 and Exhibit 2, ¶ 17. Admitted by answers, Exhibits 3 & 4. 

9

 Exhibit 1, ¶ 17 and Exhibit 2, ¶ 16. Admitted by answers, Exhibits 3 & 4. 

10 Exhibit 1, ¶ 18 and Exhibit 2, ¶ 17. Admitted by answers, Exhibits 3 & 4. 

11 Exhibit 1, ¶¶ 22, 40-43 and 63; Exhibit 2, ¶¶ 22, 40-43 and 64. 

12 LSC apparently uses the assumed name Upright Law LLC. That is not to be confused with the 

Virginia entity of the same name. 

The undersigned counsel cannot represent that he is currently conversant with the precise 

legal relationship between Mr. Morgan and Mr. Delafield and Upright Law, LLC (the Virginia 

company) and LSC, the Illinois limited liability company. However, the status of each person 

with these entities is not a material fact in the analysis of whether the final hearing on the Show 

Cause Order issued against Ms. Pfeiffer should be continued. 

Case 16-00703-SCS Doc 16 Filed 12/14/16 Entered 12/14/16 12:33:19 Desc Main

 Document Page 3 of 10
4 

LLC (again, “Sperro”)13 The New Car Custody Program was described by Chern in an email 

sent to “valued partners” on June 18, 2015. (See Chern email at Exhibit 5).14 (The New Car 

Custody Program shall also be referred hereafter as “the Program” or “the Sperro Program”). 

Mr. Chern explained that the Program was designed to assist the debtor by relieving him or her 

of the burden of a vehicle he or she could not afford. See Exhibit 5.15 Mr. Chern further 

represented that the Program had been reviewed and approved by a former U.S. Trustee, ethics 

counsel and in-house counsel. (Exhibit 5). The complaints filed by the U.S. Trustee on the other 

hand allege that the Program is an unlawful scheme to benefit the lawyers and Sperro at the 

expense of the lienholders.16 

3. The Upright Defendants Contend that the New Car Custody Program As 

Conceived Did Not Violate Any Law 

The answers filed by the Upright Defendants in the Western District Cases assert that the 

Program was vetted carefully and as conceived did not violate any law, rule or regulation.17 

See, e.g., Exhibit 3, ¶¶ 29 and 39 and Exhibit 4, ¶¶ 29 and 39: 

 

13 Exhibit 1, ¶ 29 and Exhibit 2, ¶ 29. 

14 Exhibit 1, ¶ 30 and Exhibit 2, ¶ 30. 

15 Chern’s email reflects that the Program contemplated prompt notification to the lienholder that 

the vehicle was available for surrender or liquidation and reasonable towing and storage fees. 

Also the program contemplated that Sperro, not the lienholder would pay the fees and costs the 

debtor incurred for its bankruptcy. 

Undersigned counsel is not yet prepared to proffer evidence concerning the interests of the 

lienholders but it has been suggested that banks and financing companies (the “lienholders”) 

prefer to have a third party take custody of the vehicle and liquidate it at auction as the 

lienholders are not in the business of repossessing and liquidating vehicles. 

16 Exhibit 1, ¶¶ 29-39 and Exhibit 2, ¶¶ 29-39. 

17 As reflected herein, the Upright Defendants assert that the complaints against them are without 

merit (defenses that Ms. Pfeiffer should be entitled to use as they are developed). Having said 

that, the merits of the accusations concerning the Sperro Program need not be resolved in order 

Case 16-00703-SCS Doc 16 Filed 12/14/16 Entered 12/14/16 12:33:19 Desc Main

 Document Page 4 of 10
5 

The Upright Defendants admit that in May 2015 it advised its partners 

and attorneys about the availability of a “New Car Custody Program” 

after reviewing the proposed program, conducting due diligence on 

Sperro and Fenner and analyzing the programs potential benefits for its 

clients. 

** ** ** 

The Upright Defendants state that as part of the presentation to them of 

the benefit of its services, Sperro advised the Upright Defendants that he 

uses his connections as a former repossession, towing and storage 

service provider to automotive lenders and his regional storage facilities 

to facilitate the prompt turnover of the vehicles to the applicable secured 

lender. 

It is expected that the Upright Defendants will present significant evidence in the 

Western District Cases that the Program was proper as conceived and vetted and approved by at 

least three attorneys. Such evidence will paint a much different picture of the Sperro Program 

than as alleged by the U.S. Trustee. 

A summary of the defenses to be raised by the Upright Defendants in the Western 

District Cases can be found in the discovery responses filed by Upright Law in an adversary 

proceeding pending in Tennessee brought by Ally Financial, Inc. against the Upright 

Defendants.18 (“the Ally Financial Matter). The Second Amended Complaint in the Ally 

Financial matter attacks the bona fides of the New Car Custody Program in much the same 

manner as the complaints in the Western District Cases. (Exhibit 6, ¶¶ 18-26). In response to an 

interrogatory asking whether the Program complied with all state and federal laws, Upright Law 

responded: 

Upright states that the program, as marketed, described and 

investigated was presented as a legitimate program pursuant to 

which Sperro assisted in the prompt disposition of the vehicle 

 

to consider this motion. All that Ms. Pfeiffer is asking that the Court permit her the opportunity 

to use the evidence developed in the Western District Cases. 

18 Ally Financial, Inc. v. Donahue, et al., Adv. No. 3:16 – 90048 (M.D. Tenn.) 

Case 16-00703-SCS Doc 16 Filed 12/14/16 Entered 12/14/16 12:33:19 Desc Main

 Document Page 5 of 10
6 

through (a) its prompt return of the vehicle to the lien holder; (b) 

its prompt auction of the vehicle for the lien holders benefit; or 

(c) if abandoned by the lien holder, disposing the vehicle through 

auction or other means. It was further presented that Sperro was 

able to perform such services effectively because of his past and 

existing relationships with consumer auto financing companies 

and his national network of towers and storage facilities. 

Answering further, Upright refers Ally to its response to 

Interrogatory No 5. 

See Exhibit 7 at p. 6, No. 8. 

Upright Law also provided detailed information concerning its due diligence to determine 

that the Program was proper: 

Upright Law states that its due diligence with regard to Sperro 

included (a) Kevin Chern speaking to Mr. Fenner19 at length about the 

program and how it operated, at and after the April 2015 annual National 

Association of Consumer Bankruptcy attorneys conference, where Mr. 

Fenner was promoting the Sperro program and where Mr. Chern first 

met Mr. Fenner; (b) Mr. Chern reviewing the program with the 

Upright’s General Counsel at the time, David Leibowitz; (c) Mr. 

Leibowitz speaking with Mr. Fenner at length to gather details about the 

service; d) Mr. Leibowitz researching the interplay between the Sperro 

program and the Bankruptcy Code; (e) Mr. Leibowitz investigating 

whether any claims had been filed against Fenner, Sperro, Collateral 

services of Indiana or any other Sperro-related entitles known to Upright 

Law at the time (he found none); (f) vetting the program with Upright 

Law’s outside counsel, Felicia Burda, the former United States Trustee 

for Regions 20 and 21, who researched the propriety of the program and 

consulted with other attorneys familiar with the Bankruptcy Code and 

how the program might interact with the requirements of the Code; (g) 

vetting the program with Mary Robinson, the firm’s outside professional 

counsel, and the former Administrator of the Illinois Attorney 

Registration and Disciplinary Commission, who researched the propriety 

of the program in relation to the Rules of Professional Conduct; and (h) 

Mr. Chern speaking with other attorneys who Mr. Fenner presented as 

referrals who previously had clients who used the program which 

attorneys represented by Mr. Chern that they had never received a 

complaint from any party whatsoever about their clients’ use of the 

 

19 Mr. Fenner is, upon information and belief, an owner of Sperro, LLC and at the very least 

someone who controls or directs its actions. Exhibit 6, ¶ 10. 

Case 16-00703-SCS Doc 16 Filed 12/14/16 Entered 12/14/16 12:33:19 Desc Main

 Document Page 6 of 10
7 

Sperro program, had no issues with Sperro, and were happy with the 

program. 

Exhibit 7 at p. 4-5, No. 5. 

 As noted above, the due diligence included obtaining the advice and counsel of at least 

three attorneys expert in the areas of bankruptcy law and professional responsibility; i.e., Felicia 

Burda, former U.S. Trustee for Regions 20 and 21 and former Deputy Executive Director of the 

American Bankruptcy Institute20; Mary Robinson, former Administrator of the Illinois Attorney 

Registration and Disciplinary Commission and member of the ABA Standing Committee on 

Ethics and Professional Responsibility21; and David Leibowitz, former Chief Legal Officer of 

Upright Law who served as a panel trustee for 25 years and a Director of the National 

Association of Bankruptcy Trustees.22

4. The Procedural Status of the Western District Case 

The Western District Cases have been consolidated for trial. See, Order, Exhibit 8. Trial 

is scheduled to begin on September 25, 2017. See Scheduling Order, Exhibit 9 at No. 1. The 

Scheduling Order provides that discovery is to be completed 60 days before trial. Id., at No. 7. 

Initial expert reports by the U.S. Trustee are to be filed by March 17, 2017 and by the defendants 

by April 26, 2017, and rebuttal reports are to be filed by June 16, 2017. (Id., at No. 11). 

 The parties’ proposed discovery plan displays that the New Car Custody Program will be 

a prominent focus of discovery. See Exhibit 10 at No. 2.23 Discovery has already begun. 

 

20 See Ms. Burda’s biography at Exhibit 16. 

21 See Ms. Robinson’s biography at Exhibit 17. 

22 See Mr. Leibowitz’ biography at Exhibit 18. 

23 As the Plan reflects the parties expect to issue discovery on, among other topics, the 

relationships between the various defendants, the New Car Custody Program, the promotion of 

Case 16-00703-SCS Doc 16 Filed 12/14/16 Entered 12/14/16 12:33:19 Desc Main

 Document Page 7 of 10
8 

(Exhibits 11-13).24 The U.S. Trustee’s document requests show a keen interest in discovering 

all aspects of the Sperro Program. Exhibit 14, pp. 8-10, Nos. 21-28.25 

Unquestionably, the depositions of the management of Upright Law, LLC and LSC will 

be taken in the Western District Cases. Also, it is likely that the testimony of Ms. Burda, Ms. 

Robinson and Mr. Leibowitz (and perhaps other experts) will be obtained during the discovery 

phase and/or at trial of the Western District Cases. All of this evidence is relevant to Ms. 

Pfeiffer’s defense and hopefully will be available to this Court at the hearing on the Show Cause 

Order. 

 

B. Pending Order to Show Cause andReasons to Continue a Hearing on the Merits 

 The Court’s Show Cause Order (Exhibit 15) requires Ms. Pfeiffer to show cause why she 

should not be deemed to have violated various Virginia Rules of Professional Conduct; why she 

should not be held in contempt; and why appropriate sanctions should not be assessed against 

her. (Doc. No. 2). The pending Show Cause Order focuses directly on the New Car Custody 

Program (that is, the Sperro Program) and Ms. Pfeiffer’s referral of her client, Mr. Hall, to the 

program. See, the Show Cause Order, Exhibit 15, pp. 1-5.26 The Court has cited possible 

violations of Rules of Professional Conduct 1.1 (competence), 1.2(c) (not assist a client in 

 

the Program, the disposition of property under the Program and the sharing of compensation 

received from the debtors or any entity providing compensation on behalf of the debtors. 

24 These exhibits are certificates of service reflecting that discovery requests have been served. 

25 The requests seek documents reflecting (1) communications regarding the Sperro Program, 

(2) materials exchanged between LSC and Mr. Morgan and Mr. Delafield regarding the Program, 

(3) information obtained about Mr. Fenner and Mr. Sperro and (4) all information relating to the 

Sperro Program. 

26 Although Ms. Pfeiffer is affiliated with LSC and Upright Law, LLC and is assigned clients via 

LSC, Mr. Hall retained Ms. Pfeiffer directly. 

Case 16-00703-SCS Doc 16 Filed 12/14/16 Entered 12/14/16 12:33:19 Desc Main

 Document Page 8 of 10
9 

fraudulent or criminal activity), 8.4(b) (not commit a criminal or deliberately wrongful act), and 

8.4(c) (not engage in conduct involving dishonesty, fraud, deceit or misrepresentation). Id., pp. 

5-8. The Court’s Show Cause Order also refers to potential violation of a criminal statute, Va. 

Code §18.2-115. Id., note 7. There is no doubt that these are serious charges which Ms. Pfeiffer 

needs to address with as many facts that she can muster. 

 Ms. Pfeiffer is a small firm practitioner (herself and one full-time and one part-time 

associate.) All of the evidence being developed in the Western District Cases will be relevant to 

Ms. Pfeiffer’s defense to the Show Cause Order. For her to independently develop that evidence 

(even if she could) would be prohibitively expensive and wasteful of time and resources that will 

be spent by the Upright Defendants in the Western District Cases. 

 If the Western District Cases did not exist, the undersigned likely would ask for a trial in 

mid to late-summer 2017.27 A further delay until the Western District Cases are tried and 

resolved would not cause prejudice. Ms. Pfeiffer only used the Program once and will never use 

it again. (We believe that Mr. Sperro is, in fact, incarcerated.). Moreover, the lienholder in Mr. 

Hall’s case agreed to a settlement to which Ms. Pfeiffer contributed. 

 Therefore, for the reasons set forth above, Edrie A. Pfeiffer, Esquire respectfully requests 

that this Court continue the final hearing in this matter pending the resolution of the two Western 

District Cases. 

Date: December 14, 2016 Respectfully submitted, 

 EDRIE A. PFEIFFER, ESQUIRE 

By Counsel 

 

27 Ms. Pfeiffer obviously has easy access to her file regarding her representation of Mr. Hall. 

However, developing the evidence regarding the creation of the Sperro Program and LSC’s 

vetting of that program is a far more complex project. 

Case 16-00703-SCS Doc 16 Filed 12/14/16 Entered 12/14/16 12:33:19 Desc Main

 Document Page 9 of 10
10 

/s/ Bernard J. DiMuro_ 

DIMUROGINSBERG, P.C. 

Bernard J. DiMuro (VSB No. 18784) 

1101 King Street, Suite 610 

Alexandria, Virginia 22314 

Tel: (703) 684-4333 

Fax: (703) 548-3181 

bdimuro@dimuro.com 

 

Counsel for Defendant 

CERTIFICATE OF SERVICE 

 I hereby certify that on December 14, 2016, I electronically filed the foregoing with the 

Clerk of Court using the CM/ECF system, which will send notice of such filing to counsel of 

record that are registered with CM/ECF. 

 

/s/ Bernard J. DiMuro_ 

Bernard J. DiMuro (VSB No. 18784) 

Case 16-00703-SCS Doc 16 Filed 12/14/16 Entered 12/14/16 12:33:19 Desc Main

 Document Page 10 of 10