REP MCR Realty, L.L.C. v. Lynch (363 F. Supp. 2d 984, 2005)

MEMORANDUM OPINION AND ORDER

FILIP, District Judge.

Plaintiff, REP MCR Realty, L.L.C. (“REP” or “Plaintiff’) has sued Michael Lynch (“Lynch” or “Defendant”), and has alleged that Lynch is liable under a personal guaranty (“Guaranty”) that Lynch signed. Almost a year after Lynch was sued, he filed a third-party complaint against Seyfarth, Shaw, Fairweather, and Geraldson (“Seyfarth Shaw”) and Edward J. Karlin (“Karlin”) (collectively, “Third-Party Defendants”), who were attorneys advising Lynch and/or various entities in which he had substantial interests at the time the Guaranty was signed. By his third-party suit, Lynch claimed he was entitled to indemnification in the event he were found to be liable to REP on the Guaranty. (D.E. 62.)

There are three motions pending before this Court. REP has moved for summary judgment against Lynch on the breach-of-guaranty claim. Seyfarth Shaw and Kar-lin also have moved for summary judgment against Lynch on his third-party indemnification claim. These motions were filed and briefed after Seyfarth Shaw and Karlin moved for dismissal of Lynch’s third-party suit against them based on alleged fabrication of three critical documents Lynch produced in the litigation (“Sanctions Motion”)—documents that appear to be the strongest, if not, more likely, the only, documentary evidence in support of at least some aspects of Lynch’s claims against Seyfarth Shaw and Karlin.

Briefing proceeded on all three motions. During the briefing, REP joined in the Sanctions Motion against Lynch. REP explained that it believed it had a strong case for summary judgment on its suit against Lynch concerning the Guaranty, but REP understandably also wanted an opportunity to argue that it was entitled to the benefit of any sanctions ruling against Lynch. As explained further below in Section III, there are few, if any, material factual disputes concerning REP’s summary judgment motion. As one would expect, there are many factual disputes concerning the Sanctions Motion.

On January 20 and 21, 2005, the Court held an evidentiary hearing on the Sanctions Motion that included testimony from several witnesses. Included among the witnesses were Defendant Michael Lynch and Third-Party Defendant Edward Kar-lin. Based on the evidence presented in connection with the Sanctions Motion, including the live testimony, the Court cannot help but conclude that Lynch wilfully and intentionally attempted to perpetrate a fraud on the other parties in this case, on the system of civil justice generally, and on the Court.

Perhaps not surprisingly, given the gravity of the allegations against Lynch, he never suggested during the proceedings relating to the Sanctions Motion that any sanction short of dismissal with prejudice would be appropriate if Lynch were found, as he has been, to have engaged in the charged document fabrication and perjury. The Court has nonetheless independently considered whether some other, lesser sanction would be appropriate. After engaging in that assessment, the Court cannot conclude that any lesser sanction would be reasonable, fair, or just. As precedent teaches, dismissal with prejudice is not only proportionate to the offenses at issue, but any lesser sanction under the circumstances (such as merely excluding the fabricated documents) would unfairly minimize the seriousness of the misconduct and fail to deter sufficiently such misconduct by others in the future.

The Sanctions Motion (D.E. 161) is granted, and Lynch’s third-party complaint against Seyfarth Shaw and Karlin is dismissed with prejudice. The summary judgment motion of Seyfarth Shaw and Karlin against Lynch’s third-party claims (D.E. 129) is dismissed as moot. REP’s summary judgment motion (D.E. 120) against Lynch concerning his liability under the Guaranty is granted.

I. FACTS

A. Introductory Backdrop

Defendant, Michael Lynch, is a young entrepreneur who engaged in hundreds of millions of dollars in transactions in the last fifteen years or so, largely in the area of distressed real estate and distressed business acquisition. (Sanctions Hr’g Tr. at 232-33, 330-31.) He has, or at least had, a controlling and/or substantial interest in various business entities. (E.g., id. at 232, 243, 331.) In connection with his business endeavors, he has been personally involved in financing over $460 million in debt since 1991. (Id. at 239, 330.)

As Lynch described it, in the summer of 1998, Lynch and a group of business associates completed a business acquisition. (Id. at 233, 235.) As is typical in such acquisitions, there were various corporate entities involved in the acquisition and in the structuring of the final corporate landscape. In general terms, in the summer of 1998, the Lynch camp acquired, through an entity known as “McCook Metals LLC,” a large distressed aluminum plant located in McCook, Illinois, for some $97 million. (Id.) Profits would be passed through to the entrepreneurs through the LLC entity. (Id. at 235.) In general terms, Seyfarth Shaw and Karlin were attorneys who counseled Lynch and/or his camp in connection with the McCook acquisition and the eventual Guaranty, which was completed as one of the various corporate moves that followed the initial acquisition.

Approximately 30 days after the closing of the acquisition, Lynch and his fellow entrepreneurs began considering further corporate moves that would enure to their benefit from a tax perspective. (Id.) The purchased assets would be restructured into seven or eight different limited liability corporations, with a reallocation of the purchase price based on third-party appraisals. (Id. at 236.) The restructuring also was attractive because it would, among other things, allow the Lynch camp to eliminate the potential of other participants to acquire substantial additional equity ownership interests in upcoming years. (Id. at 237.) The potential would have allowed those other participants to move from 5% to 30% equity ownership positions, in an entity or entities that Lynch believed were worth, or at least could be worth, anywhere from $80 million, to $150 million, to as much as $1 billion dollars. (Id. at 237, 282.) In addition, the additional corporate moves that were being contemplated would allow Lynch and his colleagues to free up 150 acres of land at the aluminum plant, which Lynch believed had a potential development value for them of $100 to $150 million. (Id. at 237.) Lynch admitted that he saw the potential moves as presenting a “very unique opportunity” for him and his associates. (Id.)

The corporate moves also would involve placing a new long-term mortgage on the property that would remain in use as an aluminum plant. (Id. at 238.) Lynch engaged his former fraternity brother, an investment banker named Scott Miller of Cohen Financial in Chicago, to help broker the transaction. (Id.) Lynch was the person from his group who negotiated the mortgage, and Lynch was also the lead person involved in the McCook Properties endeavor overall. (E.g., id. at 322; Mov. Ex. 8.) He owned, directly or indirectly, approximately 49-51% of McCook Properties, and he was the leading actor related to it. (Sanctions Hr’g Tr. at 322.)

As discussed immediately below, Lynch eventually negotiated for $30 million in financing for the ongoing aluminum operations with Morgan Guaranty Trust Company of New York (“Morgan”). In connection with that loan, Lynch executed a personal Guaranty that, as the Court explains in detail below, obligated Lynch to personally guaranty the obligations of McCook Properties, LLC (“McCook Properties”) in the event of a default, which could include, among other things, a voluntary bankruptcy filing by McCook Properties.

B. The Morgan Guaranty Trust Company of New York Transaction

On December 30, 1998, Morgan officially entered into a loan with McCook Properties for $30,850,000 (“Loan”). (D.E. 121 ¶¶ 7-8.) The Loan was evidenced by, among other things, a fixed rate note for $30,850,000 issued by McCook Properties to Morgan dated December 30, 1998 (“Note”), and it was secured by, among other things, a Mortgage and Security Agreement (“Security Instrument”). (Id. ¶ 8.) Michael Lynch, President of Cloverleaf Holdings, Inc., the managing member of McCook Properties, executed the Note and Security Instrument on behalf of McCook Properties. (Id. ¶ 9; D.E. 139 ¶ 9.) The parties (i.e., REP and the Mov-ants generally, on the one hand, and Lynch, on the other) vary slightly in their estimation of how much of McCook Properties Lynch owned, although the difference appears to be inconsequential. REP maintains that Lynch “owned approximately fifty percent of McCook Properties” (D.E. 121 ¶ 9), while Lynch explains that he owned between forty-nine and fifty-one percent (Sanctions Hr’g Tr. at 322). More specifically, although Lynch disputes that he owned 50% of McCook Properties, he acknowledges that he owned 50% of McCook Metals LLC, which was a 99% owner of McCook Properties. (D.E. 139 ¶ 9.) In any event, Lynch was the moving force and biggest player in the McCook transaction, at least with respect to issues implicated by the pending motions.

The Security Instrument granted a first priority security interest to Morgan in certain real property, and the Note required that McCook Properties make a “constant payment” of $268,309.52 to Morgan on the first day of each calendar month, up to and including December 2008. (D.E. 121 ¶¶ 10-11.) Failure to pay any amount due under the Note prior to the tenth calendar day after that amount becomes due is an “Event of Default” as defined under the Note and Security Agreement. (Id. ¶ 12.) In addition, McCook Properties covenanted not to file a voluntarily bankruptcy petition under Section 4.3(u) of the Security Instrument. (Id. ¶ 13.) Pursuant the terms of the contract, failure to comply with the covenant not to file a voluntary bankruptcy petition is an “Event of Default.” (Id. ¶ 14.) Section 5 of the Note and Section 10.1(c) of the Security Instrument both authorized Morgan to accelerate the Loan and to declare it “immediately due and payable,” without notice or demand to McCook Properties, so long as an Event of Default existed. (Id. ¶ 15.)

Lynch executed a Guaranty dated December 30, 1998, which identified him as the Guarantor. (Id. ¶ 19.) Morgan required Lynch to sign the Guaranty in his individual capacity, not as a corporate officer, as evidenced by the signature block for the Guaranty. (Id. ¶ 22.) The Guaranty does not identify itself as a corporate guaranty, and it does not identify McCook Properties or any other person or entity other than Lynch as the Guarantor. (Id.) Section 1.1 of the Guaranty provides:

Guarantor hereby absolutely, irrevocably, and unconditionally guarantees to Lender [Morgan] (and its successor and assigns), jointly and severally, the payment and performance of the Guaranteed Obligations as and when the same shall be due and payable.... Guarantor hereby absolutely, irrevocably, and unconditionally covenants and agrees that it is liable, jointly and severally, for the Guaranteed Obligations as a primary obligor, and that each Guarantor shall fully perform, jointly and severally, each and every term and provision hereof.

(Id. ¶ 24.)

Section 1.2, on page 2 of the Guaranty, defined which obligations were “Guaranteed Obligations.” It provided that “in the event ... (ii) of Borrower’s [McCook Properties’] breach or default, under Sections 1.3 or 8.2 of the Security Instrument, or (iii) of the Property or any part thereof becoming an asset in a voluntary bankruptcy or voluntary insolvency proceeding, then the Guaranteed Obligations shall also include the unpaid balance of the Debt (as defined in the Security Instrument).” (Id. ¶ 25 (underlining in the Guaranty).) Section 1.5 states:

If all or any part of the Guaranteed Obligations shall not be punctually paid when due, whether at maturity or earlier by acceleration or otherwise, Guarantor shall, immediately upon demand by Lender, and without presentment, protest, notice of protest, notice of nonpayment, notice of intention to accelerate the maturity, notice of acceleration of the maturity, or any other notice whatsoever, pay in lawful money ... the amount due on the Guaranteed Obligations to Lender....

{Id. ¶ 28.) The Guaranty also explained that the Lender need not first institute or exhaust its remedies against the Borrower, McCook Properties, before enforcing the Guaranty against the Guarantor. {Id. ¶ 29.)

Section 5.5 limited the method of amending the Guaranty to “an instrument in writing executed by the party or an authorized representative of the party against whom such amendment is sought to be enforced.” {Id. ¶ 35.) Section 5.11 made clear that the Guaranty embodied

THE FINAL, ENTIRE AGREEMENT OF GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR’S GUARANTY OF THE GUARANTEED OBLIGATIONS AND SUPERCEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY AGREEMENT.

{Id. ¶ 36 (capitalization in the Guaranty).)

In August 2001, McCook Properties defaulted on the loan when it did not pay the required installments of the principal and interest. {Id. ¶ 37.) On August 16, 2001, Morgan sent a default letter to McCook Properties and accelerated the Note. {Id. ¶ 38.) On December 3, 2001, McCook Properties filed a voluntary bankruptcy petition under Chapter 11 of Title 11 of the United States Code. {Id. ¶¶ 40-41.) On December 7, 2001, and December 11, 2001, Morgan sent Lynch letters demanding that he perform on the Guaranty and pay the Guaranteed Obligations immediately. {Id. ¶ 42.) Lynch responded that he did not believe himself to be personally liable under the Guaranty. {Id. ¶ 43.) Lynch did not pay, and has not paid, any amounts under the Guaranty, Note, or Security Instrument. {Id. ¶ 44.)

On January 17, 2002, Morgan filed suit against Lynch on the Guaranty. (D.E. 1.) As explained, REP came into the litigation when Judge Gettleman granted leave, under Federal Rule of Civil Procedure 25(c), for REP to substitute as Plaintiff after an April 2003 reassignment of Morgan’s interest. (D.E. 88.) With respect to REP’s pending summary judgment motion, the parties disagree over the amount of damages Lynch potentially owes. These disagreements are discussed below, when the Court considers REP’s summary judgment motion at the end of this opinion in Section III.

C. The Production of the Three Documents at Issue in the Sanctions Motion and the Filing of Lynch’s Third-Party Complaint Against Seyfarth Shaw and Karlin

As discovery was proceeding between the parties, in connection with this case and their litigation in other fora, the three documents central to the Sanctions Motion at issue here were discovered and produced. Specifically, in a supplemental document production in late 2002, Lynch’s attorneys produced three important documents {infra at 13-14) that are the subject of the Sanctions Motion sub judice. (Cronin Dep. at 90, 92; D.E. 155, Ex. A ¶ 5.) There is no meaningful dispute that these documents are and were of great significance: as one of Lynch’s attorneys subsequently testified, when he first saw them, he said, “Wow. Isn’t this great?” (Cronin Dep. at 94.) Lynch’s counsel also reviewed and relied on these (forged) documents when they were drafting Lynch’s third-party indemnification claim against Seyfarth Shaw and Karlin. (Id. at 90-91.) Lynch’s counsel also relied on these documents when taking the deposition of Kar-lin prior to the filing of Lynch’s third-party claims. (Sanctions Hr’g Tr. at 217-18, 230.) The documents were of great importance because they were corroboration for important aspects of Lynch’s claims against Seyfarth Shaw and Karlin.

In this regard, in his third-party complaint against Seyfarth Shaw and Karlin, Lynch alleged among other things that, because of the alleged malpractice and incompetence of Seyfarth Shaw and its attorneys, Lynch was led to execute the Guaranty notwithstanding that he had “explicitly instructed Karlin and Seyfarth [Shaw] that any so-called personal guaranty would not be acceptable.” (D.E. 62 (Third Party Complaint) ¶ 1.) Lynch also rejected the notion that he ever agreed that any liability would be triggered by a corporate bankruptcy. (See, e.g., id. ¶ 8 (“Lynch advised that McCook Properties would accept only a qualified and limited guaranty by an officer of McCook Properties which could be triggered only by fraud, wasting of assets or gross mismanagement.”).)

Although Lynch was sued on the Guaranty in January 2002 (D.E. 1), he did not file a third-party complaint against Sey-farth Shaw and Karlin seeking indemnification, until after the discovery and production of the three documents at issue in the Sanctions Motion. (Cronin Dep. at 90.) Lynch’s third-party complaint was advanced in January 2003. (D.E. 62.)

1. Substance of the Three Challenged Documents

The three “new” documents produced by Lynch’s counsel, and at issue through the Sanctions Motion, included the following. First, there was a purported draft of the Guaranty that Lynch eventually signed, hereinafter referred to as the “Lynch Draft Guaranty” or “LDG.” (Mov. Ex. 11.) The LDG appeared to look like all the other drafts and the eventual signed original, except for a number of significant differences on pages 2 and 13, as discussed at length below. Specifically, pages 2 and 13 of the LDG contained numerous different indicia of forgery that distinguished those two pages of the LDG from all other pages of the Guaranty and its drafts, including page 1 and pages 3-12 of the LDG itself. As for substantive terms, only pages 2 and 13 of the LDG (and not any other pages of any other draft or the execution copy) supported Lynch’s positions that (1) he had agreed to something other or less than a personal guaranty; and (2) he had not agreed to a voluntary bankruptcy trigger for the personal guaranty.

The second significant document produced by Lynch’s counsel was a December 1, 1998 letter (the “December 1 Letter”) that Lynch undisputably authored and signed. (Mov. Ex. 9.) The December 1 Letter, which purportedly was sent by Lynch to Edward Karlin at Seyfarth Shaw, stated that:

We have received the Morgan Guaranty documents that were sent to us today from your offices. We will forward our comments to you shortly. Per our phone conversation today, the partners will not sign a personal guarantee for this mortgage loan. No personal guarantee was ever mentioned to us by Morgan Guaranty.

It is our understanding via Scott Miller of Cohen Financial that Morgan Guaranty only requested that an officer of McCook Properties LLC., guarantee only the typical mortgage loan carve outs such as fraud, wasting of the assets, and gross mismanagement. A bankruptcy filing (voluntary or involuntary) is not what we agreed to. Scott Miller confirmed with Jim McCall and I that this is a nonrecourse loan and does not require a personal guarantee by the partners.

If this is not Morgan’s position, then we have no other choice then to walk away from the Morgan Mortgage, despite pressures from GE Capital & PPM Finance to be paid off on the Term B and Term C loans.

Please let us know immediately what Morgan’s attorneys intend to do with this issue.

Sincerely,

Michael Lynch

(Id.) As explained below, the December 1 Letter, which Lynch concedes he signed and authored, is demonstrably false in multiple significant respects.

The final letter produced in the late 2002 production was dated December 28, 1998 (the “December 28 Letter”). (Mov. Ex. 10.) The December 28 Letter was purportedly sent to Edward Karlin. It stated:

Dear Ed,

Per your instructions, attached are the executed five (5) signature plates that you requested Michael Lynch sign as Chairman of McCook Properties LLC. If you have any questions before the closing this week, Michael will be in the office tomorrow.

Sincerely,

James C. McCall

CC: Michael Lynch

(Id.) James C. McCall is a former business associate of Lynch’s, who is not alleged to be a part of the Lynch fraud. This letter also contains material falsehoods that reveal the fabricated nature of the document, as discussed below.

On February 11, 2004, Seyfarth Shaw and Karlin filed their Sanctions Motion, alleging that Lynch fabricated these three documents and “foist[ed] [them] upon the Court.” (Mem. in Supp. of Seyfarth Shaw and Edward J. Karlin’s Mot. for Sanctions (D.E. 112) at 1.) Briefing proceeded on that motion—with Lynch filing a response (D.E. 133), and Karlin and Seyfarth Shaw filing a reply (D.E. 140). During the course of the briefing, the Court granted repeated requests by Lynch for extensions of time so as to accommodate circumstances facing Lynch and his counsel (such as Lynch’s claimed need for additional discovery and a change of firms for certain of Lynch’s counsel). During this initial portion of the briefing on the Sanctions Motion, Lynch largely argued that the Mov-ants had failed to prove their case by clear and convincing evidence, and he filed no affidavit specifically denying the fabrication.

During the briefing cycle, the Court also granted Lynch’s motion to file a surreply. In the surreply, which was filed on July 28, 2004, Lynch for the first time submitted an affidavit concerning the Sanctions Motion, in which he offered testimony. (D.E. 155.) Lynch asserted that his belated testimony, which was arguably vague in at least some respects, undermined the Movants’ case. (D.E. 160 at 2.) The affidavit was offered on the express or implicit premise that Lynch was somehow precluded from testifying live because of the parties’ prior statements (made before Lynch submitted his affidavit) that they did not believe a live hearing was needed to resolve credibility issues. (Id.)

On August 31, 2004, the Court ordered the parties to rebrief the Sanctions Motion on the express premise, issued by the Court, that “either party will be able, at the conclusion of the expedited briefing, to present whatever live testimony it chooses, and neither party will be precluded from presenting live testimony if any other party chooses not to present live testimony.... Put differently, if Mr. Lynch would like to testify live, he will be entirely free to do so....” (Id.) The Court felt such a step was appropriate and necessary because it appeared, with all respect, that Lynch might be engaging in eleventh-hour gamesmanship. Given the gravity of the allegations, and the interests of all parties and the system of civil justice generally in resolving matters such as the Sanctions Motion on the basis of a clear and level playing field, the Court wanted to make sure every side had an opportunity to present fully and fairly their respective positions and to have the Sanctions Motion fairly resolved on the merits.

The parties engaged in rebriefing, and this Court held a two-day hearing on the Sanctions Motion on January 20 and 21, 2005. Both sides were given an opportunity to present witnesses and arguments. As the Court indicated in its oral ruling of January 25, 2005, the evidence adduced at that hearing unfortunately made clear that Mr. Lynch engaged in multiple acts of wilful document fabrication and perjury.

II. MOTION FOR SANCTIONS

A. Authority to Impose Sanctions

The parties do not dispute that this Court has the power to sanction Lynch if he has engaged in document fabrication and/or perjury, including through the sanction of dismissal with prejudice of Lynch’s claims against Seyfarth Shaw and Karlin. Precedent unquestionably supports that implicit agreement of the parties. See, e.g., Pope v. Fed. Express Corp., 974 F.2d 982, 984 (8th Cir.1992) (“Dismissal of Pope’s lawsuit is a severe sanction, yet under the circumstances we cannot find that such a sanction constitutes an abuse of the district court’s discretion. The dismissal of Pope’s suit was based on the district court’s finding that manufactured evidence and perjured testimony had been introduced in an attempt to enhance the case through fraudulent conduct.”); Kovilic Constr. Co., Inc. v. Missbrenner, 106 F.3d 768, 773 (7th Cir.1997) (“The cases that have upheld dismissals as a sanction based on inherent powers have typically involved bad faith, fraud, or undue delay by one of the parties.”); Quela v. Payco-General Am. Creditas, Inc., No. 99 C 1904, 2000 WL 656681, at *7 (N.D.Ill. May 18, 2000); Brady v. United States, 877 F.Supp. 444, 452-53 (C.D.Ill.1994).

Precedent teaches that a district court’s authority to impose such sanctions comes from two sources: Federal Rule of Civil Procedure 37 and the Court’s own inherent powers. See, e.g., Quela, 2000 WL 656681, at *6. Federal Rule of Civil Procedure 37(b)(2) states that, if a party disobeys a discovery order, the court can respond with a variety of measures, including dismissal of the action or proceeding at issue. See Fed.R.Civ.P. 37(b)(2)(A)-(E). In addition, the Court may require that the wrongful party pay costs and attorneys’ fees. See Fed.R.Civ.P. 37(b)(2).

Although Rule 37 requires a party to violate a judicial directive in order to impose sanctions, “a formal, written order to comply with discovery is not required.” Quela, 2000 WL 656681, at *6. Courts are entitled to interpret broadly what constitutes an order. See id. (“In this case, although there has been no specific court order, we believe such an order is not required to provide notice that parties must not engage in such abusive litigation practices as coercing witness testimony, lying to the court, and tampering with the integrity of the judicial system.”) (collecting cases). The latitude to interpret broadly stems from the presumption that all litigants, including those far less educated and intelligent than those involved in this case, are reasonably deemed to understand that fabricating evidence and committing perjury is conduct of the sort that “is absolutely unacceptable.” Id. (collecting cases).

Lynch raises no objection based on whether there is authority to sanction him under Rule 37. Even if Rule 37 somehow did not provide authority, however, it would be of no moment, because it is settled that federal courts have inherent powers to sanction litigants for bad-faith and fraudulent conduct related to federal cases. These powers “ ‘are governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.’ ” Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (quoting Link v. Wabash R.R. Co., 370 U.S. 626, 630-31, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962)). A court’s inherent powers also include the power, in appropriate cases, to impose the sanction of dismissal with prejudice. See, e.g., Diettrich v. Northwest Airlines, Inc., 168 F.3d 961, 964 (7th Cir.1999) (inherent powers “permit a court to impose the ultimate sanction of a grant of judgment (or its equivalent, dismissal with prejudice)”); Kovilic, 106 F.3d at 773. “Although dismissal with prejudice is a permissible judicial sanction for fraud on the court, the general rule is that before dismissing a suit with prejudice as a sanction for misconduct a court should consider the adequacy of a less severe sanction.” Oliver v. Gramley, 200 F.3d 465, 466 (7th Cir.1999) (internal citations omitted). The Court will proceed accordingly.

The parties also are in agreement as to the applicable standard of proof that the Movants must satisfy—namely, the standard of clear and convincing evidence. (See Lynch’s “Response to Renewed Motion for Sanctions” (filed Sept. 28, 2004) at 2 (“Seyfarth Shaw and Karlin bear the burden here of establishing by clear and convincing evidence their claim....”); Mem. in Supp. of Seyfarth Shaw and Edward J. Karlin’s Renewed Mot. for Sanctions (D.E. 161) at 4 (Movants acknowledging that, “[t]he burden of proof on this motion is clear and convincing evidence”).) Their understanding is in accord with precedent—see, e.g., Maynard v. Nygren, 332 F.3d 462, 468 (7th Cir.2003)—and the Court accordingly will apply this standard of proof.

B. Analysis of Merits of Sanctions Motion

Resolution of the Sanctions Motion requires the Court to answer two interrelated and fundamental questions. First, are the three documents at issue in this case-the LDG, the December 1 Letter, and the December 28 Letter—fabricated? If the first question is answered in the affirmative, it gives rise to the second question: who is responsible for the fabrication? After considering all the evidence and testimony provided at the Sanctions Hearing, the Court concludes that Movants have demonstrated by clear and convincing evidence that (1) all three documents are, indeed, fraudulent and in no ways just mistakes or genuine; and (2) Lynch is responsible for the fabrication.

1. The Three Documents Were Fabricated

Movants maintain that the three relevant documents, the December 1 Letter, the LDG, and the December 28 Letter are forgeries. Lynch asserts that while the three documents may contain some mistakes and the LDG contains differences from other versions of the Guaranty, those differences do not amount to proof that the documents were forgeries. (Sanctions Hr’g Tr. at 25.) After two days of hearings and considering numerous exhibits and witnesses’ testimony, the Court concludes that the documents were, indeed, forged.

a. The LDG Was Forged

Substantial and interrelated documentary and testimonial evidence made clear that the anomalous pages 2 and 13 of the LDG, which are the pages that would benefit Lynch more than anyone else in the world, are forgeries. There are numerous objective indicia of fraud, which reveal that the pages are fakes; not coincidentally, the faked pages are the ones (indeed, it appears, are the only documentary or “objective” evidence, in tandem with the other two faked documents) that substantively support Lynch on central aspects of his case.

To begin, there are multiple different objective indicia of fraud that reveal that pages 2 and 13 of the Lynch Draft Guaranty are not authentic pages of any draft of the Guaranty document.

The first four objective indicia of fraud relate to the “footer” areas of pages 2 and 13 of the LDG as compared to all other pages of any draft or executed version of the Guaranty, including the other eleven pages of the LDG that do not contain substantive changes that benefit Lynch. As was explained by the testimony offered by Movants, the Guaranty document that Morgan used in this transaction was essentially a boilerplate document for Morgan, which it routinely used for these types of transactions. (See, e.g., id. at 37-38; Thompson Dep. at 12.) The Guaranty was generated from a generic template, and there was little if any modification ever permitted because these loans and guarantees were part of a high-volume area of Morgan’s business: the loans were securi-tized and resold to others, and they needed to have consistent terms and obligations in that regard. (See, e.g., Thompson Dep. at 12,16; Sanctions Hr’g Tr. at 37.)

Because of the need for standardized documents, Morgan and its attorneys insisted that Morgan’s attorneys control the drafts of documents such as the Guaranty. (Sanctions Hr’g Tr. at 37-38.) In this case, Morgan was represented by the law firm of Womble Carlyle Sandridge & Rice (“Womble Carlyle”) in Atlanta, Georgia. (See, e.g., id. at 37; Mov. Ex. 2.) Womble Carlyle uses word processing and document control systems that have been typically employed in medium and large law firms for many years. As is typically the case, Womble Carlyle’s word-processing system placed a distinctive document control number (sometimes referred to within law firms as the “DCN”) in the bottom left portion of the “footer” of each page of a document such as the Guaranty. (E.g., Thompson Dep. at 18; Wiley Dep. at 17-18.) The footer is a standard, stock portion of a document produced by Womble Carlyle, a “label that appears at the bottom of each page” (Wiley Dep. at 26), that is placed on every page of a document by the word processing software (id. at 26-27).

The document control number is like a finger print, in that each DCN is a unique number respectively assigned to each new document created by Womble Carlyle, as assigned in sequential order based on when the document was created. (Id. at 17.) As a document goes through various new drafts, Womble Carlyle’s computer software automatically appends an additional identifier to the end of the document control number. (Id. at 18.) Thus, every document concerning the Guaranty in the McCook Properties loan had the number “A# 118883,” followed by a period and the version number. (Id. at 18-19.) For example, the final version of the Guaranty, version four, had document number “A# 118883.4.” (Mov. Ex. 8; Wiley Dep. at 19.)

On all pages of the LDG, other than the faked pages 2 and 13, the document control number appears as one would expect, “A# 118883.2.” (Mov. Ex. 11.) This number is from the computer system and is consistent with all the other documentary evidence in the case. On page 2 of the LDG, however, the DCN appears as “A# 1 18883.2,” such that there is a gap between the first two numbers of the DCN. (Id. at 2.) The DCN on page 13 of the LDG is even more dubious; it appears as “A1 13383.2.” (Id. at 13.) Terry Wiley is the Executive Director at Womble Carlyle, and he is in charge of administration and support for its 1200 personnel, including the technology and support systems such as the computer and word processing systems. (Wiley Dep. at 6-8.) He explained that electronic and documentary records established that the actual version 2 of the Guaranty was printed only once. (Id. at 25-26; Mov. Ex. 12 at 1.) He also explained that the erroneous “document control numbers” which appear on page 2 and page 13 of the LDG reveal that the pages were not generated by any Womble Carlyle system. (Wiley Dep. at 25-31.) As for the DCN on page 13, he said it indicates that page 13 was printed from an older version of a word processing system not even used by Womble Carlyle. (Id. at 29-30.)

Wiley also discussed three other footer discrepancies in pages 2 and 13 of the LDG besides the two DCN discrepancies. Specifically, on all other pages of the LDG and in every other version of that document, the title of the lender, Morgan' Guaranty Trust Company, appeared in a font style known as “initial cap” font in the lower right hand corner of each page, while on pages two and thirteen of the LDG, the title of the lender erroneously appears in all capitals (“all caps”). (Id. at 31-33; compare also Mov. Ex. 4 at 2, 13 (footers in genuine draft pages 2 and 13) with Mov. Ex. 11 at 2, 13 (incorrect footers in LDG).) In addition, the page number in the footer of page 2 of the LDG is above the horizontal line that contains the DCN and the client-lender’s name, while the page number on every other page of the LDG has the page number even with the DCN and client-lender’s name, which led Wiley to conclude that page 2 of the LDG did not come from Womble Carlyle. (Wiley Dep. at 31; see also Sanctions Hr’g. Tr. at 37-38.) This collection of discrepancies led.Mr. Wiley to conclude that there was no way pages 2 and 13 of the LDG could have been prepared on a Womble Carlyle computer. As previously stated, Womble Carlyle insisted on maintaining control of the actual document, and the document control system at Womble Carlyle indicated that draft number 2 of the Guaranty (which is supposedly the draft embodied by the LDG, notwithstanding that there was another draft that was consistent with all other versions of the Guaranty and that did not have the Lynch-friendly substantive changes) had only been printed once. (E.g., Wiley Dep. at 25-33; Sanctions Hr’g Tr. at 37-39; Mov. Ex. 4; Mov. Ex. 12 at 1.)

Many other indicia of fabrication exist with respect to pages 2 and 13 of the LDG. For example, the first sentence of page 13 of the LDG erroneously drops a word that is not omitted in any other version of the document, including in the actual draft version 2 of the Guaranty that the LDG purports to be. Specifically, the first sentence on page 13 (which begins on page 12) erroneously states that “[t]he exercise by Lender of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other or remedy.” (Mov. Ex. 11 at 12-13.) All other versions of the draft state, in relevant part, that such exercise “shall not preclude the concurrent or subsequent exercise of any other right or remedy.” (E.g., Mov. Ex. 4 at 13 (emphasis added); accord Mov. Ex. 8 at 13 (same).) The erroneously dropped “right” appears only in page 13 of the LDG.

In addition, in only page 13 of the LDG (as opposed to other versions of the document, including the .actual draft version 2), the number of the subject heading for section 5.12 is mistakenly italicized; “5.12” is not in italics in any other draft, and no other section numbers are italicized in any draft. (Mov. Ex. 11 at 13; com/pare, e.g., Mov. Ex. 4 (actual 2d draft) at 13.)

Furthermore, line nine of Section 5.12 on page 13 of the LDG erroneously states “AND EACH IS SUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE....” (Mov. Ex. 11 at 13.) No other version of the Guaranty, including the actual draft version 2, has “IS” and “SUE” separated by a space (they all correctly contain the word “ISSUE”), nor does any other version lack a space between “RIGHT” and “TO.” {E.g., Mov. Ex. 4 at 13; Mov. Ex. 8 at 13.)

In addition to the aforementioned discrepancies, page 13 of the LDG, the signature page, provides for the signature on the Guaranty of the “Chairman, McCook Properties, LLC” (i.e., provides for something other than personal liability for Lynch). (Mov. Ex. 11 at 13.) This difference, which obviously would potentially benefit Mr. Lynch by some $30 million if it were valid, appears in no other draft of the document, including the actual version 2 of the document printed from the Womble Carlyle system. James Thompson was the attorney for Morgan at Womble Carlyle, and he controlled the Guaranty document. {E.g., Thompson Dep. at 9-10; Sanctions Hr’g Tr. at 37-38.) Thompson explained that he did not believe page 13 of the LDG came from Womble Carlyle because if he ever would have drafted a signature block for a non-personal guarantee, he would have put the name of the relevant corporate entity under the listing for the guarantor, with a corresponding signature space listing the “by, name, title.” (D.E. 161, Ex. F (Thompson Dep.) at 47.) As a result, he “would never have put the McCook Properties underneath the signature line” as it appears on page 13 of the LDG. {Id.) Thompson also testified that the “Chairman” position referenced in the signature spot of page 13 of the LDG would not make sense because, as he understood it, a “chairman” was not a type of officer able to bind a corporation, so he would have looked “for a president or vice president there.” {Id.) Thompson further explained that page 13 of the LDG was operationally useless to him and Morgan because if all the Guaranty obligated was an officer of McCook Properties in a non-personal capacity, then “I wouldn’t even have had a guaranty,” because McCook Properties already had “the exact liability that this document purports to create.... ” {Id.; see also id. at 48.) Moreover, Thompson testified that Morgan had a standard requirement of a personal guaranty from an individual in a control position over the borrower, such as Lynch, with sufficient assets to justify the lending risk. (Sanctions Hr’g Tr. at 37, 60-61.)

Three more discrepancies exist on page 2 of the LDG and implicate Section 1.2 of the document. First, the paragraph lettering of the subparts of Section 1.2 on page 2 of the LDG is inconsistent. Unlike all other versions of the draft, which are lettered in alphabetical order with lower case letters, such as “(a), (b), (c), (d), (e),” Section 1.2 of the LDG includes subparts “(a), (b), (c), (d), (e), (I).” (Mov. Ex. 11 at 2.) The subheading of the final subpart of Section 1.2 is the wrong letter and in the wrong case. In addition, the last paragraph on all versions of page 2 of the Guaranty, except for page 2 of the LDG, has the word “Losses” in bold type, but “Losses” in the LDG is not in bold type. (Mov. Ex. 11 at 2; compare, e.g., Mov. Ex. 4 at 2; Mov. Ex. 8 at 2.) Moreover, page 2 of the LDG omits a voluntary bankruptcy trigger for the Guaranty, which in the Guaranty states:

In addition, in the event (i) of any actual fraud, willful misconduct or material intentional misrepresentation by Borrower, its general partners, if any, its members, if any, its principals, its affiliates, its agents or its employees or by any Guarantor or Indemnitor in connection with the Loan, (ii) of Borrower’s breach or default under Sections 1.3 or 8.2 of the Security Instrument, or (in) the Property or any part thereof becomes an asset in a voluntary bankruptcy or voluntary insolvency proceeding, then the Guaranteed Obligations shall also include the unpaid balance of the Debt (as defined in the Security Instrument).

(Mov. Ex. 8 at 2 (italics added; underlining in original); compare Mov. Ex. ll(LDG) at 2.) The omitted bankruptcy trigger on page 2 of the LDG—i.e., the italicized language above in the actual Guaranty—is the trigger under which Lynch has incurred liability in this case.

In the context of the evidence presented at the Sanctions Hearing, the diverse indi-cia of fraud on pages 2 and 13 of the LDG made clear that the LDG was a purposeful fabrication. Mr. Wiley, the systems expert at Womble Carlyle, testified that the LDG, or at least the disputed pages of it that benefit Lynch, did not come from a Womble Carlyle system. (E.g., Wiley Dep. at 24-33.) There are not only objective discrepancies in the footers, but Womble Carlyle’s document control system also reflects that the document was printed only once, producing the actual version 2 of the document (under which Lynch is personally liable) that the LDG purports to be. (E.g., Mov. Ex. 4; Mov. Ex. 12 at 1.) Wiley also explained that one could not change the footer in a Womble Carlyle document by accident; instead, “[i]t would be quite deliberate.” (Wiley Dep. at 54.)

Lynch and Karlin also offered testimony. To be clear, as to the LDG and all other material issues, the Court credits Karlin over Lynch and, in fact, finds Lynch to have offered wilfully false and perjurious testimony at various times. The. crediting of Karlin’s testimony over Lynch is based on the credibility of their positions in light of other evidence presented, and on an assessment of the credibility of their live, in-court testimony. Karlin answered questions in a straightforward, credible manner while Lynch, with all respect, was often combative, offered inconsistent testimony, or could not answer questions on cross-examination in a meaningful manner at all.

As to the LDG, Karlin testified that Womble Carlyle maintained control of the transaction documents, as Mr. Thompson had directed. (Sanctions Hr’g Tr. at 37-38.) He explained that Seyfarth Shaw did not put any drafts on its systems and only made suggested edits to the Guaranty by transmitting hand-marked copies of the documents sent by Womble Carlyle back to that firm, which had control of the document. (Id.) Lynch, in conflict with all of the other evidence in the case and the inferences that the Court draws from it, maintained that the LDG was authentic. (Id. at 326-28; see also D.E. 155, Ex. B (Lynch Surreply Aff.) ¶¶ 2,10.)

The evidence of Lynch’s document fabrication and perjury in this case comes from many directions, and as often happens in cases, the persuasiveness of each piece of evidence is reinforced by other pieces of evidence, such that the overall mix of evidence points in a synergistic way to a single conclusion. Some of the evidence concerning the fake nature of the LDG will be discussed below, as it most naturally is addressed in the specific context of other documents. Nonetheless, the Court adds that, with respect to the LDG, the Court concludes that the frequency and nature of the discrepancies relating to pages 2 and 13 of the LDG do not allow any reasonable conclusion whatsoever that the discrepancies are the result of a massive computer glitch or some other unexplained happenstance: Mr. Lynch would need to be the unluekiest man in the world to:

(1) be the only person to have produced a document;

(2) which contains numerous inexplicable objective discrepancies'—many non-substantive yet irreconcilable with the comprehensive document control system at the law firm that maintained control of the document and its drafts;

(3) and which contains two other principal substantive discrepancies that make no commercial sense for Morgan but stand to be benefit Lynch personally in the potential amount of $30 million.

In this regard, it bears mention that no other participant in the transaction has any copy of the LDG in electronic or paper form in its files. {E.g., Mov. Ex. 12; Sanctions Hr’g Tr. at 37-38, 136; see also id. at 65-66.) Moreover, to the extent there is any doubt concerning the fabricated nature of pages 2 and 13 of the LDG (and there is no meaningful doubt at all), it is worth noting that Lynch never even attempted to search, or have anyone else search, hundreds of boxes of readily available files of Seyfarth Shaw to see if another copy of the LDG (or any of the other challenged documents) could be located. (Sanctions Hr’g Tr. at 160-63.) (The Mov-ants testified that they located no such copies. (Id. at 136; see also id. at 65-66).) Given that the recovery of even a single other copy of that sort would obviously have substantially undermined, if not destroyed, the Movants’ chances of meeting them burden of proof, commonsense dictates that Lynch had every motive to search for another copy unless he already knew that the challenged documents were fake and no other copies would be found.

b. The December 1 Letter Is a Fake

The conclusion that the December 1 letter is a forgery comes from, inter alia, the collection of factual inaccuracies and objective falsities that it contains. In fact, almost every sentence of the letter is false.

For example, the first sentence of the December 1 Letter states that the author, Lynch, received the Guaranty documents “today.” (Mov. Ex. 9.) However, evidence makes clear that Karlin sent the referenced documents over one week earlier, on November 23, 1998, in anticipation of a November 25, 1998, meeting with McCall and Lynch. This evidence comes in the form of testimony from Mr. Thompson, the Womble Carlyle attorney, and related documentary evidence from his firm (Mov. Ex. 2; Thompson Dep. at 22-24); documentary records from Seyfarth Shaw in the form of a transmittal record and other time sheets documenting events (see Mov. Ex. 3; id. Ex. 5 at 87-88); and direct testimony (which the Court credits) from Mr. Karlin (e.g., Sanctions Hr’g Tr. at 41-M2). When Lynch was later fabricating the December 1 Letter or causing someone else to do it, it would have been easy to jumble relevant dates, especially if one had not assiduously constructed a timeline as reflected by all other documentary evidence and witnesses to the transaction, including disinterested ones like Thompson. However, if Lynch had truly written the letter on December 1, 1998, there is no way that Mr. Lynch, the conceded author, would have made this type of mistake.

By way of another example of the forged nature of the December 1 Letter, in it, Lynch states that he would forward his comments to Karlin about the transmitted documents “shortly.” (Mov. Ex. 9.) However, Lynch had already shared his thoughts about the draft documents with Karlin at an in-person meeting that took place on November 25, 1998—a meeting reflected in Karlin’s time sheets. (Mov. Ex. 5 at 87-88; see also, e.g., Sanctions Hr’g Tr. at 41-44.) There was no reason for Lynch to forward comments that he had already given to Karlin, nor is there any mention of the November 25 meeting whatsoever in the bogus December 1 Letter. In addition, no evidence, certainly no credible evidence, was introduced that the there was a phone conversation, as Lynch claimed in the December 1 Letter, on that date, in which Lynch claims that he (among others) would not agree to a personal guaranty. (Mov. Ex. 9; see also McCall Dep. at 43-44 (testimony of Lynch’s former partner, and the former CFO of McCook Metals, who contradicts the December 1 Letter and states that he never spoke with Lynch about whether McCall would execute a personal guaranty).) Rather, the evidence established that Lynch and Karlin, among others, had met on November 25, 1998, at which time Kar-lin explained that Morgan was insisting, consistent with its general policy discussed elsewhere, that Lynch personally guarantee the loan. (Sanctions Hr’g Tr. at 41-48.)

The second paragraph of the December 1 Letter contains further falsehoods. For example, in it, Lynch refers to the supposed understanding of his investment banker (and college fraternity brother), Scott Miller, concerning the Guaranty. (Mov. Ex. 9.) In the December 1 Letter, Lynch maintains that Miller “confirmed ... that this loan is a nonrecourse loan and does not require a personal guarantee by the partners.” (Id.) This is a convenient, self-serving reiteration of a discredited statement Lynch made in the first paragraph, but Miller conceded under oath that he could not recall discussing with Lynch any issues concerning Lynch’s personal liability under the Guaranty and would “doubt” that he would ever do so. (Miller Dep. at 44; see also id. at 45, 58.) These concessions from Miller, moreover, came in the context of an overall deposition in which his testimony made clear that he was loyal and friendly to Lynch and was begrudgingly conceding anything against him.

Paragraph three states that Morgan’s insistence on personal liability would give Lynch “no other choice then to walk away from the Morgan Mortgage.” (Mov. Ex. 9.) However, Lynch himself testified at trial (the first time he uttered such a statement (Sanctions Hr’g Tr. at 300)) that this was untrue—he ivas willing to concede to personal liability for a voluntary bankruptcy by McCook Properties (id. at 294, 299-300). Finally, the last line of the December 1 Letter states that Lynch wanted to know Morgan’s stance on the issue. Given that Lynch learned their stance at the November 25 meeting (id. at 47-48), it is clear he already knew “what Morgan’s attorneys intended] to do with this issue” (Mov. Ex. 9).

As with the LDG, the reasons for concluding that Lynch fabricated the December 1 Letter (Lynch concedes that he authored and signed it) does not lie with a single mistake or factual inaccuracy. Rather, it is the pattern of mistakes— hardly a single statement in the letter can be true, given the letter’s purported timing. At the Sanctions Hearing, while Lynch attempted to explain away some of the document’s many inconsistencies, he could not explain the major ones, such as why Miller was referenced when Miller did not know anything about the agreement or why the letter referred to Lynch receiving documents “today,” when Lynch received them on November 23. Thus, given the overwhelming evidence, the Court has no other choice but to conclude that Lynch’s letter is an after-the-fact fabrication.

c. The December 28 Letter Is a Fabrication

The December 28 Letter is the third of the fabricated documents. Most important to this conclusion is the deposition testimony of James McCall, a former business colleague of Lynch’s. While he recognized the signature on the bottom of the letter as looking like his, he had no recollection of writing the letter (McCall Dep. at 123-124), and did not even know the meaning of a term he purportedly used in it— “signature plate”—a term Lynch repeatedly used in his testimony at the Sanctions Hearing (id. at 128-130; see also Sanctions Hr’g Tr. at 260, 308).

The timing of the December 28 Letter also helps to prove its fabricated nature. The letter alleges that McCall sent signature plates on December 28—5 days after the completed, signed loan papers (and Guaranty) actually were mailed back to Womble Carlyle. (E.g., Sanctions Hr’g Tr. at 55-57; Mov. Ex. 7.) Thus, there was no reason for McCall to send any executed “signature plates” to Karlin; the documents already had been signed and delivered. Furthermore, Karlin and Thompson made clear that the pages of a Morgan document that required a party’s signature were not separated from the rest of the document, nor could they be sent separately, as the December 28 Letter reflects. (Sanctions Hr’g Tr. at 68-69; Thompson Dep. at 33-34.) In fact, Womble Carlyle apparently looked at the returned documents to see if the staples had been removed and replaced in a different location. (Sanctions Hr’g Tr. at 68-69.) There is no indication that Womble Carlyle found anything untoward in the returned documents, nor that they received the signed pages separately from the rest of the documents. Finally, Karlin was not even in Chicago, much less at work, on December 28, 1998, as the letter purportedly directed to him reflects. Karlin, who testified that he did not receive any such letter, was in Florida on vacation during this period of time. (Id. at 67.)

In sum, the December 28 Letter also is an after-the-fact fake. It is possible (although not clear (see McCall Dep. at 123, 130)), that McCall, who is not alleged to be part of any scheme to defraud the Movants or otherwise to obstruct justice, may have been duped to actually sign the document, perhaps by Lynch slipping it into a stack of papers. Nonetheless, and critically, McCall certainly did not author and send the letter and bogus “signature plates” on December 28, 1998, as the letter falsely purports to document..

2. Lynch Fabricated the Documents

To rule on the Sanctions Motion, the Court must turn to step two: deciding whether Lynch is responsible for the fabrication of the documents. The Court, after reviewing all the evidence, concludes that there is only one answer, which evidence overwhelmingly establishes: Lynch is indeed responsible.

The most significant evidence in this regard is Lynch’s own testimony that he generated and signed the faked December 1 Letter. Lynch’s testimony about the generation of the letter has differed in some respects over time, which hardly promotes confidence in his testimony. He has never wavered, however, from the bottom-line points that he generated the document—either by typing it himself or dictating it (Sanctions Hr’g Tr. at 249, 277)— and personally signed the document (id. at 249). These admissions are devastating to Lynch. They are analogous to an in-court admission from a criminal defendant that he is the author of a bank robbery demand note. On the basis of these admissions alone, and the material falsehoods in the faked December 1 Letter, dismissal of Lynch’s claims with prejudice likely would be warranted.

The admissions also provide considerable insight about who is responsible for the other two faked documents. First, as to the LDG, the December 1 Letter and the LDG act in tandem to point toward Lynch. The LDG is clearly fabricated, and the December 1 Letter deals with the' same two issues that are implicated by the substantive alterations in pages 2 and 13 of the LDG: the bankruptcy trigger and the capacity in which Lynch signed the Guaranty. In addition, the Bates numbers for the two documents are consecutive: the December 1 Letter has Bates number GL 38765 (Mov. Ex. 9) and the LDG begins with Bates number GL 38766 (Mov. Ex. 11). As explained later, it is undisputed that Lynch had an opportunity to interject the bogus documents into the dniverse of materials that his attorneys produced, and he above anyone else in the world had a motive to attempt to escape the consequences of the personal Guaranty that he signed. .

The December 28 Letter is also tied to Lynch, since he is carbon copied on it. (Mov. Ex. 10.) Of the parties referred to in the letter—Karlin, McCall, and Lynch— Lynch is the only person who makes sense, given the overall presentation of the evidence, to be the generator of the document. McCall testified that he did not remember whether he authored it or not, and Karlin testified that had not seen it until Lynch’s attorney’s produced it. (E.g., Sanctions Hr’g Tr. at 66-68.) The fake letter is extremely helpful to Lynch, over and above anyone else, and there has been no allegation that McCall had any reason to write the letter, especially given all the inaccuracies in it.

Several other factors implicate Lynch as responsible for the fabrication of the two documents (in addition to the December 1 Letter, which he concedes he generated and signed). First, Lynch, more than any other individual, had the motive to forge the documents. Of all the parties involved, Lynch clearly enjoyed the greatest benefit from the relevant documents if the fraud had succeeded. (He may have been the only person to have materially benefit-ted, but the Court need not reach that conclusion.) Lynch was the only person liable under the Guaranty, and thus the person with the greatest if not the only motive to attempt to doctor the record concerning the history of his signing of the Guaranty.

Lynch also had the opportunity to fabricate the documents and to have them interjected into the record in this case. His attorneys produced the documents, and the attorneys produced them from sources that would have easily allowed Lynch to slip the documents into the production. Sources of the documents produced by Lynch’s own attorneys included, among other places, Lynch’s personal files and documentation taken from Lynch’s garage. {Id. at 191; see also Cronin Dep. at 51, 53-54.)

Third, Lynch’s behavior is also consistent with that of a forger. After his attorneys (and only his attorneys) produced copies of the disputed documents, no one else located any copies of the documents in their electronic and paper files. There were some 200 boxes of documents from Seyfarth Shaw (which were being maintained at the offices of Miller Shakman and Hamilton, its counsel) that Lynch or his agents could easily have accessed at any time. (Sanctions Hr’g Tr. at 160-163.) The Movants denied that there were any copies of the fake documents in their files. (E.g., id. at 66, 136.) Commonsense says that Lynch, a highly educated person with considerable resources, would have attempted to clear his name by reviewing the Seyfarth Shaw files if there was any chance a helpful corroborating document would be located there. What would prove the challenged documents’ authenticity more than finding a copy of them in Sey-farth Shaw’s own files? But Lynch did not even attempt to look, despite ample opportunity and incentive to do so.

3. Lynch Is the Only Person Who Is a Logical Candidate for the Forger, Given the Rubric of Evidence in the Case

As the Court explained in its oral ruling, the Court thought hard about whether there was any plausible or reasonable alternative to the conclusions the Court reached. As to the fact that the documents were fake, this was not an issue that was ever in meaningful doubt. Indeed, Lynch’s counsel came close to conceding this issue in his opening statement (id. at 25), which, incidentally, substantially raised his credibility