eToys.com

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eToys.com is a retail website that sells toys via the Internet. Emarketer was once quoted as saying; "Put simply, eToys is the benchmark against which all other toy sites are measured."^{[citation needed]} Like so many other "Dot-com" companies, the company that owned the eToys site filed for chapter 11 protection toward the end of the Internet bubble on March 7, 2001.

Unlike many CEOs of the time, when eToys finally did expire, CEO Toby Lenk went down with it still holding 10 million shares. Lenk also prevailed upon his senior team to follow his example of not selling their shares, hoping to save eToys by signaling confidence to Wall Street.

Nearly all the eToys assets were acquired by KB Toys in two separate bankruptcy auctions, then later sold to D.E. Shaw, a New York based hedge fund. Just prior to its final sale, lawyers on behalf of eToys filed a lawsuit in New York Supreme Court against Goldman Sachs for multiple securities violations. The suit, still pending a decision, is estimated at being worth up to $800 million.^{[citation needed]} Coupled with that, a shareholders group began privately investigating suspected wrongdoings by certain individuals and law firms overseeing the bankruptcy case. This group continues to pursue the matter in Federal Court.

The Wall Street Journal printed an article on the issues of the shareholders and a Court approved consultant, Collateral Logistics Inc (CLI) owned by Steven Haas (a/k/a Laser Haas). It can be found at the "Where's Justice for All" website on "Fraud eToys".

The allegations by the shareholders and Laser Haas are that the U S Trustee forewarned the parties against violating Section 327(a) which prohibits bankruptcy estate lawyers and professionals from holding or representing a conflict of interest. Not only was this section violated by the counsels for the debtor and counsel for the creditors "collaboratively", the violation was done in secret by a "clandestine" hiring letter that contained an improper clause that rewarded "post-petition" "wind-down coordinator", that is the admitted paid associate of the counsel for the creditors. The clause, clause (i), stated that if the "wind-down coordinator" choose not to apply to the court, he would then be rewarded as CEO and President of the bankrupt debtors.

The US Trustee made a motion to disgorge the firm of Traub Bonacquist n Fox for $1.6 million on February 15, 2005. The Disgorge Motion, which is Court docket item 2195 of the Delaware Bankruptcy case eToys 01-706, testified that the parties were forewarned, that the acts were deliberate, rather than inadvertent, that Traub firm was vastly experienced in bankruptcy matters, that affirmative misrepresentations of no conflict of interest had occurred, while Traub and the Wind down coordinator had conflicting loyalties, that the [diametric] lines between Creditor v Debtor had been made void, that the issue was materially adverse, and that Fraud upon the Court had occurred.

The District Court appeals were all heard by Judge Kent Jordan who is now promoted to the 3rd Circuit (cases 05-829, 05-728, 05-830 and 05-831). Kent Jordan's former firm, Morris James represented CLI/Haas in the eToys matter.

The shareholders and Haas had complained to the Director in Washington DC of the EOUST, as well as the Asst US Trustee, who emailed the Disgorge Motion to everyone, while also making it known to President Bush's Corporate Fraud Task Force and the SEC Bankruptcy Fraud Division in Atlanta GA. The Director of the EOUST, the Asst US Trustee and the Director of the Corp Fraud Task Force have all subsequently resigned.

Recently the appeal of Haas in the 3rd Circuit of 06-4308 had rejected an En Banc rehearing request and the Supreme Court remains the alternative. The shareholders still have a 3rd Circuit appeal that currently has a briefing scheduled to occur.

In 1999, the company was involved in a high-profile dispute with Swiss art site etoy. EToys attempted to seize the etoy.com domain from etoy on the grounds that it was confusingly similar to its own domain, but it relented after widespread Internet outrage.^[1] That season's Christmas-season television ad campaign featured Israel Kamakawiwo'ole's rendition of "(Somewhere) Over the Rainbow". [1]

Notorious for attempting to sell its customer list in an attempt to ward off bankruptcy, despite its TRUSTe-certified privacy statement promising that "We do not sell, rent, loan or transfer any personal information regarding our customers or their kids to any unrelated third parties. Any information you give us . . . will not be used in ways to which you have not consented." The firm was also notorious for a failed attempt to appropriate the etoy domain name from a European art/performance group by suing for trademark violation. The eToys name was acquired and the site relaunched October 23, 2001 by KB Toys.

The eToys.com website was eventually reopened by eToys Direct Inc., a descendant of Internet startup and KB Toys partner Brainplay.com. It continues to market toys by mail order under the eToys name through both the website and printed catalogs.