Mount Kellett Capital Management has found it’s name getting dragged into litigation twice in the last three days. Both lawsuits have the strikingly similar issue in it of improper stock dilutions, one in the case of Baja Mining and the latter in the case of Evoq Properties of Los Angeles.
Baja Mining’s largest stock owner, Louis Dreyfus Commodities Metals Suisse, alleged (http://www.mineweb.com/mineweb/view/mineweb/en/page66?oid=153598&sn=Detail&pid=102055) in its petition in the British Columbia Supreme Court that “Baja may ‘engineer an arrangement with Mount Kellett’ with the new share issue, unfairly diluting the position of other shareholders in the process.” Louis Dreyfus also calls into question the ethics of attorneys: “Louis Dreyfus also lambasts Baja over its choice of independent counsel. Or as Louis Dreyfus terms it: ‘so-called’ independent counsel. Louis Dreyfus alleges that counsel, Fasken Martineau, ‘takes instructions and answers only to Baja, not the shareholders of Baja.’ Louis Dreyfus objects to Fasken Martineau because the firm had previously advised it in its dealings with Baja, which has included arrangement of a credit facility. ”
In Los Angeles Superior Court Case No. BC 487078, filed today in the Los Angeles County Central District, Aztlan Cold Storage is suing Mount Kellett controlled Evoq Properties (formerly Meruelo Maddux Properties) the Plaintiffs seek declaratory relief to establish amongst other things, whether a violation of 17 CFR 240.10b-5 took place during a complex series of events involving loans and securities pledged as collateral. 17 CFR 240.10b-5 states that:
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
Violation of an SEC imposed regulation such as 17 CFR 240.10b-5 is made unlawful by 15 USC 78j. Under 15 USC 77ff, such violations can be punished by up to 20 years in a federal prison along with a fine.
PERJURY & FORGERY
Aztlan’s suit goes on to allege that the filing against it by Merco Group-3185 Washington Blvd LLC of the Superior Court lawsuit BC 479498 was a malicious prosecution, that the allegation that it owed approximately $1.2 million was based upon the formulation and keeping of the proverbial ‘two sets of books’ in violation of Sections 1500 and 1507 of the California Corporations. The suit also contends that ousted Evoq’s former CEO, Richard Meruelo, who was ousted from control at the behest of Mount Kellett’s operatives, was the victim of having his signature forged to the verification under penalty of perjury which accompanied the filing of that case in the court. The fact is that on the date at which Meruelo’s signature was purportedly signed to the verification in Los Angeles County, he wasn’t even in the State of California.
WHISTLE BLOWER PROTECTION ACT
Blow the whistle on corporate corruption–get stabbed in the back as your reward!
Aztlan’s Third Cause of Action is brought under the California Whistle Blower Protection Act. This part of the suit contends that Evoq’s former security director was ousted because he refused to participate — after the advent of Mount Kellett imposed management — in violations ranging from the falsifications of corporate records, to civil rights violations against minorities, a Gay employee, and women who were subjected to quid pro quo sexual harassment (paid more than other women because they were sleeping with a manager). In addition to forcing him out of his job, the suit also alleges that Evoq converted a portion of the stock that he owned in the company in violation of a court order.
UNPROFESSIONAL & OBNOXIOUS MANAGEMENT
99% of business to business process service goes on without a hitch; normal businesses just accept service and supply the process server with the name and title of the person that’s accepting service…but the Mount Kellett folks who took over at Evoq are REALLY WEIRD!
Having discussed the behavior of the Mount Kellett imposed management of Evoq for the past several months with former employees and people who’d done business with the company both before and after the takeover, I guess I should have been ready for unprofessional, immature, and generally obnoxious behavior when I went to serve the company with the Aztlan lawsuit. Anyway, at least the corporate twit I wound up dealing with was kind of entertaining because virtually everything he said was (a) stupid and (b) childish. In fact, it was like talking to an elementary school bully who thinks he’s real smart.
This twit starts telling me that I’m guilty of “trespassing” by attempting to serve the company with legal process. This is truly idiotic. Serving court papers is inherently legal. To trespass you have to go on someone’s property for an unlawful purpose. He claims that it was wrong for the security guard on the first floor of their headquarters (they’re in 626 Wilshire Blvd. Ste 850, Los Angeles) to let me go up to their office after I informed the officer that I was there to serve legal papers. The guard was obviously much better trained than the corporate twit since he knew that he was obligated to give me access under the case of Bein v. Brechtel-Jochim Group, Inc. (1992) 6 Cal.App.4th 1387, 8 Cal.Rptr.2d 351. As I explained to the twit, if the guard hadn’t given me access I could have served the papers on the guard and walked out of the building.
It was obvious that the twit wasn’t capable of making independent decisions. He had to keep going back to his cubicle in the other room, probably to call higher ups or lawyers, every time I brought up a simple legal issue, like whether the company was willing to accept service for Julio Davila (an employee being sued along with the business entities) or whether they were actually going to insist upon my engaging in “due diligence” by coming back two more times and then serving the papers on anybody in charge of the office. After checking with his handlers, the twit agrees to take the papers for Julio to keep me from coming back and “harassing” them (he seemed like he gained some weird pride in using the word “harassing,” as though I’ve never been falsely accused of it before by some ignoramus who thinks that being served with a lawsuit is some major earthshaking event for a multi-million dollar business).
Finally, displaying the ultimate in sissy – coward behavior, he refuses to give me his name or title claiming that I had “no need” for it, as if this is normal corporate behavior. Having been serving process since 1973, I of course know that it isn’t…..but that’s just the latest page in the Detective’s Diary…..and below you can find the pages of the latest lawsuit….