Gibraltar y Otros Casos

An Online Poker Magnate Folds His Cards in Chevron Pollution Case

Bloomberg - Paul Barrett 18/02/2015

The digital poker magnate who financed an epic pollution lawsuit against Chevron has disavowed the case and accused the lead plaintiffs' lawyer of misleading him about the underlying facts.

Wait—poker magnate who financed what now?

Entering its third decade, the extraordinary legal fight over oil pollution in the Ecuadorian rain forest has featured an enormous cast of characters—none less likely than Russell DeLeon, who made a fortune in online gambling and resides in the tax haven of Gibraltar, a tiny British territory at the southern end of the Iberian Peninsula. A Harvard Law School friend of the plaintiffs' lawyer in the case, New York-based Steven Donziger, DeLeon began financing the litigation against Chevron in 2007. Over the next six years, DeLeon invested some $23 million, allowing Donziger to sustain a suit against a multinational corporation that fought him at every turn (and spent many multiples of the plaintiffs' budget).

In February 2011, Donziger won a stunning $19 billion verdict on behalf of thousands of poor Indians and farmers who live in the Amazon region of northeast Ecuador. Chevron, however, contended that the plaintiffs' attorney had achieved this victory by means of fraud, coercion, and fabricated evidence. The oil company countersued Donziger in federal court in New York, accusing him of turning the environmental suit into a massive extortion scheme. In March 2014, Chevron won the New York case and obtained an order from a U.S. district judge barring Donziger and his clients from ever benefiting from their ill-gotten Ecuadorian verdict. Donziger has denied wrongdoing and appealed the judgment against him.

As all this unfolded, most of Donziger's key supporters—fellow lawyers, paid scientific experts, and financiers—have backed away from him, accusing the lawyer of dishonesty. The latest to abandon Donziger is DeLeon. Like many of the others, the gambling tycoon retreated under pressure from Chevron, which sued him personally in Gibraltar for allegedly financing a crooked legal campaign in Ecuador.

Having reviewed Chevron's racketeering suit against Donziger—and the U.S. judge's ruling—DeLeon said in a written statement dated Feb. 16 that he concluded that "representatives of the [Ecuadorian] plaintiffs, including Steven Donziger, misled me about important facts. If I had known these facts, I would not have funded the litigation."

In exchange for his $23 million investment, DeLeon had been promised a 7 percent share of any recovery in the case. He said in his statement: "I no longer seek or wish to receive any financial benefit from this matter, and I have therefore decided to relinquish my entire interest in the litigation to Chevron." The oil company agreed to drop its suit against DeLeon. He said he would provide Chevron with information and documents related to the pollution case.

The oil company and Donziger offered differing interpretations of DeLeon's settlement and disavowal. "We are pleased that yet another long-time supporter has ended his association with this scheme," R. Hewitt Pate, Chevron's vice president and general counsel, said in a prepared statement. "Chevron will continue to hold accountable those who associate themselves with this fraudulent litigation."

Karen Hinton, Donziger's spokeswoman, refused to accept that DeLeon had actually reversed himself. "We don’t believe he has disavowed the case," she said in an e-mail. "We believe he has been pressured into saying so. Mr. DeLeon vetted the case with his own lawyers after Chevron filed the [New York racketeering] case. He knows the charges against us are fabricated by Chevron."

Hinton also argued that DeLeon's relinquishing any financial interest in the case was a boon to the plaintiffs. She noted that others, including the law firm Patton Boggs and the hedge fund Burford Capital, had also surrendered financial interests in a potential plaintiffs' recovery as part of their backing away from Donziger and the plaintiffs. The various shares that have been relinquished—Hinton called them "points"—have "reverted back to the clients by operation of law." Moreover, she added, those same points "can now be used to sell to other investors or to pay for the cleanup once recovery happens."

Asked for a breakdown of which investors and/or lawyers currently own shares of a potential plaintiffs' recovery, Hinton did not respond.
 

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