I was wondering why someone from Postmedia came to my blog today after googling "James West" "Liberty Silver", and so I googled a bit myself, and I came across this:
Law360.com - Canadian mining investors can't duck pump-and-dump suit. I wonder if anything at all has been happening in this case since last year:
Law360, New York (February 11, 2015, 9:47 PM ET) -- A Florida federal judge refused to toss claims in a putative class action alleging a group of major investors in Liberty Silver Corp., a Toronto-based mining company, used celebrities to conduct an illegal pump-and-dump scheme with the company’s stocks, ruling Wednesday there was a plausible securities fraud claim.Good times! And Jeb Handwerger and James West have hopefully learned a lesson, right? Right?
U.S. District Judge Kenneth L. Ryskamp said he would not dismiss the claims against BG Capital Group Ltd., Outlook Investments Inc., Look Back Investments Inc. and Robert Genovese, who allegedly helped run a manipulation scheme to pump up Liberty Silver's share price.
Plaintiff Todd Stanaford's claims sufficiently allege that the investors’ actions violated the Securities Exchange Act, enriching the defendants by misrepresenting or omitting critical information about the company's holdings and assets to shareholders.
The investors first registered close to 2.5 million shares at $0.05 apiece at a time when Liberty Silver had no employees, cash, property or assets, according to court filings. They then acquired a substantial portion of the shares and allegedly used third-party brokers to disseminate materially false or misleading statements about the mining company through the media, inflating the price of the stock, court filings said.
“Plaintiffs contend that they purchased the securities at the artificially inflated price and relied upon the price of the securities and the statements disseminated by defendants,” the brief said. “Subsequently, plaintiffs allegedly suffered huge losses when defendants 'dumped' large blocks of Liberty Silver stock by selling 6,600,000 shares at $1.31 per share.”
The original complaint against Liberty Silver and select investors takes particular aim at Genovese for allegedly running a stock manipulation scheme involving intricate shell corporations that traded huge amounts of Liberty Silver stock to give the appearance of demand.
The suit claims the company’s shares jumped even further after Genovese successfully listed the company on the Toronto Stock Exchange in December 2011 based on false reports and undisclosed information. After the TSX listing, Genovese then allegedly attempted to drive Liberty Silver shares higher by offering to purchase natural resource company Sennen Resources Ltd. in July 2012 for $48 million.
Sennen CEO Ian Rozier balked at Liberty Silver's offer, saying it and the company's questionable business practices were offensive, according to the complaint.
In October 2012, the U.S. Securities and Exchange Commission's Division of Enforcement halted all Liberty Silver stock trading due to “questions concerning publicly available information about Liberty Silver, the control of its stock, its market price and trading in the stock.” Only after the SEC action did the pump-and-dump scheme come to light, according to the suit.
Representatives for Stanaford and the defendants did not immediately respond to requests for comment Wednesday evening.
According to Liberty Silver and its attorneys, the company and two other named defendants, Geoffrey Browne and William Tafuri, have agreed to settle with plaintiffs in the suit for $1 million. A joint notice of settlement in principle was filed with the court Dec. 5.
“Although defendants continue to deny plaintiffs’ allegations, the company believes it is in the best interests of its stockholders to focus its attention on its business and put the matter behind it,” the company’s statement says.
Todd Stanaford is represented by Gary S. Menzer of Menzer & Hill PA and William B. Federman of Federman & Sherwood.
Robert Genovese, BG Capital Group Ltd., Look Back Investments Inc. and Outlook Investments Inc. are represented by Thomas O. Gorman and Chimera N. Thompson of Dorsey & Whitney LLP. Liberty Silver Corp., Geoffrey Browne and William Tafuri are represented by Patrick G. Dempsey of PGD Law Firm LLC; and Jennifer C. Hildebrand, Robert H. Hotz Jr. and Michelle A. Reed of Akin Gump Strauss Hauer & Feld LLP.
The case is Stanaford v. Genovese et al., case number 9:13-cv-80923, in the U.S. District Court for the Southern District of Florida.
Correction: An earlier story incorrectly stated the ruling applied to Liberty Silver. It applied to certain investor defendants only. The error has been corrected.