So, we are in the U.S. Federal District Court, Southern District of New York.
The Judge had a conference in her chambers with our lawyer and Banro's lawyer in late April.
Banro was represented by Akin Gump, a large and well known New York law firm. The Senior Litigation Partner attended the conference with a team of lawyers. This guy bills out at thousands per hour so they are taking this seriously. Our lawyer went alone.
The first issue was the issue of serving John Clarke, CEO of Banro. We had not been able to serve him because he lives in Britain and there are 30,000 John Clarke's in Britain. Our server could not find him. We had asked Banro's lawyer to serve him for us and they refused service. The judge was not very happy with this and made it clear to them that they should serve him before May 4th. On May 3rd they served him.
As an aside, I have learned from an insider at the Company that there is discussion of firing John Clarke. This would be problematic for them because 1. It would admit they did something wrong. But, it might limit their liability if they were able to blame all the bad stuff on Clarke. Our suspicion is that they are trying to fire Clarke and buy him off with a golden parachute to ensure his silence. There is precedent for this since the prior CEO, Simon Village was fired when he threatened to blow the whistle on bribes and received a $3 million payment in exchange for silence. Even if they pay Clarke millions, in exchange for silence, the courts can break that silence agreement and force him to testify under oath. My bet is that Clarke knows stuff which is explosive. There are billions of dollars at stake here and people could go to jail. So stay tuned on this one.
The second issue addressed at the conference is the issue of venue. We have a strong case on the merits but that is only slightly relevant at this point. Banro is taking the position that the Canadian court is the proper venue and the U.S. is not relevant. They say the Canadian court is competent, has handled the issue, and that is that.
As you know, our view is that there is Nexus in the U.S. The crime was committed in the U.S. 80% of the shareholders and capital are from the US. The Company lied to me to my face in the U.S. (John Clarke in a private meeting in Denver), and the Company used the cover of the US Securities laws and its New York Stock Exchange listing. "Judge, This is a US based crime committed under US Securities Laws, they cannot wiggle out of that fact." "Judge do you want to send the signal to all foreign companies that they can come here and commit fraud and face NO CONSEQUENCES?"
We are making the public policy argument that foreign companies cannot come here, use our laws as cover, screw US citizens and then claim that their local courts provide the correct remedy. There is a lot of logic in our position.
The Company acknowledges that argument but says Canadian courts are just as good as US courts.
It is a subtle and smart defense because Judges believe in respecting one another. When you become a Judge you are bound to honor the rule of law and they are hesitant to criticize one another. So, there is some bias for our judge to respect the Canadian judge. However, it will all come down to the Judge's discretion and the fact pattern. There is case law on both sides of this one. In fact, there are several strong competing precedents. We think on balance they favor us.
We believe the logic of our case is very strong and the fact pattern is strongly in our favor. But, if our judge is lazy she should could just say Canadian law applies. It would help clear her docket. We would appeal but I am informed that our odds on appeal are not good because judges have a lot of discretion.
One thing they did that hurts them is that they got the Canadian court to extinguish our claim forever. One of the tests our judge faces is the question of "can the litigant get relief in the foreign court." Well, since we have be expunged forever in Canada the answer is clearly no. So, by overplaying their hand and banning us forever on this matter in Canada they may have shot themselves in the foot.
So, here is the timeline. May 18th, 20 page briefs due from both sides on the venue issue. June 18th responses to both briefs from both sides. Then hearings, pleadings, more briefs, etc.
So, the venue issue will not be decided before July at the earliest and my lawyer thinks it could take the balance of the Summer and Late into the Fall.
Frankly, I do not know how to handicap this one. Logic says we should win, but my lawyer says he rates it at 50/50. I think he is being conservative and really believes the odds are better than that but does not want me to be surprised if we lose.
Here is the good news. IF we make it through this VENUE door the other side has a real problem. The case is strong and we are going to rock their world. Our lawyer is more worried about this venue step than anything else which follows. It is just impossible to know how sympathetic the judge will be toward our complaint. However, she was very cordial and acknowledged that we had pleaded correctly. This complaint is very real.
So, we need to all hope an pray that this woman sees our argument clearly. Here is where any of you could help. We need articles and other materials which show how "in the tank" or "bought" the Canadian Courts are for Canadian corporations. Our lawyer did not say this in conference and we have to be careful not to criticize. But in our filings we want to reference some articles which talk about how bad the Canadian courts are at policing stock fraud. We will do our own search but if you have anything supporting that line of argument, send it. Thank you.
There will probably not be any updates for at least another month, unless there are unusual developments. These cases move slowly. Keep your fingers crossed. My bet, we are going to get these assholes. They have a real problem. Me.
Best,
Larry -----------
Carpe diem
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