Multivision's Nazerali testifies about Imagis, Thomas
2015-04-20 20:28 ET - Street Wire
by Stockwatch Business Reporter
Aly Nazerali, the plaintiff in a libel trial against the Deep Capture website, returned to the stand on Monday morning as defence lawyer Roger McConchie continued his cross-examination over Imagis Technologies, a lively facial-recognition promotion from the early 2000s.
As previously described in court, Imagis received a go-private offer on March 6, 2002, from the Pembridge Group, chaired by Treyton Thomas. (The offer is of interest because on the day it was announced, Imagis's shares touched a 52-week high of $5.66, up $1.76 over the previous day.) All this came about two months after Imagis hired Pembridge Venture Partners as a non-exclusive financial adviser on Jan. 3, 2002.
Mr. Nazerali's testimony is part of a libel lawsuit he is pursuing against Deep Capture and others that allegedly defamed him in on-line postings in 2011. The postings claimed, among other things, that Imagis was a pump-and-dump.
On Monday, Mr. McConchie asked Mr. Nazerali to describe his initial interactions with Mr. Thomas. Mr. Nazerali recalled that their first face-to-face meeting took place over dinner at a hotel in Boston. He had said in earlier testimony that the meeting was in November or December, 2001, and was arranged after a man named Brad Harrington, who claimed to work for Pembridge, called Mr. Nazerali and invited him to meet Mr. Thomas. Today, after Mr. McConchie read from a pretrial interview in which Mr. Nazerali had said the meeting occurred "immediately prior" to the Nov. 9, 2011, closing of a $3.6-million private placement done by Imagis, Mr. Nazerali recalled that this was the case.
In the course of this line of questioning, Mr. Nazerali testified that he discussed the private placement at the meeting with Mr. Thomas, who participated through Indo Sakura Trust. Mr. Nazerali estimated that Mr. Thomas's investment was in the hundreds of thousands of dollars.
In addition to himself and Mr. Thomas, Mr. Nazerali testified that Iain Drummond, Imagis's chief executive officer, was also at the hotel meeting. Another meeting later took place between Mr. Thomas and Buck Revell, Imagis's chairman, on the Harvard campus, said Mr. Nazerali. By his recollection, no one else from Imagis met Mr. Thomas face to face before Jan. 3, 2002, the day that Imagis hired Pembridge as an adviser.
In response to further questions, Mr. Nazerali said he never visited Pembridge's offices in Boston, met any of Mr. Thomas's staff or knew the names of any of Pembridge's other directors.
Mr. McConchie wanted to know if Mr. Nazerali had ever heard of Mr. Thomas prior to the meeting in Boston. Mr. Nazerali said he first learned of Mr. Thomas in 1996 through press articles that revolved around an "interesting takeover bid, if you want to call it that," for an exchange-listed company. He did not elaborate.
Upon further questioning, it was established that around the time Mr. Nazerali began his involvement with Mr. Thomas, Mr. Nazerali began looking up news articles about Mr. Thomas or receiving them from investment bankers. Mr. McConchie started reading from a handful of such articles.
The articles appeared to Mr. McConchie to be press releases issued by Pembridge. One, headlined "Life After Harvard" and dated Jan 21, 2002, described Pembridge as "the hedge fund equivalent of Berkshire Hathaway."
An earlier one was from 1998 and was headlined "Pembridge Group Announces Chairman's Inclusion in Who's Who." Among other things, the 1998 article stated that before Mr. Thomas founded Pembridge in 1995, he held senior positions in investment banking, most recently at Kidder, Peabody & Co. Mr. McConchie asked whether Mr. Nazerali had tried to speak to anybody from Kidder about Mr. Thomas. The answer was no. Mr. McConchie then sketched Kidder's history, noting that amid financial difficulties and insider trading scandals, the firm was sold to General Electric in 1986 and then to PaineWebber in 1994. Mr. Nazerali's lawyer, Dan Burnett, objected to this line of questioning, and Mr. McConchie moved on.
Mr. McConchie read other parts of the 1998 article, namely that Mr. Thomas graduated from Harvard and had written and given presentations on a paper called "Corporate Governance in International Commerce" (with no citation, Mr. McConchie pointed out). In response to questions, Mr. Nazerali said he never discussed the paper or the presentations, never saw Mr. Thomas's Harvard degree, and only "may have" seen his resume.
A Jan. 28, 2000, article, "Harvard Sabbatical No Hindrance to Pembridge," invited readers who wanted more information on Pembridge to contact a Ms. Tyler Carrington. Mr. McConchie quoted his own pretrial interview comment that the names Carrington and Harrington (the above-mentioned man who apparently invited Mr. Nazerali to meet Mr. Thomas) have a "musical symmetry." On the stand, Mr. Nazerali said he had never met either person and never brought up their similar names to Mr. Thomas.
Mr. McConchie then turned to the Jan. 3, 2002, announcement that Imagis had hired Pembridge as an adviser. The release stated that Imagis issued Pembridge 50,000 warrants, with each warrant exercisable for one share at $2.20. Mr. Nazerali confirmed this.
The go-private offer arrived shortly after, on March 6, 2002. Mr. McConchie asked Mr. Nazerali about Imagis's efforts to verify that Pembridge could afford the acquisition. Mr. Nazerali responded that Imagis hired Raymond James, which provided extracts from fund rating agencies and directories, such as Morningstar and Bloomberg. After further questioning, Mr. Nazerali testified that neither Morningstar nor Bloomberg actually rated Pembridge; they just "put it on a list," as Mr. McConchie summarized. Mr. McConchie said that the only information Morningstar had was whatever Pembridge had told it. "I don't know that to be a fact," replied Mr. Nazerali.
Mr. McConchie later asked if Pembridge had exercised any of the warrants. Mr. Nazerali responded that to his understanding, it had, but he could not say when. |
