"Truth is an absolute defense." A Seattle judge has thrown out ZiaSun Technologies Inc.'s lawsuit against eight people it claims engaged in an Internet cyber-smear campaign against the Solana Beach company.
U.S. District Judge Marsha Pechman dismissed the lawsuit this week against the defendants, known as the
ZiaSun 8, after she ruled Washington was an improper venue for the suit. ZiaSun filed the suit in Seattle
because the Silicon Investor chat room, where most of the messages were posted, is based there.
Lawyers for ZiaSun and its president, Anthony Tobin, aren't done fighting, however. They will ask the judge
to reconsider her dismissal, said ZiaSun attorney Patrick Pearce in Seattle.
If unsuccessful, ZiaSun will ask the judge to transfer the case to a proper venue, perhaps San Diego.
"California is probably a strong candidate, but we'll see," said Pearce. "First we will ask for a
reconsideration. ZiaSun is definitely going to continue to pursue the lawsuit."
James A. Shalvoy, a Manhattan Beach lawyer, filed the motion to dismiss on behalf of his client, Stephen
Worthington, a Northern California resident who posted messages under the alias "Auric Goldfinger."
Shalvoy now has been hired by the most vociferous member of the ZiaSun 8, Floyd Schneider of Saddle
River, N.J. Schneider uses the names "thetruthseeker," "floydie" and "crimsthieves."
"I don't think the case has any merit," Shalvoy said. "The plaintiffs seem to believe the First Amendment stops
at the Internet."
When asked if ZiaSun 8 postings were libelous, Shalvoy said, "Truth is an absolute defense."
The lawsuit stems from an online war of words in which the ZiaSun 8 posted messages in the Silicon Investor
chat room as well as on individual Web sites. The spat gained widespread attention in part because of fears
that it and similar lawsuits will have a chilling effect on free speech.
Some messages from ZiaSun 8 members ridiculed the company's financial statements. Others made
allegations of criminal conduct and criminal associations by ZiaSun officers. Still others suggested that the
company engaged in fraud.
ZiaSun sued, alleging that the Internet posters were engaged in a conspiracy with short sellers to drive down
the stock price. In short selling, investors bet that a stock price will fall.
The company also alleged defamation, various violations of Washington consumer laws, racketeering statute
violations and interference with expected business.
The judge found there was insufficient reason to sue in Seattle, since no relevant action took place there.
Pearce noted that the judge made no rulings on the merits of ZiaSun's allegations. ZiaSun is a little-known
Internet holding company with business in North America, Asia and other international markets.
In a related case, stock promoter Bryant Cragun, who is backing ZiaSun, sued Schneider and recently won a
restraining order that forbids him to refer to Cragun as dishonest, disreputable or a criminal.
Issued by a San Diego judge, the order also required Schneider to post a retraction on his Web site of his
"sell recommendation" for ZiaSun stock.
Adorned with cartoons of flying pigs, Schneider's Web site claims, "The Truthseeker is on a quest to expose
the scams and irregularities of Wall Street in order to protect mom-and-pop investors."
Schneider, a regional vice president of Real Estate Mortgage Network, did not contest the San Diego order.
After this week's dismissal, however, he hired Shalvoy.
Copyright Union-Tribune Publishing Co.
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