Re: 4/25/01 - [PDCI] Johndoes.org: Lawsuit against anonymous internet poster dismissed by Plaintiff PDC Innovative Industries
For Immediate Release:
Contact: Nick Lindesay (530) 579-6078
April 25, 2001
Lawsuit against anonymous internet poster dismissed by Plaintiff PDC Innovative Industries
A publicly-traded Florida company has retreated in its case against a New York internet message board poster
BROWARD COUNTY, FLA. -- The John Does Anonymous Foundation announced today that PDC Innovative Industries, Inc. (PDCI), a thinly traded publicly held Florida company with evidently no manufacturing or retailing structure, has voluntarily dismissed its lawsuit against internet poster David Nakhon. The suit was dismissed just one day prior to a scheduled hearing on Nakhon’s motion to have the suit dismissed due to lack of personal jurisdiction by the Florida court over the New York resident.
Nakhon had previously promoted PDCI and its stock, as an individual investor, often rallying support for the company on popular financial message boards such as Yahoo! and Raging Bull. But in early 2000, after reviewing PDCI’s SEC filings, Nakhon, an Israeli now living and conducting business in the United States, realized that PDCI had engaged in "less than arm’s length" transactions with its own officers and directors, which Nakhon alleged were fraudulent. For example, the president of PDCI, the late David Sowers, had sold, using third-party shell corporations which Sowers controlled, PDCI technology patents which Nakhon alleges that PDCI had previously disclosed as assets in its SEC filings. Nakhon also posted on message boards his personal opinions relating to PDCI’s dilution of shareholder equity by increasing PDCI’s outstanding stock issue. Nakhon believed, and published on internet message boards, that the officers and directors, most of whom are members of the Sowers family, were bilking investors for the Sowers’ own personal gain.
Nakhon states "I published these messages because I felt, after promoting this stock for so long, that I had an obligation to the other shareholders to inform them that I had made a mistake in investing in [PDCI], and that we had all been snookered by PDCI and its management." Nakhon also felt that he had an obligation to report the matter to the SEC. PDCI is now under an "informal inquiry" investigation by the SEC’s Enforcement Division, although neither PDCI nor the SEC has publicly disclosed that fact. The CEO (and primary target of the investigation) of PDCI recently died, and it is not known if the SEC will proceed against the remaining officers with any kind of regulatory action or litigation.
After Nakhon began anonymously posting his criticisms of PDCI and the Sowers on internet message boards, PDCI responded by suing the New York resident in Broward County, Florida, knowing that it would be difficult for Nakhon, who had already lost all of his savings in his investment in the collapsing PDCI stock, to retain out of state legal counsel. PDCI also obtained an ex parte emergency injunctive order which prohibited Nakhon from posting defamatory remarks about PDCI and the Sowers family. "I never posted a single defamatory remark about either PDCI or the Sowers", Nakhon recalls. "Every opinion I stated was the absolute truth."
Nakhon quickly realized, after being served a summons, that he would have to come up with $10,000 to $20,000 in cash to retain legal representation in Florida, which would be difficult after losing his savings to PDCI. He turned to several public organizations for assistance, but no one was able to help him. Then he heard about the John Does Anonymous Foundation through another poster on the Raging Bull message board. He visited the JDAF web site at www.johndoes.org and was able to immediately contact Foundation board member Carla Hoenhouse.
"I’ll never forget my first conversation with David," relates Hoenhouse. "He was bewildered, and he didn’t know where to turn. He felt as though he would be forced to ‘cave’ into the plaintiffs’ demands that he publicly retract his statements and confess that he had wrongfully defamed the Sowers. He was shocked and intimidated."
While the Foundation attempted to locate counsel to represent Mr. Nakhon in Florida, he proceeded to represent himself in the interim, filing motions to quash the injunctive order and to dismiss the case on jurisdiction. Mr. Nakhon states that were it not for the generous moral support he received from the Foundation and the many victims of frivolous litigation that he met through the Foundation’s web site, he could not have survived the experience. "After I talked to [JDAF Founder] Les French and others who had been through these [lawsuits] before, I realized that I have little, if anything, to fear. I actually began posting about PDCI again, even though the lawsuit was pending."
Jim Martin, board chairman of the Foundation, points out that in over 300 known cases filed by public companies against internet critics, not one single plaintiff has ever obtained a verdict against an internet poster. "Most cases are either thrown out by the courts, or are dismissed voluntarily by the plaintiff, such as the PDCI-Nakhon case" stated Martin.
The John Does Anonymous Foundation is a non-profit organization dedicated to promoting free speech in the public interest, and to provide support to individuals who are being sued for freely expressing their opinions on the internet. The Foundation maintains a web site at johndoes.org . Organizations and individuals wishing to contribute to The Foundation to support its projects, or to contribute to the costs of its legal defense in the litigation described in this news release, should contact Mr. Nick Lindesay or Mr. Jim Martin at (530) 579-6078, or send email to barter@johndoes.org.
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