Smart Video beats Hamouth in short-swing suit
2005-11-07 15:11 ET - Street Wire
by Stockwatch Business Reporter
The year 2005 has been a bad year in court for former Howe Street promoter Rene Hamouth. He kicked off the year fighting attempts by a U.S. law firm to collect a $359,724 judgment it won in Colorado. (All figures are in U.S. dollars.)
Then in March the B.C. Court of Appeal struck his libel lawsuit against a Georgia OTC Bulletin Board company, Smart Video Technologies Inc. Three months after that setback, the Court of Appeal dealt Mr. Hamouth another legal defeat, ordering him to repay a $300,000 loan to New York stock promoter Lev Zaidenberg.
Now, an Atlanta judge has ordered Mr. Hamouth to pay $172,324 in damages to the same OTC-BB company he sued for libel, Smart Video.
Smart Video sues Mr. Hamouth in Atlanta
Smart Video, in its April 2004, civil suit, said Mr. Hamouth made $151,428 in illegal short-swing trades of the company between January, 2003, and February, 2004.
Short-swing trading, or buying and selling the same shares of a company within six months, is illegal in the U.S. if you are an insider.
Smart Video claimed Mr. Hamouth owned over 10 per cent of the company at the time, a figure disputed by Mr. Hamouth.
Mr. Hamouth, in his defence, said he erroneously filed insider trading reports and he did not control enough shares to be an insider.
Mr. Hamouth paid little attention to the case, however, and he eventually lost last month in a default decision. An Atlanta judge awarded the company $172,324 in damages on Oct. 5.
Mr. Hamouth sues Smart Video in B.C.
Returning home, Mr. Hamouth sued Smart Video for libel in B.C. Supreme Court last June. Mr. Hamouth claimed Smart Video's lawyer libelled him when it told his broker about possible short-swing trading.
"The SEC has initiated an inquiry into trading activity regarding the Company's common stock, which the Company believes is directly the result of Mr. Hamouth's trading activity," Smart Video's lawyer apparently wrote.
Mr. Hamouth pointed out that the Securities and Exchange Commission had not initiated any proceedings against him and sought appropriate penalties against Smart Video.
The judge, however, appeared to agree that the SEC was looking into Mr. Hamouth's trading and ruled Smart Video's lawyer could not be held liable for tipping off the broker.
Mr. Hamouth appealed, but that got him nowhere. A Court of Appeal panel said Smart Video's lawyers were "acting in the course of their duties to their client" when they wrote the letters.
Mr. Hamouth's loss to Mr. Zaidenberg
Mr. Hamouth's apparent bad luck in court struck again in the Zaidenberg case. The Court of Appeal awarded Mr. Zaidenberg $300,000 on June 28, 2005, upholding earlier judgments in New York and in B.C.
Mr. Hamouth, in his defence, said Mr. Zaidenberg ripped him off. Mr. Hamouth claimed Mr. Zaidenberg persuaded him to buy $300,000 worth of shares in OTC-BB listing Constellation 3D Inc. just before the stock collapsed.
Mr. Hamouth said he had a deal with Mr. Zaidenberg that the loan would not become due until the company reached a specific price, but the company never reached that price. The reason, according to Mr. Hamouth, is Mr. Zaidenberg was dumping millions of shares to cover personal debts.
The Court of Appeal, however, ruled Mr. Hamouth must repay the loan. It said the possibility that Mr. Zaidenberg cheated him does not excuse his failure to repay the money.
Mr. Hamouth's lawyer says Mr. Hamouth is entitled to sue Mr. Zaidenberg for fraud, although Mr. Hamouth does not appear to have done so.
The Colorado lawyers
Rounding out the year was the $359,724 judgment against Mr. Hamouth from Colorado. Mr. Hamouth filed suit in January trying to block attempts to collect the money in B.C. No decision has yet been rendered on his attempt.
The Colorado judgment resulted from more short-swing trading allegations, this time involving now-defunct OTC-BB listing Net Command Tech Inc. A Colorado law firm filed the suit on behalf of Net Command, claiming Mr. Hamouth bought and sold while owning 24 per cent of the company.
However, even if the Colorado lawyers are successful it is not clear who would actually be entitled to Mr. Hamouth's money, given that Net Command and the other plaintiff, brokerage EBI Securities, are both defunct.
If the Colorado lawyers lose, it could mark a victory in court for Mr. Hamouth, something that seems to have eluded him so far this year. |
