"SOLV's management mace cash payments to Mr. Peter Young in return for
Mr. Young's illegal purchase of SOLV stock and bonds." (Oct. 3, 1996)
"[lithe are that SOLV paid Young." (Oct. 3, 1996)
"The London Press has reported that hard evidence was found in Mr.
Young
residence that proves [Solv-Ex CEO] Rendall made direct cash payment to
Mr. Young in return for his purchase of Solv-Ex stock It has also been
reported that Philip Henry of the Serious Fraud Office . . . has hard
evidence
that Solv-Ex also made undisclosed payments to Jan Johnson and Steve
Chance of Fiba Nordic." (Oct. 3, 1996)
"SOLV paid Young to do the deal. Period." (Oct. 9, 1996)
70. These and other similar statements by the Short Seller defendants were
intentionally false and misleading. They were made in order to interfere with Solv-Ex's efforts to
locate financing and to depress its stock price.
71. Throughout the fall of 1996, Solv-Ex continued to seek financing to allow it to complete the constructionof its Albertaplant. It was prevented from locating adequate financing because, among other reasons, the Short Seller defendants made deliberately false and misleading statements concerning Solv-Ex, its management, and its technology.
72. As a result of defendants' actions, plaintiffs have incurred substantial darnages. Solv-Ex's damages include the funds expended in its ultimately futile effort to complete its Alberta plant and the lost opportunities of exploiting its Alberta oil sands resources and its technology to their full commercial value. Charter Oak's damages include the lost fees and commissions to which it otherwise would have been entitled.
73. Defendants' conduct was intentional, egregious, and in conscious disregard of plaintiffs' rights. It was part of a pattern of misconduct that was directed at and impacted the public generally. This is an appropriate case for the jury to award punitive darnages.
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Count I
(Breach of
Contract)
74. Plaintiffs restate and incorporate the preceding fact allegations.
-75. Defendants Quillen, Quilcap, Zweig, Zweig Advisors, Mikles, Miller, Mikles/Miller, and the Deutsche Bank defendants intentionally breached their respective conf identiality agreements. They misused confidential information obtained from plaintif fs or disclosed it to third parties without plaintiffs' consent.
76. These defendants also intentionallybreached their duty of good faith and fair dealing owed to plaintiffs, including by disclosing and permitting the disclosure of information contrary to the terms of the confidentiality agreements.
77. Plaintiffs therefore seek to recover their actual damages caused by these
defendants' conduct
Count II
(Fraud)
78. Plaintiffs restate and incorporate the preceding fact allegations.
79. Defendants Quillen, Quilcap, Zweig, Zweig Advisors, Mikles, Miller,
Mikles/Miller, Weir Jones, and the Deutsche Bank defendants knowingly, intentionally, or recklessly
misrepresented their interest in Solv-Ex and its confidential information, concealing their intent to
exploit or otherwise damage Solv-Ex, when they executed the confidentiality agreements, without
an intention to honor the terms of the agreements.
80. The Deutsche Bank defendants also knowingly, intentionally, or recklessly misrepresented their role in the private placements of Solv-Ex stock.
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81. Plaintiffs fs therefore seek to recover their actual damages caused by these defendants' conduct, as well as appropriate punitive darnages.
Count III
(Aiding and Abetting Tortious Conduct)
Plaintiffs restate and incorporate the preceding fact allegations.
83. Defendants knew that one or more of them owed duties to plaintiffs pursuant to the confidentialityagreements. Nevertheless, each defendantprovided substantial assistance and encouragement to the breaches of these duties. They facilitated disclosure of Confidential Solv-Ex Information; misused Confidential Solv-Ex Information for their own gain and to plaintiffs' detriment; disseminated false and malicious information regarding Solv-Ex; and interfered with business opportunities belonging to plaintiffs
84 Plaintiffs therefore seek to recovertheir actual darnages caused by defendants' conduct, as well as appropriate punitive damages.
Count IV
(Interference with Prospective Economic Advantage)
85.
86.
Plaintiffs restate and incorporate the preceding fact allegations.
Prior to defendants' illegal actions, Solv-Ex had advantageous business relationships with potential sources of financing, suppliers, customers, and others. Defendants knowingly interferedwiththose relationships,with the sole purpose of hanning Solv-Ex and reaping windfall profits themselves by unlawful, dishonest, and unfair means. Their conduct damaged SolvEx, including by delaying and hindering its financing and preventingcompletionof its Alberta plant. Defendants' conduct was unlawful, without privilege or justification, and solely for their own profit.
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87. Plaintiffs therefore seek to recovertheiractualdarnages causedby defendants' conduct, as well as appropriate punitive damages.
88. 89.
Count V
(Breach of
Fiduciary Duty)
Plaintif fs restate and incorporate the preceding fact allegations.
Defendants Quillen, Quilcap, Zweig, Zweig Advisors, Mikles, Miller, Mikles/Miller, Weir Jones, and the Deutsche Bank defendants had fiduciary duties to plaintiffs. They agreed and represented/hat they would acquire and protect Solv-Ex Confidential Information. These defendants breached their duties, including by disclosing Confidential Solv-Ex Information for their own gain and to plaintiffs' detriment; using Confidential Solv-Ex Information in the dissemination of false and malicious informationregarding Solv-Ex; and using Confidential Solv-Ex Information as a means to interfere with business opportunities belonging to plaintiffs.
90 Plaintiffs therefore seek to recover their actual damages caused by these defendants' conduct, as well as appropriate punitive damages.
Count Vl
(Aiding and Abetting Breach of Fiduciary Duty)
91. Plaintiffs restate and incorporate the preceding fact allegations.
92. Defendants knew that one or more of them owed fiduciary duties to plaintiffs, including pursuant to the confidentiality agreements. Nevertheless, each defendant provided substantial assistance end encouragementto the breachesofthese duties. They facilitated disclosure of Confidential Solv-Ex Information; misused Confidential Solv-Ex Information for their own gain and to plaintiffs' detriment; disseminated false and malicious information regarding Solv-Ex; and interfered with business opportunities belonging to plaintiffs.
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93. Plaintiffs therefore seek to recovertheiractualdarnages causedby defendants' conduct, as well as appropriate punitive damages.
Count VII
94. 95.
(Unjust Enrichment)
Plaintiffs restate and incorporate the preceding fact allegations.
The Short Seller defendants were enriched as a result of their unlawful attacks on Solv-Ex. They obtained this profit only as a result of intentional deception and their scheme to acquire and misuse confidential information about Solv-Ex, all to assist themselves in a campaign to drive down the price of Solv-Ex shares so that they could reap windfall profits from short sales.
96. The Short Sellerdefendants'knowinglymanipulativeactions were inherently detrimental to plaintif fs. The circumstances are such that in equity and good conscience, the Short Seller defendants should be required to return the profits they reaped from their illegal activities, or their equivalent share value, to plaintiffs.
Count VIII
(Constructive Trust)
97.
98.
Plaintiffs restate and incorporate the preceding fact allegations.
Defendants Quilcap, Quillen, Zweig, Zweig Advisors, Mikles, Miller, Mikles/Miller, and Weir-Jones had fiduciary duties to plaintiffs, which agreed to share Confidential Solv-Ex Information in reliance upon express or implied promises to use the information only for purposes related to financing and to protect the confidentialityof the information. The Short Seller defendants aided and abetted breaches of these fiduciary duties.
99. The Short Seller defendants misappropriated the information they obtained and misused it to their economic advantage, at the expense of plaintiffs. Defendants reaped profits -21
belonging to plaintiffs as a result of this fraudulent activity, and they have used these misappropriated funds for their further benefit.
100. The circumstances are such that, in equity and good conscience, a constructive trust should be imposed in favor of plaintiffs upon all profits the Short Seller defendants reaped from their illegal activities, as well as all profits stemming from these defendants' further use of the misappropriated funds.
Count IX
(Conspiracy)
101. Plaintiffs restate and incorporate the preceding fact allegations.
102. The Short Seller defendants comprised a conspiracy whose purpose was to thwart plaintiffs' efforts to locate financing, including for construction of Solv-Ex's Alberta plant, and thereby to destroy Solv-Ex. In executing their conspiracy, the Short Seller defendants disclosed Confidential Solv-Ex Inforrnation, interfered with plaintiffs' business opportunities, and made false and misleading statements about Solv-Ex.
103. Plaintiff fs therefore seek to recover their actual damages caused by these defendants' conduct, as well as appropriate punitive damages.
Count X
(Violations of New Mexico
Stat. Ann. §§ 58-13B-30 and 58-
13B-3 1)
104. Plaintiffs restate and incorporate the preceding fact allegations.
105. The Deutsche Bank defendants employed a scheme or artifice to defraud in connection with purchases of Solv-Ex stock. They hid their ownership of Solv-Ex stock in order to artificially inflate the value of the stock for their own benefit. They made untrue statements of fact
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in connection with their purchases of Solv-Ex stock. They misrepresented to Solv-Ex the relationship among entitles purchasingits stock end that they had safeguardedSolv-Ex's confidential information.
106. In connectionwith purchases of Solv-Ex stock, the Deutsche Bank defendants engaged in acts, practices, or a course of business which operated as fraud or deceit on Solv-Ex.
107. The Deutsche Bank defendants also employed a deceptive or fraudulent device, scheme, or artifice to manipulate Solv-Ex common stock. In carrying out their scheme, they acquired Solv-Ex stock through false statements and material omissions. The purpose of the scheme was to artificially raise the price of Solv-Ex stock to benefit themselves.
108. Plaintiffs therefore seek to recover their actual damages caused by these defendants' conduct.
Prayer
Plaintiffs request that defendants be cited to appear and answer herein; that plaintiff Solv-Ex Corporation be grantedjudgment against all defendants,jointly and severally, for actual and consequential damages, as well as appropriate punitive damages, pre- and postbudgment interest as allowed by law, attorney fees, costs, and any other appropriate relief; and that plaintiff John D. Hentschel, d/lo/a Charter Oak Capital, be granted judgment against the Short Seller defendants, jointly and severally, for actual and consequentialdamages, as well as appropriate punitive damages, pre- and post judgment interest as allowed by law, attorney fees, costs, and any other appropriate relief
-23-
Dated: December 4, 1998
RODEY, DICKASON, SLOAN, AKIN & ROBB, P.A.
B /l ~ . ~6 C:
Henry M. Bohnhoff
201 Third Street, N.W., Suite
2200
Albuquerque, New Mexico
87103
Telephone: (505) 765-5900
Facsimile: (505) 768-7395
AND
Yin IER & WARDEN, L.L.P.
R. Paul Yetter
Autry W. Ross
600 Travis, Suite 3800
Houston, Texas 77002
Telephone: (713) 238-2000
Facsimile: (713) 238-2002
AND
LAW OFFICES OF KEITH P.
ELLISON
Keith P. Ellison
1100 Louisiana, Suite 4600
Houston, Texas 77002
Telephone: (713) 659-8080
Facsimile: (713) 650-0146
Attorneys for Plaintiffs
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