RE: Christopher Byron->Imagis legal beagle growls at Stockwatch
2002-09-27 10:17 PT - Street Wire
LEASHLESS IN VANCOUVER
by Lee M. Webb
Imagis Technologies Inc. litigator Howard Shapray of Shapray Cramer & Associates, who filed a libel suit on behalf of the Vancouver-based biometric company against Red Herring Communications Inc. and veteran journalist Christopher Byron on Sept. 10, has taken issue with a Sept. 16 Canada Stockwatch article. The Stockwatch article examined the statement of claim against Red Herring and Mr. Byron and other public Red Herring allegations made by Imagis.
In familiar bombastic style, Mr. Shapray unleashed his objections to the Stockwatch article in a Sept. 19 letter. "I am writing you concerning your recent column entitled, 'Forthwith and Hogwash,'" Mr. Shapray began. "I assume that the 'Forthwith' refers to the sometimes bombastic legalese found in the Statement of Claim that we lawyers are a slave to in libel actions. However, it appears that the 'Hogwash' may in fact be a reference to the contents of your own 'piece.'"
In fact, the "Hogwash" was a reference to something else entirely. As noted in the article, the term was borrowed from a colourful turn of phrase used by Mr. Shapray. The Vancouver litigator once characterized claims made in connection with an action against one of his many promoter clients as "utter hogwash in a tuxedo."
Mr. Shapray informed Stockwatch that he wanted to "set the record straight on two points." Mr. Shapray's first objection was with respect to Stockwatch's characterization of the Vancouver litigator's client list, specifically, the claim that it included many well-known Howe Street promoters.
"I do not believe that it was correct to say that my client list includes 'many well-known Howe Street promoters,'" Mr. Shapray wrote. "I dare say that it has included a few, over the years. However, I also suspect, although I am not keeping score, that I have probably sued more 'well-known Howe Street promoters' than I have represented. So much for Shapray trivia which appears to fascinate you and, I am sure, your readers."
At the possibly very slight risk of bruising Mr. Shapray's ego, Stockwatch cannot attest with the same certainty that "Shapray trivia" fascinates readers; and it is hardly a matter of fascination for Stockwatch. Mr. Shapray has simply recently become one of the interesting characters involved with Imagis. As for the lawyer's client list, Stockwatch is satisfied that it does include many well-known Howe Street promoters.
Mr. Shapray may well have sued more Howe Street promoters than the many he has represented. On occasion the Vancouver litigator has sued one Howe Street promoter while representing another Howe Street promoter. For example, Mr. Shapray sued promoter Shafiq Nazerali-Walji, also known as Shafiq Nazerali, on behalf of promoter Rene Hamouth. Mr. Nazerali-Walji, an Imagis consultant, is the brother of Imagis founder and current director Altaf Nazerali.
Mr. Hamouth, a Vancouver promoter with a checkered history who was acquitted of stock manipulation charges in connection with Penway Explorers Ltd. in 1993, evidently had a falling-out with Mr. Nazerali-Walji and a cast of Howe Street veterans over the aborted vend-in of Zeolite Mira S.R.L. to Corsaire Inc., one of Mr. Hamouth's promotions. Mr. Shapray filed the lawsuit against Mr. Nazerali-Walji on behalf of Mr. Hamouth in March of 1998.
The defendants in the lawsuit included Mr. Nazerali-Walji, his offshore company, First Capital Invest Corp., Ikon Ventures Inc., one of Mr. Nazerali-Walji's OTC Bulletin Board promotions, and convicted fraudster Nelson Skalbania and his offshore company, Lyths & Hangers Ltd. Brokers named in the lawsuit include Ralph Olson and his Colorado-based brokerage, Cohig & Associates, mobster broker Jean Claude Hauchecorne, later banned for 20 years by the British Columbia Securities Commission (BCSC), Mr. Hauchecorne's colleague, Carlo Rahal, and the brokerage they worked for, Pacific International Securities, now preparing for a landmark BCSC hearing to begin on Oct. 7.
The lawsuit also mentioned Anker Bank, August Roth Bank and Raifinanz AG, three Swiss operations that allegedly provided anonymous trading services to Mr. Nazerali-Walji. Mr. Hamouth also linked Mr. Nazerali-Walji to legendary boiler room operator Irving Kott and to BCSC-banned promoter Eugene Sirianni, now living in Switzerland.
Mr. Hamouth accused the key players in the aborted Corsaire deal, including Mr. Nazerali-Walji, of a scheme of misappropriation of opportunity and of engaging in a short-selling assault on Corsaire. The defendants denied the substantive allegations. Mr. Hamouth's action against Mr. Nazerali-Walji ended in a consent dismissal without costs to either party on April 16, 1999, closing that particular door on any further insights into intriguing Howe Street shenanigans.
A year before filing the lawsuit on behalf of Mr. Hamouth, Mr. Shapray represented Atlas Capital Group Ltd., headed by Hanif Mawji, in an action against Mr. Nazerali-Walji. The other defendants in the lawsuit filed 1997 included Mr. Nazerali-Walji's ZMAX Corp., and offshore entities Anker Bank, Bank Sarasin & Co., Interallianz Bank, Credit Lyonnais (Suisse SA) Rahn & Bodmer, Credit Suisse, Banca del Gottardo, BIL Banque International a Luxembourg (Suisse) SA, Darier, Hentsch & Cie., Darier Hentsch Zurich AG, Ueberseebank AG, Raifinanz AG and Valor Invest Ltd.
As Mr. Hamouth would do the following year, Mr. Mawji linked Mr. Nazerali-Walji to the notorious paperhanger Mr. Kott. "Nazerali's involvement in shady 'boiler room' operations was not confined to his association with Kott in Amsterdam," Mr. Mawji claimed in an affidavit, identifying Mr. Nazerali-Walji by his other known name. "Nazerali himself told me of having been deported from Uruguay in the 1980s because of his operation of a boiler room in Montivideo."
Mr. Mawji went on to express his belief that Mr. Nazerali-Walji would even turn on his close associates. "Based upon his prior conduct, I believe that Nazerali will be prepared to engage in dishonesty or improper conduct, even at the expense of those who have friendly relations with Nazerali," Mr. Mawji claimed.
Mr. Nazerali-Walji denied the alleged association with Mr. Kott. "I have not been closely associated with Mr. Irving Kott or been involved or connected with any alleged fraudulent activities by Mr. Kott," he claimed. He also denied being deported from Uruguay or having ever been jailed anywhere. "I never told Mr. Mawji anything of the kind," Mr. Nazerali-Walji said.
As would subsequently happen in the Corsaire lawsuit, the action against Mr. Nazerali-Walji by Allied Capital was quietly resolved. The lawsuit was dismissed by consent on July 10, 1997, and the court file was subsequently sealed.
Having twice sued Mr. Nazerali-Walji at least twice on behalf of clients who made serious allegations of misconduct against him in court documents, Mr. Shapray is now representing Imagis, a company with which the Vancouver promoter with numerous offshore connections is closely associated. Perhaps it is not surprising that Mr. Shapray does not keep score of his clients.
After registering his objection with respect to Stockwatch's characterization of his client list, Mr. Shapray turned to his second point, this one involving the Red Herring libel action. As reported by Stockwatch, the statement of claim filed by Imagis notes that Mr. Byron's article appeared on Red Herring's Web site and also on MSNBC's Web site. "Despite the warnings and presentation of factual information to refute the false claims, Red Herring refused to publish any retraction or remove the Article from Red Herring's website, though MSNBC did so forthwith," Imagis alleged.
Imagis made much the same claim in a Sept. 12 news release. "It should be noted that MSNBC which originally carried the article that had been posted on Red Herring's Web site, immediately withdrew it once the company informed MSNBC of the factual inaccuracies and in the article," the company stated. "However, after the company notified Red Herring of the facts and identified the defamatory imputations contained in the article, Red Herring published the article in its monthly magazine thereby ensuring wider circulation and causing further damage to the company."
Stockwatch reviewed an Aug. 15 letter from MSNBC's lawyer, Kraig Baker of Davis Wright & Tremaine, to Imagis that is clearly at odds with Imagis's claims regarding the removal of Mr. Byron's article from MSNBC's Web site.
"We have been asked to respond to your letter of Aug. 13, 2002, regarding the MSNBC.com posting of the Red Herring article written by Christopher Byron," Mr. Baker wrote. "MSNBC Interactive has given serious consideration to your concerns contained in the Aug. 12, 2002 letter sent to Red Herring. However, based on our review of the article and the applicable law, a correction is not warranted and, indeed, would only bring further public attention to the matters raised in the article.
"While we don't believe that there is a basis for the publication of a correction, as part of our normal administrative procedures with respect to the posting of articles such as the Red Herring article, this article was removed from the MSNBC.com website on August 13, 2002 and should be removed from all servers by August 14, 2002. In addition, pursuant to our standard procedures, there will be no continuing links to the August 5, 2002 article on the MSNBC.com website nor will the article be accessible using the search function on the MSNBC.com website."
In addition to reviewing the letter, which clearly states that the article did not warrant any correction and, further, was removed as part of MSNBC's "normal administrative procedures," Stockwatch contacted Mr. Baker. The MSNBC lawyer was specifically asked whether the removal of Mr. Byron's article was at all related to the complaint from Imagis. His answer was unequivocal. "This article would have come down whether Imagis had sent the letter or not," Mr. Baker said.
Evidently Mr. Shapray did not like either the Stockwatch review of the MSNBC letter or the report of Mr. Baker's unequivocal response. "As to the issue of MSNBC and its response, it is apparent that somebody has provided you with a copy of the letter from Mr. Kraig Baker of Davis Wright & Tremaine that was delivered to my client last month," Mr. Shapray wrote on Sept. 19.
Mr. Shapray is perhaps still labouring under the mistaken notion that a Stockwatch reporter has some special association with Red Herring or Mr. Byron. In an Aug. 6 letter, Mr. Shapray was quite explicit about an alleged association, remarking that a recent event was making it very difficult for him to convince his client, Imagis director Treyton Thomas, to respond to questions posed by a Stockwatch reporter. "The event in question is the appearance of an article, authored by Mr. Christopher Byron, in Red Herring, which has a very distinct aroma of your direct collaboration," Mr. Shapray wrote.
In the same letter, Mr. Shapray, who had informed Stockwatch on July 25 that he did not represent Imagis, suggested that Mr. Byron's article might be actionable. Before the end of August, Mr. Shapray was representing Imagis and on Sept. 10 he filed the libel suit against Red Herring and Mr. Byron.
On Sept. 13, Mr. Shapray delivered another piece of correspondence to a Stockwatch reporter, advising that he was acting as counsel for Imagis. "I believe that you have material evidence relating to the matters in issue in this Action," Mr. Shapray wrote. "In addition to your testimony, I believe that you may have physical evidence, in the form of notes and/or recordings of communications with Mr. Byron and/or others associated with him pertaining to the subject matters of the Red Herring article." The lawyer requested that immediate steps be taken to preserve any relevant evidence.
Mr. Shapray cited Rule 28, advising a Stockwatch reporter that he could be "compelled to answer certain questions and provide information," before going on to pose a series of questions. While neither Red Herring nor Mr. Byron has yet filed a notice of appearance, let alone a statement of defence, Mr. Shapray pushed for responsive answers within four days. On Sept. 17, the Imagis litigator was advised that a Stockwatch reporter would take his request under advisement.
"I do not object to providing you with a reasonable opportunity to take legal advice on your legal obligations, however, the need to preserve evidence in a case such as this is pressing," Mr. Shapray replied on Sept. 18. Perhaps troubled by dark imaginings about whirring paper-shredders and midnight trips to a distant dumpster, the agitated Mr. Shapray requested a response within two days. "Failing a satisfactory reply by that time, you may expect that I will bring a motion to the court, and seek the appropriate relief, at the earliest practicable opportunity."
Meanwhile, Stockwatch does indeed have a copy of Mr. Baker's letter to Imagis. In fact, many people undoubtedly have a copy. The letter was in the public domain, available to anyone with Internet access, which is exactly where Stockwatch obtained a copy of the correspondence. Interestingly, the letter was not placed in the public domain by Mr. Shapray's client, Imagis, which instead just offered its wobbly spin on MSNBC's response. On Sept. 19, Mr. Shapray provided some more spin.
"I have subsequently been in communication with Mr. Baker over my client's interpretation of his letter and certain other objectively observable facts that contradict the interpretation placed on it by Red Herring and Stockwatch," Mr. Shapray wrote. "After giving a particular version of events to you, it appears that Mr. Baker has now been muted. I say this because Mr. Baker tells me that his client does not want to offer any explanation of the fact that other, rather old Byron/Red Herring articles, continue to appear on the MSNBC server, while the article in question was promptly removed."
Setting aside the imputation that Mr. Baker might be less than straightforward, if the MSNBC lawyer has "been muted," he left the unleashed Mr. Shapray with a distinct advantage. The Vancouver litigator seized the opportunity.
"If it is simply routine 'business' as usual to remove Red Herring articles from MSNBC's servers, so quickly, why has MSNBC declined to explain the phenomenon of why articles written by Mr. Bryon for Red Herring several months ago still appeared on MSNBC servers today?" Mr. Shapray wondered in his Sept. 19 letter. "Might it be, Mr. Webb, that MSNBC had simply, as a matter of expediency, decided to remove any articles from its website and archive server if there is a controversy over their content that MSNBC does not want to become involved with? In my view, in light of the continued appearance of other Byron/Red Herring articles on MSNBC.com that is a more likely explanation of the truth than the version that you would have your readers swallow."
While "swallow" is not a word that Stockwatch would normally use with respect to its readers, those readers can make their own determination about what to swallow. If they like, they can ingest Mr. Shapray's tale about the spineless folks at MSNBC who, by his account, publish articles and then remove any evidence of their existence if the subject of the article complains. Not only that, Mr. Shapray's carefully couched tale seems to insinuate, they perhaps even lie about their practices.
Stockwatch does not presume to speak for MSNBC. Stockwatch provided a report substantiated by a letter from MSNBC's lawyer and subsequently corroborated in an interview with Mr. Baker. Stockwatch has no reason to believe that either the letter or the information provided by Mr. Baker was misleading.
Mr. Shapray is correct in pointing out that other "rather old Byron/Red Herring articles" appeared on the MSNBC server as of the date of his letter. Indeed, there were three such articles when Stockwatch checked. While Stockwatch cannot speak for MSNBC, a simple explanation for that "phenomenon" may very well be that the articles were just inadvertently left on a server, rather than being removed as is the stated usual practice.
Other "objectively observable facts" support Mr. Baker's claim that so-called "partner articles" published by MSNBC, such as Red Herring articles, are removed after a certain period of time as part of MSNBC's normal administrative procedures. Mr. Byron has written 17 Red Herring articles that were also carried by MSNBC as part of its news content. As of the date of Mr. Shapray's letter, 14 of those articles no longer appeared on MSNBC's servers. Perhaps, contrary to Mr. Shapray's speculative musings, the 14 articles were removed as part of the normal administrative procedures, as claimed by MSNBC, and the three articles still available on the site were an aberration; in other words, they were simply missed.
MSNBC also carries partner articles from Newsweek, The Wall Street Journal and The Washington Post, among others. Those articles are also removed after a certain time as part of MSNBC's normal administrative procedures, though perhaps an article or two might still be found on MSNBC's servers.
It remains to be seen whether Mr. Shapray will have the opportunity or the inclination to unleash his theory regarding MSNBC's conduct in court. Meanwhile, Stockwatch can address the closing expectation in Mr. Shapray's Sept. 19 letter.
"I expect, that should you decide to do another story about me or the Imagis lawsuit, you will not make the same mistakes twice," Mr. Shapray wrote. The bombastic Mr. Shapray need have no concern on that score. If they occur, Stockwatch is quite prepared to acknowledge errors and is diligent in ensuring that they are not repeated. However, Stockwatch is satisfied that there were no mistakes in the first place with respect to the two issues raised by the Vancouver litigator.
With 91,400 shares changing hands on the TSX Venture Exchange, Imagis closed at an objectively observable $1.18 on Sept. 26.
Comments regarding this article may be sent to lwebb@stockwatch.com.
(More information regarding Imagis Technologies is available in Canada Stockwatch articles published on March 7, 11, 15, 25, 27 and 28; April 2, 9 and 16; May 17, 23 and 30; June 4, 11, 18, 26 and 28; July 3, 12 and 18; and Sept. 12, 13, 16, 20, 23 and 24, 2002.) |
