Donziger Is Thumbing His Nose At Injunction, Chevron Says

In a memorandum of law filed Oct. 1 but made public Wednesday, Chevron writes that Donziger has raised more than $2.4 million by selling interests in the judgment, with at least $1.5 million ending up in his and his wife’s bank accounts.

Law360 - Mike Curley 26/10/2018

Chevron Corp. has asked a New York federal judge for strong sanctions against attorney Steven Donziger, saying he has been selling interests in a fraudulent $9.5 billion judgment in Ecuador over pollution in the Amazon for his own gain despite court judgments prohibiting him from profiting from the judgment.

In a memorandum of law filed Oct. 1 but made public Wednesday, Chevron writes that Donziger has raised more than $2.4 million by selling interests in the judgment, with at least $1.5 million ending up in his and his wife’s bank accounts.

In doing so, he has willfully and repeatedly violated U.S. District Judge Lewis Kaplan’s RICO injunction, refused to transfer funds from the judgment to Chevron, and posted online that court decisions against him “deserve no deference by any authority.” The company said in September that Donziger should be jailed for refusing to transfer the funds.

“Donziger’s brazen acts of contempt continue the pattern of racketeering for which he was found liable, threaten the integrity of this court’s rulings and are causing further harm to Chevron,” the company wrote. “Severe sanctions are warranted to secure Donziger’s compliance and compensate Chevron for its injuries because he has shown that he will not comply until compelled to do so.”

Judge Kaplan in 2014 ruled that the $9.5 billion judgment in Ecuador was fraudulently ghostwritten by Donziger and other members of his legal team, who had bribed a judge to sign off on it. An international tribunal ruled similarly in the Hague in August.

Despite the injunction, Chevron wrote that Donziger has sold interests in the judgment to several investors, citing evidence and declarations from his associates that the company said “eviscerates” his claims that he’s raising money for his clients’ legal fees, but instead showing he used the money for his own bills — including $54,000 in American Express charges, a $14,000 gym membership and a $5,000 bar tab — as well as an “out of court” “non-legal” strategy to put pressure on Chevron.

While Donziger has told the court the funds being raised are to pay his legal fees, Chevron wrote that his Ecuadorian clients have told various courts that they cannot afford ongoing court costs and that the agreements to sell the interests are made without their input, and the Amazon Defense Coalition, his remaining client, has no litigation to fund.

Chevron wrote that according to an accounting analysis, since 2016, nearly 95 percent of the funds going into Donziger’s personal and firm accounts came from investors buying interests in the judgment. According to Chevron’s memorandum, he concealed the funding sources by routing transfers through Canadian lawyers.

Finally, Chevron accused Donziger of using shares in the judgment to fund an “extortionate” campaign against Chevron, paying off activists, celebrities and others to create bad press toward Chevron.

These efforts include the upcoming “Indigenous Solutions for Environmental Challenges” conference in Banff, Alberta, for which Chevron said Donziger budgeted $200,000 and will include as speakers many of the activists he paid off with shares from the judgment.

Kathleen Mahoney, who’s organizing the conference, told Law360 that Donziger is not one of the donors, and that the conference is academic and seeks to use the context of the case giving rise to the Ecuador judgment to consider the role of judicial remedies for violations of the rights of indigenous and other affected peoples.

Donziger told Law360 in an email that Chevron’s memorandum was “wholly misleading” and part of a “demonization” campaign, adding he has received “modest fees” for his work in the case. He added that he is preparing a response for the court that he intends to file by Wednesday.

“All expenditures described by Chevron in its motion are personal expenditures made by me after being paid by my clients out of funds they raised for the case with my help,” he said. “They do not violate the terms of the RICO judgment or clarification order. I never raised funds to pay myself; I helped my clients raise funds out of which they paid general expenses for the litigation against Chevron and the accountability campaign used to pressure the company to meet its legal obligations to the people it harmed in Ecuador.”

Donziger said all his work has been to enforce the Ecuador judgment, which he said was affirmed in whole or in part by three appellate courts in Ecuador, and by three layers of appellate courts in Canada, including by the entire supreme courts of both countries.

Donziger further argued that Judge Kaplan’s decision was flawed and based on “paid-for and false” testimony.

Specific to the allegations in the memorandum, Donziger said the figures used by Chevron were “wildly off base,” with a significant chunk of the funds going into his accounts being paid out to attorneys and consultants for the Ecuador case or for another case altogether, while he earns “very little” in fees fighting the Chevron suit.

In a press release issued Thursday, Donziger further accused Chevron of intimidating Katie Sullivan, an associate of his, into signing the affidavit cited by Chevron in its memorandum, saying it was made up of false statements intended to undermine the Ecuador settlement.

According to a transcript of her deposition, Sullivan said she “feared the unknown” that came with the litigation surrounding Donziger and hoped that her part in it would be over quickly so she could get back to her normal life.

She admitted in the deposition that she did not have specific recollection of some actions attributed to Donziger in the affidavit — specifically, assertions that he directed the Amazon Defense Coalition to disburse funds to certain activists, and that he told investors a press campaign would help hold Chevron accountable.

While the draft of the affidavit was prepared by attorneys for Chevron, Sullivan said in the deposition that the affidavit was correct and true, she was able to suggest edits and deletions to put things in her own words — most of which the attorneys incorporated — and that she “put in a lot of effort to make sure that words were not put into my mouth.”

Sean Comey, a spokesperson for Chevron, said all the statements made in the motion are supported by hard evidence.

“All claims from Donziger and his co-conspirators should meet the same standard or be dismissed as what they are — efforts to deflect attention from the overwhelming evidence of his long-running pattern of lawless behavior, which is documented in Judge Kaplan’s exhaustive RICO decision, and affirmed by the Second Circuit Court of Appeals,” he told Law360 in an email. “As described in Chevron’s contempt motion, the evidence shows that this pattern continues to the present day and that Donziger has used his long-running scheme to enrich himself and his supporters.”

Sullivan could not immediately be reached for comment Thursday.

Chevron is represented by Randy M. Mastro, Andrea E. Neuman and William E. Thomson of Gibson Dunn & Crutcher LLP, and Herbert J. Stern and Joel M. Silverstein of Stern Kilcullen & Rufolo LLC.

Donziger is representing himself.

The case is Chevron Corp. v. Donziger et al., case number 1:11-cv-00691, in the U.S. District Court for the Southern District of New York.

--Additional reporting by Caroline Simson. Editing by Adam LoBelia.