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Litigator Funder Who Helped Underwrite Ecuador Case Settles with Chevron

Law.com - Scott Flaherty 18/02/2015

Chevron Corp.’s lawyers have picked off another target in their campaign against those involved in a lawsuit accusing the oil giant of damaging the Amazon rainforest in Ecuador. On Monday, a key financial supporter of the environmental litigation, Gibraltar-based billionaire James Russell DeLeon, renounced his association with the case.

Chevron settled tort claims against DeLeon in Gibraltar over his funding of an Ecuadorean lawsuit that, in 2011, led to a $19 billion environmental judgment against the oil company, which was later cut to $9.5 billion on appeal.

The deal with DeLeon comes almost a year after U.S. District Judge Lewis Kaplan in Manhattan concluded that Steven Donziger, the lawyer who led the environmental suit against Chevron for villagers in Ecuador’s Lago Agrio region, secured the massive judgment through fraud and racketeering.

Chevron has since taken aim at the plaintiffs lawyer’s supporting cast, including litigation funders like DeLeon and Donziger’s erstwhile cocounsel Patton Boggs, which in May disclosed a $15 million settlement to resolve the fraud and malicious prosecution claims that Chevron had brought against the firm in May 2013. DeLeon was accused in the Gibraltar suit of turning a blind eye to the alleged fraud.

Under the settlement announced Monday, DeLeon, an online gaming magnate who previously disclosed in the Gibraltar lawsuit that he had provided about $23 million to back the Ecuadorean litigation, agreed to give up his seven percent stake in the $9.5 billion judgment. He also disassociated himself from the litigation and Donziger.

“We are pleased that yet another long-time supporter has ended his association with this scheme,” Chevron general counsel R. Hewitt Pate said in a statement on Monday announcing the deal with DeLeon. The company was represented in Gibraltar by global litigation boutique Kobre & Kim, while lawyers at Gibson, Dunn & Crutcher have led Chevron’s fraud case against Donziger in U.S. district court in Manhattan.

In a public statement agreed to as part of the settlement, DeLeon said he started funding the Ecuadorean case in 2007, “in the good faith belief” that he was “supporting a worthy cause.” After reviewing Kaplan’s March 2014 fraud and racketeering opinion, however, DeLeon concluded that Donziger and other representatives of the Lago Agrio plaintiffs misled him about “important facts.”

“If I had known these facts, I would not have funded the litigation. I no longer seek or wish to receive any financial benefit from this matter,” DeLeon’s statement said. DeLeon was represented in the case by David Spears of Imes & Spears. Spears also represented an investment vehicle that DeLeon controls called Torvia Ltd., which is also covered under the Chevron settlement.

The deal with DeLeon closes the book on one aspect of Chevron’s quest to root out those who had a hand in the Ecuadorean litigation. But the oil giant’s campaign is still active on several other fronts. It has cases pending in Gibraltar against another financial supporter of the Ecuadorean lawsuit, Woodsford Litigation Funding Ltd., and against Amazonia Recovery Ltd., a Gibraltar-based company established by Donziger to distribute funds from the Ecuadorean judgment.

Donziger told us in an email on Tuesday that he rejects DeLeon’s statement that “I or anybody else on our team misled him in any way, shape, or form.” Donziger is pursuing an appeal of Kaplan’s fraud and racketeering decision.
 

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