Spokane law firm Stamper Rubens PS is representing seven people, three of them Spokane residents, who claim in a federal lawsuit that they were misled into investing hundreds of thousands of dollars in an oil-exploration venture off the coast of Israel.
However, an attorney representing individual defendants named in the suit vehemently denies the allegations, and an attorney representing a defendant company involved in the oil-exploration venture says he plans to seek dismissal of the suit on jurisdictional and statute of limitations-related grounds.
The lawsuit was filed in July in U.S. District Court here and amended earlier this month to add more plaintiffs. It accuses PetroMed Inc., based in Belize, and a number of affiliated companies and several principals in those companies, three of whom are King County residents, of criminal profiteering, securities fraud, unjust enrichment, and other wrongful acts.
The plaintiffs in the case include Donald and Carol Lewis and their daughter, Cynthia Rogers, all of Spokane, as well as David Solomon, Henri Moreau, Howard Crosby, and Omar Fattah. Solomon, Moreau, and Crosby all live elsewhere in Washington, and Fattah, who invested the largest sum in PetroMed, lives in Mexico. Altogether, the suit indicates, they invested more than $633,000 in PetroMed.
They claim in the suit that they invested startup capital in the PetroMed venture with the expectation that their investment would result in the acquisition of oil drilling rights and the beginning of exploration work off the coast of Israel. Instead, they allege, the defendants engaged in an elaborate conspiracy to defraud them. Along with the various PetroMed entities, principals named as defendants included Russell Koch, Lyle Durham, and CPA Thomas Harris, all of King County, and Hagai Amir, of British Columbia.
Two weeks ago, following a hearing, a federal judge denied a request by the plaintiffs in the case for a preliminary injunction prohibiting PetroMed from transferring or selling any company assets.
The ruling came after a temporary restraining order that the plaintiffs had won expired.
J.J. Sandlin, a Yakima-area attorney who represents Koch, Durham, Harris, and Amir individually, denies allegations that the defendants essentially were running a Ponzi scheme. Also, Sandlin contends that efforts by the plaintiffs to halt work on the oil-exploration venture were self-defeating in that they put the investors' money at further risk.
He says PetroMed is making progress on the project, with an exploration ship currently working off the Israeli coast, and adds, "This is a very exciting project that may turn the entire economic picture of the Middle East upside down. It looks very promising."
John J. Tollefsen, a Seattle-area attorney who represents PetroMed, says he believes the suit violates the statute of limitations and that there are no legitimate issues that warrant it being tried in federal court, so he plans to seek its dismissal on those grounds.
Michael Church, an attorney at Stamper Rubens, says attorneys for the two sides are scheduled to meet with a federal judge at an initial conference next month to decide on discovery, or information-gathering, deadlines, and to set a tentative trial date.
The plaintiffs alleged in their suit that they invested in PetroMed Inc., PetroMed PLLC, and PetroMed Corp. between about 2004 and 2008, based on various representations by Koch, Durham, and Amir that the companies had obtained or were close to obtaining permits for seismic drilling and were poised for exploration.
Some plaintiffs say they also were assured that PetroMed stock soon was to be listed on a public stock exchange, after which their shares would be worth a lot more money, and that a $450 million bond offering to fund operations had been completed or was imminent.
The suit claims that the defendants wrongfully transferred PetroMed assets between various affiliated entities without shareholder notice or approval and not on a share-for-share basis, with intent of defrauding the investors.
The suit seeks unspecified damages, with the full amount to be determined at trial, but asks that actual damages be tripled based on Consumer Protection Act violations and also seeks a civil penalty of up to $250,000.
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