ChevronTexaco 's important victory: New York Court finds Steven Donziger guilty of racketeering

Chevron – Ecuador litigation:   New York Court finds lawyer Steven Donziger and his allies guilty of Racketeering

Case 1:11-cv-00691-LAK-JCF Document 1874 Filed 03/04/14 Page 1 of 497

A 497 page opinion of Judge Lewis Kaplan, a New York District Judge, supports a verdict that represents a rotund victory for ChevronTexaco in its case against lawyer Steven Donziger and his allies, the plaintiffs of the Lago Agrio, Ecuador litigation against the U.S. oil company.

According to the verdict Steven Donziger will not be able to enforce the Lago Agrio, Ecuador verdict against ChevronTexaco in the United States and will be prevented from benefitting from any further action against Chevron in connection with this case.  Says Judge Kaplan in his opinion: “They [the Lago Agrio plaintiffs], LAP, submitted fraudulent evidence. They coerced one judge, first to use a court-appointed, supposedly impartial, “global expert” to make an overall damages assessment and, then, to appoint to that important role a man whom Donziger hand-picked and paid to “totally play ball” with the LAPs. They then paid a Colorado consulting firm secretly to write all or most of the global expert’s report, falsely presented the report as the work of the court-appointed and supposedly impartial expert, and told half-truths or worse to U.S. courts in attempts to prevent exposure of that and other wrongdoing. Ultimately, the LAP team wrote the Lago Agrio court’s Judgment themselves and promised $500,000 to the Ecuadorian judge to rule in their favor and sign their judgment. If ever there were a case warranting equitable relief with respect to a judgment procured by fraud, this is it.”.

The opinion adds: “one Ecuadorian legal team member [for the Lago Agrio plaintiffs] , in a moment of panicky candor, admitted that if documents exposing just part of what they had done were to come to light, “apart from destroying the proceeding, all of us, your attorneys, might go to jail.”.

The verdict claims that Steven Donziger and his allies behaved like gangsters in their efforts to extort billions of dollars from ChevronTexaco. His allies included P.R. specialists, Technical Companies such as Denver- based Stratus (settled with Chevron out of court), lawyers,  consultants, “environmental” organizations such as Amazon Watch,  investors trying to get a piece of the booty, even the judges. In short, an unprincipled legion of bounty hunters. Donziger stood to pocket $600 million if he had succeeded.  

The Lago Agrio, Ecuador litigation started in 2003. In a cynical fashion the lawyers working for Donziger at this stage explained their objectives as follows:  “to exceed the $6 billion figure, while still passing the

laugh test.”  DX 731 (Apr. 15, 2006 Email from D. Fisher to S. Donziger and A. Page), in page 50 of the opinion.

When I became interested in this case I first met with Ms. Karen Hinton in Washington DC, the person who was handling the P.R. work for Steve Donziger and the rest of the plaintiffs.  I wanted to hear the two sides and eventually did so. After she explained their position to me I told her that, as a petroleum geologist with some knowledge of the Ecuador oil industry, I felt they had a weak case and that the Court expert, Mr. Richard Stalin Cabrera, did not seem qualified to evaluate this complex case, judging by his credentials and performance. Little did I know that Mr. Cabrera had met several times with Donziger’s team before being appointed “expert” and that Mr. Cabrera’s report would actually be written by the Donziger’s  team!. Judge Kaplan says:  “it was obvious that the plaintiffs had already predetermined the findings of the global assessment, that they themselves would write a report that would support their claim for billions of dollars against Chevron and would simply put Mr. Cabrera’s name on it. The purpose of the meeting was to establish all the conditions for controlling and managing the expert’s work, in secret, in accordance to the plaintiffs’ interests”, page 79 of the opinion.  In 2007, Mr. Cabrera had the gall to say the following:

“I should clarify that I do not have any relation or agreements with the plaintiff, and it seems to me to be an insult against me that I should be linked with the attorneys of the plaintiffs”. But he was! 

In this first and only meeting I told Ms. Hinton, in all candor, that I felt they should settle with Chevron and that Petro Ecuador should be part of the settlement, even if not mentioned as co-defendant in the litigation. She asked if I had any figure in mind and I said one billion dollars, to be contributed half and half, an arbitrary amount I admit, but one that, based on my experience in the oil industry, I felt adequate for the size of the environmental problem in the Oriente of Ecuador. I could see she was shocked at an amount she considered too low. At the time I did not realize they were not looking for justice but looking for big money. 

Rafael Correa won the presidency of Ecuador while the litigation against Texaco was going on and immediately threw his weight against the oil company. “THE PREZ WAS VERY UPSET AT TEXACO. HE ASKED THE ATTORNEY GENERAL TO DO EVERYTHING NECESSARY TO WIN THE TRIAL AND THE ARBITRATION IN THE U.S. . . . THIS SATURDAY HE WILL REPORT ON THE MATTER ON NATIONAL TELEVISION, OFFICIALLY NOW. AT THAT TIME HE WILL CLARIFY SEVERAL POINTS IN ORDER NOT TO HURT US

IN THE TRIAL.  In a further note, the LAPs’ media agent wrote that President Correa “GAVE US FABULOUS SUPPORT. HE EVEN SAID THAT HE WOULD CALL THE JUDGE.”, page 121 of the opinion.

 “President Correa took to the radio on April 28, 2007, denouncing the “homeland selling” lawyers defending Chevron-Texaco, “who for a few dollars are capable of selling souls, homeland, family, etc.,”, page 122 of the opinion.

Donziger wrongly assumed, thinking of the Las Vegas movie, that what happened in Ecuador would stay in Ecuador. However, the dealings with Cabrera and the murky behavior by the Denver consultants, Stratus, leaked and became known by Chevron. From then on the whole disaster started to unravel. After finding out about this, Mr. J. Kohn, one of the investors funding the plaintiffs, severed his ties with Donziger. He said: “I relied on Mr. Donziger to tell me the truth about what was going on in the Ecuadoran litigation . . . and I now know that Mr. Donziger did not tell me the truth. It is now clear to me that Mr. Donziger deceived and defrauded me, and that, as a result, we continued to pay millions of dollars to that litigation that we never would have paid had we known the truth.”, page 163 of the opinion. 

After he lost Kohn’s support Donziger managed to obtain the support of  Washington’s law firm Patton Boggs and finance organization Burford Capital. Patton Boggs became heavily involved in the venture and persuaded Burford to put their money in the case. Donziger agreed that “Burford’s return on its investment would be paid from the Lago Agrio plaintiff’s share of any recovery on a judgment net of the portion allocated to the attorneys’ fees”. In other words he was protecting his money.

The judge who claimed to have written the verdict, Nicolas Zambrano, lied and was found to be bribed by the plaintiffs. Judge Kaplan said:  “the Court finds that Zambrano did not write the Judgment issued under his name. He was astonishingly unfamiliar with important aspects of its contents. His testimony at trial was evasive and internally inconsistent…. his responses and explanations at trial varied from one minute to the next…. “

So, if Zambrano did not write the verdict, who wrote it? : an analysis made by Court experts concluded that the verdict was written by the team of Lago Agrio plaintiffs, this is, the Donziger team, pages 200-220 of the opinion.

According to the judge Donziger was evasive repeatedly at his deposition in the action against him, his deposition in this case, and again at trial. In his June 2013 deposition in this case, Donziger replied “I don’t know” or “I don’t recall” to more than 180 questions, nearly every substantive question posed to him. And during his cross-examination at trial, Donziger so responded over one hundred times. The judge adds: “The likelihood that Donziger’s memory was as bad as these answers suggested is very small”, page 265.

In reaching his verdict Judge Kaplan stated, giving detailed reasons, that Steven Donziger and his team had incurred in ethical violations: bribery, coercion, corruption, deception, ghost writing and fraud, pages 330-339.

Furthermore the judge details how Donziger engaged in money laundering, obstruction of justice and witness tampering, pages 380-390.

The judge concludes:

“All of the property that Donziger now has and which he hereafter may receive as a result of the Judgment are and will be the products of the Judgment obtained in consequence of his predicate acts of racketeering”.

The Court also found that the judicial system in Ecuador is below standards and quoted President Correa as saying: “the Judicial Branch depends on the Executive Branch. If I don’t give it money it has no means to act”.  To illustrate this assertion the judge further quoted from government officers, as follows: “The president of the Civil and Criminal Commission of the National Assembly stated in 2009 that “[w]e have a justice administration system that has entirely collapsed.”.  And in June 2010, the Judicial Council publicly declared that “the Judicial Branch is not independent,” and noted “serious risks” that affect the ability to dispense justice.

The verdict represents a remarkable triumph for ChevronTexaco. I am gratified about this verdict because I like to see justice win. This case was used and misused by political extremism, by ignorant movie stars, by ideologically poisoned organizations, by corrupt politicians, to blame a company for wrong doings that another company had committed. A group of gangsters tried to get billions of dollars in their pockets through fraud.

               They ( almost)  got away with it.