Jessica M. Karmasek Feb. 18, 2015, 10:45am



SAN RAMON, Calif. (Legal Newsline) - Chevron Corp. said Monday it has settled with the principal funder of the fraudulent lawsuit against it in Ecuador.




The oil giant brought claims against James Russell DeLeon in Gibraltar, where DeLeon maintains a residence, for his role in funding and advancing the lawsuit.




 




Under the settlement, DeLeon, an American online poker magnate, has resolved those claims by withdrawing financial support from the Ecuador litigation and assigning his interests in the litigation to Chevron. Chevron, in turn, has agreed to release all claims against DeLeon.




 




In filings with the Gibraltar court, DeLeon previously disclosed having invested nearly $23 million in the case in exchange for about 7 percent stake in the $9.5 billion Ecuadorian




judgment against Chevron.




 




DeLeon’s funding entity, Torvia Limited, and his associate, Julian Jarvis, also are parties to the settlement, according to Chevron.




 




“We are pleased that yet another long-time supporter has ended his association with this scheme,” said R. Hewitt Pate, Chevron’s vice president and general counsel. “Chevron will continue to hold accountable those who associate themselves with this fraudulent litigation.”




 




Last March, Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York ruled that the $9.5 billion judgment against Chevron in Ecuador was the product of fraud and racketeering activity, finding it unenforceable in the United States and holding Steven Donziger, the lead lawyer behind the lawsuit, liable for RICO violations.




The judgment also noted DeLeon’s involvement, which included providing the main source of funding for the film Crude. Under the settlement, DeLeon has agreed to assign to Chevron all of his financial interests in the movie.




 




“Commencing in March 2007, I provided funding to support the litigation in Ecuador against Chevron Corporation, in the good faith belief that I was supporting a worthy cause. However, I have since reviewed the March 4, 2014 opinion by Judge Kaplan of the United States District Court for the Southern District of New York setting out the Court’s findings and I have also considered the evidence presented during the trial,” DeLeon said in a public statement. “As a result, I have concluded that representatives of the Lago Agrio plaintiffs, including Steven Donziger, misled me 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 and I have therefore decided to relinquish my entire interest in the litigation to Chevron.”




 




Karen Hinton, spokeswoman for Donziger, said Tuesday while they are disappointed that DeLeon couldn’t withstand Chevron’s “pressure campaign,” his settlement will allow for cleanup of the Ecuadorians’ ancestral lands.




 




“By agreeing to settle with Chevron, Mr. DeLeon has given the rainforest villagers a valuable and much-appreciated gift -- the use of critical funds to litigate their claims over a period of several years at no cost,” she explained. “Mr. DeLeon’s stake in the Ecuador judgment now will be made available to other investors or the affected communities themselves for use in their cleanup once a full recovery of the judgement is achieved.”




 




She said they also “fully expect” Kaplan’s ruling, which was cited in the settlement, to be reversed on appeal.




 




“The Kaplan ruling is factually and legally flawed, was the product of one-sided proceedings in favor of Chevron, and relied heavily on the word of an admittedly corrupt former judge to whom Chevron paid exorbitant sums of money in exchange for false testimony,” Hinton said, adding that Chevron’s willingness to drop all of its claims against DeLeon reflects its “increasingly weak position” in the overall litigation.




 




“Given that Mr. DeLeon has not funded the Ecuador litigation for at least two years, the settlement will have no material impact on the ongoing lawsuits to seize Chevron’s assets around the world to force the company to comply with the Ecuador judgment,” she said.




 




“Unfortunately for Chevron, its expensive retaliation strategy against Mr. DeLeon and others has failed to end the litigation, has only increased the resolve of the affected villagers, and has not diminished the company’s risk from collection actions targeting its assets to ensure compliance with the judgment.”




 




Hinton said the settlement is an “obvious byproduct” of the company’s “intimidation-by-litigation model” that seeks to retaliate against any individual who helped the villagers in their campaign to hold the company accountable for its dumping in Ecuador.




 




“Chevron abusively sued Mr. DeLeon in Gibraltar in 2013 on factual issues that already had been resolved by the courts of the company’s chosen forum of Ecuador. This litigation was an effort to harass Mr. DeLeon into abandoning his support for the vulnerable villagers,” she explained. “After almost two years of expensive litigation in Gibraltar without as much as a trial, and likely facing years of further litigation, Chevron’s strategy as regards Mr. DeLeon worked and he threw in the towel.”




 




Hinton also called out DeLeon for his “false” statement.




 




“Mr. DeLeon personally visited multiple locations in the affected area of Ecuador’s rainforest and met local residents, members of the Ecuadorian legal team, health care workers and community advocates. He also personally observed numerous toxic waste pits that had been abandoned by Chevron,” she said. “He was kept apprised at all times of all material facts related to his investment and he was not misled about any of the facts related to the litigation. He also conducted his own extensive due diligence of the litigation after Chevron raised its complaints of ‘fraud’ and came away satisfied.




 




“His statement to the contrary is itself highly misleading and was obviously made as a condition of his settlement with Chevron.”




 




From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.


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