HLNT/NIR/Walters lawsuits:
There isn't really any updates to the legal issues at this time but this will serve to answer questions by Hot Penguin and Assets.
Does Humphries have the money and staying power for a trial?
Humphries is currently involved in a Chapter 7 Bankruptcy, in which all of his assets are disposed of. However, because he lives in Texas, he has the right to file for a Homestead on his house to protect it from the bankruptcy liquidation. All of his other assets will be disposed of, of which there is very little in any case. For Humphries, this is a blessing, as he gets rid of all of the debts.
But the other issue is that the Judge in the New York Case has not completely allowed the HLNT Counter Claims and 3rd Party Action to go forward just yet, so for Humphries, it is a moot point. Right now, he is simply a witness in the NIR/HLNT original case in which HLNT is the defendant.
How high is the level of animosity between these two entities? is it strictly business or is it personal?
There is animosity between them. Walters basically accused Humphries of orchestrating the fraud, and NIR basically accused Walters and Humphries of arguing over who was at fault. But the real problem that affects them all is the possibility of Criminal Charges being filed against the three, and they each still need and depend on each other not to sell the others out. Things can still get pretty nasty there.
Do you think it will go to trial in NY? Or will Humphries et al just take it to the steps of the courthouse and then try to settle?
In the New York case, the Judge has asked for P/Decs, or as PD has stated, Pleadings and Declarations. The NOI's were to have been presented in November, so the assumption is that both sides have decided to go to trial. Although there can still be delays, this could possibly happen in the next 60 to 90 days. Then a trial can be scheduled within 30 to 60 days, and the trial could last as long as 2 weeks to 30 days, depending on the adjournments that are requested. The March deadline for the conclusion of the case can be extended by the Judge, or She can instruct both parties to take whatever evidence they have to trial at that time, but she wants to be careful not to allow for any appeals based upon procedural errors. The driving factor behind this is Ribotsky. He literally has a tiger by the tail that he can't let go of, because to settle without something substantial will just get him into more trouble with his investors, which is ironic as it seems that he will never pay them back in any case. But he doesn't want to and can't walk away in any case.
I have sat on juries in which the jury members have gone through Boudior, been selected, empaneled and have sat in the courtroom waiting for the Judge and parties to enter, and at the very last minute, a settlement has occured. Ribotksy, being a lawyer and familiar with the legal system, will push it to very end. He can actually settle at any point up until the jury begins deliberations, so he has plenty of time to let the situation play out. As far as a settlement, he will want nothing less than something that allows him to save face and release him from his part in the fraud, but he will have to give up the notes, which he will be very reluctant to do. He will fight to the end, even if it means his own destruction, unless he can overcome his ego with common sense.
More precisely, what has to happen for NIR to fold or have the judge rule in HLNT's favor?
Ribotsky is facing SEC Charges right now, which are far more serious than HLNT's lawsuit. He has a personal cashflow problem, and the convertible notes that exist within NIR at this moment have been pretty much tied up, so he is not able to convert very much if any at all to ease his cashflow problem. If HLNT's cash flow improves, that could be a catch 22, they can cover their legal fees, but this could spur Ribotsky on to try to overwhelm HLNT, hoping that the Judge would treat him more favorably since HLNT would then have some type of cash flow. Again, it is not likely that he will want to give up.
As for trial, there are two types of trial, one in which the judge decides, and one in which a jury decides. Both NIR and HLNT have asked, in their original filings, for a jury trial, HLNT for the purposes of getting a higher award for damages if they should prevail, and Ribotsky for the same reason. Now, Ribotksy has realized that his one hope is that if he can blow enough smoke in front of the jurors that they will be confused enough to at least not decide against him, although he would prefer that they would decide for him. But the point is that the Judge will not be the one deciding this case. The only other way for this case to get settled is if Ribotsky is forced out of NIR and a Trustee, or new management were to settle to avoid far greater losses in a potential court case. This can still happen but the probability is very low at this time.
Will any shares be returned to HLNT for retirement in your opinion?
Regarding Humphries, his shares were already returned per a court order, and were retired.
Regarding NIR, HLNT would want cash, not a return of the shares, as the cash could be used to buy back shares, pay legal fees related to Walters, fund production, or product development, etc. Although with Ribotsky's current state, cash isn't very likely either.
Regarding Walters, Walters is trying to rely on his 'get out of jail free' card, the Release Agreement, to get this case into and decided in arbitration to keep any settlement or agreement private so as not to affect his wife's political career, and to avoid any testimony that could come back to haunt him in a possible Criminal case. HLNT can and should be able to get the case out of Arbitration and into the Federal District Court in California, where the case is public (it is possible to have the judge close the case to the public, but it is not very likely). Once in Court, Walters knows he will lose, so he is hoping to run HLNT out of money (piling up legal bills until HLNT cannot continue in Court). If HLNT should improve its position with income and increased revenues, then Walters may decide to use the HLNT Stock and the Texas Notes as bargaining chips in order to work some kind of settlement that allows him to avoid being involved in a trail as either a witness or a defendant. In that case, the stock would be returned and then retired.
Final Note on the Walters issues. The New York court has authorized commissions for the purposes of obtaining depositions from Walters and his companies in California. If and when this happens, there should be some type of legal activity show up in the Califoria state court system. This is being watched for.
The opinions expressed herein are my own and all investors should perform their own due diligence and make their investment decisions accordingly.
