MHHC Enterprises Inc (MHHC)

[capted]

A Florida federal judge has dismissed a lawsuit alleging Young Conaway Stargatt & Taylor aided a treasure hunter's phony search for emeralds, but the firm's attorney, Bruce Silverstein, could still face sanctions for his alleged role in the hoax.
U.S. District Senior Judge James Lawrence King of the Southern District of Florida issued two orders last week in JTR Enterprises v. Colombian Emeralds. The first order dismissed the fraud claims against the Delaware law firm, but the second order scheduled a Thursday sanctions hearing for Silverstein.
Motivation Inc., a Key West, Fla., salvage company, alleged both Silverstein and Young Conaway promoted the fraudulent search and attempted to conceal testing disputing the emeralds' value. But King said there was not enough evidence for the claims against Young Conaway to stand.
"The court agrees that there is indeed a disparity of evidence regarding this particular respondent to the point that, after a careful and thorough review of the documentary exhibits and the live testimony of the three witnesses offering testimony on the merits, that there is not sufficient evidence in this record upon which the trier of fact could make factual findings respecting Young Conaway Stargatt & Taylor," King said in the five-page order.
Felicia A. Gojmerac, a spokeswoman for the firm, declined to comment.
"Until all the litigation is over, the firm of Young Conaway Stargatt & Taylor has no comment," Gojmerac said in an emailed statement.
King did reject Silverstein's motion to dismiss the sanctions claims. Motivation presented three witnesses and submitted 54 exhibits while asking the court to sanction both Silverstein and Young Conaway, according to court documents. The judge noted none of the witnesses or evidence concerned the law firm and also said Silverstein had yet to introduce any evidence during the two previous sanctions hearings.
"The court finds that claimant Motivation has presented sufficient evidence, which if believed by the court after the close of evidence by all sides, would sustain imposition of sanctions against respondent Silverstein," the judge said.
Neither Silverstein nor his attorney, John T. Rogerson III of Adams and Reese, responded to phone calls and emails seeking comment.
King also dismissed claims against Paul Sullivan, a former deputy campaign manager for former President Bill Clinton, who invested in JTR Enterprises, the entity formed to own the emeralds. The judge said both witnesses testified Sullivan had nothing to do with the litigation.
Motivation alleged in court documents that Silverstein and the law firm aided and abetted treasure hunter Jay Miscovich's fabricated discovery of precious emeralds dumped into the Gulf of Mexico supposedly originating from a 17th-century shipwreck. Miscovich claimed the emeralds were worth half-a-billion dollars.
Motivation's lawsuit is the second legal problem to arise from Silverstein and Young Conaway's involvement in the treasure hunt. Azalp LLC, the New York investment group that financed the treasure hunt, has also filed litigation asserting Silverstein and the law firm aided and abetted Miscovich's scheme. The Azalp litigation is still pending in the Southern District of Florida and raised similar claims.
In 2010, Miscovich, who committed suicide last year, paid $80,000 to purchase roughly 80 pounds of low-grade emeralds from a Jupiter, Fla., gem dealer, according to the initial complaint. Miscovich told investors that he found the gems after buying a treasure map to the 17th-century shipwreck in a Key West bar for $500.
Upon securing the treasure map, Miscovich began to solicit investors to recover the missing jewels. The plaintiffs invested or loaned roughly $1.6 million to fund the treasure hunt, according to their complaint. However, in 2011, the plaintiffs began to suspect Miscovich had hijacked their investment, but believed the emeralds were still a legitimate investment. Azalp filed a lawsuit in the Delaware Court of Chancery accusing Miscovich of waste of assets, breach of fiduciary duty, breach of contract and mismanagement.
Miscovich retained Silverstein and Young Conaway to represent him in the Chancery Court lawsuit. Azalp accused the attorneys of employing "hardball tactics ... that far exceeded the bounds of proper advocacy." The Chancery Court litigation eventually settled.
It is also alleged by both Motivation and Azalp that both Silverstein and Young Conaway orchestrated a series of transactions designed to generate a profit from Miscovich's treasure hunt. Young Conaway took an equity interest in an entity formed by Miscovich to finance the treasure hunt and Silverstein invested $100,000 of his own funds in the venture, according to court documents. The plaintiffs in both Florida suits contend Silverstein's ownership interest was a violation of professional ethics prohibiting lawyers from taking a financial interest in ongoing litigation.
In 2011, the plaintiffs learned through laboratory tests that the emeralds were coated with modern-day epoxy resins, exposing the shipwreck story as false, Azalp alleged in its complaint. The plaintiffs also alleged Silverstein was "troubled" by the epoxy findings, but still insisted there was no "dispositive proof" that Miscovich had invented the claims.
Jeff Mordock can be contacted at 215-557-2485 or [e-mail]. Follow him on Twitter @JeffMordockTLI.


Read more: http://www.delawarelawweekly.com/id=1202678403292/Sanctions-Against-Young-Conaway-Nixed-in-Jewel-Hoax-Lawsuit#ixzz3QEOzjnaU