Replies to post #52679 on SPO Networks Inc (SPOI)

[bandit1958]

Yea sounds like that judge needs his or
her butt kicked. Some of these judges
are more crooked than the fraud felons.
Its clear they commited fraud. I would
love to be sitting on that jury if it
comes to that.

[Sparks100]

In answer to your question, the simple answer is no, but it is not that simple.

When I mentioned the Doctrine of protecting the note and lien holders, I was talking about a several centuries old practice that has passed down from one form of law to another here in the U.S. It is very hard for Judges to admit that "Yes, the note holders are a victim, but they are not the only victims here." HLNT is a corporation, which exists for all practical purposes as an individual, with the right to sue and be sued. Yet, when the Corporation is damaged by the actions of others, even the employees they depend upon the most, sometimes this is lost in the twists of the case.

Based upon the information that was at hand currently in the case, the Judge made a predictable decision. The Judge truly failed to allow for the discovery necessary for HLNT's attorneys to properly specify the elements of the fraud for the pleadings. The most important issue is that the Judge never denied that the fraud existed, she simple stated that HLNT's attorneys were not specific enough in their pleadings. She placed HLNT in the position in which it must appeal the ruling since She dismissed the claims with prejudice. Whether she did this properly or not with respect to HLNT's right to due process is a subject for the appeals court.

One of the things that I take exception with is the Judges downplay of the fraud, where she stated that Walters had committed "Corporate Waste". Where a company buys two cars but needs only one, that is waste. Where they buy a computer but don't use it, that is waste. But where a company accepts a debt for an asset of no value and that it is known by the people involved in the dealing that the asset has not value, that is fraud. For the Judge to even characterize the fraud as corporate waste is highly unprofessional.

The other of the things and the one I take the most exception with is the mind set of the Judge that HLNT in any way owes NIR for the notes. First, on the Six Million worth of notes, HLNT did not receive a dime of the financing for those notes, Dealers Exchange did. And in the transfer of the notes, HLNT got nothing for it. I would love to be able to walk up to anybody on the street and put my hand over theirs and say, "Here is a handful of air, now you owe me 6 Million Dollars." The Judge, which reflects badly on her, has forgotten, misunderstood, neglected, (whatever) the most fundamental rule of business. Without proper consideration, there is no contract. HLNT should not have to pay a cent for the 6 million worth of NIR notes, and NIR cannot benefit from the fraud regardless of the innocence of the NIR entity. Now as to the other notes for which HLNT (SSEV) did receive payment. I would agree that HLNT owes on that but for the facts that Walters agreed to assume the notes, and the revenue producing operations that helped to service the notes were also transferred to him with the notes. Had HLNT received any part of the revenue after the transfer of the notes, then yes, HLNT would owe against the original NIR notes. But all that was left was an empty shell, so no, HLNT doesn't legitimately owe on that one either.

What the Judge has really done is make the case even more complicated as she has literally opened Pandora's box. The Breach of Fiduciary Duty has opened up Ribotsky, Walters and Humphries to all sorts of litigations by interested parties. HLNT's stockholdes (who had standing), NIR investors, NIR creditors, etc. It aint' pretty at all. Remember, all the Judge did was to deny HLNT's basis, for the time being anyway, for their counter claims of fraud.

Now, in answer to your question, She has not in any way denied HLNT's use of the defense of fraud in the original case brought by NIR. In and of itself, the Breach is not sufficient to negate the obligation, but it is sufficient to raise the ugly specter for PWC that HLNT can litigate the notes further, reducing the likelyhood of any beneficial gain from pursuing the notes in litigation for PWC and NIR. There is no guarantee that either party will win, but the acknowledgement of the Breach certainly increases HLNT's chances of winning in the trial. This is something that PWC has to carefully consider when it comes to a decision on any settlement. So yes, it does have an impact.