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(The opinions expressed here are those of Alison Frankel, a columnist for Reuters.)
By Alison Frankel
NEW YORK, Feb 18 (Reuters) - During settlement talks in Abu Dhabi last month, lawyers for the Greek shipping tycoon Victor Restis once again extended an offer to United Against Nuclear Iran, a non-profit headed by former U.S. diplomat (and Miami lawyer) Mark Wallace.
UANI has denounced Restis for violating international sanctions against Iran and facilitating Iran's development of nuclear weapons by secretly exporting Iranian oil in his company's tankers. To settle the litigation over UANI's accusations, the Restis entities offered to pay UANI $400,000 and to appoint Wallace to the board of the Restis tanker management company, Golden Energy Management.
There's nothing unusual about attempting to settle a case involving explosive allegations, of course. But here's the twist: Restis and his company Enterprise Shipping and Trading are actually plaintiffs in the case, a defamation suit Restis's lawyers filed in federal court in Manhattan.
UANI and Wallace are defendants (along with others). Restis, in other words, was willing to put up nearly a half-million bucks and to admit a sworn enemy into his business in order to settle a claim he initiated. That's not a typical course for high-stakes litigation.
The two sides, as you might imagine, offer quite different accounts of why Restis has been offering to settle this suit since soon after he filed it last July.
According to the transcript of a hearing Friday before U.S. District Judge Edgardo Ramos, Restis's goal is a public announcement from UANI that he isn't violating anti-Iran sanctions or doing business with the country.
His lawyer Michael Bhargava, who took the Restis litigation with him when he moved Monday from Manatt, Phelps & Phillips to Chadbourne & Parke, told Ramos that Restis was forced to sue UANI because the non-profit's devastating allegations were hurting the shipping company's business. All that the Restis entities really want from the suit, he said, is a withdrawal of UANI's accusations, which they believe to be based on "fraudulent and facially unreliable" documents.
To achieve that end as quickly as possible, Bhargava told Ramos, Restis invited UANI's Wallace to sit on Golden Energy's board to prove to him that his tankers are not illegally transporting Iranian oil. The $400,000 payment that also featured in settlement talks, Bhargava said, was the non-profit's idea; his client agreed to pay because Restis supports UANI's goal of blocking Iranian nuclear weaponry.
UANI, meanwhile, has portrayed Restis's settlement offer as an attempt to buy off his critics and avoid discovery demands by the non-profit, which contends that Restis is still aiding Iran, most recently docking a ship called the Helvetia One at the port in Bandar Imam Khomeini. (Restis counsel Bhargava told Ramos on Friday that the ship was on a legitimate humanitarian mission to deliver grain to Iran.)
Last week, UANI's lawyer, Lee Wolosky of Boies, Schiller & Flexner, asked Judge Ramos for leave to seek sanctions against Restis, after the Restis entities' designated corporate representative missed a scheduled deposition.
The defamation suit, Wolosky told Ramos in a Feb. 6 letter, is a sham, and Restis shouldn't be permitted to avoid its consequences.
"Knowing that discovery would eventually reveal the true nature and extent of their business dealings in Iran and with sanctioned entities, plaintiffs sought to conceal their misconduct by refusing to produce documents showing their substantial Iranian business dealings and then by proposing to settle the litigation before discovery could reveal the scope of their cover-up," Wolosky wrote. "At the end of their discussions in Abu Dhabi, Ambassador Wallace and the defendants made clear that the settlement discussion charade was over, that Mr. Restis must once and for all acknowledge that his statements denying any business in Iran were untrue and that plaintiffs must make good on their commitment to end their Iran business as a necessary condition to settlement."
At the conclusion of Friday's hearing, Judge Ramos denied UANI's request to move for sanctions, but he said the Restis entities must produce a corporate representative to sit for a deposition. Ramos also ruled that Boies Schiller can renew UANI's sanctions request, presumably if the Restis corporate rep fails to show. Wolosky told Ramos that he intends to press the Restis witness about the details of these purported grain deliveries to Iranian ports.
I'm sure the corporate representative will be well prepared to answer, but Ramos's order requiring discovery to move forward is a reminder of the risk of bringing a libel or defamation claim: When you file such a suit, you expose yourself to your alleged defamers. Victor Restis's amended complaint portrays him as a Jewish descendant of Holocaust survivors who would never aid Israel's archenemy Iran. By his account, Restis is the aggrieved victim of a slanderous media campaign by an irresponsible "name and shame" group. Perhaps that's all true. But Restis is about to find his version of the truth scrutinized and tested by his own accusers.
The deposition dispute is "yet another level of intrigue" in a case already loaded with machinations, as Judge Ramos noted at Friday's hearing. Restis is a prominent Greek businessman, with interests in media and banking as well as his shipping concerns.
In July, as Reuters reported, Restis was arrested and taken into custody in Greece on charges of embezzlement and money laundering through his family's failed bank, FBBank. (The Greek criminal allegations are unrelated to UANI's allegations of aiding Iran.)
Restis was released pending trial in December, but his lawyers have said he cannot be deposed in the defamation suit in the U.S. because of the conditions of his release. UANI's Wallace, meanwhile, faces criminal allegations of defamation in Greece, based on a complaint filed by Restis. UANI counsel Wolosky told Ramos that he won't agree to depose Restis in Greece because of the risk to Wallace.
The Justice Department just turned up in the case as well. An assistant U.S. Attorney from Preet Bharara's civil division entered an appearance at Friday's hearing at the behest of UANI. Michael Byers told Judge Ramos that the government is also interested in what Restis has to say about the supposed grain shipments to Iran. He wouldn't say more about the feds' role in open court.
As I said, it could turn out that at the end of this litigation, Restis succeeds in refuting UANI's accusations. That's what Restis counsel Bhargava expects, according to an email statement he sent me.
"Although UANI may have a positive mission of preventing Iran from developing nuclear weapons, it knows that its allegations about the Restis Group companies are false," the statement said, in part. "(The Restis entities) offered UANI full access to their records to show that they do not engage in illegal trade with Iran, but UANI was not interested. We will now vigorously prosecute this case, and we look forward to the opportunity to set the record straight in court."
UANI believes discovery will show why the Restis companies were so eager to settle. In an email, Wolosky said Restis has already admitted some of what he denied when he first brought the defamation suit.
"The plaintiffs represented in their complaint that they do not do business with Iran," Wolosky said. "Confronted with evidence to the contrary, they have finally admitted they have had extensive dealings in Iran, which continue to this day. Now they do not want to come here to testify about that business under oath. When you file suit in this jurisdiction, you need to tell the truth under oath and abide by our discovery rules - or face sanctions." (Reporting by Alison Frankel; Editing by Ted Botha)