To sustain a two-decade legal and publicity campaign against Chevron (CVX) over oil pollution in Ecuador, plaintiffs’ attorney Steven Donziger has relied on all manner of creative financing. He has sold slices of the case to individual investors and to hedge funds. Now one of those investors, an American transplant in Gibraltar who made a fortune in the online gambling business, may be sorry he ever heard about the Amazonian contamination case.
On March 14, a judge in Gibraltar, a tiny British territory on the southern end of the Iberian Peninsula, ruled that Chevron can proceed with a lawsuit seeking unspecified damages from Russell DeLeon in connection with his financing what the oil company maintains was a liability suit that evolved into a racketeering conspiracy. The interim ruling follows a blistering decision issued on March 4 by a federal judge in New York who backed Chevron’s contention that Donziger orchestrated a conspiracy involving bribes, coercion, and fabricated evidence. In 2011, Donziger’s clients—thousands of poor farmers and indigenous tribe members—won a $19 billion judgment against the company in a provincial courthouse in the city of Lago Agrio, Ecuador.
San Ramon (Calif.)-based Chevron sought the ruling in New York as a tool to fight Donziger’s pending attempts to enforce the Ecuadorian judgment, which the judiciary of the small Andean nation has since affirmed (although the damages were cut to $9.5 billion). With its action against In suing Russell DeLeon in Gibraltar, Chevron shows it intends to punish those who aided Steven Donziger’s Ecuadorian oil pollution casein what U.S. District Judge Lewis Kaplan of New York branded a massive fraud against the company. In New York, it seems almost certain that Chevron will seek an additional order from Kaplan forcing Donziger to pay millions of dollars in legal fees the company has doled out to defend itself against the pollution suit and pursue ancillary litigation.
“A U.S. federal court in New York has ruled that the judgment against Chevron in Ecuador is the product of a fraudulent scheme intended to extort billions of dollars from the company,” Morgan Crinklaw, a Chevron spokesman, said in an e-mail. “Chevron believes that the perpetrators of that scheme should be held accountable for knowingly advancing the fraud.”
A lawyer for DeLeon did not respond to a request for comment. Karen Hinton, a spokeswoman for Donziger, said via e-mail: “Chevron’s case against Mr. DeLeon is yet another attempt by Chevron to retaliate against anybody who tries to help the [Ecuadorian] communities hold Chevron accountable for its environmental crimes and wrongdoing, as found by three layers of courts in Ecuador.”
In Gibraltar, Chevron will now move ahead with a civil suit against DeLeon, who, according to U.S. court filings, invested millions of dollars in Donziger’s litigation in Ecuador. DeLeon also helped pay for the 2009 documentary Crude, a film by acclaimed director Joe Berlinger, whom Donziger enlisted to join his multimedia campaign to pressure Chevron. If DeLeon is ultimately held liable for significant damages, his fate could inhibit other investors from backing advocacy-oriented documentaries expressing anti-corporate views.
In a case populated by vivid characters, DeLeon stands out as one of the most unlikely participants. A friend of Donziger’s from their student days at Harvard Law School, DeLeon and his wife, Ruth Parasol, made a billion-dollar fortune with a digital gambling company called PartyGaming (BPTY:LN). (In 2011, Party Gaming merged with a second corporation.) According to media reports, DeLeon and Parasol are in the process of selling their shares in connection with a divorce settlement. If Chevron has its way, some of the proceeds from that sale will flow into the corporation’s coffers.