Athens: NewLead JMEG, a coal mining joint venture with NewLead Holdings; its chief executive Jan Berkowitz and Michael Zolotas, CEO of NewLead Holdings, have been ordered by a judge to produce all documentation to support their defence in a breach of contract lawsuit being heard in the Supreme Court of the County of New York.
London-based trader TransAsia Commodities in January filed a civil case against the defendants, seeking $6.2m in compensation over a failed agreement to buy 110,000 tonnes of coal, which was never delivered to the buyer.
TransAsia alleges that NewLead JMEG signed the multimillion-dollar sales agreements to inflate its share price and to obtain credit from banks. The defendants deny the allegations.
All the requested documentation will be used by the court in consideration of the plaintiff’s proposed motion to strike and compel.
“If, following the May 20, 2015 conference, the Court concludes the defendants have not complied with their discovery obligations and this order, TransAsia’s Motion to Strike may be granted, and judgment entered for TransAsia on all counts in this action,” the court order says.
All electronic documentation produced by the defendants will be subject to digital forensic analysis before it is submitted to the court, according to a court order seen by Splash.
During the last court session on April 13, TransAsia’s attorneys accused the defendants of altering a sales contract and forging TransAsia’s principal’s signature on the new document, according to the court transcript obtained by Splash.
Judge Charles E Ramos has ordered the defendants to produce all computer hard drives and electronic storage media (such as flash drives and mobile devices) in Berkowitz’s possession, control or custody that have ever contained documents related to the action. The deadline for producing these materials is May 13.
All these devices are to be delivered to the New York office of digital forensics firm Stroz Friedberg. The company will “create forensically sound, full forensic images of each device, then search and analyze all data on the devices to identify documents, data (or fragments of data), and artefacts that reasonably appear to be relevant to the issues in this action”, the court order says.
Once the analysis is complete, Stroz Friedberg will present the “presumptively relevant” findings to the defendants’ lawyers, who will then have 14 days to conduct a privilege review to decide what will be excluded from the scope of discovery.
The defendants can object to Stroz presenting certain findings to TransAsia’s counsel but must produce a log identifying the materials, along with “detailed basis” for each objection.
All Stroz’s findings that are not subject to these objections will be passed on to the plaintiff’s lawyers. The court order says any issues relating to the defendants’ list of objections must be resolved, possibly with the help of the court.
In the last court session on April 13, TransAsia’s counsel alleged that emails from Zolotas and Berkowitz pertaining to the action had been sent from 15 different email addresses, including from nine different domain names. The defence explained this was “just one email address that appears internally or externally”.
Nevertheless, the new court order requires that all “responsive, non-privileged documents” be obtained as a result of a search of the various email addresses supplied by TransAsia’s lawyers.
Similarly, the court has ordered the defendants to identify all email service providers and cloud storage services that may have handled documents relating to TransAsia’s recovery requests.
The defence confirmed in court in April that it was still in the process of retrieving documents from Michael Zolotas since receiving the plaintiff’s letter of deficiency in February.
The defendants must also produce documents and communications showing evidence of contracts or payments to Ingram Barging Company, Associated Terminals, Riverway and/or Power Dock loading facilities and SGS Inspection Services “and/or other companies performing similar services related to the shipment of coal under any coal purchase agreement with TransAsia”, the court order states.
The trader says it believes NewLead JMEG to be an “empty shell company” and last August requested a variety of information from the defendant to show its financials.
In consideration of this, the court has ordered the defendants to produce the joint-venture agreement between NewLead JMEG and NewLead Holdings and documents that show its organisation and structure.
Evidence of all the officers and directors of NewLead JMEG and NewLead Holdings from 2012 to present must similarly be provided, plus evidence of production of coal by the defendants at any coal mine.
The defendants must also produce documentary evidence of the sale or supply of coal to any entity, as well as the procurement contract NewLead JMEG had in place to be able to fulfil its sales contract with TransAsia.
The litigation has been adjourned until May 20.