Chevron takes shakedown lawyers to court in RICO trial

We’ve spent plenty of time and column space here over the last couple years keeping you up to date on the the attempts of various corrupt Ecuador agencies and their Eco-warrior counterparts in the United States to sue Chevron over claimed damages in Ecuador’s oil fields. While such tactics have traditionally been successful against big corporations with deep pockets, choosing to simply pay off the pests rather than spending the time and money to fight them, not so with Chevron. The plaintiffs, led in large part by Manhattan lawyer Steven Donziger, tried to dig too deep, racking up a $19B judgement in an Ecuador court based on what turned out to be a staggering series of apparently fraudulent ploys. Chevron fought back and refused to cough up a dime.

And now, in what may prove to be a lesson in not waking a sleeping giant and making him too angry, Chevron has turned the tables and taken Donziger and company to court in NY claiming they engaged in racketeering.

Chevron alleges in the non-jury trial before U.S. District Judge Lewis Kaplan that a Manhattan lawyer, Steven Donziger, and others involved in the pollution case engaged in a “racketeering enterprise” and won the 2011 verdict through coercion, manufactured evidence and bribery of the Ecuadorean judge who wrote it. The company is seeking a ruling preventing the plaintiffs from trying to enforce the verdict in courts around the world. Burford reached an agreement with Chevron to provide testimony after being described in the lawsuit as a party involved in the scheme, Bogart said yesterday.

Donziger contends he did nothing unlawful in Ecuador and that Chevron engaged in similar tactics. Kaplan said in a ruling last week there’s “considerable evidence” the pollution case was “tainted by fraud.”

In a portion of testimony filed with the judge, Bogart said “we simply do not countenance in any way the kind of behavior this court has already found has occurred” and “we never would have invested” in the case if they were aware of the allegedly fraudulent activities.

This should be interesting to watch and we’ll definitely keep an eye on it. I don’t recall another case of this size where the person trying to pick the big company’s pockets wound up in front of a judge being brought to task for their actions. Donziger’s defense thus far seems to be, “Hey, everybody does it.” I’m not sure how well that’s going to wash here.

The judge is already getting an earful in the opening days of the trial.

A former expert for the plaintiffs, David Russell, testified yesterday that he provided a $6.114 billion damages estimate based “largely on assumptions Donziger told me to use.”

“Within a year of working for Donziger, I came to learn that my cost estimate was wildly inaccurate and had no scientific data to back it up,” he said in written testimony submitted to the judge.

After drawing up his observations in the Hotel Lago, he arrived at a cost-estimate of more than $6 billion. He called the figure Wednesday a S.W.A.G., or a “Scientific Wild Ass Guess.” Two years after his falling out with Steven Donziger, who was then the lead attorney on the lawsuit representing residents of the Ecuadorean rainforest, Russell quit the case and publicly disavowed the estimate.

“While I was working on the estimate in the Hotel Lago, Donziger told me that he wanted a ‘really big number,’ and he needed a ‘really big number’ for purposes of ‘putting pressure’ on Chevron to settle the litigation,” the deposition states. “In response, I told him that I would try to come up with the biggest possible cost estimate I could.”

As we’ve detailed here in the past, Chevron has a lot more to unleash in front of the judge. Fraud, abuse, threats to court officials in Ecuador and people who have come clean and admitted that they flat out lied about what went on down there in the jungle. What must have looked to Donziger like the score of a lifetime may be turning into a nightmare. Of course, this isn’t a criminal trial – yet – and will only result in a judgement preventing the plaintiffs from profiting from this attack. Could it lead to more serious charges later? I’ll have to ask some lawyers about that one. Stay tuned.