Monday, May 9, 2016

Latest Legal Developments in The Manhattan Club Case

More developments in this important case.  I say important because even if you don't own there, there are important issues at stake here.

Apparently, the NYAG is once again seeking to take depositions of defendants/respondents. Defendants have asked the court to stop the depositions—same arguments as earlier made, except this time NYAG will waive negative inference from asserting the 5th amendment, thereby eliminating the whipsaw effect.

You will recall that this issue was briefed back in December/January and there was supposed to be a hearing on it but NYAG backed off when TMC withdrew its motion. AG wanted to depose the defendants. TMC said if they were deposed they would have to take the 5th amendment (I refuse to answer on the grounds it may incriminate me in the criminal case)—that is how we first learned that there, indeed, was a criminal investigation. The effect of taking the 5th amendment can be used against TMC in the civil case to prove fraud. If TMC testifies in the civil case and does not assert the 5th, then that testimony can be used against them in the criminal case (hence the whipsaw). Courts will often stay a civil action so the criminal action can go forward and defendants are not prejudiced in the civil case by taking the 5th amendment in the criminal case. It is more fair.

TMC has the better argument on that one.

NYAG may be worried that the Judge will find they haven’t done enough discovery and the court may let the individual defendants out of the case. AG may also be worried that the judge will rule in TMC’s favor on the standard of care for the injunctive relief that was recently briefed and argued and that NYAG will face a long drawn out appeal before they can take any more discovery.


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