“The decision in the Lago Agrio case was obtained by corrupt means. The defendants here may not be allowed to benefit from that in any way.”
“The wrongful actions of Donziger and his Ecuadorian legal team would be offensive to the laws of any nation that aspires to the rule of law, including Ecuador – and they knew it”
“If ever there were a case warranting equitable relief with respect to a judgment procured by fraud, this is it.”
“What this Court does do is to prevent Donziger and the two LAP Representatives, who are subject to this Court’s personal jurisdiction, from profiting in any way from the egregious fraud that occurred here.”
“This case is extraordinary. The facts are many and sometimes complex. They include things that normally come only out of Hollywood – coded emails among Donziger and his colleagues describing their private interactions with and machinations directed at judges and a court appointed expert, their payments to a supposedly neutral expert out of a secret account, a lawyer who invited a film crew to innumerable private strategy meetings and even to ex parte meetings with judges, an Ecuadorian judge who claims to have written the multibillion dollar decision but who was so inexperienced and uncomfortable with civil cases that he had someone else (a former judge who had been removed from the bench) draft some civil decisions for him, an 18-year old typist who supposedly did Internet research in American, English, and French law for the same judge, who knew only Spanish, and much more.
In the end, however, he and the Ecuadorian lawyers he led corrupted the Lago Agrio case. They submitted fraudulent evidence. They coerced one judge, first to use a court-appointed, supposedly impartial, “global expert” to make an overall damages assessment and, then, to appoint to that important role a man whom Donziger hand-picked and paid to “totally play ball” with the LAPs.
They then paid a Colorado consulting firm secretly to write all or most of the global expert’s report, falsely presented the report as the work of the court-appointed and supposedly impartial expert, and told half-truths or worse to U.S. courts in attempts to prevent exposure of that and other wrongdoing. Ultimately, the LAP team wrote the Lago Agrio court’s Judgment themselves and promised $500,000 to the Ecuadorian judge to rule in their favor and sign their judgment. If ever there were a case warranting equitable relief with respect to a judgment procured by fraud, this is it.
What this Court does do is to prevent Donziger and the two LAP Representatives, who are subject to this Court’s personal jurisdiction, from profiting in any way from the egregious fraud that occurred here.
Justice is not served by inflicting injustice. The ends do not justify the means.
The importance of Donziger’s media and public relations strategy is evident from the manner in which Donziger spent the millions of dollars that were obtained from investors. He outlined the campaign in a memorandum he wrote to his team in late 2003. He explained that the team would initiate and/or utilize celebrities; non-governmental organization “pressure;” the “Ecuador government – executive, and Congress;” national, international, and Ecuadorian press; a “divestment campaign” in which the team would seek to convince institutional investors to sell Chevron stock and even a criminal case in Ecuador in its effort to obtain money from Chevron.
Just as important as the pressure campaign directed at Chevron was an analogous campaign directed at the Ecuadorian courts. As we have seen already, Donziger viewed the
Ecuadorian courts as corrupt, weak and responsive to pressure – as institutions that, at best, “make decisions based on who they fear the most, not based on what the laws should dictate.”
Donziger hired David Russell, an environmental engineer, to generate an initial cost estimate for remediation of the Concession area. Russell visited only about 45 of the hundreds of oil pits in the region, and based his calculations on an extrapolation of what he observed at those sites. But he did not analyze any soil or water samples at any of the sites he visited. And his visits to some of those sites, he acknowledged at trial, were no more searching than driving past them at 40 or 50 miles per hour.
Secrecy was essential because Donziger and the LAP team knew that an appearance of independence and neutrality was essential in order for the expected efforts of Pinto and Reyes to be taken seriously by Chevron and the court. In fact, the agreement was for Reyes and Pinto to work covertly for the LAP team and to keep their relationship with the LAPs secret from the judge. And Donziger well understood that the arrangement was improper.
Faced with this coercion, Judge Yánez granted the request to cancel the LAPs’ remaining judicial inspections. Donziger and Fajardo succeeded also in convincing the judge that he should “fear” the LAP team
Donziger noted also in his July 17, 2007 email to Fajardo that the LAPs’ hired consultants needed to be required to submit their drafts to the LAP team early on. Donziger wanted control over the consultants’ reports from their inception. He did not want to risk waiting until their work was “final” and ready to be included in the report to discover that it ultimately was not “useful” to the LAPs.
We now know, and Donziger eventually admitted, that the Cabrera Report was not written by Cabrera. It was written almost entirely by Stratus and others working at the direction of Stratus and Donziger. Indeed, all of the damage amounts in the Cabrera Report came verbatim from
In the last analysis, the facts concerning the Cabrera Report are crystal clear. The remaining LAP judicial inspections were cancelled, the global expert proposal adopted, and Cabrera appointed in consequence of the coercion of and pressure placed upon Judge Yánez. As Donziger admitted in a Crude outtake, Judge Yánez “never would have done [that] had we not really pushed him.
Cabrera was not even remotely independent. He was recruited by Donziger. He was paid under the table out of a secret account above and beyond the legitimate court-approved payments. He was promised work on the remediation for life if the LAPs won. The LAPs gave him an office and life insurance, as well as a secret ary who was a girlfriend of one of the LAP team members.
Donziger, however, over time has attempted to avoid responsibility in a variety of ways including denial followed by various explanations, justifications and evasions in efforts to portray these events in a benign light. None has merit.
The Court rejects Donziger’s excuses entirely. He knew at all times that his actions were wrongful and illegal.
It was Donziger’s purpose to magnify the pressure on Chevron by increasing both the perceived magnitude of its potential exposure and the perceived likelihood that the exposure in the end would culminate in huge liability. He repeatedly did so by manifestly wrongful means,
which included corruption of the litigation and a pressure campaign premised on misrepresentations.
Chevron’s claim with respect to the Lago Agrio case itself, insofar as it pertains to the predicate acts of attempted extortion, is not that the case was entirely baseless. Rather, it is that Donziger and others corrupted the case by bribing the judge and by other corrupt and fraudulent means and that they did so, among other reasons, to instill fear in Chevron of a catastrophic result sufficient “to get [Chevron’s] money without” litigating the case to judgment, without “going through a lengthy appeals process that drags this out for years,” and without the need for time consuming and expensive judgment enforcement proceedings.
As amply detailed above, Donziger’s actions in increasing the pressure on Chevron by dishonest and corrupt steps in the litigation – coercion, bribery, ghostwriting, and so on – were intended to communicate threats to Chevron. Their purpose was to instill fear of a catastrophic outcome in order to increase the amount Chevron would pay to avoid the worst.
Donziger’s misconduct outside the courthouse went hand in hand with his misconduct within it. Both were parts of an offensive to produce a multi-billion dollar payout. Donziger’s “brute force” campaign depended largely on his ability to threaten Chevron by portraying the litigation as a likely source of huge liability for the company.
Donziger engaged in multiple acts that are indictable under the wire fraud statute and that therefore are acts of racketeering activity.
Donziger’s overriding goal was to extract a large payment from Chevron in exchange for peace. In pursuit of that objective, however , he engaged, as we have seen, in a number of deceitful schemes, each of which was intended to play its part in achieving that end and each of which was furthered by use of the wires. These included, but were not limited to: (1) the ghostwriting of the Cabrera Report by Stratus and the LAPs and the passing off of the report as the work of Cabrera, together with the misrepresentations of his supposed impartiality and independence; (2) the false portrayal of Cabrera as neutral and impartial, (3) the concealment of the true relationship among Cabrera, Stratus and the LAPs, including concealment of the secret payments to Cabrera; (4) the ghostwriting by Stratus of the response to Chevron’s objections to the Cabrera Report, which too were passed off as Cabrera’s work; (5) the attempts to deceive Chevron and courts in the Section 1782 proceedings concer ning what actually had transpired among Cabrera, Stratus, and the LAPs; (6) the ghostwriting of a ll or much of the Judgment and Zambrano’s false claim of authorship; and (7) the false statements to the media and to public officials that were made to increase the pressure on Chevron.
As the “cabeza” of the Lago Agrio litigation for the LAPs, Donziger’s responsibilities included: (1) obtaining money to fund the litigation and related activities, including public relations
and media, and (2) disbursing, or causing the disbursement of, the funds thus raised to vendors and to recipients in Ecuador, most notably Selva Viva, which managed most of the money sent there. To whatever extent he (1) obtained money from outside the United States or (2) sent or caused money to be sent from the United States to another country, in each case with the requisite intent and to promote the carrying on of a RICO predicate offense, he committed money laundering. The record in this case contains persuasive evidence of a number of such offenses by Donziger.
Donziger’s conduct with respect to the Fajardo Declaration was obstruction of justice, plain and simple. The declaration was drafted while the Stratus Section 1782 proceeding was pending, as Donziger was acutely aware. Its purpose – in Donziger’s words – was to “prevent Stratus’ role relative to the Cabrera report from coming out.” Donziger was involved in the communications as to what it would and would not say. He knew that it was false or misleading. His conduct was intended to “impede . . . the due administration of justice,” and it fell squarely within the federal obstruction of justice statute.
Donziger attempted to have Mark Quarles alter materially the declaration he submitted to Judge Sand in an earlier proceeding in this district between Chevron and the ROE. As discussed previously, Donziger urged Quarles to assert that Cabrera neither had entertained suggestions from nor even met with the LAPs regarding his work plan, both of which Donziger knew were false. Although Donziger knew that the statements he sought to have Quarles make were false, he urged Quarles to adopt them to prevent exposure of the truth regarding Cabrera and to
mislead the court. Donziger’s effort to influence Quarles’s testimony constitutes witness tampering.
The Court’s findings make clear that Donziger caused the use of the secret account for the purpose of paying Cabrera, that he asked Kohn to wire money to that account, and that he knew the money was intended to pay Cabrera. It has found further that the money in fact was used to pay Cabrera. The Court therefore finds that Donziger was “aware” that it was “substantially certain” that Cabrera would be paid from the funds he wired to the secret account.
Here, the payments increased the likelihood that Donziger’s business – that of contingency litigation – would benefit from a favorable judgment. Roughly 30 percent of the 20 percent contingency fee owed to the litigation team accrues to Donziger. He stood to benefit directly from any judgment and, accordingly, from any act that improved the likelihood that such a judgment would issue and its amount. The improper payments to Cabrera were intended to do, and did, exactly that.
As the foregoing discussion makes clear, Donziger’s pressure campaign included a plethora of false and misleading representations to persons and entities – including among others members of the media, the New York Attorney General, the SEC, the New York State Comptroller, and Chevron shareholders – often in efforts to pressure Chevron into settlement. Likewise, Donziger, a member of the New York Bar, attempted to deceive the judges of this Court.
There is abundant evidence that, at the time the Ecuadorian courts’ decisions in the Lago Agrio case were rendered, the judicial system was not fair or impartial and did not comport with the requirements of due process. The Ecuadorian decisions therefore are not entitled to recognition here.
In sum, this Court finds that Ecuador, at no time relevant to this case, provided impartial tribunals or procedures compatible with due process of law. The decisions of its courts in the Lago Agrio case are not entitled to recognition in courts in the United States. The defendants’ reliance on them, as well as their collateral estoppel defense, therefore fail.