Long-Term Investor Goes After Perpetrators of Short & Distort Stock Market Manipulation Scheme

San Francisco, December 22, 2011 - Gross Law filed a lawsuit on behalf of Noble Investment Fund Limited (”Noble”) claiming millions of dollars in investment losses in Gerova Financial Group (”Gerova”) as a result of a “short and distort” or “reverse pump and dump” scheme that had the purpose and effect of artificially depressing the share price of Gerova.

The complaint alleges the defendants and their coconspirators amassed huge short positions in Gerova’s stock in late 2010 and early 2011 (including many illegal naked positions), immediately before the company was to complete two major mergers. The defendants and their coconspirators, then, launched a coordinated attack on the company’s reputation, enlisting the assistance of forbes.com blogger and self-described “Investor Advocate,” Neil Weinberg in their scheme to spread false and misleading information concerning the company. When it was all over, Gerova had lost approximately $800 million in market capital in less than two months, and the actual investors in Gerova, including Noble, had suffered massive losses. Noble’s shares, in particular, for which it paid $5.75 million, as one of the company's original investors, were worth approximately $17 million prior to initiation of the attack; they are now virtually worthless.

“Defendants and their coconspirators like to portray themselves as on the side of investors,” said Stuart G. Gross, managing attorney at Gross Law, “but in reality these people make money by destroying the investments of others.” Gross continued, “The decision by Noble to step forward and pursue claims against those who perpetuated this attack upon Gerova and its investors sends a clear message: these schemes constitute securities fraud, and the schemes’ victims will not sit back and leave the perpetrators of such schemes in peace.”

The complaint describes a veritable rogues gallery of active participants in the scheme, including:

• Scott Hintz, a convicted felon (bank fraud);

• Daniel Ivandjiiski, who was barred for life from the securities industry for insider trading in 2008 and who now, using the pseudonym Tyler Durden, runs the webbiest zerohedge.com (which is registered at this father’s PO Box in Ivandjiiski’s native Bulgaria);

• Keith Dalrymple, a former securities analyst, whose last FINRA registered broker-dealer employer shut its doors after it was found to have violated rules “governing the content and disclosures required for equity research reports, during Dalrymple’s tenure there as director of research; and

• Victoria Dalrymple, another Bulgarian native and Keith Dalrymple’s wife, business partner and coconspirator.

”The size and timing of the short positions taken against the company, the timing of their settlement, and the timing of the release of false and misleading information concerning the company were all orchestrated too perfectly to be coincidental,” said Gross.

As the complaint alleges, the statements made by defendants and their coconspirators concerning Gerova were demonstrably false and misleading. However, defendants and their coconspirators made calculated use of the echo chamber-like quality of the financial blogosphere, which quickly lent their false and misleading statements increased reach and creditability. Combined with the effect of the enormous levels of short-shelling by defendants and their coconspirators, the release of the false and misleading information had precisely the effect that Defendants and their coconspirators desired: collapse of Gerova’s share price. With that collapse, came the collapse of the planned mergers and, in Noble’s case, losses of millions of dollars.

The lawsuit, known as Noble Investment Fund Limited v Keith Dalrymple, Victoria Dalrymple and Dalrymple Finance, No. CGC-11-516822, was filed in The Superior Court of the State of California, county of San Francisco. Noble is seeking compensatory and punitive damages, restitution, disgorgement, and injunctive relief.

Stuart Gross Named A 2011 Rising Star In Business Litigation By Super Lawyers

SAN FRANCISCO, July 2011: For the second consecutive year, Super Lawyers has named Stuart Gross to its list of Rising Stars in Northern California. Stuart’s selection was based on an evaluation by Super Lawyers of twelve indicators of peer recognition and professional achievement. According to Super Lawyers, “Rising Stars names the state’s top up-and-coming attorneys.” Moreover, “[w]hile up to five percent of the lawyers in the state are named to Super Lawyers, no more than 2.5 percent are named to the Rising Star list.” Stuart was specifically named among the Rising Stars in the area of Business Litigation.

Court Enjoins Caltrans Project Threatening Ancient Redwoods

SAN FRANCISCO, July 6, 2011: Northern District of California Judge William Alsup today ordered Caltrans to cease all work on a controversial project to widen Highway 101 through the ancient redwoods of Richardson Grove State Park in Humboldt County. Gross Law and co-counsel have sued Caltrans, on behalf of the Center for Biological Diversity, the Environmental Protection Information Center, California for Alternatives to Toxics, and Humboldt residents, alleging Caltrans violated federal environmental laws and ignored the mortal threats posed by the proposed project to ancient redwoods in the park and its environs,.

In his decision granting the plaintiffs’ motion for a preliminary injunction, filed by Gross Law and co-counsel, Judge Alsup found the plaintiffs had convincingly shown that absent the injunction irreparable harm to ancient redwoods was likely. The opinion states: “The type of harm Caltrans’ project threatens is undoubtedly irreparable. Exposing and cutting the roots of these trees makes them prone to infection and drying out. Weakening the roots of redwoods adjacent to the road affects the complex symbiotic root structure of the entire grove. After we decide the merits, Caltrans cannot plant new redwoods to provide adequate relief. Some of the trees that are likely to be harmed are more than a thousand years old.” Judge Alsup further found: “Plaintiffs have raised serious questions concerning whether Caltrans’ statement of reasons [in support of the project and regarding its environmental impact] was arbitrary and capricious.” Moreover, Judge Alsup found that the factors necessitating Caltrans perform a more comprehensive environmental review of the proposed project were “likely satisfy[ied],” and that “[t]he public interest is best served by letting the ancients thrive a little longer while the merits of their future are evaluated in court.”

Gross Law and co-counsel will file a motion for a final and permanent injunction of the project on September 8, 2011. A hearing will be held on the motion at 8:00 a.m. on December 1, 2011.

The lawsuit is captioned Bair et al. v. Caltrans et al., No. 10-04360-WHA (N.D. Cal.).

California Lawyer Recently Turned To Stuart Gross For His Views On The Current State Of International Investment Dispute Resolution

Gross Law represents local El Salvadoran communities, as amici curiae, in a case brought by a Canadian mining company, in the name of its U.S. subsidiary (which until shortly before it filed the case was a Cayman Islands company) against the Republic of El Salvador in the International Center for the Settlement of Investment Disputes (”ICSID”), Pac Rim Cayman LLC v. Republic of El Salvador, ICSID Case No. ARB/09/12.

Stuart told California Lawyer that the current system of treaty-based international investment dispute resolutions suffers from substantial democratic and representational deficiencies which threaten the legitimacy of the system. Stuart noted, in particular, if international investment tribunals sanction the growing use by foreign investors of shell companies formed in countries in which the investors have no business operations, with the purpose of gaining the protections of investment treaties between that country and their host state, that legitimacy will be further eroded.

Gross told California Lawyer “ICSID has concerns for the perception of its legitimacy.” Based on these concerns, ICSID rules now provide for the participation of amici “but not as full participants in the case.” Furthermore, “reporting still varies panel to panel--not all opinions are available.”

In regards to the Pac Rim case, Gross discussed the particular damage that would be caused to the legitimacy of the system if the case was allowed to go forward, notwithstanding the geographic hopscotch in which the claimant engage in order to gain the protections provided to foreign investors under the Central American Free Trade Agreement. “If ICSID accepts jurisdiction, it means that a company can shop for any treaty the host country is a party to, and then move assets to invoke the treaty’s arbitration clause.” Gross warned that sanctioning such “flag of convenience” strategies would permit investors to freeload on trade agreements, thereby undermining the mercantile trade-offs negotiated by the treaty parties, and thus the willingness of states to entered into such treaties. “Even if treaty-shopping is business as usual, that doesn’t make it proper, ” Gross noted. In response to questions concerning recent moves by certain countries, such as Australia, away from the current system of investor-state resolution, Gross told California Lawyer: “This is the chickens coming home to roost.”

Commercial Fishermen Challenge Constitutionality Of Non-Resident Fees Charged By The State Of California

SAN FRANCISCO, May 18, 2011 - Gross Law filed a class action lawsuit today on behalf of commercial fishermen who, because they reside outside California, are charged double, triple, or more for certain California commercial fishing licenses, permits and registrations. The lawsuit alleges the discriminatory fee structure violates United States Constitutional protections against economic discrimination based on state residency. The lawsuit names current and former California Department of Fish and Game directors and chief deputy directors and current California Fish and Game Commissioners. It seeks return of the discriminatory fees charged in past years to out-of-state fishermen and an order stopping the discriminatory fees from being charged in the future.

“Men and women who earn a living fishing in our state should not be penalized thousands of dollars a year merely because they call somewhere else home,” said Stuart G. Gross, managing attorney at Gross Law. “These penalties are not only unfair and wrong, they violate clearly established constitutional prohibitions against economic discrimination based on state residency.”

The fees being challenged involve licenses, vessel registrations and permits for certain types of commercial fishing. In some cases, non-resident fishermen are forced to pay more than 3.75 times higher fees than their in-state resident counterparts.

The lead plaintiff, Kevin Marilley of Bellingham, Washington, has been a San Francisco Bay commercial herring fisherman for more than 20 years. Under the current discriminatory fee scheme, in 2011, Mr. Marilley would pay $5,206.00 for the various licenses, permits, and registration necessary for him to participate in the fishery, while a resident would pay only $1,489.75, a difference of more $3,700 in one year alone.

The lawsuit, known as Marilley v. McCamman et al., No. 11-02418-DMR (N.D. Cal.) was filed in the San Francisco Division of Northern District of California.

THE EMBARCADERO, PIER 9, SUITE 100, SAN FRANCISCO, CA 94111 T 415.671.4628 F 415.480.6688