The Supreme Court of Gibraltar has issued a judgment against Pablo Fajardo, Luis Yanza, Ermel Chavez, Frente de Defensa de la Amazonia (the “Front”) and Servicios Fromboliere for their role in a conspiracy to procure and attempt to enforce a fraudulent Ecuadorian judgment against Chevron. The court awarded Chevron Corporation$38 million in damages and interest and issued a permanent injunction against the defendants, preventing them from assisting or supporting the case against Chevron in any way.
Fajardo, Yanza and Chavez are Directors at Amazonia Recovery Ltd. (“Amazonia”), a Gibraltar-based company set up to receive and distribute funds that the co-conspirators hoped to obtain from the corrupt Ecuadorian judgment. The company was established in 2012 by Steven Donziger, the lead American lawyer behind the fraud, and his associates. Donziger and Fajardo, an Ecuadorian lawyer, were found by a U.S. Federal Court to have engaged in extortion, money laundering, wire fraud, Foreign Corrupt Practices Act violations, witness tampering and obstruction of justice. The Front, which has long been involved in peddling a dishonest public relations campaign against Chevron aimed at extorting a settlement from the company, and Servicios Fromboliere, an Ecuadorian law firm established by Fajardo, are both shareholders in Amazonia and part of the extensive web of obscure entities established by the participants in the fraud against Chevron to attempt to hide their misconduct and profit from it.
Today’s ruling is the latest in a series of setbacks for Donziger and his team, which has been unsuccessful in its attempts to enforce the Ecuadorian judgment across a variety of jurisdictions.
“In issuing this decision, the Supreme Court is holding the perpetrators of this fraudulent enterprise accountable for their actions,” said R. Hewitt Pate, Chevron’s vice president and general counsel. “In courtrooms around the world, this fraudulent scheme against Chevron Corporation continues to implode.”
This latest judgment against Donziger’s associates and their supporting organizations follows a December 2015 ruling against Amazonia itself, in which the Supreme Court of Gibraltar awarded Chevron$28 million in damages and issued a permanent injunction against Amazonia preventing it from assisting or supporting the case against Chevron Corporation in any way. Chevron claims against Amazonia asserted that the company is a vehicle to perpetuate the ongoing fraud scheme against Chevron, with the express purposes to procure funding for the scheme, fund the plaintiffs’ conspiracy, issue shares of the company to lawyers, advisors and funders, and receive and distribute proceeds from the corrupt Ecuadorian judgment.
In 2015, Chevron filed similar claims in Gibraltar against Fajardo, Yanza and Chavez, and later, in 2017, successfully joined the Front and Servicios Fromboliere to the proceedings as additional defendants. Despite orders from the court, and their status as directors and shareholders in the Gibraltar company, the defendants failed to acknowledge service of court documents or participate in the proceedings. As a result, the court issued a default judgment against the defendants, awarding Chevron$38 million. The award was based on legal fees and other costs incurred by Chevron to uncover and combat the conspiracy. The Gibraltar court also issued a permanent injunction prohibiting the defendants from further participation in the scheme and ordered the defendants to reimburse Chevron for any future expenses it incurs defending itself against the fraud.
In addition to these developments in Gibraltar, efforts to enforce the fraudulent Ecuadorian judgment have now been rejected in Argentina, Brazil, Canada and the United States.
In the United States, in March 2014 Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York ruled that the Ecuadorian judgment was the product of fraud and racketeering activity, finding it unenforceable in the United States and holding Donziger liable for RICO violations. In his opinion, Judge Kaplan described Amazonia as a “Gibraltar company…through which the property collected on the judgment is to be funneled.”
In Brazil, in 2015 the Federal Prosecutor’s Office issued a recommendation to the country’s Superior Court of Justice that the judgment not be recognized for enforcement, finding that it was “issued irregularly, especially under uncontested acts of corruption” and that recognizing it would violate Brazilian and “international public order.” The Brazilian Superior Court of Justice subsequently unanimously rejected attempts to enforce the judgment in November 2017. On May 16, 2018 the Brazilian Superior Court of Justice rejected attempts by the plaintiffs to limit the scope of its decision through a motion to clarify.
Similarly, in 2016 Argentina’s public prosecutor’s office recommended that its National Court reject the effort to recognize the Ecuadorian judgment in that country. The National Court No. 61 in Buenos Aires dismissed the recognition action on October 31, 2017. An appeal is now pending.
In Canada, in January 2017 a court ruled that the Ecuadorian judgment could not be enforced against Chevron Canada Limited, an indirect subsidiary of Chevron. That decision was upheld on appeal in on May 23, 2018 by the Ontario Court of Appeals.
Since the extent of Donziger and his team’s fraud scheme was revealed, more than a dozen former insiders and allies have abandoned the effort, including Donziger’s former co-counsel, environmental consultants, funders, investors, employees and Ecuadorian collaborators.
