Internet law site sues old partners
Jenna Colley , 25 February 2001
Houston-based Internet Law Library Inc. is throwing the book at its former partners.
In a federal lawsuit filed Jan. 26, Internet Law Library accuses ex-investors of a slew of improprieties, alleging stock manipulation, securities and exchange violations and fraud.
Internet Law Library filed the suit in U.S. District Court in Houston against Southridge Capital Management LLC and its executives Steve Hicks, Dan Pickett and Christy Constabile. Also named are Canadian company Thomson Kernaghan & Co. and investor Cootes Drive LLC.
Internet Law Library, through several subsidiaries, operates various Internet sites containing databases for legal and other research.
According to the suit, Southridge agreed to a $3 million convertible preferred stock purchase and a $25 million line of equity. The company alleges that after agreeing to provide the $28 million in capital, Ridgefield, Conn.-based Southridge sold the company’s stock short.
Southridge Capital Management executives Hicks, Pickett and Constabile could not be reached for comment.
The suit further alleges that the signatory party in the transaction, Cootes Drive, was controlled and created by the defendants, and acted as a “straw man” for the transactions and “not an accredited investor.” According to the suit, Internet Law Library alleges, “that the funding actually came from Southridge and Thomson Kernaghan & Co.”
Cootes Drive, through its trustee in the Cayman Islands, could not be reached for comment.
Officials with Thomson Kernaghan & Co. also could not be reached.
