Article: $300M Stock Manipulation Suit Goes Forward

Article - Media, Publications

$300M Stock Manipulation Suit Goes Forward

Mark Hamblett, 30 July 2002

Internet Law Library Inc.’s allegation that it was the victim of “death spiral financing” by defendants who have a long history of stock manipulation states a claim under federal securities laws and will not be dismissed, a federal judge in New York has ruled.

Judge Robert L. Carter for the Southern District of New York rejected motions to dismiss brought by Southridge Capital Management and Cootes Drive LLC, which deny their agents violated a promise to refrain from short-selling shares of Internet Law Library immediately after agreeing to provide $28 million in financing.

Internet Law Library, now known as ITIS Inc. (OTC BB:ITII.OB – News), owns Internet sites specializing in legal research and litigation support services.

The company claims that, in spring 2000, it negotiated with Southridge for capital of up to $28 million, consisting of a $25 million equity line agreement and a $3 million convertible preferred stock purchase that ultimately triggered the lawsuit, Internet Law Library v. Southridge Capital Management, 01 Civ. 6600.

The company alleged that Southridge and its agents, Steve Hicks, Dan Pickett and Christy Constabile, promised to refrain from selling ITIS stock for one year after the closing, and also promised not to manipulate the stock to depress its price.

ITIS Chief Executive Hunter M.A. Carr repeatedly asked Southridge and its agents about his concern on short-selling, and was told several times that Southridge would not engage in the practice. Carr claimed he relied on these representations when he signed the stock purchase agreement on May 11, 2000, with Cootes Drive, a company that replaced Southridge as a signatory at the last minute.
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Article: Internet law site sues old partners

Article - Media, Publications

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. Continue reading “Article: Internet law site sues old partners”