Zennie62 on YouTube

Wednesday, November 17, 2010

Simpson, Thacher & Bartlett LLP Loses Round in $100 M PrediWave Fraud Case

In the latest chapter of this complicated six-year-old tech industry story this blogger covered on March 22, 2010, the law firm Simpson, Thacher & Bartlett LLP (an 800-employee business litigation firm with offices in New York and Palo Alto, as well as seven other cities worldwide) lost another round in its attempt to "shut up" former PrediWave outside Director Jimmy Li. Li was attempting to investigate PrediWave company documents and conducting an investigation that would reveal the misconduct of Former Tech CEO Jianping “Tony” Qu, once the head of PrediWave Corporation.

Jianping “Tony” Qu was reported to have "taken off" with $100 million in bonuses, leased 30 cars and purchased a whopping 19 homes. Simpson, Thacher & Bartlett was alleged to have been involved in a cover-up of Mr. Qu's actions. Why? That's not known. Here's the timeline of original events, as repeated from this blogger's last post, but adjusted to make the story clearer:

1) Attorneys for Simpson Thacher became aware by December 1, 2004 that Mr. Qu was directing the sale of tens of millions of dollars of memory chips to PrediWave through a shell corporation whose profits were pocketed by Mr. Qu.
2) Simpson Thacher uncovered evidence showing that delivery records and price quotes from a non-existent Chinese company were falsified, while the memory chips themselves were purchased from a tech firm operating only a few miles from PrediWave’s Fremont headquarters.
3) Mr. Qu was paid a $25 million bonus in January 2005 while Simpson Thacher sat on the evidence it had gathered regarding his activities.
4) Attorneys for Simpson Thacher filed a lawsuit in May 2004 preventing two PrediWave directors, one of them PrediWave outside Director Jimmy Li, from reviewing company documents and conducting an investigation that would reveal Mr. Qu’s misconduct.
5) In 2005, Simpson Thacher chose to hire a private investigations firm, not for the purpose of exposing Mr. Qu’s actions, but to determine the probability of the fraud going public. Simpson Thacher never disclosed the results of that investigation to PrediWave’s board of directors, which included PrediWave outside Director Jimmy Li.
6) While serving as PrediWave’s counsel for only little over a year, Simpson Thacher billed over $16 million in legal fees. At the same time, Mr. Qu was receiving approximately $25 million in annual bonuses from a company that had recorded no sales and no profits.
Thus, there are two "bad guys" here: Mr. Qu and Simpson, Thacher & Bartlett LLP. The "good guy" is Jimmy Li, and thank to Justice Patricia Bamattre-Manoukian, of the Sixth District of the California Court of Appeal, the good guy's winning.

This is what the press release reports:

Justice Patricia Bamattre-Manoukian, writing on behalf of the Sixth District of the California Court of Appeal, affirmed the denial of Simpson Thacher’s motion in the malicious prosecution lawsuit brought by former PrediWave outside Director Jimmy Li. This is the latest in a string of adverse rulings against the law firm, which is facing charges of massive fraud leveled by its former client PrediWave. Li’s malicious prosecution lawsuit has been deemed a “related case” to the PrediWave fraud case by the Santa Clara Superior Court, where both cases are proceeding.

What's not explained is why  Simpson, Thacher & Bartlett, once a client of the now bankrupt PrediWave, would "sit on" the evidence against Mr. Qu, unless they were in on the "take" themselves.    In working to thwart investigation of the actions of Mr. Qu, Simpson, Thacher have worked to destroy the career and the reputation of Jimmy Li, and have failed, only throwing dirt on its own reputation in the process.

Stay tuned.

Visit the new Zennie62.com

Google Analytics Alternative