ZIASUN TECHNOLOGIES SETTLES GROUNDBREAKING LAWSUIT
OVER INTERNET STOCK MANIPULATION.
Solana Beach, CA., October 25, 2000 -- ZiaSun Technologies, Inc. (NASD OTC
BB: ZSUN), along with its former president, Tony Tobin, and consultant Bryant
Cragun, today announced the settlement of two groundbreaking cybersmear lawsuits
against four individuals accused of manipulating ZiaSun's stock by disseminating
false statements and "press releases" over the Internet. Through this
settlement, ZiaSun, Tobin and Cragun succeeded in stopping a pattern of
derogatory statements that harmed the company and drove down stock prices.
The lawsuits involved conduct beginning in early 1999. ZiaSun and Tobin
learned that an anonymous group of apparent short sellers were using Internet
bulletin boards to post negative statements the company and Tobin concluded were
false. ZiaSun and Tobin filed a lawsuit in Seattle federal court to stop the
practices. ZiaSun succeeded in uncovering the identities of these anonymous
Internet users and the action was transferred to federal court in California,
where one of the defendants resides.
When Cragun, a consultant for ZiaSun, learned that many of the same
individuals were making similar statements about him personally, he sued them in
California state court. Cragun's lawsuit accused the defendants of working in
conspiracy to manipulate stock prices of several companies including ZiaSun to
enhance their profits on short sales.
Both cases made headlines in January 2000 when the federal court in the
ZiaSun case issued the nation's first known preliminary injunction against
Internet defamation, and the state court in the Cragun case issued the nation's
first known temporary restraining order against Internet market manipulation.
The judge in the Cragun case also ordered defendant Floyd Schneider to post a
retraction on the Internet of "press releases" he had issued recommending that
ZiaSun investors sell their stock.
In earlier interviews and releases, ZiaSun and Cragun made clear they were
suing primarily to enjoin the defendants' practices, which they believed to be
unlawful and damaging to markets and investors. In fact, in the state court
action, Cragun did not sue for monetary damages, instead asking the court only
to enjoin the defendants' conduct and order them to return to investors their
alleged profits from short sales.
After the injunctions issued in January, the cases were vigorously
litigated. Late this summer, the state court granted a series of motions brought
by Cragun. Cragun had asked the defendants to produce evidence supporting
contested statements they had made on the Internet. When they failed to produce
any evidence to support their statements -- instead raising numerous objections
-- Cragun asked the court to intervene. After a series of contested motions, the
court overruled the defendants' objections, ordered the defendants to produce
all disputed evidence, including trading records, and issued harsh monetary
sanctions of almost $19,000 against the defendants and their attorney. The
sanctions were a penalty for their attempts to conceal evidence or their lack of
evidence.
At about the same time, ZiaSun filed a motion asking the federal court to
find defendant Floyd Schneider in contempt for violating the January preliminary
injunction. Shortly after the discovery and sanctions orders in the state court,
and as Schneider was due to defend his alleged contempt in federal court, the
defendants agreed to cease and desist from their actions, broadly agreeing to
refrain from publishing, on the Internet or otherwise, statements about ZiaSun,
Cragun, Tobin, and a variety of other related individuals and companies
protected under the settlement agreement.
ZiaSun and Cragun very pleased with the defendants' agreement to refrain
from such wide-ranging conduct. According to ZiaSun President, Al Hardman, "This
settlement is a great victory for ZiaSun. The defendants have agreed to far
broader restraints than we ever hoped to obtain in court." ZiaSun's attorney,
Christopher Howard, labeled the restraint provisions of the agreement as broader
than any restraint a court would have the power to order. "The defendants have
agreed to waive any First Amendment claims they may have regarding the types of
statements covered in the agreement," said Howard. "That's something you can
obtain only through an agreement. No court in the country can order a party to
waive First Amendment protection." Howard also pointed out that the First
Amendment would not afford protection, in or out of court, for the defendants'
alleged market manipulation activities. "The First Amendment does not protect
all speech," said Howard, "and false statements intended to manipulate the
prices of publicly traded stocks have been enjoined by the courts since at least
1934."
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Under the terms of the settlement, the defendants agreed
"to refrain from publishing to any third party, directly, indirectly,
or through any third party intermediary, any statement, opinion or
other communication . . . about . . . Bryant Cragun; ZiaSun
Technologies, Inc.; Anthony Tobin; Loraca International, Inc.;
Chequemate International, Inc.; Titan Motorcycles of America, Inc.;
Asia4Sale; Online Investors Advantage; Dynatech International, Inc.;
any plaintiff or cross-defendant in [either of the lawsuits]; any
member of Bryant Cragun's or Anthony Tobin's family who defendants
know or reasonably should know is related to Cragun or Tobin; any
individual or entity who defendants know, reasonably should know, or
ever have suggested is related to Bryant Cragun or Anthony Tobin; any
person defendants know or reasonably should know is an officer,
director, employee, agent, subsidiary, or shareholder of any of the
companies identified above; or any person defendants know or
reasonably should know is an employee, agent, attorney, accountant,
heir, successor, assign, or representative of Bryant Cragun, ZiaSun,
or Anthony Tobin."
The defendants also agreed to cease all postings on any Internet bulletin
boards related to any of the companies or individuals protected under the
agreement.
The defendants also agreed to waive any First Amendment protection to make
such statements, to the extent the First Amendment protects them, and to submit
to jurisdiction of both the federal and state courts to enforce the restraint
provisions including by injunctive relief. In fact, as of this release, Cragun
has filed a motion asking the state court to enter judgment against the
defendants to enforce the settlement.
To accommodate the settlement, the plaintiffs similarly agreed not to post
such statements about the defendants, although the plaintiffs had not engaged in
such conduct and none of the defendants had accused them of doing so.
Under the settlement agreement, both cases will be dismissed as to the
settling defendants and all parties will bear their own attorneys' fees and
expenses. No money will change hands. In a separate but related agreement,
Bryant Cragun purchased an assignment from defendant George Joakimidis of
Joakimidis' claims in a cross-complaint. In that cross-complaint, which was
filed in state court, Joakimidis claimed to be due payment on an agreement to
purchase certain stock holdings he had liquidated. Cragun purchased an
assignment of those claims from Joakimidis for $60,000. The assignment will give
Cragun all rights to pursue whatever value those claims have.
According to Cragun, he expects to completely make back the cost of the
assignment in short order. "I always felt that the claims against me in the
cross-complaint were nothing more than a nuisance," said Cragun. "I had nothing
whatsoever to do with the transactions described in the cross-complaint and it
was always my opinion that Mr. Joakimidis named me in the cross-complaint only
because I had sued him. But it looked like the claims could have some negotiated
value against other parties and it was well worth it to buy the assignment in
order to help pave the way for the kind of broad relief we obtained in the
settlement of the real cases."
Shortly after purchasing the assignment from Joakimidis, Cragun filed suit
against PT Dolok Permai dba International Asset Management, one of the other
cross-defendants and a party who Joakimidis alleged to be at the heart of the
transaction described in the cross-complaint. According to Cragun, it appears PT
Dolok Permai is the party behind Joakimidis' claims. "I don't know much about PT
Dolok," said Cragun, "although I have been accused publicly of being part of
their operations. Based on Mr. Joakimidis' complaint and the investigation we
have done both in the litigation and in our recent efforts to assist the Wall
Street Journal in a related investigation, it looks like PT Dolok is behind the
transactions that caused Joakimidis to sue. I intend to pursue them to recover
the full value of the claims I purchased."
ZiaSun will continue to pursue its claims against two other defendants in
the federal case and, according to company president Al Hardman "ZiaSun will
continue to take whatever steps are necessary to protect the interests of its
shareholders and will vigorously defend itself against any further manipulation
tactics." Cragun previously settled his claims on similar terms with the only
other defendant in the state court action.
For Further Information, contact:
Michelle Cutting
Shareholder Services, ZiaSun Technologies Inc.
(858)350-4060
[email protected]
