Ruling a Slap on the Wrist
U.S. District Judge J. Lawrence Irving’s words were tougher than his deeds last week, as he found that former Nucorp Energy Chairman Richard L. Burns had defrauded investors and creditors of his oil and gas company. Irving ruled in favor of the Securities and Exchange Commission, which had filed a civil suit against Burns last year.
But the only penalty was a permanent injunction prohibiting Burns from violating SEC regulations in the future. No criminal or financial penalties were assessed. That surprised some longtime Burns watchers, who expected more severe sanctions.
Irving’s actions were limited solely because the SEC asked only that Burns be ordered not to repeat the violations. Even at that, Irving had to determine if Burns, who now owns an oil and gas drilling company, was likely to repeat the violations, which is the key test to issuing such an injunction.
What swung his decision, Irving said in court, was Burns’ role with Deposition Technology, a San Diego-based company that in November was purchased by an Illinois company for $25 million in notes. As part of that deal, Burns, who had resigned as chairman of Deposition Technology last summer, received $3.2 million. That money increased the “likelihood that (Burns) would violate the law in the future,” Irving said.
Settlement talks are under way to resolve a civil suit filed against Burns by dissident Nucorp shareholders. Irving’s ruling will hasten the out-of-court talks, according to sources close to the case.
New Twist in Sun Savings Suit
The expected lengthy legal proceedings in Sun Savings & Loan’s lawsuit against its former chairman, president and chief executive, Dan Dierdorff, took another turn in federal court Monday.
Dierdorff had asked U.S. Magistrate Harry McCue to quash a subpoena by Sun seeking Dierdorff’s personnel records at other financial institutions he once worked for. McCue denied the motion.
Officials will not say why they want Dierdorff’s old personnel records. Sun has sued Dierdorff, alleging fraud and mismanagement. Dierdorff, in turn, has countersued Sun for $30 million, denying the allegations and claiming that the company conducted a “campaign” to discredit him.
TravelLodge to Buy Stock
With only 3.5% of its outstanding stock in public hands, industry observers have long wondered why TraveLodge International has remained a public company. On Monday, the locally based subsidiary of Trusthouse Forte California (itself a subsidiary of Trustehouse Forte PLC of London), answered the queries.
The company will buy back the approximately 76,000 of publicly held stock for $44 per share. The company admits that is stock is worth $44 to $48 per share, so the offer is on the low end of that estimate. The shares are not listed on any exchange and there is limited, if any, trading.
