Litigation
“Round Trip” Sales of Gas
We represented a large insurance company in litigation with a leading global financial services firm over the validity of large surety bonds that guaranteed Enron Corporation subsidiaries' delivery of natural gas to an offshore company. Our client was one of eight sureties sued to collect approximately $1.2 billion. Our client and the other sureties alleged that the financial services firm and Enron had defrauded the sureties by concealing the fact that the gas deliveries that were bonded by the sureties were part of pre-arranged circular or “round trip” sales, that is, sales where the original seller repurchased gas from the original buyer at the same time and the same location as the original sale. Discovery was conducted at a greatly accelerated pace. Over a six month period more than 250 depositions were taken. Midway through the proceedings, we successfully resisted an attempt to impose joint and several liability upon our client for fraud for failing to pay on the surety bonds issued by our client and all the other sureties. The matter was tried over a five week period to a jury in the Southern District of New York. All of the other sureties settled just before the case went to the jury. On January 2, 2003, shortly after the case went to the jury, our client and the financial services firm reached a settlement favorable to our client. The case attracted a great deal of media attention.