TALLAHASSEE (CN) – InvestorsHub.com, an investment website, accuses a Canadian company of “libel tourism”: suing iHub for defamation in Ontario Superior Court to take advantage of Canada’s defamation laws, though the website and its owners have “no connection” with Canada. They want a $105,000 Canadian judgment thrown out. One of the plaintiffs faces up to 20 years in prison for stock fraud in the United States, according to U.S. press reports.
“Canada provides less protection for free speech than United States and Florida law,” the plaintiffs say in their federal complaint against the Mina Mar Group and Mina Mar Group of the USA.
Joining InvestorsHub as plaintiffs are its former president Robert Zumbrunnen and Matthew Brown, whom the complaint describes as a former employee. They say they did not bother to defend themselves in the Canadian lawsuit because they have “no connection” to Canada.
The plaintiffs, who refer to themselves in the complaint as iHub, say, “iHub owns and hosts an Internet website that provides a forum for serious investors to gather and share market insights using an advanced discussion platform.” iHub claims to have “more than 200,000 members who have posted more than 55 million messages on more than 15,000 different iHub boards.”
The Orange County Register described iHub and Brown somewhat differently, in a Feb. 17, 2010 story: “Matthew Brown, founder of Orange County stock board InvestorsHub.com, pleaded guilty today to four counts of stock fraud and money laundering. He faces up to 20 years in prison and a $500,000 fine. Brown entered his plea in U.S. District Court in Delaware,” the Register reported.
The story continued: “Federal prosecutors charged Brown and six others with a pump-and-dump scheme to hype five lightly traded stocks on InvestorsHub, drive up the price and then sell. In his plea agreement, Brown admitted that investors lost at least $1 million because of his scheme.
“Prosecutors said Brown and the others arranged with help from insiders to gain control of millions of shares in the target companies. Then they spread glowing rumors on InvestorsHub and other stock boards, prompting unwitting buyers to rush in. Then they sold.”
Here is a link to Brown’s plea agreement.
Zumbrunnen was not involved in that case.
Mina Mar Group is a Canadian corporation based in Ontario. Its U.S. branch, Mina Mar Group of the USA, is based in Fort Lauderdale. Its president, defendant Miro Zecevic, lives in Ontario.
In 2008, Mina Mar filed a $4 million defamation suit against InvestorsHub and Brown – adding Zumbrunnen and others in 2009 – “based upon the statements of third parties posted on iHub’s boards,” according to the complaint.
“Neither iHub, Brown, nor Zumbrunnen posted any of the allegedly defamatory statements,” they say.
“Because iHub, Brown, and Zumbrunnen were not properly subject to the personal jurisdiction of the Canadian Court in the Canadian defamation lawsuit, they did not defend themselves.”
When iHub failed to show in Canada, Mina Mar and Zecevic “obtained a final judgment against iHub, Brown, and Zumbrunnen holding them liable for libel and defamation and, among other things, ordering iHub, Brown and Zumbrunnen to pay $75,000 (CAD) in general damages and $10,000 (CAD) in punitive damages; ordering iHub, Brown, and Zumbrunnen to apologize and publicly retract certain statements; ordering iHub, Brown and Zumbrunnen to disclose the names and addresses of certain individuals who made statements on iHub’s Site; enjoining iHub, Brown and Zumbrunnen from posting defamatory statements about Mina Mar Group Inc. and Miro Zecevic; and ordering iHub to pay $20,000 (CAD) as the costs of the action,” according to the complaint. The Canadian court also ordered them to pay $13,650 in costs.
In September 2010, Mina Mar recorded the judgment in Leon County, Florida.
“(B)ecause the law of Canada provides less protection for freedom of speech than United States and Florida law,” iHub says it should be “shielded from liability.” It claims that Brown and Zumbrunnen were not even iHub employees of the company at the time of judgment, and that Brown did not work for iHub when the allegedly defamatory statements were posted.
A December 2010 letter from InvestorsHub to Mina Mar, posted on Mina Mar’s website, states: “In compliance with the Judgment of the Ontario Superior Court, InvestorsHub.com Inc. (‘IHub’) hereby apologizes to Mina Mar Group Inc., Mina Mar Group Inc. (of the USA) and Miro Zecevic for defamatory postings authored by third parties not affiliated with iHub that appeared on the iHub website.”
iHub principals faced possible jail time for contempt if they did comply with the Canadian court order; proceedings there have been rescheduled from December 2010 to February 2011, Marketwire reported on Jan 11.
The plaintiffs in Tallahassee want the Canadian court order deemed unenforceable, under the Uniform Out-of-Country Foreign Money-Judgment Recognition Act.
Their lead counsel is Deanna Shullman with Thomas & Locicero in Lake Worth, Fla.