MANHATTAN (CN) – A Mexico-based Internet yellow pages company sued Yahoo and the Baker & McKenzie law firm for $2.7 billion, claiming they conspired to “pervert” the Mexican legal system to duck a legal judgment by bribing the chief judge of the Mexican Federal District Court.
Worldwide Directories and Ideas Interactiv sued Yahoo, Yahoo de Mexico, and Baker & McKenzie, on Wednesday in Federal Court.
The Mexican judge is identified in the 33-page lawsuit, but is not a defendant in the RICO complaint.
Worldwide claims that the defendants “colluded to mastermind and carry out a conspiracy to avoid and/or nullify a $2.7 billion dollar judgment in favor of plaintiffs and against defendants Yahoo-US and Yahoo-Mexico that was entered by the Mexican courts. The non-parties comprising the U.S. based enterprise that actively assisted with carrying out the scheme include Dr. Edgar Elias Azar (‘Azar’), President of Mexico’s District Federal Superior Courts, and Edgar Raul Rodriguez (‘Rodriguez’), a clerk in the Mexico appellate court, and likely several others.”
Worldwide says it sued Yahoo in 2011 in a contract complaint involving its Internet and print directory service.
“To ensure a successful outcome, rather than mount a legitimate legal challenge to the bona fide judgment, plaintiffs allege that the evidence shows that RICO defendants conspired to unlawfully obtain a positive judgment through a series of criminal acts, including bribery, money laundering, mail fraud, and wire fraud, among others, in order to corrupt the Mexican judiciary,” the complaint states.
Nonetheless, Worldwide says, in 2012 the Mexican court ordered Yahoo to pay $2.7 billion in damages.
The Mexican judicial system is notoriously corrupt. It can be bewildering to North Americans, as it is based upon the Napoleonic Code, which grants defendants far fewer rights than the British-based U.S. system.
Torture is regularly used to extract confessions. One Mexican federal judge told Courthouse News that even if he found a defendant’s rights had been violated by unconstitutional torture, he could not spring him from jail. “All I can do is say it was illegal,” the judge said in an interview in his chambers.
Worldwide claims in its lawsuit: “During the underlying litigation, Yahoo did not fully disclose to its investors the extent of the potential judgment against Yahoo. Getting the judgment overturned was imperative if Yahoo would continue to compete in the Internet communication services industry, and not pay a substantial sum to satisfy the judgment. Accordingly, having failed to intimidate and corrupt the trial judge, the RICO defendants set out to corrupt the appeals process and overturn the judgment.
“In order to accomplish this common purpose, the RICO defendants committed repeated acts of obstruction of justice and coercion of judicial officials aimed at pressuring plaintiffs to drop their suit or accept a settlement that is substantially less than the amount of Yahoo US’s exposure, and ultimately to illegally obtain a favorable judgment.”
In doing so, Worldwide claims, the defendants obstructed justice, violated the Foreign Corrupt Practices Act, committed extortion in violation of the Hobbs Act, and wire fraud and money laundering.
It claims that nonparty Azar, chief judge of the Mexican Federal District Court, “is known throughout Mexico for his willingness to influence the disposition of cases in exchange for money. As the ultimate supervisor of the judges involved in making these decisions, Judge Azar had substantial influence over members of the Mexican judiciary.”
The lawsuit continues: “From the very moment that plaintiff initiated a lawsuit to address Yahoo’s multiple contract breaches, and even before the filing of the case during the pre-claim discovery phase, the RICO defendants conspired to corrupt the judicial process through intimidation and coercion. Specifically, the RICO defendants sought to use the co-conspirator Judge Azar to intimidate a Mexican district judge into ruling for Yahoo and then, when those efforts failed, sought to and successfully did corrupt the appellate Mexican judicial system, resulting in a corrupt fraudulent reversal of the lower district court’s $2.7 billion damages award and a reduction of the damages award to $172,500.
“At the RICO defendants’ request, Judge Azar improperly injected himself into plaintiffs’ civil case and attempted to intimidate the District Court Judge Segu assigned to decide the case to rule in favor of Yahoo despite extensive evidence of Yahoo’s liability.
“In furtherance of this conspiracy, the evidence shows that defendants Baker & McKenzie improperly conducted ex parte meetings with Judge Azar to discuss the implementation of their scheme to corrupt the Yahoo judgment.”
Worldwide claims that Baker & McKenzie “drafted their own, self-serving decisions in favor of Yahoo,” and then “delivered the illegal opinions on a memory stick to the district court judge who had already been informed by Judge Azar that the opinion would be delivered by Yahoo’s lawyers.”
But “despite Judge Azar’s threats and intimidation, and contrary to instructions,” Judge Segu refused to enter the dictated decision, and ruled for Worldwide, the company says, whereupon “the RICO defendants immediately set to corrupt and influence the appellate court which would be responsible for reviewing that decision.”
Then in a few prime paragraphs, Worldwide claims: “In furtherance of this conspiracy of intimidation and perversion of justice, plaintiffs have obtained evidence that Judge Azar, at the direction and instruction of the RICO defendants, met on numerous occasions for several hours with the Chief Judge of the Appellate Courts, intimidating her and ultimately directing her and her panel to reverse the judgment below and enter a corrupted judgment in favor of Yahoo.
“Indeed, when an attorney for plaintiffs went to meet with Judge Azar about the status of the appeal before it had even been filed by Yahoo, Judge Azar explained that the other side had ‘got there before him’ and plaintiffs ‘cannot win in my court’ and had ‘already been defeated’ and there were ‘too many zeros involved’ for his mind to be changed.”
Worldwide claims that its allegations “are not speculative.” It says it its evidence “that this fraudulent corrupt judgment was obtained by Judge Azar’s threats and intimidation comes directly from eyewitnesses who personally observed the conspiracy. These eyewitnesses include the original District Court Judge Segu who has provided sworn testimony about the intimidation and corruption he suffered at the hands of Judge Azar, and threats of harm to the judge if he failed to comply. These threats caused Judge Segu to temporarily flee his native country for the United States. Judge Segu has provided counsel with the original memory stick containing the illegal opinion exonerating Yahoo and an opinion finding for Yahoo on the underlying merits drafted by defendants Baker & McKenzie, at the direction of Yahoo. Plaintiffs have the memory stick, and a forensic analysis of this memory stick indicates that it was drafted on a computer/workstation owned by defendant Baker and McKenzie further suggesting this scheme was tied to and originated from the United States.”
Worldwide demands damages for RICO violations and fraud.
It is represented Robert Magnanini with Stone & Magnanini, of Short Hills, N.J.
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