Opinion ID: 75504
Heading Depth: 2
Heading Rank: 1

Heading: Allegations with respect to GYS

Text: 1. GY&S represented Cascade on a variety of legal matters from the summer of 1989 through Incendy’s disappearance in November 1991 and was retained to assist Cascade and Incendy in defending against those who raised questions about the truthfulness of Cascade’s reported financial condition. 2. On January 15, 1991, GY&S sent Incendy a letter regarding an option agreement that Cascade had. GY&S told Incendy that all material information about Cascade’s business and operations must be accurately reflected in Cascade’s registration statement, and GY&S recommended that Cascade correct any inaccuracies in Cascade’s recently filed prospectus. No corrections were made. 3. In the summer and fall of 1991, Cascade and Conston were considering a deal with Oleg Cassini. GY&S advised Cascade how to issue information to the public regarding the proposed deal. In June 1991, Cascade issued two press releases regarding a purported agreement that it and Conston had reached with Oleg Cassini. In the fall of 1991, GY&S was actively involved in trying to help Cascade and Conston “get out” of the purported agreement. GY&S made no effort to cause Cascade to issue any press releases disclaiming the June 1991 press releases. 4. The OSS published an article on October 2, 1991, raising questions about Cascade. On October 7, 1991, GY&S prepared, without “appropriate investigation or inquiry,” a memorandum for Incendy suggesting statements that he could issue to the public in response to the OSS Report and Cascade’s recent stock price decline. GY&S allegedly did nothing to assure itself of the factual accuracy of its proposed statements. Cascade then issued a document to the public that was based largely on GY&S’s recommendations. 5. On October 2, 1991, in response to a request from Incendy, GY&S sent Incendy an opinion letter regarding the bankruptcy status of Conston. Despite its knowledge that Conston’s Plan of Reorganization had been confirmed on April 18, 1991, GY&S 7 concluded that “there is no doubt that Conston is in bankruptcy.” This letter enabled Incendy to justify the non-consolidation of Conston’s financial statements with those of Cascade in 1991. 6. In October 1991, GY&S attorney Michael Platner spoke to stock analysts, who were allegedly spreading rumors about Cascade and advising people to sell Cascade stock short, and urged them to stop raising questions about Cascade. 7. On October 30, 1991, Cascade issued a press release in which it stated that it had instructed its attorneys to file suit against the OSS for trade defamation and various other claims. Cascade also stated that it believed there was a connection between the OSS Report and shortselling activity that was orchestrated by brokerage firm analysts. Although GY&S reviewed and approved the press release, it was drafted by a different law firm. GY&S knew from its legal research that a trade defamation suit would have “substantial difficulties,” and it knew that its investigation had revealed no connection between shortsellers and the OSS Report. 8. On November 7, 1991, GY&S attorney Michael Platner wrote a letter to The Miami Review regarding an article that Platner heard was being prepared about Cascade. Platner claimed that there was no justification for printing such an incomplete and un-investigated article.