Jury awards attorney $350K after finding he was defamed by company's CEO
By Brandon Gee
The Daily Record Newswire
If reputation is everything, then Daniel P. Neelon came close to losing it all.
In the end, the Braintree lawyer was able to claim vindication — but not before seeing his good name tarnished in connection with a Mongolian gold mining scandal, and only after waging a years-long battle in federal court that finally ended last month.
A U.S. District Court jury awarded Neelon $350,000 after finding that he was defamed by Canadian defendants who publicly accused him of participating in a fraud to transfer ownership of a Mongolian subsidiary without authorization.
The bizarre saga began in November 2010. Neelon, who was working at the Boston law firm Denner Pellegrino, prepared documents on behalf of client Georges Cohen for a $216,000 loan to fund the Mongolian gold mining operations of Garrison Asia, a subsidiary of Toronto-based Garrison International.
The loan agreement, negotiated with Garrison International president and CEO Blair Krueger, provided Cohen with an extraordinary remedy: In the event of a default lasting more than 72 hours, he could transfer 100 percent of the shares in Garrison Asia to himself using a pre-signed share transfer pact contained in the agreement.
When Garrison allegedly defaulted less than two months after signing the agreement, Cohen took possession of Garrison Asia with the assistance of his Mongolian lawyer.
Krueger responded with “veiled threats about ‘ugly’ things that could happen to Neelon in Mongolia” if the shares and company assets weren’t returned, according to Neelon’s complaint.
Krueger also issued two press releases in 2011 that accused Neelon and Cohen of conspiring to steal Garrison Asia’s shares and assets.
The second news release identified Neelon by name, noted that he was a Massachusetts attorney, and claimed that he and Cohen were the subjects of an active Mongolian criminal investigation proceeding toward trial.
In reality, according to Neelon, Krueger had merely complained to Mongolian authorities, who declined to pursue a case against the Boston lawyer.
In other communications, Krueger accused Neelon of bribery and threatened to report him for ethical violations, according to the complaint.
The purpose of Krueger’s actions, according to Neelon, was to pressure Cohen to reverse the transfer of Garrison Asia.
Neelon responded by suing Krueger and Garrison International, now known as Desert Eagle Resources, for defamation, unfair and deceptive business practices, and tortious interference with prospective economic relationships.
“In one way or another it impacted virtually every part of my life,” Neelon says of the defamatory statements. “On the professional side, the phone just stopped ringing. I’ve never seen a period so dry for the types of calls that I had received on a fairly regular basis before that last press release was issued containing false public information suggesting that I had been criminally charged.”
Neelon says he received “pointed queries” from other lawyers, as well as current and potential business partners, who said while they understood the allegations against Neelon could not be true, “they presented a challenge for doing business together.”
Lost opportunities included a separate coal mining venture Neelon had been exploring in Mongolia and the dissolution of the law partnership he had formed after leaving Denner Pellegrino. And while Neelon was never arrested, he was effectively detained in Mongolia for months due to a bar transit order related to Krueger’s allegations.
“The matters I had to deal with over there were absorbing a very large, unexpected amount of time,” Neelon says. “I wasn’t able to devote the type of time and attention to my U.S. law practice that I had imagined.”
Watching his hard-earned reputation slip away caused an “enormous amount of stress,” he says, and proved equally distressing for his family, deeply rooted in Massachusetts for generations only to see its name now dragged through the mud.
Neelon is haunted by the fact that the news releases turned up in Internet searches for his son at a time when he was applying to medical school. Despite a “better-than-A” undergraduate GPA at Columbia University, Neelon says, his son was not granted a single interview at any of his top-flight schools.
“It just, of course, makes me wonder the rest of my life if that was the cause,” Neelon says ruefully.
The defendants in the case are represented by Damian R. LaPlaca of Devine Millimet in Boston. LaPlaca declined to comment.
Neelon, meanwhile, says one of his biggest pre-trial hurdles was convincing judges that his case belonged in federal court in Massachusetts. The defendants’ first attempt to move the suit to Mongolia or Canada came early in the case when they filed a motion alleging lack of personal jurisdiction, which was denied by Judge F. Dennis Saylor IV in 2013.
Then, in 2014, after the case had survived a motion for summary judgment, Judge Indira Talwani denied the defendants’ motion for forum non conveniens.
International civil litigator Theodore J. Folkman of Murphy & King in Boston, though not involved in the matter, says there was good reason to keep the case in Massachusetts.
“[Neelon] is an American. His reputation, to the extent his reputation matters, matters where he is,” Folkman says.
Neelon also successfully deflected the defendants’ conversion counterclaim against him, which was dismissed on summary judgment.
The defendants accused Neelon of intentionally engaging with Cohen to steal the shares in Garrison Asia by drafting the loan agreement with its default terms. They claimed they then were induced to default under the agreement by contemporaneous written and oral statements by Cohen.
Neelon says he had no ulterior goals.
“I did not know anything about these parties at the time that I first got the representation,” Neelon says. “I don’t think anyone could have predicted some of the things that happened after that. … When I started this, I was just engaged to negotiate the terms of the documents and draft them with assistance of Mongolian counsel.”
The loan agreement’s default remedy was justified by the fact that Cohen had previously advanced more than $3 million to the same parties and had never been repaid, according to Neelon.
Talwani did not opine on Neelon’s motives.
“Even assuming that a reasonable jury could find that Neelon’s intent in drafting the loan agreement was to obtain the Garrison Asia shares, Garrison International offers no facts suggesting that Neelon’s acts were wrongful. Garrison International does not argue, for example, that the agreement was anything less than an arm’s length deal,” the judge wrote in dismissing the conversion counterclaim. “Whatever Neelon’s intent in drafting the Note, Garrison International has presented no evidence of acts occurring outside of the arm’s length negotiation of a loan agreement.”
Neelon did suffer some pre-trial defeats; most notably, his failed attempt to add an emotional distress claim to his complaint based on an alleged scheme by the defendants to bribe Mongolian government officials into harassing Neelon and having him unlawfully detained in Mongolia.
The resulting trial was remarkably “streamlined,” says Neelon’s lawyer, Paul J. Andrews, who previously worked with Neelon at Denner Pellegrino. (The two now practice together at Braintree’s Neelon, Andrews & Levin.)
“It all boiled down to whether the news releases were false and defamatory or not,” Andrews says. “I think the evidence that established the defamation was just crystal clear. They alleged a criminal action against Dan, but we had documentary evidence that showed just the opposite. His client was under investigation, not him.”
While Neelon had argued for lost wages of $1 million, he’s pleased with the jury’s $350,000 verdict, which was handed down the morning after closing arguments at the conclusion of the two-week trial.
“We’re satisfied,” Andrews says. “Our primary satisfaction is that Dan has been vindicated in this. That’s what got us into court in the first place: Dan wanted to clear his name.”
Their work is not done, however. The defamatory press releases are still turning up online, on reputable websites including Reuters.
“Previously, we only had an allegation that the news release was defamatory. Now that we have this judgment, we’re hoping we’ll be able to take some efforts to see that this thing is taken off,” Andrews says. “Obviously, one of the things we want to do here is let everyone know that Dan was vindicated, and we do have a judgment that these were defamatory.”
