doc 46 treaty answer

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS

SHERMAN DIVISION SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. CASE NO. 4:14-cv-812 RONALD L. BLACKBURN, ANDREW V. REID, BRUCE A. GWYN, MICHAEL A. MULSHINE, LEE C. SCHLESINGER, SAMUEL E. WHITLEY, AND TREATY ENERGY CORPORATION, Defendants.

DEFENDANT TREATY ENERGY CORPORATIONS ANSWER AND AFFIRMATIVE DEFENSES TO COMPLAINT

NOW INTO COURT, through undersigned counsel, comes Defendant, Treaty Energy

Corporation (Treaty), which responds to the Complaint filed by Plaintiff, Securities and

Exchange Commission (SEC) on December 15, 2014, as follows:

ANSWER

I. Summary

1. The allegations in Paragraphs 1 3 of the Complaint are Plaintiffs Summary of

the alleged claims therein, to which no response is required. To the extent a response is deemed

necessary, Defendant Treaty denies all such allegations as they apply to it.

II. Jurisdiction and Venue

2. Defendant Treaty does not contest the jurisdiction of this Court, as alleged in

Paragraph 4 of the Complaint.

Case 4:14-cv-00812-RAS Document 46 Filed 04/13/15 Page 1 of 6 PageID #: 426

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3. Regarding the allegations of venue in Paragraph 6 of the Complaint, Defendant

Treaty denies that venue is proper and further denies that the transactions, acts, practices, and

course of business described in the Complaint occurred within the jurisdiction of the Eastern

District of Texas.

III. Parties

4. Defendant Treaty admits that it is a Nevada corporation with its principal place of

business in New Orleans, Louisiana but denies all of the remaining allegations in Paragraph 6 of

the Complaint.

5. Defendant Treaty lacks knowledge or information sufficient to form a belief about

the truth of the allegations in Paragraph 7 of the Complaint but, out of an abundance of caution,

denies all allegations therein.

6. Defendant Treaty admits that Andrew V. Reid was its CEO and Chairman of the

Board from or about April 2010 until he resigned from the company and its Board of Directors

on July 28, 2014. Defendant Treaty lacks knowledge or information sufficient to form a belief

about the truth of the remaining allegations in Paragraph 8 of the Complaint but, out of an

abundance of caution, denies all allegations therein.

7. Defendant Treaty admits the allegations in Paragraph 9 of the Complaint.




9. Defendant Treaty admits that Lee C. Schlesinger was its Chief Investment Officer


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from or about November 2011 until his resignation in September 2013. Defendant Treaty lacks

knowledge or information sufficient to form a belief about the truth of the remaining allegations

in Paragraph 11 of the Complaint but, out of an abundance of caution, denies all allegations

therein.




IV. Facts


the truth of the allegations in Paragraphs 13 83 of the Complaint but, out of an abundance of

caution, generally denies all allegations therein.

V. Claims for Relief

12. The allegations in Paragraphs 84 112 of the Complaint state legal conclusions,

to which no response is required. To the extent a response is deemed necessary, Defendant

Treaty denies all allegations as they apply to it.

13. To the extent not otherwise denied, Defendant Treaty denies any and all other

allegations in the Complaint.

AFFIRMATIVE DEFENSES

1. Venue in this case is improper because none of the acts alleged in this Complaint

took place in the Eastern District of Texas. Rather, venue would be proper in the Eastern District

of Louisiana where Defendant Treatys principal place of business is located, where a significant


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number of shareholders are located, where most of the acts alleged in the Complaint occurred,

and where nearly all the witnesses anticipated in this matter are located.

2. Plaintiffs Complaint, and each of the purported claims against Defendant Treaty,

fails to state a claim upon which relief can be granted.

3. At all times, Defendant Treaty acted in good faith, with good cause, and without

willful, malicious, egregious, or intent to violate any laws or to harm anyone in any manner.

4. Defendant Treaty is not liable for Plaintiffs claims, in whole or in part, because it

relied in good faith upon the professional judgments of legal professionals at the time of the

alleged acts as to matters which it reasonably believed to be within such persons professional or

expert competence.

5. The claims alleged in Plaintiffs Complaint are barred, in whole or in part, by the

applicable statutes of limitation.

6. Plaintiffs claims for injunctive relief are barred because there has been no

violation of the Securities Act or the Exchange Act, and because there is no reasonable

likelihood that any violation will be repeated. Plaintiffs injunctive relief claim is further barred

because the adverse effects of an injunction far outweigh any benefit from an injunction.

7. Plaintiffs claim for penalties is barred because any alleged violation was isolated

and/or unintentional.

8. Defendant Treaty is informed and believes, and on that basis alleges, that as a

result of Plaintiffs acts, conduct and omissions, Plaintiff waived its right to assert each and

every purported cause of action contained in the Complaint, in whole or in part.


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9. All of the allegations in Plaintiffs Complaint were the acts of persons for whom

Treaty is not responsible.

By alleging these defenses, Defendant Treaty does not allege or admit that it has the

burden of proof and/or persuasion with respect to any of these matters. Defendant Treaty

presently lacks sufficient knowledge or information to determine whether additional affirmative

defenses may be available. Accordingly, Defendant Treaty reserves its right to assert additional

affirmative defenses in the event that discovery reveals that they would be appropriate.

JURY DEMAND

Defendant Treaty requests a trial by jury on all aspects of this case so triable.

WHEREFORE, Defendant, Treaty Energy Corporation, respectfully prays that Plaintiff,

Securities and Exchange Commission, take nothing by reason of its Complaint and that this

Honorable Court enter a judgment in its favor, dismissing all claims by Plaintiff with prejudice

and awarding Defendant all legal costs in accordance with applicable federal law, as well as all

other and further relief as the Court deems appropriate.

Respectfully submitted,

_____________________________________ ANDREW L. KRAMER, PRO HAC VICE

201 St. Charles Avenue, Suite 2504 New Orleans, Louisiana 70170 Telephone: 504-599-5623 Facsimile: 866-667-3890 Email: [email protected] Counsel for Defendant

Treaty Energy Corporation


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CERTIFICATE OF SERVICE

On this 13th day of April, 2015, the undersigned hereby certifies that the foregoing has been served via electronic transmission upon all counsel of record:

Jennifer D. Brandt Jeffrey J. Ansley Counsel for Plaintiff SEC Counsel for Defendant Schlesinger Burnett Plaza, Suite 1900 Bell Nunnally & Martin, LLP 801 Cherry Street, Unit #18 1400 One McKinney Plaza Fort Worth, Texas 76102-6882 3232 McKinney Avenue [email protected] Dallas, Texas 75204-2429 [email protected] Robert M. Corn Henry L. Klein Counsel for Defendant Whitley Counsel for Defendants Blackburn, The Lyric Center Reid, Gwyn & Mulshine 440 Louisiana Street, Suite 2000 844 Baronne Street Houston, Texas 77002-1636 New Orleans, Louisiana 70113 [email protected] [email protected]

_________________________________


doc 46 treaty answer

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