Aug. 16 Shareholder Vote Ordered in ‘Consipio v Private’

LAS VEGAS—In the Nevada version of Consipio v. Private, District Court Judge Elizabeth Gonazalez has issued an order responding to the plaintiffs' motion submitted late last month seeking an expedited time frame for a new Board of Directors election by Private shareholders. The plaintiffs’ motion as well as an opposing motion by the defendants was filed in response to an order issued by Judge Gonzalez June 20 that ordered Private, among other things, to “immediately notice a shareholder's meeting at which [Private] will elect a Board of Directors.”  

As reported by AVN at the time, the June order came on the heels of a months-long effort by the court to determine the whereabouts of 3,950,000 shares of common Private stock that were supposed to have been handed over to Consipio as collateral on a debt of at least $2 million that Private defaulted on in March 2008, according to the court.

The latest order, filed July 1, followed a June 28 hearing in court by the parties to provide supporting the parties’ competing motions regarding the shareholder election.

Plaintiffs had requested that the special shareholder meeting take place July 8, that the record date for the meeting be set on June 2, that a special meeting of the Private Board of Directors take place June 28, and that Private be compelled to issue shares allegedly owed to Sureflix Digital Distribution as part of the deal it struck to acquire the gay properties in 2009.

After reviewing the motions and considering the arguments of counsel, Gonzalez ordered that the annual meeting of Private’s shareholders on or before August 16 at Private’s Barcelona, Spain headquarters with a live video-conference connection to the Las Vegas offices of plaintiffs’ counsel, Lionel Sawyer & Collins, and that “shares in street name with the disclosure of Ultimate Beneficial Owners (i.e. those investors who paid for and dispose of, the shares) of those shares along with any voting instructions provided by that ultimate beneficial owner shall be entitled to cast votes (in person or by proxy) at the Shareholders Meeting.”

The judge further ordered that Private provide appropriate notice of the meeting consistent with SEC requirements and that relevant materials and voting instructions be sent to shareholders that reiterate the voting requirements elaborated above.

“It is incumbent upon the Board of Directors,” wrote Gonzalez, “to develop a voting instruction form that will adequately identify the Ultimate Beneficial Owners, as defined herein.”

It is presumed that the specificity and insistence by Gonzalez to ensure the absolute identification of ultimate beneficial owners of Private stock is in response to a finding by the court that Private, through a Milton-controlled subsidiary, Slingsby Enterprises Ltd., had failed to deliver 3,950,000 shares of Private common stock to Consipio for it to vote in the November 2010 shareholder election, the results of which were put on hold, and subsequently invalidated by the judge, because of the missing shares.

According to the court, the inability of Consipio to vote all of its shares had a significant impact on the results of the November vote. Had Consipio been able to vote all of its shares, the slate of proposed Board members put forward by Milton would likely not have prevailed over a slate put forward by Consipio and other stakeholders, the ramifications of which are significant in terms of the future management and direction of Private.

A notice was also filed with the court July 1 by plaintiffs’ counsel that Berth Milton is scheduled to be deposed Aug. 24 at 10 a.m. at the Lionel Sawyer & Collins Las Vegas offices.

In other Private news, federal judge Mark W. Bennett ruled Tuesday against a motion for a default judgment filed by Private’s American subsidiary Fraserside IP—which is not the same company as another similarly named Private subsidiary, Fraserside Holdsings—in the Iowa lawsuit, Fraserside v Youngtek, in which the Barcelona company has alleged copyright infringement by two Youngtek-operated tube sites, and

“After considering the relevant factors, I conclude good cause exists to set aside the default entry. Youngtek was negligent in its handling of the complaint; however, its failure to timely respond to the complaint was not intentional or contumacious. Additionally, Youngtek has various potential meritorious defenses to Fraserside’s claims and Fraserside has not pointed out that it would be prejudiced in any concrete way by setting aside the default entry. Thus, I grant Youngtek’s Motion to Set Aside Default.

Judge Gonzalez’ July 1 Order in Consipio v Private can be accessed here.

Judge Bennett's July 12 Order in Fraserside v Youngtek can be accessed here.