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Silvercorp Metals widens suits to add five defendants (Lisi Niesner/Reuters/Lisi Niesner/Reuters)
Silvercorp Metals widens suits to add five defendants (Lisi Niesner/Reuters/Lisi Niesner/Reuters)

Silvercorp widens defamation suit, adds five defendants Add to ...

Silvercorp Metals Inc. is expanding its lawsuit against people and companies it alleges defamed the miner as part of a stock manipulation scheme, by naming five new defendants, including a Vancouver-based investment firm and two of its employees.

The China-focused silver miner said Monday that after “extensive investigations” in recent months, it tracked down the Vancouver connection through documents signed by one of the defendant’s 72-year-old mother.

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Vancouver-based Silvercorp said all of the new defendants are connected with a website, AlfredLittle.com, which published anonymous allegations in September that the company was overstating production and misrepresenting the quality of its mines.

Silvercorp filed a lawsuit in New York last year against AlfredLittle.com, as well as the website chinastockwatch.com and a handful of defendants, alleging the spread of “false, defamatory and fraudulent” information about the China-focused miner.

Shares of Silvercorp fell by 30 per cent, to below $6, in September after two sets of reports, backed by anonymous short sellers, accused the company of wrongdoing.

Silvercorp denied the accusations and vowed to fight back against what it called a “short and distort” scheme.

The shares recovered weeks later after an independent KPMG Forensics audit helped clear Silvercorp’s name, but have been struggling amid investor fear of the fallout from a growing number of allegations of wrongdoing that have surfaced in recent months against companies doing business in China.

The new defendants in Silvercorp’s lawsuit include EOS Holdings LLC., a Vancouver-based investment firm named after a Greek goddess, its founder Jon Carnes, and Zane Heilig, both of whom have addresses in the Vancouver area and Las Vegas, according to Silvercorp. It also added a firm called International Financial Research & Analysis and an analyst to the list of defendants.

Silvercorp alleges the new defendants were involved in the publication of a press release under the Alfred Little name in March, relating to another company called China Integrated Energy through the PR Newswire service.

According to Silvercorp, PR Newswire’s records show Mr. Heilig’s 72-year-old mother “authorized” the release, providing contact phone numbers for the defendants.

Mr. Heilig’s mother also hand-wrote the check to pay PR Newswire for issuing the release, “using funds forwarded by Zane Heilig,” Silvercorp alleged.

Reached by telephone on Monday, a man identifying himself as Mr. Carnes refused to comment on the lawsuit. Efforts to locate Mr. Heilig and his mother were unsuccessful.

Mr. Carnes founded EOS in 1992 and Mr. Heilig is the director of research at the company, according to Silvercorp. The EOS website outlines a number of investment deals with Chinese companies dating back to 2007.

However, the EOS website states that the company liquidated its fund as of June 30 due to “poor performance of our investments.”

In a statement Monday, Silvercorp said it “has sued the defendants for defamation, unjust enrichment, trade libel and tortious interference, and deceptive acts and practices.”

The company said it is seeking compensatory and punitive damages in its legal action.

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