Ex-USA Springs attorney seeks to pursue Swiss financier on fraud charge
The law firm that for three years represented USA Springs in bankruptcy court now wants to go after the Swiss firm that it had once hoped would bail out the water bottling company.
The USA Springs bankruptcy trustee has asked the court to hire the Boston-based firm of Riemer and Braunstein to try to enforce a $60 million judgment against Malom Group AG by working with Swiss authorities who are investigating a massive fraud case against the firm.
Malom said it plans to object to the motion.
The filing is the latest twist in the decade-long saga of USA Springs, which had tried to build a bottling plant in the towns of Nottingham and Barrington despite the tenacious opposition of some residents who claimed that the operation would jeopardize their drinking water.
USA Springs obtained a permit, but ran out of money and – with the plant only partly built — filed for Chapter 11 bankruptcy in the summer of 2008 to put together a financing package.
The debtor, through its attorney, Alan Braunstein, put together a package based on $60 million in promised financing from Malom, which never came through with the financing.
Braunstein quit as USA Springs' attorney in August 2012 citing "irreconcilable differences" with his client, which had been critical of how Braunstein handled the Malom matter, but not before obtaining a $60 million judgment against Malom.
Braunstein claims his firm was owed $2 million for his work in the case, but the estate won't have enough to money pay that fee, even it was able fetch a good price for the land at auction.
Now the bankruptcy trustee, Timothy P. Smith, wants to retain another partner of Braunstein's firm, Peter Sutton, to attempt to collect on that judgment.
"The firm wishes to continue communicating with and to assist the Swiss prosecutor in connection with any civil and criminal proceedings in Switzerland against Malom and Malom's principals and/or representatives," the trustee wrote in his filing.
Sutton said his firm would do the job for free, unless it is able to collect on the judgment. But that isn't the reason it's doing it, said Sutton.
"The firm believes that fraud on a bankruptcy court must be prosecuted by the appropriate authorities and the firm is willing to work without compensation to that end to assist in prosecuting Malom and its agents," Sutton said in an affidavit.
Malom has yet to file its objection. In the past, the firm has told the court that it is still trying to finance the deal even though it is no longer obligated to do so due to USA Springs' alleged misrepresentation about its contracts to sell waters overseas.