Sunshine under legal cloud
The Sunshine Mine plans to reopen late this year, but a legal storm cloud continues to hang over the famed North Idaho silver mine.
The increasingly bitter dispute between the mine’s parent company and former investor James Christianson now includes allegations ranging from a threat to blow up a home to racketeering to money diverted for Italian suits. Apart from the lawsuit, a federal grand jury is now believed to be looking into the matter.
An executive with Sterling Mining Co. said the claims are false and suggested the lawsuit is part of a revenge plot by Christianson after his attempts to take over the mine were thwarted.
“We don’t understand where he’s coming from,” said Mike Mooney, Sterling’s secretary and treasurer. “We do know that he tried to take over the Sunshine. When this was refused is when he started this campaign.”
Christianson, of Vancouver, Wash., declined through one of his attorneys to comment for this story. The attorney, Todd Mitchell, said Christianson has been served with a grand jury subpoena asking for all documents and records pertaining to his dealings with Sterling.
Christianson sued Ray De Motte, the president of Sterling, in 2005, claiming he had been defrauded of $3.4 million. Not only did De Motte make false promises and divert Christianson’s money to other ventures, he also hid “potentially crippling environmental penalties” hanging over the mine, according to court documents.
The lawsuit, which was filed in federal court, was amended last month to include additional allegations of fraud and accuses others involved with the mine or associated companies. Along with more than a dozen counts of fraud and allegations of racketeering and securities violations, the lawsuit alleges that one of the mine’s directors, Carol Stephan, diverted $134,000 of Christianson’s investment to purchase a home in Coeur d’Alene.
Also named in the amended lawsuit is David Bond, who publishes the Silver Valley Mining Journal. Bond, a former Spokesman-Review reporter, is described as a “general” in De Motte’s “world-wide silver revolution,” who “served out threats and intimidated those who opposed De Motte,” according to court documents. In one instance, Bond “threatened to ‘burn down’ and/or ‘blow up’ the home” of a former employee of De Motte, after the employee questioned how money was being spent.
Christianson invested $4,000 in Bond’s mining journal. Bond used a portion of this money to purchase Italian suits, according to court documents.
Bond denied the allegations, calling them personal attacks from “a bad child having a bad hair day.” He said Christianson is simply bitter after having been denied a seat on the company’s board of directors and is using the lawsuit to drive down the value of the company.
“It’s stupid. They guy is probably trying to run the stock down a dollar so he can buy more,” Bond said, adding that his only piece of Italian clothing is a single silk tie purchased with “my own money.”
Court documents filed recently by Sterling portray Christianson as desperate to gain control of the Sunshine Mine and of being “mesmerized” by its silvery riches. The response includes e-mail correspondence between Christianson and company officials, including a message in which Christianson described the mine as a “a mighty powerful, almost irresistible force beckoning the silver bug.” In another message, Christianson “attempted to use his perceived status as a major investor with ‘lots of money,’ to coerce a summer intern to allow him to be her ‘sugar daddy,’ ” according to court records.
Christianson provides no evidence of racketeering and is accused by Sterling of making the claim purely to harm the reputation of the company. Accusations of racketeering, according to Sterling’s response to the lawsuit, are “the litigation equivalent of a thermonuclear device.”
The response from Sterling also claims Christianson earned $526,000 on his investment in the mine.
Mooney, the company’s treasurer, said in an interview Friday, “It’s hard to understand what his motivation would be. We believe that he’s made significant money in his investments – very significant dollars. We don’t really understand what his claims are.”
There have been no other claims of wrongdoing from the 3,000 or so other investors in Sterling, Mooney added.
“We’re doing things right. We’re doing it very right. We’ve just set very, very high standards for ourselves,” Mooney said. “That’s why this is so distressing.”
Christianson maintains he has ample evidence of patterns of deceit and fraud. His attorney, Mitchell, said Christianson has “no interest in taking over Sterling Mining Company over anything in that regard.”
Even if Christianson did profit from his investment in the mine, he would have been “much better off financially had he never met Mr. De Motte and Ms. Stephan,” according to a statement issued by Mitchell.
A trial date has been set for June 2008.