Silvercorp Sues Jon R. Carnes, his
EOS Holdings and Zane Heilig as "Alfred Little"/ "IFRA" in Silvercorp
amended New York Lawsuit
VANCOUVER, British Columbia � January 9, 2012 � Silvercorp Metals Inc. (�Silvercorp� or
the �Company�) today filed an amended lawsuit in the Supreme Court of
the State of New York, County of New York, adding EOS Holdings LLC., Jon Carnes, Zane Heilig, Andrew Wong and International Financial Research & Analysis Group
(�IFRA�), as defendants. The original claim, filed on September 22, 2011 alleges that defendants Chinastockwatch.com, Jerry Katz,
Alfredlittle.com, Alfred Little, Simon Moore, and several �John Doe� defendants with spreading �false, defamatory
and fraudulent� information about Silvercorp on the Internet and in letters
to the media and regulators to drive down the price of Silvercorp�s stock to
profit from their short
positions in the stock. The defendants have not yet answered the Silvercorp�s suit and the allegations
remain to be proved.
Silvercorp has conducted extensive investigations to support the allegations concerning the involvement of the various
parties who have been added
as defendants:
1.
Jon R. Carnes is a member of the group comprising Defendant Alfred Little. Carnes is a
United States citizen who
maintains resident addresses both in Las Vegas,
Nevada and in the Vancouver, British Columbia area. Carnes is the President of Defendant EOS Holdings LLC (�EOS�), which
he founded in 1992, and he is an official (with the title �Protector�) of One
Horizon Foundation, which
is the largest shareholder of EOS.
2.
Zane Heilig is a member
of the group comprising Defendant
Alfred Little. Heilig
is a United States citizen
who maintains resident addresses both in Las Vegas, Nevada and in the Vancouver, British
Columbia area. Heilig is
the Director of Research at EOS, and has worked for
Carnes for many years.
3.
EOS Holdings LLC is a member of the group comprising Defendant Alfred Little. EOS Holdings LLC., a Nevada corporation, describes itself as a fund that focuses
on �identifying and funding
first and second round investments in small and mid sized companies in the U.S.,
Canada and China,� and that has �completed over 25 investments
to date.� EOS� website represents
that it maintains a team of five
full-time agents and numerous part-time agents in
China based in its
Chengdu office.
Carnes, Heilig and
EOS are alleged to have become
participants in the group comprising Alfred Little well before
the September 2011 attacks
on Silvercorp and other companies with operations in China. On March 29, 2011, Carnes, Heilig, IFRA, and EOS were involved in the publication of a press
release in the name of �Alfred Little�
relating to another company called China Integrated Energy through the PR Newswire
service. PR Newswire�s records show that the 72 year old mother of EOS�s Research Director Zane Heilig �authorized� the �Alfred Little�
release, and gave as contact phone numbers for the
release the Vancouver phone number of defendants Heilig, Carnes, and
EOS. Heilig�s mother
also gave PR Newswire, as
an additional contact phone number,
the Hong Kong phone number of the added defendants Andrew Wong
and IFRA. Furthermore, Heilig�s
mother hand-wrote the check
to pay PR Newswire for
running the �Alfred Little� release using funds forwarded
by Zane Heilig.
Andrew Wong and IFRA are members
of the group comprising defendant
Alfred Little. Andrew Wong is a Senior Analyst at IFRA, which describes itself as a �provider
of complex financial analysis, business research,
and investigative due diligence services.�
IFRA maintains offices in the United States and
China, including at the following locations: (i)
10/F Miramar Tower, 132 Nathan Road, Tsim Sha Tsui,
Kowloon, Hong Kong; (ii) 548 Market Street, San
Francisco CA 94104; and (iii) 2280 East Ventura Boulevard, Camarillo CA 93010, as well as
a contact phone number in New York County (area code 646).
A Shanghai-based analyst with IFRA named �Dino� Huang admitted in
an interview with the Globe and Mail, that IFRA had prepared the �Alfred Little�
report attacking Silvercorp
on which this law suit is based.
The IFRA analyst further admitted that IFRA prepared the report on behalf
of an �unnamed hedge fund� that had
shorted Silvercorp stock,
and thus would profit if
the stock price dropped.
In two separate anonymous affidavits recently filed on behalf of �Alfred Little� in
New York Court in the Sino Clean and Deer litigation against �Alfred Little� arising from similar short-and-distort stock manipulations, �Alfred Little�
swore under oath that he
has �used� IFRA to carry out his
activities. (�Alfred Little�
swore to the affidavits before
a notary at the U.S. Consulate in
Shanghai, but then redacted
his name and signature before submitting the
affidavits to the Court.)
Information obtained from EOS� website further indicates that the person responsible for �overseeing all
of the fund�s activities�
is Kun Huang, who is described as its �Asia Region
Manager� and its �Chief Investment Analyst�. Mr. Huang is a Canadian citizen with a residence in Vancouver, British Columbia. Other senior EOS officials include Jeff Huang (a/k/a Xiaofu
Huang), its Director of Investment Investigation; Beth Liu, Vice President; Xiping Wang, Vice President; Joseph Ramelli,
Manager of Equity Trading;
Biquiang Huang, Vice President
managing its Chengdu
office, and Li (Emma) Liu, Director China. On
information and belief EOS controls
and acts through One
Horizon Foundation, EOS Research
LLC, EOS Asia Investments
Limited, Carnes Investment Foundation,
and JCAR Funds Ltd., among
other entities and individuals.
EOS maintains offices
in the United States, Canada and China, including at the following locations: (i)
2560 Highvale Drive, Las Vegas, NV 89134; (ii) 1500
West Georgia Street, Suite 1400, Vancouver, British Columbia V6G 2Z6, Canada;
(iii) 3740 Chatham Street, Suite 205, Richmond, British Columbia V7E 2Z3,
Canada; (iv) Level 18, The Office Tower, Shangri-La Centre, 9 Binjiang
Road (East), Chengdu, Sichuan, China 610021; and (v) 689 Guang
Dong Lu, Huang Pu Qu, Shanghai, China 200001, as well as locations in Beijing and Hong Kong.
Silvercorp has alleged that, beginning on August 29, 2011 and continuing
up to the present, defendants
have posted on the chinastockwatch.com and
alfredlittle.com websites and sent anonymous letters to the
British Columbia Securities Commission, the Ontario Securities Commission, Silvercorp�s auditors at Ernst & Young, and various
financial media outlets that falsely and maliciously allege that Silvercorp�s financial statements and its resource deposits were overstated, among other false and defamatory statements. Following these statements, Silvercorp�s stock price dropped sharply � as much as 20% in a day on unusually high trading volumes
� before partially recovering as Silvercorp came forward with information in the
form of bank statements, government records
and other documents to rebut the defendants� false allegations.
Silvercorp has sued the defendants for defamation, unjust enrichment, trade libel and tortious interference, and deceptive acts and practices. As a result
of the conduct charged, Silvercorp has asked the court
to order the defendants to
pay compensatory and
punitive monetary damages, to order
that the defendants�
profits from their short selling activities should be disgorged
to Silvercorp or imposed with a constructive trust and paid
as the court may direct, and to order
the defendants to remove
false statements about Silvercorp
from their websites and not to repeat such misconduct, among other relief.
As previously reported, Silvercorp has reported on the facts as they are understood to law enforcement authorities in Canada, the United States, and China and is cooperating with the investigations in those
countries. Silvercorp is
represented in this matter by the law firm of K & L Gates LLP.
About
Silvercorp Metals Inc.
Silvercorp Metals Inc. is engaged in the acquisition,
exploration, development and mining
of high-grade silver-related mineral
properties in China and Canada. Silvercorp
is the largest primary silver producer in China through the operation of the four silver-lead-zinc
mines at the Ying Mining
District in the Henan Province of China. Silvercorp
recently acquired the XBG
and XHP silver-gold-lead-zinc mines nearby the Ying Mining District
in Henan Province, further consolidating
the region. Silvercorp
has commenced production at
its second production foothold
in China, the BYP gold-lead-zinc project in Hunan
Province, and is currently
constructing the mill and
related facilities in preparation for mining at the GC silver-lead-zinc project in Guangdong Province. In Canada, Silvercorp is preparing an application for a Small Mine Permit for the Silvertip high grade silver-lead-zinc
mine project in northern
British Columbia to provide a further
platform for growth and geographic diversification. The Company�s
shares are traded on the
New York Stock Exchange (symbol: SVM) and Toronto
Stock Exchange (symbol: SVM) and are included as a component of the S&P/TSX Composite and
the S&P/TSX Global Mining Indexes.
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