Case 4:14-cv-00812-RAS Document 46 Filed 04/13/15 Page 1 of 6 PageID #: 426

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
SECURITIES AND EXCHANGE
COMMISSION,

Plaintiff,

v.

RONALD L. BLACKBURN,

ANDREW V. REID, BRUCE A. GWYN,

MICHAEL A. MULSHINE, LEE C.

SCHLESINGER, SAMUEL E. WHITLEY,

AND TREATY ENERGY

CORPORATION,

Defendants.

CASE NO. 4:14-cv-812

DEFENDANT TREATY ENERGY CORPORATIONS

ANSWER AND AFFIRMATIVE DEFENSES TO COMPLAINT
NOW INTO COURT, through undersigned counsel, comes Defendant, Treaty Energy
Corporation (Treaty), which responds to the Complaint filed by Plaintiff, Securities and
Exchange Commission (SEC) on December 15, 2014, as follows:
ANSWER
I.

Summary
1.

The allegations in Paragraphs 1 3 of the Complaint are Plaintiffs Summary of

the alleged claims therein, to which no response is required. To the extent a response is deemed
necessary, Defendant Treaty denies all such allegations as they apply to it.
II.

Jurisdiction and Venue

2.

Defendant Treaty does not contest the jurisdiction of this Court, as alleged in

Paragraph 4 of the Complaint.

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3.

Regarding the allegations of venue in Paragraph 6 of the Complaint, Defendant

Treaty denies that venue is proper and further denies that the transactions, acts, practices, and
course of business described in the Complaint occurred within the jurisdiction of the Eastern
District of Texas.
III.

Parties
4.

Defendant Treaty admits that it is a Nevada corporation with its principal place of

business in New Orleans, Louisiana but denies all of the remaining allegations in Paragraph 6 of
the Complaint.
5.

Defendant Treaty lacks knowledge or information sufficient to form a belief about

the truth of the allegations in Paragraph 7 of the Complaint but, out of an abundance of caution,
denies all allegations therein.
6.

Defendant Treaty admits that Andrew V. Reid was its CEO and Chairman of the

Board from or about April 2010 until he resigned from the company and its Board of Directors
on July 28, 2014. Defendant Treaty lacks knowledge or information sufficient to form a belief
about the truth of the remaining allegations in Paragraph 8 of the Complaint but, out of an
abundance of caution, denies all allegations therein.
7.

Defendant Treaty admits the allegations in Paragraph 9 of the Complaint.

8.

Defendant Treaty lacks knowledge or information sufficient to form a belief about

the truth of the allegations in Paragraph 10 of the Complaint but, out of an abundance of caution,
denies all allegations therein.
9.

Defendant Treaty admits that Lee C. Schlesinger was its Chief Investment Officer
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from or about November 2011 until his resignation in September 2013. Defendant Treaty lacks
knowledge or information sufficient to form a belief about the truth of the remaining allegations
in Paragraph 11 of the Complaint but, out of an abundance of caution, denies all allegations
therein.
10.

Defendant Treaty lacks knowledge or information sufficient to form a belief about

the truth of the allegations in Paragraph 12 of the Complaint but, out of an abundance of caution,
denies all allegations therein.
IV.

Facts
11.

Defendant Treaty lacks knowledge or information sufficient to form a belief about

the truth of the allegations in Paragraphs 13 83 of the Complaint but, out of an abundance of
caution, generally denies all allegations therein.
V.

Claims for Relief

12.

The allegations in Paragraphs 84 112 of the Complaint state legal conclusions,

to which no response is required. To the extent a response is deemed necessary, Defendant

Treaty denies all allegations as they apply to it.
13.

To the extent not otherwise denied, Defendant Treaty denies any and all other

allegations in the Complaint.

AFFIRMATIVE DEFENSES
1.

Venue in this case is improper because none of the acts alleged in this Complaint

took place in the Eastern District of Texas. Rather, venue would be proper in the Eastern District
of Louisiana where Defendant Treatys principal place of business is located, where a significant
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number of shareholders are located, where most of the acts alleged in the Complaint occurred,
and where nearly all the witnesses anticipated in this matter are located.
2.

Plaintiffs Complaint, and each of the purported claims against Defendant Treaty,

fails to state a claim upon which relief can be granted.

3.

At all times, Defendant Treaty acted in good faith, with good cause, and without

willful, malicious, egregious, or intent to violate any laws or to harm anyone in any manner.
4.

Defendant Treaty is not liable for Plaintiffs claims, in whole or in part, because it

relied in good faith upon the professional judgments of legal professionals at the time of the
alleged acts as to matters which it reasonably believed to be within such persons professional or
expert competence.
5.

The claims alleged in Plaintiffs Complaint are barred, in whole or in part, by the

applicable statutes of limitation.

6.

Plaintiffs claims for injunctive relief are barred because there has been no

violation of the Securities Act or the Exchange Act, and because there is no reasonable
likelihood that any violation will be repeated. Plaintiffs injunctive relief claim is further barred
because the adverse effects of an injunction far outweigh any benefit from an injunction.
7.

Plaintiffs claim for penalties is barred because any alleged violation was isolated

and/or unintentional.
8.

Defendant Treaty is informed and believes, and on that basis alleges, that as a

result of Plaintiffs acts, conduct and omissions, Plaintiff waived its right to assert each and
every purported cause of action contained in the Complaint, in whole or in part.
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9.

All of the allegations in Plaintiffs Complaint were the acts of persons for whom

Treaty is not responsible.

By alleging these defenses, Defendant Treaty does not allege or admit that it has the
burden of proof and/or persuasion with respect to any of these matters. Defendant Treaty
presently lacks sufficient knowledge or information to determine whether additional affirmative
defenses may be available. Accordingly, Defendant Treaty reserves its right to assert additional
affirmative defenses in the event that discovery reveals that they would be appropriate.
JURY DEMAND
Defendant Treaty requests a trial by jury on all aspects of this case so triable.
WHEREFORE, Defendant, Treaty Energy Corporation, respectfully prays that Plaintiff,
Securities and Exchange Commission, take nothing by reason of its Complaint and that this
Honorable Court enter a judgment in its favor, dismissing all claims by Plaintiff with prejudice
and awarding Defendant all legal costs in accordance with applicable federal law, as well as all
other and further relief as the Court deems appropriate.
Respectfully submitted,
_____________________________________
ANDREW L. KRAMER, PRO HAC VICE
201 St. Charles Avenue, Suite 2504
New Orleans, Louisiana 70170
Telephone: 504-599-5623
Facsimile: 866-667-3890
Email: akramer@kramerllc.com
Counsel for Defendant
Treaty Energy Corporation
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CERTIFICATE OF SERVICE
On this 13th day of April, 2015, the undersigned hereby certifies that the
foregoing has been served via electronic transmission upon all counsel of record:
Jennifer D. Brandt
Counsel for Plaintiff SEC
Burnett Plaza, Suite 1900
801 Cherry Street, Unit #18
Fort Worth, Texas 76102-6882
brandtj@sec.gov

Jeffrey J. Ansley
Counsel for Defendant Schlesinger
Bell Nunnally & Martin, LLP
1400 One McKinney Plaza
3232 McKinney Avenue
Dallas, Texas 75204-2429
jansley@bellnunnally.com

Robert M. Corn
Counsel for Defendant Whitley
The Lyric Center
440 Louisiana Street, Suite 2000
Houston, Texas 77002-1636
rcorn@corn-law.com

Henry L. Klein
Counsel for Defendants Blackburn,
Reid, Gwyn & Mulshine
844 Baronne Street
New Orleans, Louisiana 70113
henry@hlklawoffice.com

_________________________________