A court fight over the sale of Oasis Financial, a third-party litigation financier that loaned money to fuel lawsuits, has spilled over into Cook County court, where Oasis’ founder has accused Oasis’ executive leadership of conspiring with a buyer to acquire the company at a cut rate, while using lawyers with the firms of Kirkland & Ellis and Littler Mendelson to keep the founder and other minority stake holders in the dark the entire time.
On Sept. 10, Gary D. Chodes and corporation Oasis Shareholder Recovery LLC filed suit in Cook County Circuit Court against a host of defendants involved in the alleged conspiracy to sell Oasis at a steep discount.
The list of defendants includes attorneys Walter Holzer, of Kirkland & Ellis LLP, and James M. Witz, of Littler Mendelson P.C., and their respective law firms.
The lawsuit specifically accuses Holzer and Witz and their firms of engaging in fraud. The complaint alleges the lawyers worked with the alleged conspirators to conceal information concerning the sale of Oasis from Chodes and other minority owners. Specifically, the complaint alleges the lawyers crafted and sent alleged “fraudulent” and “false” communications concerning the sale to Chodes, to persuade him to sign off on the arrangement. And the complaint alleges the lawyers later allegedly sent “manipulated” documents concerning the sale to Chodes and at least one other owner.
The lawsuit centers on the 2016 sale of Oasis to a group of buyers, allegedly led by private equity firm Parthenon Capital.
According to the lawsuit, that transaction may have closed for $71 million. However, the lawsuit asserts none of that money went to the minority owners, including Chodes.
Chodes had served as CEO of Oasis until 2013, when he was replaced by Ralph Shayne.
Chodes said he and other minority owners first learned of the sale from communications sent by Witz on behalf of the buyers and executives of Oasis. According to the complaint, Chodes said those initial communications indicated the entire purchase amount had been used to satisfy debt, so there were no proceeds from the sale to divide with minority owners. The communications also asserted all minority ownership shares “had been extinguished” in the sale.
“… The Defendants through agents … dangled money to Chodes purportedly to settle the various legal claims and disputes … so long as Chodes would sign … some sort of release to cover everyone and everything involved in the Transaction,” Chodes wrote in his complaint.
However, when Chodes “did not immediately take the bait,” the complaint said the defendants “embarked on scorched earth litigation against Chodes.”
However, later Chodes said he learned of “side deals” involving some of the buyers, including “kickbacks” to induce some of Oasis’ board members to sign off on Parthenon’s purchase of Oasis. That agreement allegedly came despite Parthenon’s alleged submission of a bid that “was around half that submitted by other sophisticated commercial actors.”
According to the complaint, Chodes alleges the Kirkland firm, in particular, was allegedly aware of the "side deals," yet "actively helped all the Defendants try to pull off the scheme and prevent minority owners from grasping it."
According to the complaint, the lawyers allegedly involved allegedly benefited from the alleged arrangement by allegedly receiving “additional lucrative engagements with defendants and their affiliates.”
Chodes alleged Shayne also received “future employment, future earnings, and other compensation and benefits” for his participation in the alleged conspiracy to allegedly cut out Chodes and other minority owners from the Oasis transaction.
The conspiracy was first alleged in a complaint filed in Lake County Circuit Court in 2018. That case has survived a motion to dismiss, and remains pending.
Chodes and the plaintiffs are represented in the action by attorney James Madigan, of Chicago.