The gist: Armed with a $72 million judgment against two former executives at one of its Lafayette-based subsidiaries, oilfield services giant Superior Energy is making it clear it wants the name of one of those execs stripped from the UL baseball complex.
The background: In April 2016, the Houston-based public company sued Chris Russo and Marty LeBlanc, the ex-COO and CFO of Stabil Drill, respectively, alleging they defrauded the company to the tune of tens of millions of dollars through complex self-dealing schemes.
After a six-week trial, a Texas jury sided with Superior in December, unanimously finding that both men breached their fiduciary duty to the company, committed fraud and misappropriated the company’s trade secrets; Russo was ordered to pay $23.7 million in damages and return $27.7 million in profits from the schemes, while LeBlanc was ordered to pay $7 million for damages and return $3.4 million in profits. Another $10 million in interest was tacked on to the award (Superior’s general counsel tells me the other defendants named in the suit settled with the company before the case went to trial). In April, Harris County District Judge Caroline Baker signed the $72 million judgment.
Attorneys with the two law firms separately representing Russo and LeBlanc tell me they are taking the first steps toward appealing the jury verdict. “This is all personal, and it’s not serving Superior’s business interests,” says Houston attorney Shaun Clarke of Smyser Kaplan & Veselka, which represents Russo. “We’ve contended that Superior knew all along exactly what Chris was doing. … It was uncontested that Stabil Drill was one of Superior’s most profitable subsidiaries.” (After this story was published, both Russo and LeBlanc separately filed motions for new trials, with Russo claiming a key witness should have been compelled to testify. Read the follow-up story here.)
Superior Energy, however, is running out of patience on the Russo Park matter. Chris Russo, whose late father Sammy Russo founded Stabil Drill and served as its president until shortly before his 2013 death, pledged $5 million toward the renovation to UL’s baseball stadium — in essence buying the rights to rename the complex M.L. “Tigue” Moore Field at Russo Park. The donation pledge was publicly revealed just months before the lawsuit was filed.
Shortly after filing suit, Superior reached out to the university to notify UL officials of the court’s temporary injunction prohibiting Russo from fulfilling the balance of that pledge. In December of last year, the company’s general counsel, Bill Masters, again wrote to UL President Joe Savoie threatening legal action if it accepted any additional payments.
Superior maintains the donated monies were derived from fraud. “Discovery in the case produced evidence that virtually all of the funds previously donated by Mr. Russo to ULL for the Russo Park baseball stadium were funded directly by illegal and fraudulent acts perpetrated by Mr. Russo,” Masters wrote to Savoie in the December letter. He attached a forensic auditing expert’s analysis showing the specific source of funds for each donation, including more than $2 million the audit found came from shell companies Russo allegedly created to hide millions in kickbacks from vendors. “[W]e urge you to take whatever steps you determine necessary to drop the Russo name from the baseball stadium,” Masters added.
Masters tells me Superior isn’t asserting its “legal rights to recover funds previously contributed, but we will do so if we discover that additional contributions were made that we are unaware of.”
UL’s response? Superior received a letter dated Feb. 22 from attorney Steve Oats informing the company that he represents the university and asking that all correspondence be sent to him. “We will contact you in the near future to discuss your request,” Oats states. Masters, who calls Oats’ response “a brushoff letter,” says he has not heard anything since.
“We are monitoring the lawsuit,” Savoie tells me in an emailed response. “Out of respect for the parties involved and the judicial process, we are not making any decisions until the legal matters have reached their conclusions.”
The university president says to date Russo has donated $3 million to the baseball stadium renovation project.
Superior is well aware that it may have the UL Board of Supervisors on its side. Shortly after the suit was filed, the board approved the university’s request to call the complex Russo Park — with a caveat: Russo had to come through with the full $5 million for the name to stick.
“In our management, we’ve got all sorts of UL grads … we’ve got a whole bunch of businesses in Lafayette, most of them are run by UL grads. Everybody is just mind-boggled how they haven’t done anything,” Masters says. Superior Energy employs approximately 1,100 people locally (it had a lot more before the downturn) and has six subsidiaries headquartered in the Lafayette area and another, Completion Services, with a large facility here.
“I can’t imagine [the university] wanting to have his name [on the park.] He’s probably one of the biggest fraudsters in recent history of Lafayette,” Masters says. “I can’t remember anyone getting tagged for that big a fraud verdict in Lafayette.”
Masters says the Russo Park issue isn’t the only source of Superior Energy’s frustrations in this matter. The company initially tried to get federal prosecutors involved, and the FBI acknowledged in 2016 that it knew of the allegations in the suit.
“We’ve been made aware of the civil suit, and in a case where there are allegations of criminal wrongdoing in a civil action, an FBI investigation could be initiated based on that alone,” Don Bostic, who at the time was supervisory special agent for the local FBI office, told me back then.
“The authorities were contacted and they didn’t do shit,” Blaine Edwards, who heads litigation at Superior Energy, told The Texas Lawbook last month. “It is one of my pet peeves about this whole thing.”
Attorney Clarke maintains the civil suit itself has devastated his client financially, saying Russo will never be able to pay this kind of judgment. “It might as well be $60 billion, because he doesn’t have the money,” he says.
Clarke also can’t understand why Superior has pushed so hard for criminal prosecution. “Superior has made no secret it wants [Russo] in jail,” he contends, adding that Russo is “fully resigned to the fact that he’s not going to have a penny to his name when this is all over.”
“That’s true even if we win on appeal and prevail at a new trial,” Clarke continues. “To go up against a behemoth costs a lot of money.”