U.S. District Judge Darrin P. Gayles in the Southern District of Florida has granted sanctions against a litigation trust attached to Venezuela's state-owned oil company, Petróleos de Venezuela — or PDVSA — following a failed lawsuit led by high-powered Boies Schiller Flexner attorneys.

As the court ruled PDVSA U.S. Litigation Trust lacked standing to go after more than 40 international energy trading firms, it's now on the hook for attorney fees and costs.

It brought the antitrust case in March 2018, laying out 19 counts, including claims the defendants fixed bids and prices to wipe out competition and cloned PDVSA's computer servers to steal confidential information.

The plaintiff claimed it lost at least $11 billion to the alleged scheme, and sought compensation, treble damages, injunctive relief, interest fees and costs. The defendants denied the allegations.

Chairman of Boies Schiller Flexner in New York David Boies took the lead for the plaintiff. He and his team did not respond to requests for comment before deadline but have previously told the Associated Press that the lawsuit was part of the Venezuelan government's efforts to show it takes corruption seriously.

“This is an action that Venezuela has taken to re-establish itself as a country where the rule of law applies, where corruption isn't going to be tolerated and where people who violate the public trust will be held accountable,” Boies told the Associated Press. “It's a long road, but every long road begins with the first few steps.”

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Click here to read the full complaint

Among the defendants was consulting firm Helsinge Inc., accused of cloning servers and charging oil companies to join the alleged scheme. Alex M. Gonzalez of Holland & Knight in Miami represents Helsinge and its affiliates, and labeled the allegations baseless.

Alex Gonzalez of Holland & Knight, Miami. Alex Gonzalez of Holland & Knight, Miami. Courtesy photo.

Gonzalez and his team, including Isreal Encinosa and Brian Briz, argued that the trust had no authority to make claims on behalf of Venezuela's state-owned oil company. They alleged it was created to serve the lawyers, an investigator and a financier, who were promised 66 percent of any recovery.

“That's pretty amazing when you think about it,” Gonzalez said. “Two-thirds of the recovery going to the lawyers, an investigator and a financier. So we believe that the purpose was not as the plaintiff argued, to primarily benefit the suffering Venezuelan people.”

According to Gonzalez, PDVSA could have made a claim in the case but didn't, while the trust failed to produce witnesses that could authenticate its standing.

“In addition to that, the Venezuelan National Assembly, which is the only legitimate branch of government recognized by the United States at the current time, explicitly ruled that the trust had no authority to speak for PDVSA.”

The defendants moved to dismiss with prejudice in July 2018 citing lack of standing.

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Related story: Venezuela-Linked Trust Sues Foreign Oil Traders for Bribes

Gayles agreed to dismiss the case on March 8, finding that the trust agreement was set up to serve the professionals involved, rendering it void under New York law but declining to rule on whether it fit under Venezuelan law.

Magistrate Judge Alicia Otazo-Reyes recommended Gayles dismiss the case and adopt sanctions after the plaintiff failed to make key witnesses available for deposition, including PDVSA's general counsel.

The plaintiff objected to the sanctions and has appealed, arguing it had complied with every court order and had offered many other witnesses up for deposition that the defense wasn't interested in.

“[The defendants'] goal was to place the trust in the position of having to produce witnesses over which it did not have control so as to manufacture a sanctions motion,” the plaintiff's objection said.

Otazo-Reyes will weigh how much the defense is entitled to.

Gonzalez said he hasn't yet calculated how much he'll claim but said it will be “substantial” as the case took significant time and energy.

“It's been a hard-fought battle with worthy adversaries,” Gonzalez said. “Boies Schiller is a serious and very competent firm. So we're very pleased with the results and we believe that this case never should have been brought in the first instance. The federal courts are no place for radical litigation like this.”