LEGAL NEWS - Judge denies Eferton's default judgement motion against Hou

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Tom Jennemanntom.jennemann@fastmarkets.comSenior North American Correspondent973-204-3383

Winter Park, Florida 09/05/2016 - A California judge has denied Eferton DMCC's motion for default judgment against Terry Hou, a man accused of defrauding the company in a $45 million copper financing deal.

Eferton DMCC, the non-ferrous metals trading subsidiary of Eferton Group, claims that it was the victim of an alleged scheme whereby Hou, who lives in China, induced the company purchase copper ingots represented as containing a high percentage of copper but which actually contained very little copper.

Hou was served with legal documents on December 3, 2015 but he did not show for a preliminary court date. Shortly afterwards, Eferton filed a motion for default judgement against Hou.

But US District Court Judge Manuel Real ruled that Eferton's complaint did not have the required specificity needed to meet the heightened pleading requirements of a default judgment.

There also remains a dispute as to the material facts in the case, which makes entering default judgment on Eferton's behalf inappropriate, the judge said in a May 5 order.

Eferton must now file an amended complaint or voluntarily withdraw this case by May 11, Judge Real said.

Lawyers for Eferton were not immediately available to comment on whether or not they intend to file an amended complaint against Hou.

ABOUT THE CHARGES

In 2015, Eferton entered into six contracts with World Gold International Ltd and six contracts with Shing Fu (HK) Metal Co for the shipment of copper ingots from the US to China, according to court documents.

Prior to signing those contracts, Eferton reviewed certificates issued by Asia-Global Renewable Energy Corp and bearing Asia-Global's corporate seal that stated the material contained 97-percent pure copper. Eferton believes that Asia-Global was the supplier to World Gold, the company's lawyers said in court documents.

The metal was loaded onto ships and departed the US for China. Less than two days before it was set to arrive in port, Shing Fu refused to take delivery, claiming that material contained less than 10 percent copper and had high levels of impurities.

Eferton claims that Terry Hou controls World Gold and Shing Fu as well as Asia-Global.

On April 25, Judge Real dismissed the charges against co-defendant Asia-Global, ruling that Eferton failed to "plead the specific facts of [Asia-Global's] involvement with the alleged misrepresentation".

"Eferton, failed to allege with specificity the relevant contracts that gave rise to these allegedly fraudulent activities as well as the dates of these transactions. Mere general allegations of a multi-month period of various contracts and agreements does not suffice," the judge said.

Nevertheless, Judge Real did leave the door for Eferton to update its complaint to include more details on Asia-Global's alleged involvement.

(Additional reporting by Ian Walker)



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