Kazeminy suit ends, but fight isn't over

  • Article by: TONY KENNEDY , Star Tribune
  • Updated: August 12, 2009 - 11:17 PM

Norm Coleman said he's happy the lawsuit was killed. The plaintiff said a power play in Texas forced him to abandon it.

A politically explosive lawsuit that may have cost Norm Coleman support in the final days of Minnesota's 2008 U.S. Senate race is dead, but the underlying dispute continues to smolder and could be revived.

Both sides asked a Texas judge this week to kill the suit, which alleged that longtime Coleman supporter Nasser Kazeminy improperly attempted to funnel $75,000 to Coleman's family through an underwater services company he controlled in 2007. The suit sparked an FBI investigation, but FBI officials declined to comment this week on the status of their probe.

The plaintiff, Paul McKim, said through his lawyer that he was forced to abandon the suit because Kazeminy orchestrated a power play that squeezed McKim out as a minority shareholder of the Houston-based firm Deep Marine Technology Inc.

"This is far from the last chapter in this story,'' said Casey Wallace, Mc-Kim's lawyer. "While he [McKim] has been deprived of standing in this case ... he by no means is abandoning his claims.''

Coleman, who was not a party to the suit, said Wednesday he is happy to see the end of the suit, which was filed just nine days before voters selected Democratic challenger Al Franken over Coleman by a narrow margin in a race that ended only after a protracted recount. Coleman said the suit "obviously" damaged his hard-fought reelection effort.

"There was never, never, ever anything involved in this that had anything to do with my wife or me in terms of any monies being traded. Nothing,'' Coleman said. "And yet the allegations played out and the election is over and now the suit goes away and I'm gladit has.''

McKim, a self-proclaimed Republican, claimed Kazeminy disguised $75,000 in payments to a Minneapolis insurance company that employs Coleman's wife as an independent contractor. B.J. Thomas, who was then the chief financial officer of Deep Marine, later testified in a deposition that Kazeminy ordered the payments even though there was no evidence that Deep Marine received any services from Hays Companies, Laurie Coleman's employer.

Thomas said Kazeminy directed the payments during a conversation in which he lamented the amount of money Coleman earned as a U.S. senator.

Hays acknowledged receiving the payments but insisted none of the money went to Laurie Coleman.

Kazeminy has vehemently denied the accusations and a special litigation committee appointed by Deep Marine's board of directors cleared Kazeminy and other executives and shareholders of any wrongdoing. But the firm said Deep Marine reserves the right to sue McKim, a former CEO who founded the company.

Wallace said McKim was stripped of his legal standing to advance the Texas lawsuit because Kazeminy and another major shareholder of Deep Marine merged the company into a new corporate entity after the lawsuit was filed, cashing out McKim and other minority shareholders by paying them one cent for each share.

John (Chip) Rainey, a lawyer for Deep Marine's special litigation committee, said McKim's request to end the suit means he is sending up the "white flag." Rainey is trying to get the judge to allow Coleman to recoup his legal costs. The judge is expected to rule within a week.

Coleman said he's sorry his close friend Kazeminy "got dragged through the mud on this. He's an honorable man, a decent man.''

tonyk@startribune.com • 612-673-4213

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