Uranium Resource Inc's Juan Tafoya Project mineral lease encompasses over 4,000 acres in McKinley and Sandoval Counties, New Mexico

Who: The Juan Tafoya Land Corporation and Attorney A – Uranium mining lease case history

This is a discussion of Attorney A‘s representation of Juan Tafoya Land Corporation for the purposes of leasing their mineral rights for uranium exploration, not any other aspect of Attorney A’s misrepresentations of JTLC for the past 10 years, which are numerous and complex.

Here are observations of how Attorney A has employed legal maneuvers and tactics in the Juan Tafoya Land Corporation (JTLC, incorporated 1976), originally a type of Spanish land grant corporation, whose shares cannot be bought & sold, and are only acquired through blood descendants of the original owner, Juan Tafoya, who received the 4,000+ acre land parcel covering parts of McKinley, Sandoval and Cibola Counties, New Mexico, from the Spanish King sometime in 1724.

Readers need to understand the Spanish Land Grant system and how it has operated to transfer property to successive generations, to fully grasp the similarities in Attorney A’s exploitation of the same family/group dynamics in any of his receivership, guardianship, estate, or trust cases that Attorney A commits when advising JTLC as their corporate attorney. Attorney A’s exploitation of his legal client (JTLC) is on a scale writ large — very large — because it is the entire community of Marquez, NM, whose residents are predominately, but not entirely, shareholders in JTLC. Currently the NM State Supreme Court’s 1981 ratified list of shareholders of JTLC (wherever they live) number approximately 550+/-.

Before Attorney A intruded & inserted himself into JTLC in 2007, JTLC was a New Mexico corporation whose shareholders had been definitively decided in a final 1981 New Mexico State Supreme Court ruling listing the then-current “trunk heirs” from whom all other shareholders must descend from (by blood, not marriage.) For example, if two shareholders married and had children, their combined shares would be divided between however many children they had, after their deaths. A full generation after the 1981 NM Supreme Court ruling, things were going well, even smoothly for all JTLC shareholders.

But in October 2006, JTLC President, with backing of the Board of Directors and a majority of the shareholders, executed a 10-year uranium mining lease agreement with Neutron Energy Inc, a wholly-owned subsidiary of publicly-traded uranium and lithium producer, URI. The terms were — for JTLC and the small community of Marquez, NM — generous, even perhaps eye-popping.

From Page 48-49 of URI’s March 2, 2017 10-K SEC filing:

The Property. The Juan Tafoya project is comprised of lands covering an area of approximately of 4,097 acres of fee (deeded) surface and mineral rights that are owned by the Juan Tafoya Land Corporation (“JTLC”) and 24 leases with private owners of small tracts covering a combined area of approximately 115 acres. The JTLC lease (the “JT Lease”) has a term of ten years, and it can be extended on a year-to-year basis thereafter, so long as we are conducting operations on the Juan Tafoya project. Additionally, the JT Lease required:

(i) an initial payment to JTLC of $1,250,000;

(ii) annual rental payments of $225,000 for the first five years of the lease and $337,500 for the second five years;

(iii) after the second five years, annual base rent of $75 per acre;

(iv) a gross proceeds royalty of 4.65% to 6.5% based on the prevailing price of uranium;

(v) employment opportunities and job-skills training programs for shareholders of the JTLC or their heirs,

(vi) periodic contributions to a community projects fund if mineral production commences from the Juan Tafoya project and

(vii) funding of a scholarship program for the shareholders of the JTLC or their heirs.

We are obligated to make the first ten years’ annual rental payments notwithstanding the right to terminate the JT Lease at any time, unless (a) the market value of uranium drops below $25 per pound, (b) a government authority bans uranium mining on the Juan Tafoya project, or (c) the project is deemed uneconomical by an independent engineering firm. The Company intends to negotiate with the JTLC on the terms for the continuation of the JT Lease.”

Once the uranium lease with URI was signed, Attorney A entered the picture in 2007. We note that JTLC possessed characteristics similar to all of Attorney A’s victims, which left them vulnerable to attorney & judicial exploitation:

1. A large sum of money was held in the corporation’s bank accounts ($1.25 Million, with what were contractually-guaranteed annual payments of $225,000, after five years increasing to $337,500, due JTLC) Perfect for the payment of legal fees that Attorney A would then assess and collect on behalf of his work as corporate attorney for JTLC;

2. An attractive asset (over 4,000 acres + all subsurface mineral rights, with guaranteed cash infusions into JTLC for the next 10 years) that Attorney A, acting as corporate attorney, would control on behalf of his client (JTLC Board of Directors);

3. A group of people to be divided and conquered (i.e., fights created pitting the JTLC shareholders against the JTLC Board of Directors, initiated and continued by Attorney A’s perverse actions) which create the pretense that allows Attorney A to convert all available cash into attorney’s fees, in return for his legal ‘services’ as Attorney A ‘referees’ the battles he has created pitting the Board of Directors (BOD) against shareholders, who are exploited through staged litigation created, then mediated, then adjudicated, by Attorney A in courts like those of Judge B.

These same 3 traits are present in all of Attorney A’s victims, be they corporations (JTLC, NM Escrow Title), trusts (Skupaka, Herrmann, Smoot, Willis, Darnell), or estates (RC Gorman.)

It’s worth examining how Judge B allowed his court (as the presiding judge) to hear a court case brought by Attorney A, which was only dismissed by Judge B 2 1/2 years later by Summary Judgment largely supported by the basic, 1st year law school principal of res judicata. What sort of Judge comports himself by denying a pro se respondent’s Summary Judgment before the judge ultimately throws the case out — 2 1/2 year later — on Summary Judgment?

There’s much, much more to this story, but to jump forward to March 2, 2017, and the filing of the most recent SEC 10-K form, skipping a whole lot of misconduct of Attorney A, to focus on what is happening today with JTLC and the results of its having suffered poor legal representation for the past 10 years by Attorney A, that leaves JTLC on the verge of bankruptcy, shareholder chaos (Attorney A introduced new shareholders to JTLC and paid them dividends, contrary to the 1981 NM Supreme Court ruling), dividend payments to incorrect shareholders and/or shorting legitimate shareholders their proper dividend payments, the amendment of by-laws by which disallowed the respondents ability to run for the BOD, and no elections for new BOD members held in the past 2-3 years, although the original, pre-2007 bylaws (which have worked to manage JTLC since 1976) have been amended (under Attorney A’s advisory position as corporate attorney) to preclude the election of anyone other than the current BOD members.

Attorney A has been quite busy in the last 10 years sowing seeds of destruction and ruin between the largely family-related members of JTLC, similarly to how Attorney A sows dissension and strident discord among family members whose court cases he is appointed to oversee. Attorney A creates these cases by failing to acknowledge the legitimate legal contracts that bind the parties to a legal action they have been promised, and substituting murky, confusing, contrary instructions of his own choosing, that advance his goals of creating more litigation for which Attorney A will be handsomely paid.

The uranium mining lease agreement extension, signed by JTLC, and only announced only on May 8, 2017 — a full 7 months after expiration of the original lease — through the filing of the 8-K report to the SEC renegotiates the annual lease bonus price from approx. $307,000 down to approx. $174,000, which is a significant, approximate 40% reduction in money owed to JTLC by URI.

Here are the very generous terms that JTLC, acting under the direction of their corporate attorney, Attorney A, signed a legally-binding extension to their Oct 2006 lease, signed sometime after the Oct 2016 expiration of the existing lease, from the May 8, 2017 8-K SEC filing by Uranium Resources Inc:

Item 7.01 — Regulation FD Disclosure.

On May 8, 2017, Uranium Resources, Inc. (the “ Company ”) announced an amendment (the “ Amendment ”) to the Uranium Mining Lease and Agreement, dated October 12, 2006 (as amended, the “ Mining Lease ”), between Neutron Energy, Inc., a wholly owned subsidiary of the Company (“ Neutron ”), and Juan Tafoya Land Corporation (“ JTLC ”). Among other things, the Amendment:

  • extended the term of the Mining Lease by three years, through October 11, 2020, and provides for an annual base rent of $174,109.75 during each year of the extended term in lieu of the $307,252.50 that would have otherwise been due;
  • fixed the gross proceeds royalty due on uranium produced from the Juan Tafoya project at 4%, regardless of the price of uranium, replacing royalty rates that previously depended on the price of uranium and ranged from 4.65% to 6.5%, and established an additional 2% royalty for uranium concentrates that are milled, transported over, stored or processed at the Juan Tafoya project but that are not mined there; and
  • provides JTLC the right to utilize certain water rights covered by the Mining Lease so long as Neutron does not provide notice to JTLC of its intent to utilize such water rights.

A description of the Mining Lease and the Juan Tafoya project can be found in the Company’s 2016 Annual Report on Form 10-K filed on March 2, 2017. Other than as described above, the Mining Lease continues in full force and effect as described in the Form 10-K.

In general, the corporate financial outlook for URI is not good. They have no projects in production (in either uranium or lithium), they have no earnings, they have negative return on assets, and negative return on equity. There is no accounting for how URI remains solvent, continuing to operate, much less it’s wholly owned subsidiary Neutron Energy that actually holds JTLC’s mining lease.

Why anyone would lease their land/minerals to a company in such a poor financial position, that is not actively producing any uranium anywhere in the US (or internationally in Turkey where they operate uranium leases, too)?  In case after case it is documented that Attorney A sell out his own clients’ to their great disadvantage, but to the great advantage of his clients’ opposing party(ies). And in so depriving his own clients of their rightful money – be it earnings, inheritances, or trust asset distributions, Attorney A puts himself in a virtually unassailable legal position because he has removed funds that should be available to his clients, without which funds his clients have no ability to hire other attorneys with which to defend themselves from Attorney A’s predatory attacks.

It’s all part & parcel of Attorney A’s tried & true Pattern & Practice of his deceptive practice of law, that enriches opposing parties, leaving his own clients in a weak financial and legal position, from which Attorney A can further control & dispose of his clients’ assets in a manner particularly dis-empowering to Attorney A’s clients, but greatly advantageous to Attorney A, legally and professionally.

From the 12/31/2016 10-K filed with the SEC on March 2, 2017, Page 19-20:

Our business could be adversely affected if we are unable to successfully renegotiate certain leases.

We are currently seeking to renegotiate the leases relating to our Cebolleta and Juan Tafoya projects…. While we are seeking to amend the current leases or enter into new leases for our Cebolleta and Juan Tafoya projects on terms more favorable to the Company and more reflective of current uranium market conditions, there can be no assurance that we will be successful in such efforts, and the lessors could demand terms that are unacceptable to us or refuse to engage in negotiations. If we are unable to reach agreement with the lessors, we could decide to terminate the Cebolleta and Juan Tafoya leases and abandon the projects. If we were to abandon these projects, it is unlikely we could recoup any of our costs, and abandonment would result in a substantial impairment of our assets. Such an impairment charge could cause the price of our stock to decline.”

This public SEC filing from March 3, 2017 demonstrates how Attorney A rescued this struggling uranium mining company — at the complete expense of his clients, the Juan Tafoya Land Corporation. These actions by Attorney A are so deleterious to his client’s legal & financial positions that it raises the question of Attorney A’s motivation: did Attorney A receive any compensation from URI or its wholly-owned subsidiary and leaseholder Neutron Energy Inc in return for advising the JTLC Board of Directors to execute such a disfavorable lease with Neutron Energy/URI?

Examination of Attorney A’s entire caseload, including guardianships, estates, trusts, receiverships, as well as the case of corporate attorney for JTLC a consistent Pattern and Practice emerges:

  1. Gain control of valuable assets held by corporations, trusts, individuals, estates or in receivership;

  2. Promote feuding within the family, community, corporation, heirs, beneficiaries, or receivees that leaves Attorney A able to present himself as the moderator;

  3. Sell, lease, mortgage or otherwise dispose of or encumber client’s assets to the clients financial and legal disadvantage, all the while racking up large billable hours paid for by the client with their dwindling assets/cash.

  4. When the money runs out for billable hours and professional fees, the case is closed.

Attorney A’s actions of selling/leasing/ committing his client to a financial course for years that only awards the client with enough money to pay Attorney A’s legal fees — but nothing more — is consistent with Attorney A’s practice of defrauding his clients of enough money to defend themselves from his predatory actions. It leaves the clients defenseless, because the contracts under which they have entered — upon their attorney, Attorney A’s, advice — never provides enough money for much else but paying Attorney A his legal fees. Drug dealers have used similar tactics for years to addict their buyers, and leave them coming back for more, but unable to escape the hell of their dealer-created addiction. (See Breaking Bad, the New Mexico-set drama, as well as Better Call Saul, for details as to how this type of attorney abuse of their clients has made its way into popular culture. See Charles Dickens’ 1853 novel Bleak House for an over 160 year-old tradition of attorneys milking estates for fees, until the money runs out, and the case is ‘settled.’ The public uproar over the judiciary abuses as depicted in Bleak House helped support a judicial reform movement, which culminated in the enactment of legal reform in the 1870s.)

Attorney A began his relatively brief legal career that only began in 2000, when he was about 45 years old, and previously had only owned a landscaping business in Albuquerque. Who paid for Attorney A’s law schooling at UNM from approximately 1997 to 2000, ending in Attorney A being admitted to the bar in approximately 2000-01?

Attorney A’s consistent behavior of executing agreements that are contrary to his publicly-identified client’s best interest — no matter who the client — Receivee, Trustee, Heir, Beneficiary, corporation, or any other legal entity — is completely backwards to any honest, arms-length transaction, but Attorney A has a documented history of repeating this same type of asset-stripping in every single case he represents, whether with JTLC, or in guardianship, trust, receivership, or corporate legal representation cases.

Here’s URI’s 5 year stock price chart; draw your own conclusions about the financial health of the company Attorney A has directed JTLC to sign a 3-year uranium mining lease extension, at terms deleterious to the client:

Uranium Resources Inc 5 year stock price chart showing their stock price decline of approximately 95% mirrors their own bleak assessment of their future, announced in SEC 8-K and 10-K forms, filed within the last months.

Uranium Resources Inc 5 year stock price chart showing their stock price decline of approximately 95% mirrors their own bleak assessment of their future, announced in SEC 8-K and 10-K forms, filed within the last six months.

Anyone with a functioning knowledge of mineral exploration and mining leases knows not to re-lease or extend an existing lease with a company that is not in any financial position to execute any further exploration on their property within the lease term, as URI as publicly admitted in its March 2, 2017 SEC 10-K filing. URI publicly stated that it lacks required capital resources or partners to explore JTLC’s promising uranium leases, that could be worth millions in a longer time-frame that most JTLC families, living their daily lives, are unaware of – and well after the expiration of URI/Neutron Energy’s lease.

Questions that arise from Attorney A’s actions in advising the Juan Tafoya Land Corporation Board to pursue such a poor lease (extension) with URI/Neutron Energy, which tie up JTLC’s uranium lands with a company that can’t perform any of the stated exploration aims before the lease is now set to expire in 2020, include:

What is Attorney A’s ownership in URI, what is his ownership in URI’s wholly-owned subsidiary and JTLC leasee, Neutron Energy?

Has Attorney A received any compensation, payments, payments-in-kind, or bartered with URI/Neutron Energy or their assigns or partners since becoming JTLC’s corporate attorney?

Has any insider-trading occurred in the last 10 years of financial, and ownership manipulation of JTLC’s property, by its corporate attorney Attorney A?

During a JTLC Board Meeting held in approximately January 2017, Attorney A, acting as JTLC’s Corporate Attorney, lead a discussion with JTLC President Baca and his Board Members in whether or not they were going to purchase URI stock. Evidently the purchase of URI stock by JTLC had already been discussed between Attorney A and this BOD. It is unclear if any URI stock has ever been purchased by JTLC on behalf of the JTLC shareholders. If any stock purchases were made based on insider information not available to the public in forms 8-K and 10-K or other public sources of information, then that is insider-trading, and must be prosecuted.