An investor in Houston-based Tellurian Investments has sued Charif Souki on claims that the company co-founder and chairman of the board reneged on a promise to pay back the investor for tens of millions in losses after Tellurian’s stock value plummeted.
The lawsuit, filed by investor Christopher Parker and his company, Red Mango Enterprises, alleges Souki breached a contract with Parker to indemnify him for his losses and fraudulently induced Parker to keep his shares in order to prevent Tellurian stock, which had fallen victim to a short-selling campaign, from dropping even further.
“Souki was lying, and never planned to fulfill his promise,” said the lawsuit, filed Thursday in Colorado federal court. “Among other things, Souki never even told his bank — from which he had taken out loans including loans secured by Souki’s own Tellurian stock and/or options — that Souki had any liability outstanding to Parker and Red Mango.”
Tellurian did not respond to a request for comment and and lawyers for Souki, who resides in Aspen, Colorado, declined comment.
“The lawsuit is significant, and significant to our client, because the executive chairman of a public company made promises to our client about the stock of his company, which had a substantial financial impact on our client,” Boies Schiller Flexner partner Matthew Schwartz, the plaintiffs” lead lawyer, told The Texas Lawbook. “Charif Souki broke those promises, and in retrospect it appears he never intended to honor them. Because Souki refuses to voluntarily follow through on his commitment, today’s lawsuit asks the court to order him to make good on it.”
Tim McConn and Paul Yetter of Houston boutique firm Yetter Coleman is defending Souki, and has represented him in previous litigation matters. In 2020, the firm represented Souki in a high-stakes lawsuit between Souki, his former company, Cheniere Energy and other parties in a complex dispute in which Tellurian’s Driftwood LNG project and Carl Icahn were central to the facts. The parties struck a walkway deal on the eve of trial, which was set to take place in Harris County District Court.
According to the lawsuit, Parker first met Souki several years ago, and after flying to Aspen to meet Souki and learn more about Tellurian, Parker and Red Mango began investing in Tellurian in early 2017. Over the course of the few years, Parker built his holding in Tellurian, ultimately owning 2% of the outstanding common stock of company — personally and through Red Mango.
Tellurian’s share price in early 2017 was $20.47 per share. But by August 2019, it had dropped to roughly $5 per share, which led Parker to become concerned about his investment, the lawsuit says. When he told Souki he intended to sell his shares, Souki first sought to convince Parker to keep his shares by blaming the value drop on an aggressive short-selling campaign, and when that didn’t work, Souki “then induced Parker” to delay selling his shares by agreeing to indemnify Parker and Red Mango against any losses through the end of 2020, according to the lawsuit.
Tellurian’s stock value dropped again in early 2020, falling to under $1 per share in mid-March, the lawsuit says, forcing Souki himself to liquidate around 21.99 million shares that he beneficially owned. A March 5, 2020, SEC disclosure explained that it was part of an involuntary sale that Souki had to make in order to meet loan requirements in connection with a trust beneficially owned by Souki that had pledged 26 million shares of Tellurian stock.
By the end of 2020, the stock price had not recovered, and Parker asked Souki to uphold his end of the agreement to indemnify him and Red Mango, the lawsuit says. Souki asked Parker to hold off selling his shares for another year, and after a February 2021 meeting in Aspen, Parker agreed on the condition that Souki pay interest for the additional period.
At the meeting, Parker presented a written agreement, and while Souki agreed to the terms, he refused to sign the agreement, explaining that he could not sign a written agreement since he had not disclosed to his bank his liability to Parker and Red Mango, the lawsuit says.
Parker accepted based on the two having “a long history” and on Parker’s continued faith in Tellurian’s core business model, according to the lawsuit.
In October 2021, Parker texted Souki to set up a “firm date to close out on the guarantee,” the lawsuit says, but while Souki confirmed that he and Parker had “talked in Aspen,” he did not commit to paying Parker or fulfilling his obligation.
“Since that date, Parker, on behalf of himself and Red Mango, has demanded that Souki made the payments required of him under the contract,” the lawsuit says. “However, Souki has failed to do so in breach of his agreement.”