Fairfax's Frivolous Lawsuit Dismissed by Court

NEW YORK, Feb. 28  /PRNewswire/ -- Institutional Credit Partners, LLC ("ICP") and William F. Gahan announce the Honorable Judge Deanne Wilson's dismissal of all claims brought against them by Fairfax Financial Holdings, Ltd (NYSE/TSX: FFH, "Fairfax") and Crum & Forster Holdings, Ltd ("C&F").

This is a major setback in Fairfax's crusade to silence its critics.  ICP CEO Thomas Priore, expressed his satisfaction with Judge Wilson's decision, "We are pleased by the Court's decision as ICP should never have been a party to this litigation.  Fairfax's suit against ICP and others is designed only to stifle the flow of critical research and adverse opinions.  Yesterday's ruling was a major setback to this campaign and encouraging to others battling similar litigious intimidation."

The dismissal of Fairfax's lawsuit does not affect ICP's counterclaims against Fairfax, wherein it alleges, among other things, a scheme (the "Transaction") to improperly avoid approximately $400 million in U.S. income taxes and mislead the financial markets as to Fairfax's shorting of Odyssey Re Holdings Corp. (NYSE: ORH, "Odyssey") stock, a subsidiary of Fairfax.  ICP believes that Odyssey remains liable for this amount in addition to approximately $300 million in penalties and interest. A copy of ICP's letter to the Board of Directors of Bank of America Corporation requesting specific public disclosures regarding the problematic Transaction in which BOA participated, can be found at http://www.post233.com/ .

In July 2006, Fairfax and its New Jersey subsidiary, C&F, had filed a complaint against several analysts and investment funds, claiming that they had conspired to spread "disinformation" about Fairfax's business operations. In its headline-grabbing complaint, Fairfax claimed an absurd $6 billion in damages asserting that its reputation had been damaged and its stock price depressed by the defendants.

Just last week, Fairfax attempted to use its strike suit against ICP as both a sword and a shield.  In a public conference call with investors, Fairfax' CEO, Prem Watsa, when asked by ICP's William Gahan to provide adequate and truthful disclosure regarding the alleged tax evasion Transaction, responded with prepared remarks outlining Gahan's participation in the aforementioned racketeering conspiracy.

Now that Fairfax's lawsuit has been thrown out of court, Watsa has no excuse to continue dismissing his duty to inform the markets about such disclosure peculiarities, among which include:

  (i)   How was Fairfax able to acquire beneficial ownership, with voting
        rights, of 4.3 million Odyssey shares (the "Subject Stock") on March
        3rd 2003 when SEC filings made by third party investors on March
        31st 2003 claimed beneficial ownership and voting interest in all
        but 1.3 million shares of Odyssey's publicly available stock?
  (ii)  If Odyssey stock was sold short to Fairfax, why wasn't this material
        information disclosed in the Transaction's original documentation
        filed with the SEC? Furthermore, why wasn't this short sale reported
        to the New York Stock Exchange ("NYSE") as required by NYSE Rule
        421?
  (iii) If, as was repeatedly claimed in SEC filings, the Transaction was
        executed for "investment purposes", why was Fairfax unable to
        realize a profit from a greater than 75% increase in Odyssey's share
        price over the life of the Transaction?  Why didn't BOA incur a loss
        from being short the Subject Stock over the same period of time?
        What was the non-tax business purpose for the Transaction?




The complete list of unanswered disclosure questions asked by ICP and disregarded by Watsa can be found at http://www.post233.com/ .

It should be noted that other market participants, against whom this racketeering action is still pending, are being attacked for their criticism of the same accounting standards to which Fairfax, Odyssey and their outside auditor, PricewaterhouseCoopers LLP, have admitted deficiencies.  In fact, one day after Fairfax publicly announced the filing of its initial racketeering complaint, the company admitted accounting errors which were found to have inflated Fairfax's shareholder's equity by an average of $216 million, or 9%, per year from 1997 to 2005.  As part of Fairfax's 2006 Annual Report, to which its auditors have agreed, "the company did not maintain effective internal control over financial reporting ... "

ICP says it is prepared for Fairfax's next move.  Judge Wilson has granted Fairfax and C&F until March 27, 2008 to amend their complaint against ICP and others for the third time.  Says ICP's Priore, "We expect Fairfax to fabricate new claims in its attempt to use the courts as a shield against public scrutiny.  We would welcome the opportunity to question Fairfax's CEO under oath about the tax transaction and other required public disclosures."

DISCLOSURE: ICP and its affiliates hold investments from which they will profit in the event of a decline in the creditworthiness of Fairfax and/or Odyssey. ICP may change its investments from time to time, including the extent nature and form of these investments.  However, ICP anticipates holding, for the foreseeable future, investments whose value will increase in the event of a decline in the creditworthiness of Fairfax and/or Odyssey. ICP has made and will continue to make these investment decisions on the basis of its analysis, beliefs, and assumptions that it believes to be reasonable.  Any statements contained herein are intended solely for informational purposes. All allegations concerning any individual or entity are just that, allegations, until proven in a court of law.  The reader is directed to the source documents to confirm all statements contained herein. 

DATASOURCE: Institutional Credit Partners, LLC



CONTACT:  Pen Pendleton for Institutional Credit Partners, LLC,

[phone]



Web site:  http://www.icpcapital.com/

http://www.post233.com/ 

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