The managing director of Lines Overseas Management has taken a position against his older brother, former LOM president and director Brian Lines, in an application scheduled to heard by Bermuda Supreme Court tomorrow.

Scott Lines? affidavit supports his company?s application for a court declaration that LOM is legally entitled to release items subpoenaed by the US Securities and Exchange Commission relating to a probe of market manipulation involving Sedona Software Solutions and SHEP Technologies.

In his affidavit, filed with the Supreme Court of Bermuda Commercial Court, Scott Lines described the details surrounding LOM?s links to the two companies under SEC investigation. In both cases, he cites his older brother Brian as the key player.

The younger Lines stated that the Sedona issue dates back to December, 2002 when Brian Lines was presented with the opportunity to invest in the formation of a gold mining venture. The privately held Renaissance Mining Corp. planned to acquire majority rights to two Nicaraguan mines as well as a minority interest in a mine in Panama by engaging in a transaction with Central American Mine Holdings Ltd.

Renaissance planned to become an SEC registrant by effecting a reverse take-over of the public shell company Sedona Software Solutions, of which ?Brian Lines and others were in the process of acquiring an interest?.

Scott Lines said in his affidavit that the final plan was to raise equity capital and LOM Capital Ltd. was offered the opportunity to underwrite this private placement.

As the deal went forward, Scott Lines said his brother followed the advice of a Canadian law firm and arranged for the acquisition of up to 40 percent or 2.1 million previously issued and outstanding Sedona shares. The ownership of the other 60 percent of the shares was to remain in the hands of the Sedona shareholders until the completion of the reverse merger.

Scott Lines said that since 15 percent of the acquired shares were affiliated or restricted and could not immediately be transferred to Brian Lines or his associates, some were placed into two accounts ?ultimately for the benefit of a trust in favour of Brian and his family and myself and my family,? Scott Lines said.

The ownership in some 16.4 million issued shares in the merged Sedona-Renaissance was to be divided with 49 percent going to CAMHL, 26 percent going to former shareholders or Renaissance, 12 percent for private placement investors and 13 percent collectively for former Sedona shareholders and LOM customer accounts, he said.

Renaissance?s president Ian Park, formerly of TSE listed company Greenstone Resources and geologist R.E. van Tassel who had forty years experience in mine exploration and development ?seemed to be experienced in mining operations,? he added.

On January 21, 2003 Renaissance and Sedona announced that Sedona would cease being a shell company and would be poised after a reverse merger to exploit CAMHL?s mining rights funded by the Renaissance private placement.

At the time, gold as a commodity was trading at a five-year high and gold stocks were also doing well.

On the first day of trading, Sedona shares closed at $9.35 on the OTC bulletin board market. Eight days later when the security fell to $6.90, the SEC suspended trading citing ?questions concerning the accuracy and completeness of information? available to investors regarding such things as the merger, Renaissance assets and business operations.

Mr. Lines said as a result of the pending probe LOM withdrew thereby ?eliminating any hope of success? for the proposed transaction.

A Canadian company, RNC Gold Inc. ended up exploiting the same mining assets in a similar reverse take-over transaction. RNC?s Gold revenues increased from US $14.8 million in 2003 to US $32.2 million in 2004 and its gold sales increased from 39.095 ounces in 2003 to 78,966 ounces in 2004, he said.

?But for the Sedona trading suspension, the mining rights which RNC Gold is now successfully exploiting would have gone to the Sedona-Renaissance venture and its investors,? Mr. Lines said.

SHEP ? the other subject of the SEC probe ? was an entrepreneurial company focused on ?what appears to be a promising automotive technology ? now in demand for hybrid vehicles ? to capture energy used during vehicle braking and use it for its acceleration,? Mr Lines said.

Its technology and plans ?were viewed as promising by investors over a two-year period? and it continued to work as a developmental stage company through a series of private placements of its stock.

Starting in January, 2002, LOM records show ?two LOM customers ? whose accounts were regularly administered by Brian Lines ? deposited Inside Holdings stock in their LOM accounts.?

By April 2002, Scott Lines said that research showed that these two customers may have held 85 percent of Inside Holdings? outstanding shares. Five month later Inside Holdings acquired SHEP by a reverse take-over and renamed it SHEP Technologies Inc.

One month before the take-over, Scott Lines said that two accounts at LOM controlled by his brother bought Inside Holdings stock. The Monashee account was owned by a trust benefiting Brian Lines? family. The Largo account was owned by a trust benefiting the families of both Brian and Scott Lines, ?but Brian assumed responsibility for making the account?s investment decisions?, Scott Lines said in his affidavit.

He added that Brian Lines acquired additional SHEP stock for these two accounts through an apparent stock transfer in December 2002. That same month, it appears that Brian Lines caused another account controlled by ICH to make a $60,000 bridge loan to SHEP, he said.

?These two accounts gradually sold their holdings in SHEP, with approximately 95 percent of the sales occurring six months or more after the initial investment,? Scott Lines said.

Mr. Lines said that following the takeover, the two unnamed customers used their LOM accounts for sales, additional purchases and transfers of SHEP stock to other brokerage firms. From December, 2003 onwards, other LOM customers also bought and sold SHEP stock.

The SEC subpoenas seek the production of documents and telephone records including incoming calls for all landline and mobile phones relating to the Sedona and SHEP transactions for the period December 1, 2002 through February 28, 2003.

Scott Lines said his company would like to disclose the relevant recordings to the SEC, but lawyers CD&P have said Section 61 of the Telecommunications Act precludes disclosure. Bermuda attorney Dennis Dwyer has testified for the SEC to the opposite effect and as such, LOM and Scott Lines have sought the Bermuda Supreme Court?s guidance on the issue. His brother opposes disclosure.

During the period under investigation LOM recorded all phone calls including 19,000 outgoing long distance calls ?for the sole purpose of resolving trading disputes between LOM personnel, counterparts or clients?. Clients with accounts opened prior to July, 2001 did not have contracts permitting the recording of conversations and were unaware of the recordings.

Among other concerns, the brothers have asserted that recordings on their extensions will end up disclosing of conversations with persons not concerned with Sedona or Shep at all.