The US Securities and Exchange Commission has filed evidence to support controversial allegations that it made in a Status Report to a US District Court last December which Lines Overseas Management has moved to strike on the grounds that its allegations were "baseless", "defamatory" and "scandalous".

The SEC produced the Status Report to update a US Judge on "significant developments" related to his review of a lower court's enforcement order of four subpoenas for information that were served on LOM and its managing director Scott Lines almost two years ago.

The SEC said in a response last week that LOM's motion should be denied since each statement in the Status Report was "well founded" and "accurately reflected information that the Commission had obtained from credible and relevant sources".

In its filing, the SEC asked the court to "recognise" LOM's motion as "an attempt to distract the Court in the hopes of further putting off what it has been legally obliged to do for nearly two years".

"Had LOM put as much effort in complying with the subpoenas as it has with forestalling the inevitable, these issues would have been resolved by now and the need for judicial intervention avoided," the SEC said in its filing.

Yesterday, LOM responded by reiterating its call for the court to either strike the report with its "false" and "harmful" allegations. It argued that the status report "filed seven months after a briefing on pending issues was completed amounts to a surreply in support of its subpoena enforcement application."

If the court does not strike the report, LOM has asked it to conduct an evidentiary hearing to resolve all the issues of fact disputed by LOM.

The new SEC filing included the sworn affidavit of a professional process server stating the details of his service of three subpoenas on LOM president Donald Lines while he was visiting Boston for medical treatment last year.

Mr. Lines denied that he was actually served and took out full page advertisements in local newspapers stating his version of the facts.

The SEC said in its latest filing however there was "ample evidence to conclude that Lines was properly served with the SEC's subpoenas and was untruthful in his declaration to the contrary".

In a declaration run in full on this page, professional process server Gerson Marciel from the Massachusetts firm of Stokes and Levin said that he personally served Mr. Lines at the Copley Hotel in Boston on November 10, 2005.

He said that at 9.30 that evening he asked the clerk to call Mr. Lines' room to alert him that there was a visitor in the lobby who wanted to see him.

Mr. Lines, whom he described as a white male, approximately 5ft10in, 185 pounds and aged 60, came down a short while later and walked to the front desk, he said.

"That's when I approached the defendant and let him know I have some legal documents for him," the process server said.

"Mr. Lines then looked at the yellow ten by 13 envelope, read the label which clearly read United States Securities and Exchange on it and then said 'Goodbye!'", the process server stated.

LOM responded in a court document yesterday that the SEC had been "unable to demonstrate with appropriate evidence that Mr. Lines was validly served with process and without valid service, Mr. Lines could not have "flout[ed" any process," LOM said.

The company added that the SEC assertion that he was served is contradicted by Donald Lines' sworn declaration in which he states that he "was not served with the three administrative subpoenas...during [his trip to the United States in November 2005".

LOM added that Mr. Lines' testimony is "essentially unrefuted as the SEC's process server is unable to put forth any credible evidence that the person he served with administrative subpoenas was Mr. Lines, who, in fact, does not meet the description of the individual the process server describes."

Mr. Lines' lawyer Timothy Marshall sent a letter to this newspaper last week stating that contrary to the process server's statement, his client Donald Lines is in fact 74 years old and weights 215 pounds (see full text of the letter on Page 17).

Mr. Marshall also represents Susan Wilson [See top right of page as well as Mr. Lines' son, Brian, who was president of LOM until he stepped down last year.

Brian Lines was recently at the opposite side of a Bermuda court proceeding when his brother Scott and the company now headed by his father sought a court declaration allowing them to disclose telephone recordings and client information pertaining to the SEC subpoenas. The Bermuda Supreme Court ruled that Brian Lines was entitled to an injunction for his personal telephone conversations as well as those held with his attorneys. The injunction also applies to two interviews he gave to BMA inspectors.

Brian Lines has however informed the Supreme Court that he will seek a stay of the order allowing LOM and his brother to disclose client records and other telephone recordings pending his decision to appeal the ruling.