00/00/2014 PLAZA 5 PM: Sum?: 1400 luvim?. CA 02614-2515 10 23:30 FAX Case 2:14-cv-O4O PAUL L. GALE, Bar No. 065873 [fan]. ale troutmansanders.com HO A H. PROUTY, Bar No. 238950 TROU A ANDERS LLP 5 Park Plaza, Suite 1400 Irvine, CA 92614-2545 Telephone: 949.622.2700 FaCSimile: 949.622.2739 Attorneys for Plaintiffs BILL A. BUSBICE, JR., OLLA PRODUCTIONS, LLC, and ECIBSUB, LLC UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA (A Case q?u011-?& COMPLAINT FOR: 1. BILL A. BUSBICE, JR., an individual; OLLA PRODUCTIONS, LLC, a limited liability company; and ECIBSUB, LLC, a limited liability company, Plaintiffs, v. JAMES DAVID WILLIAMS, an individual; STEVEN J. BROWN, an individual; GERALD R. SEPPALA, an indiv1dual; LEGACY FILM CREST, LLC, a limited liabilit com any; . MOMENT FACTOR LL a limited liability compilansy; LUXE ONE INC., a corporation; I IONS LLC, a Iimited liabilit com an BIPARTISAN COAL TIONI) FOR AMERICAN SECURITY CORPORATION, a corporation; HIGHGATE PASS, LLC, a limited liabilitly company; GARUDA PARTNERS TD., an unknown entity, as Trustee of The Mulholland Ridge Trust; and DOES 1 inclusive, Defendants. 22105507 8. 9. 10. 11. IMPOSITION OF A 12. RAUDULENT TRANSFER DEMAND FOR JURY TRIAL COMPLAINT 2717-34A9-9Agigii?v Doc Pagelof 65 PagelD #26 . I . FILED CLERK, U.S. DISTRICT COURT 2 8 20M . VIOLATION OF OF CALIFORNIA DISTRICT DEPUTY VIOLATION OF THE FEDERAL SECURITIES CALIFORNIA CORPORATION CODE SECTION 2540]; COMMON LAW BREACH OF FIDUCIARY CON STRUCTIVE NEGLIGENT CONSPIRACY TO BREACH OF IMPLIED CONSTRUCTIVE TROUTMAN SANDERS LLP 5 PARK PLAZA CA 92m+2545 Case Document 1 Filed 05/28/14 Page 2 of 65 Page ID #27 Plaintiffs Bill A. Busbice, Jr. (?Busbice?), 011a Productions, LLC and Ecibsub, LLC (?Ecibsub?) (collectively, ??Plaintiffs?), allege: NATURE OF THE ACTION 1. This is an action to remedy a bold and brazen securities fraud. 2. Over the course of nine months, beginning in April 2013, James David Williams (?Williams?) with the assistance of his associates and co-conspirators Steven J. Brown (?Brown?), Gerald R. Seppala (?Seppala?), others acting in concert with them and/or providing substantial assistance to them, and their respective related entities swindled Plaintiffs out of $10,900,000. Defendants fraudulently induced Plaintiffs to invest in companies that purported to own and/or control rights to feature length ?lms, including the right to participate in the ?lm?s net revenues, and in some instances, the right to ?nance the ?lm?s marketing campaign (a so-called ?prints and advertising? or ?nancing) which, in addition to a priority return plus interest, entitled the ?nancing company to receive a substantial interest in the ?lm?s net revenues. 3. In all, Defendants? massive fraud involved four ?lms: Made in America, The Letters, Left Behind, and Angels Sing. As alleged in more detail below, for each ?lm, Williams and/or one or more of his co?conspirators structured the deals, and then fraudulently induced Busbice (through his companies) to purchase securities of various defendant entities through the intentional falsi?cation of ?nancial documents, audacious lies and material misrepresentations. For example, with respect to The Letters, Williams induced Busbice, through his wholly owned company, Olla, to purchase common stock in a corporation that purportedly had a deal with the film?s producers to ?nance over $20,000,000 for the ?lm?s campaign. The deal was similar with respect to Angels Sing, but instead of issuing Olla shares of corporate stock, Williams caused membership interests in a limited liability company to be issued. For Left Behind, Williams induced Olla to 22105507 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITF. 1400 ERVINH. CA 9261-14545 Case Document 1 Filed 05/28/14 Page 3 of 65 Page ID #28 00 purchase ?Participation Interests? in the ?lm?s net revenue, which were represented to be ?restricted securities? that had to ?be held inde?nitely unless . . . subsequently registered under the [1933 Securities] Act and applicable state securities laws or unless an exemption from registration is For Made in America, Ecibsub was induced to acquire membership interests in a production company created and controlled by Williams and his co-conspirators. 4. Although there were some differences in how the scheme for each ?lm was structured, the basic concept was the same: Williams and/or one or more of his co-conspirators, who held themselves out as experienced film industry insiders, claimed to have a deal in place to fund the production or marketing of a feature film. Plaintiffs were repeatedly told that investing in each deal would bring a guaranteed return of capital, interest, and pro?t participation rights. Williams and his co?conspirators falsely represented that they had already invested millions of their their own funds in each ?lm, that more money was needed, and that Busbice could take advantage of the lucrative deal by investing his own money. Williams and/or one of his co-conspirators were set up to manage the deals, whereas Busbice?s role Was that of a passive investor. 5. After investing $10,900,000, Plaintiffs discovered that they had been conned. Plaintiffs learned, among other things, that: 0 Williams did not in fact invest his own (or any) money in the purported deals; 0 Williams intentionally provided Busbice with fake business and ?nancial records to convince Busbice that a solid ?nancial foundation existed for each investment; 0 Williams and his co-conspirators presented Busbice with falsi?ed bank records purporting to show that multi?million dollars of funds were already invested in each transaction when, in fact, there was no money in any company other than what Plaintiffs invested; 22105507 2 - COMPLAINT TROUTMAN SANDERS LLP 5 PLAZA SUJTF. 1400 CA 92614-2545 Case Document 1 Filed 05/28/14 Page 4 of 65 Page Williams and his co?conspirators repeatedly lied and concealed the truth with falsi?ed documents at each instance when Plaintiffs tried to obtain accurate information related to their investments; and 0 Williams and his co-conspirators secretly, wrongfully and without Plaintiffs? knowledge, siphoned millions of dollars to other accounts under their exclusive control and converted Plaintiffs? money for their own personal use. 0 Out of the millions invested by Plaintiffs, almost none of the funds were spent on the film projects or used for the purposes for which they were intended. 6. In short, it appears that most, if not everything that Williams and his co?conspirators told Busbice and presented to Busbice to induce Plaintiffs? investments and to conceal the frauds that had been perpetrated, was ?agrantly false and designed to cheat Plaintiffs out of millions of dollars. 7. Instead of investing in the four fills as had been represented, Defendants used Plaintiffs? money to go on an out?of~?control personal spending spree. JURISDICTION AND VENUE 8. The claims asserted herein arise under section 10(b) of the Securities Exchange Act of 1934 (the ?Exchange Act?) (15 U.S.C. 78j(b)) and Rule lOb-S (17 C.F.R. 240.10b-5) promulgated thereunder by the Securities and Exchange Commission. 9. This Court has subject matter jurisdiction over this action pursuant to section 27 ofthe Exchange Act (15 U.S.C. 78aa) and 28 U.S.C. section 1331 (federal question jurisdiction) and has supplemental jurisdiction over the state law claims asserted herein pursuant to 28 U.S.C. section 1367(a), because they are related to claims within this Court?s original jurisdiction. 22105507 - 3 COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA Sum: 1400 IRWNE, CA 92614-2545 Case Document 1 Filed 05/28/14 Page 5 of 65 Page ID #:10. Venue is proper in this district pursuant to section 27 of the Exchange Act and 28 U.S.C. section 1391(b), because several of the acts and transactions giving rise to the violations of law complained of herein occurred in this district, and Williams and other defendants reside in this district. 11. In connection with the acts, transactions and conduct alleged herein, defendants, directly and indirectly, used the means and instrumentalities of interstate commerce, including, but not limited to, the United States mails and interstate wire and telephone communications. THE PARTIES 12. Plaintiff Busbice is an individual residing in Wyoming. 13. Plaintiff Olla is a Louisiana limited liability company. Busbice is Olla?s sole member. 14. Plaintiff Ecibsub is a Louisiana limited liability company. Ecibsub?s members are: Busbice; Dorothy Elizabeth Lippman Busbice, an individual residing in Wyoming; and Rebecca T. Romero, an individual residing in Louisiana, as Trustee for the Ryan Alfred Busbice Family II Trust, the William Matthew Busbice Family 11 Trust, and the Sarah Elizabeth Family II Trust. 15. Defendant Williams is an individual residing in Los Angeles County, California. Williams has done and continues to do business under various fictitious business names including, without limitation, New Legacy Film Investment New Legacy Media Partners Legacy Film Crest Media Management Fund and Film Crest Entertainment Plaintiffs are informed and believe, and on that basis allege, that NLFI, NLMP, and CE are not formal legal entities. Williams also operates through certain entities that are formal legally-registered entities, at least some of which are named parties to this action and are described herein below. 22105507 4 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA Sum: Milt) CA 92614?2545 Case Document 1 Filed 05/28/14 Page 6 of 65 Page ID #:16. Defendant Brown is an individual residing in Los Angeles County, California. 17. Defendant Gerald R. Seppala (?Seppala?) is an individual residing in Minnesota. 18. Defendant Legacy Film Crest, LLC (?Legacy?) is a California limited liability company with its principal place of business in Los Angeles County, California. Plaintiffs are informed and believe, and on that basis allege, that Legacy is owned and controlled by Williams. 19. Defendant Moment Factory, LLC (?Moment Factory?) is a California limited liability company with its principal place of business in Los Angeles County, California. Plaintiffs are informed and believe, and on that basis allege, that Moment actory?s only members are plaintiff Olla and defendant Legacy. 20. Defendant Luxe One, Inc. (?Luxe One?) is a California corporation with its principal place of business in Los Angeles County, California. 21. Defendant Visions L.L.C. (?Visions?) is a Minnesota limited liability company. 22. Defendant Bipartisan Coalition for American Security Corporation (?Bipartisan Coalition?) is a California corporation with its principal place of business in Los Angeles County, California. Plaintiffs are informed and believe, and on that basis allege, that Bipartisan Coalition is owned and/or controlled by Williams. 23. Defendant Highgate Pass, LLC (?Highgate?) is a California limited liability company with its principal place of business in Los Angeles County, California. Plaintiffs are informed and believe, and on that basis allege, that Highgate is affiliated with, owned and/or controlled by Williams and/or Brown. 24. Plaintiffs are informed and believe, and on that basis allege, that Defendant Garuda Partners, Ltd. (?Garuda?) is an unknown entity that is affiliated 22105507 5 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA Hm) CA 926144545 Case Document 1 Filed 05/28/14 Page 7 of 65 Page ID #:12 with, owned and/or controlled by Williams and/or Brown, and is Trustee of the Mulholland Ridge Trust. 25. The true names and capacities, whether individual, corporate, or otherwise, of the defendants sued herein as DOES 1 through 50, inclusive, are unknown to Plaintiffs. Therefore, Plaintiffs sue the DOE defendants by such ?ctitious names. Plaintiffs will amend this complaint to show the true names and capacities of the DOE defendants when they have been ascertained. Plaintiffs are informed and believe, and on that basis allege, that DOES 1 through 50, inclusive, and each of them, are in some manner liable to Plaintiffs. 26. Plaintiffs are informed and believe, and on that basis allege, that at all times herein mentioned, Defendants, and each of them, were the agents, trustees, partners, joint venturers, co?conspirators, contractors and/or employees of the other Defendants, and that the acts and omissions herein alleged were done by them, acting individually, through such capacity and within the scope of their authority, and with the permission and consent of the other Defendants and/or were thereafter rati?ed by each of the other Defendants, and that each of them are jointly and severally liable to Plaintiffs. BACKGROUND ALLEGATIONS A. The Made in America Deal 27. In April 2013, Defendants Williams, Seppala and Brown approached Busbice regarding an opportunity to invest in a feature length documentary, Made in America, through the purchase of membership units in Visions, a limited liability company organized as the ?lm?s project management, development and ?nancing entity. According to these defendants, Seppala and Brown were the ?lm?s producers, and Seppala?s company Grif?n Productions, which had deveIOped the ?lm, assigned all of its rights regarding the ?lm to Visions. 22105507 6 COMPLAINT Case Document 1 Filed 05/28/14 Page 8 of 65 Page ID #:13 TROUTMAN SANDERS LLP 5 PARK PLAZA SUiTli14()n IRVINE, CA 92614-2545 28. Visions was to be managed by Seppala, who would hold virtually all 2 of the company?s twenty ?Class A Units? which, according to an Informational 3 Financing Memorandum provided to Busbice, had ?primary governance rights 4 respecting control of the Company and the conduct of its business,? as well as 5 certain ?nancial rights. Investors could purchase Visions? ?Class Units,? which 6 granted ?limited governance rights,? but potentially lucrative ?nancial rights, 7 including the right to recoup 120% of the investor?s capital contribution before any 8 distributions were made to Class A Unit holders, followed by a pro rata share of the 9 ?lm?s pro?ts. Visions? Member Control Agreement, dated April 15, 2013, detailed 10 the members? respective rights and interests as Class A or Class Unit holders. 11 29. Defendants Seppala, Brown and Williams represented that the 12 minimum ?nancing needed for the ?lm was $1,000,000, and that Williams would 13 be investing $500,000 of his own money to purchase one Class A Unit and ?ve 14 Class Units in Visions. These defendants looked to Busbice to invest the 15 remaining $500,000 to acquire the same equity interest as Williams. 16 30. On April 15, 2013, Seppala e?mailed Busbice the ?lm?s budget, which 17 indicated that just over $1,000,000 was budgeted for various items, such as ?set 18 construction,? ?set operation,? ?special effects,? etc. Defendants Brown and 19 Williams were copied on that e?mail. 20 31. Later on April 15, 2013, Seppala e?mailed Busbice a purported wire 21 con?rmation (the ?Purported 4/ 15/ 13 Wire Con?rmation?) indicating that Williams 22 transferred $500,000 to a JP Morgan Chase (?Chase?) bank account opened for 23 Visions, Account No. 478137206 (the ?Visions 7206 Account?), which was 24 represented to be the production account for the Made in America project. 25 32. On or about April 24, 2013, Defendants Seppala and Williams sent 26 Busbice a purported printout of a Chase online statement for the Visions 7206 27 Account re?ecting that, as of April 24, 2013, that account?s present balance was 28 $531,610.12 (the ?Purported 4/24/ 13 Screenshot?). Defendants Seppala and 22105507 - 7 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA Sunni-10E) IRVINE. CA 9261-14545 Case Document 1 Filed 05/28/14 Page 9 of 65 Page ID #:Williams sent Busbice the Purported 4/24/13 Screenshot as further con?rmation of Williams? $500,000 investment in order to induce Busbice to invest. 33. On or about April 25, 2013, Defendants Seppala and Williams sent Busbice a copy of a Subscription Agreement, signed by Williams, representing that Williams was acquiring ?ve Class Units in Visions for $500,000. This Subscription Agreement also contained an acknowledgement, signed by Seppala, certifying that Visions had already received Williams? $500,000 ?by way of wire transfer into the checking or deposit account of Visions, 34. Based on these representations, on or about April 25, 2013, Busbice, on Ecibsub?s behalf, signed a Subscription Agreement to acquire five Class Units in Visions for $500,000. That Subscription Agreement provided, among other things, that ?the Units are not registered under the Securities Act of 1933 (the ?Securities Act?) or the securities laws of any state, and that such Units will be issued to the undersigned in reliance on the nonpublic offering exemption under Section 4(2) of the Securities Act and Regulation thereunder and the appropriate provisions of the applicable state 35. On April 26, 2013, in direct reliance upon on Defendants? representations, Busbice caused Ecibsub to wire transfer $500,000 to the Visions 7206 Account. B. The Luxe One The Letters Deal Part 1 (the ?rst $2,000,000) 36. In late June 2013, Williams approached Busbice regarding an investment opportunity that involved the making of a loan in connection with the theatrical release of The Letters, a feature film about the life of Mother Teresa. According to Williams, Williams had an agreement in place with the owner/producer of The Letters, Big Screen Entertainment Partners (?Big Screen?), to make a $10,000,000 loan for the ?lm, which was to be repaid with interest from the ?lm?s net revenues, and which was to be secured in a ?rst 22105507 - 8 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE 1400 IRVINE, CA 9261472545 Case Document 1 Filed 05/28/14 Page 10 of 65 Page ID #215 position by such revenues. In addition, according to Williams, that agreement also provided him (through his company, Luxe One) with certain lucrative ?back end? participation rights in the ?lm?s net pro?ts. 37. Williams had caused Luxe One to be incorporated as a special purpose entity for this purported deal in May 2013. At the time Williams solicited Busice?s investment in the deal, Williams represented to Busbice that he had already advanced to Luxe One $2,000,000 of his own money (through his entity NLFI), and had obtained a $6,000,000 contribution from Chart Investment Fund CV12 (?Chart?), which Williams represented was an entity controlled by certain unnamed clients of his with which he had done many successful deals in the past. Thus, according to Williams, only $2,000,000 remained in order to complete the $10,000,000 loan investment. Williams sought this $2,000,000 from Busbice. 38. In late June 2013, Busbice organized Olla (with Busbice as its sole member and manager) as the vehicle for his investment in Luxe One. 39. In late June 2013, Williams represented that Busbice?s company Olla, and Williams? company NLFI, would each be 25% shareholders in Luxe One, and that Chart would be a 50% shareholder, due to the size and proportions of their respective contributions. Williams also represented to Busbice that he held Chart?s proxy and that Busbice ?didn?t have to worry about Chart.? 40. In early July 2013, Williams provided Busbice with an agreement dated July 3, 2013, between Olla and Luxe One, entitled ?Prints and Advertising Investment Fund Lending Term for the Feature Film ?The Letters?? (the ?Letters Term Sheet?), which was signed by Williams on Luxe One?s behalf, and which contained provisions governing Olla?s 2,000,000 contribution, as well as certain of Luxe One?s representations regarding the overall investment. 41. In direct reliance upon Williams? representations regarding the investment, including, without limitation, that $8,000,000 had already been funded into Luxe One and that the bank account into which the investment was to be paid 22105507 - 9 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUJTE1400 NE, CA 92614-2545 Case Document 1 Filed 05/28/14 Page 11 of 65 Page ID #216 was Luxe One?s only bank account, on July 3, 2013, Busbice, through Olla, wire transferred $2,000,000 to 21 Chase bank account held by Luxe One, as instructed by Williams. 42. In July 2013, at Williams? direction, Luxe One issued 250 shares of Luxe One stock to Olla, 250 shares of Luxe One stock to NLFI, and 500 shares of Luxe One stock to Chart. C. The Left Behind Deal 43. On August 8, 2013, Williams e-mailed Busbice regarding an opportunity to invest $2,400,000 in the ?lm Left Behind, for interest and ownership of ?10% of the Worldwide Revenue from the According to Williams, Left Behind was currently in full ?lm production and was ?based on the LEFT BEHIND books which have sold 68 million copies . . . second only to HARRY POTTER AND Williams represented that the ?lm had a $15,000,000 production budget, and that Williams was funding most of that budget himself. However, Williams represented that he was ?in a bind on? the movie, because he was $2,400,000 short, and although Williams could borrow against some of his holdings, that ?takes time.? Williams stated that Busbice was ?the ?rst person that [he] thought of? and advised Busbice to ?[k]eep in mind that the ?rst three movies in the franchise . . . starring Kirk Cameron . . . made well over $100 million dollars, and this one stars Nicolas Cage.? 44. Based on Williams? solicitation, Busbice expressed interest in the Left Behind opportunity and told Williams that he could invest through his company Olla. Subsequently, on or about August 11, 2013, Williams sent Busbice an agreement, dated August 12, 2013 and entitled ?Left Behind Participating Loan Agreement? (the ?Left Behind Agreement?), purportedly governing that investment and Olla?s participation rights in the ?lm. 45. Section 5.2 of the Left Behind Agreement provides: 22105507 - 10 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE 1400 CA 92614-2545 Case Document 1 Filed 05/28/14 Page 12 of 65 Page ID #:The Lender e. Olla] acknowledges and understands that the offer and sale of the rights under this agreement (the ?Participation Interest?) to the Lender has not been registered under the United States Securities Act of 1933, as amended (the ?1933 Act?), or applicable states securities laws, and that as a result, the Participation Interests are restricted securities, and must be held inde?nitely unless the Participation Interests are subsequently registered under the Act and applicable state securities laws or unless an exemption from registration is available to allow the transfer of the Participation Interests. 46. On August 12, 2013, Williams e-mailed Busbice wire instructions for the Left Behind investment and stated: ?[o]nly send the $2,400,000 (not the $2,500,000 as outlined in the Agreement). We?ll settle that up later. Thanks.? 47. Later that day, August 12, 2013, Busbice, through Olla, wire transferred $2,400,000 to a Chase bank account of Left Behind Investments, LLC as Williams instructed, expecting that the investment would be recorded directly in Olla?s name, as investor. D. The Moment Factory Angels Sing Deal 48. In October 2013, Williams approached Busbice regarding another loan investment opportunity, this time in connection with Angels Sing, a Christmas-themed feature film starring Harry Connick Jr., Willie Nelson and others. According to Williams, Williams had set up Moment Factory (a limited liability company) as a special purpose entity for this investment, and was negotiating a deal with the film?s producers/owners, DF Indie Studios LLC 22105507 - 1 1 - COMPLAINT TROUTMAN SANDERS LLIJ 5 PARK PLAZA Sum-2 HUD CA 92614-2545 Case Document 1 Filed 05/28/14 Page 13 of 65 Page ID #218 Indie?), to make a $4,000,000 loan for Angels Sing. The loan was to be repaid with interest from the ?lm?s net revenues and was to be secured in a ?rst position by such revenues. In addition, the deal offered ?back end? participation rights in the ?lm?s net pro?ts. Williams informed Busbice that Williams (through his company, Legacy) had already put $2,000,000 of his own money into Moment Factory for the deal, and that if Busbice contributed $2,000,000, then the two would each be invested 50%-5 0% as equal members of Moment Factory. 49. On October 24, 2013, Williams, through counsel, provided Busbice with unsigned drafts of three key documents relating to the deal: (1) a ?Prints and Advertising Investment Lending Term Sheet? between Moment Factory and Busbice?s company Olla (?Angels Sing Term Sheet?); (2) a ?Single Picture Credit Facility Term Sheet? between Moment Factory and DF Indie (?Angels Sing Credit Facility Agreement?); and (3) an ?Irrevocable Letter of Direction? (?Letter of Direction?), between Moment Factory, DF Indie, and Lions Gate Films, Inc. (the ?lm?s distributor) (?Lions Gate?). Williams assured Busbice that DF Indie and Lions Gate would sign the Angels Sing Credit Facility Agreement and the Letter of Direction and that the $4,000,000 was urgently needed for the campaign for Angels Sing ?3 upcoming theatrical release. 50. On October 25, 2013, Williams e-mailed Busbice?s counsel with certain marketing and budget information for Angels Sing. The marketing information Williams furnished reflected that Angels Sing was to have an initial wide theatrical release to at least 1,000 screens. Williams represented to Busbice that the ?lm would be released theatrically on an immediate basis during the upcoming 2013 holiday season and provided a P&A/marketing budget for that purpose. 51. Busbice requested con?rmation that Williams (through Legacy) had contributed his half of the $4,000,000 fund. Thus, on October 29, 2013, at Williams? direction, Williams? counsel, Barry I. Reiss, e?mailed Busbice?s counsel 22105507 12 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE 1400 IRVINE, CA 92614-2545 Case Document 1 Filed 05/28/14 Page 14 of 65 Page ID #219 attaching what purported to be a Chase online statement re?ecting Moment Factory?s bank account?s balance from the day before, i. e. October 28, 2013 (the ?Purported 10/28 Moment Factory Balance Statement?). The Purported 10/28 Moment Factory Balance Statement indicated that on October 28, 2013, the present balance of Moment Factory?s Chase Bank account was $1,903,150.24, which funds represented amounts remaining from Williams? purported contribution of $2,000,000 into the Moment Factory account. 52. On October 30, 2013, Williams, on Moment Factory?s behalf, signed the ?nal version of the Angels Sing Term Sheet, which contained provisions governing Olla?s $2,000,000 contribution, as well as Moment Factory?s representations regarding the overall loan/investment. 53. On that same day, October 30, 2013, in direct reliance upon Williams? representations regarding the investment opportunity and the purported con?rmation of Williams? own contribution, Busbice, through Olla, wire transferred $2,000,000 to Moment actory?s Chase account. E. The Luxe One The Letters Deal Part 2 an additional $4,000,000) 54. In November 2013, following Plaintiffs? funding of the Moment Factory transaction, Williams informed Busbice that Luxe One?s deal regarding The Letters had improved to their advantage. Speci?cally, Williams represented that because The Letters was viewed as such a strong film, Luxe One was given the opportunity both to loan up to $22,000,000 for the film?s spend and to pay Big Screen $1,750,000 in ??nishing funds? for the film, in return for a direct equity stake in Big Screen (speci?cally, 35 of Big Screen?s 400 authorized shares). Williams claimed to have negotiated the new and enhanced deal with Big Screen and informed Busbice that Luxe One needed to amass an additional $12,000,000 to carry out the deal. Williams represented to Busbice that both Chart and NLFI 22105507 - 13 - COMPLAINT TROUTMAN SANDERS LLP SUJTE 1-100 CA 92614?2545 5 PAR Case Document 1 Filed 05/28/14 Page 15 of 65 Page ID #220 (Williams? company) were contributing an additional $4,000,000, but that an additional $4,000,000 was needed from Busbice/011a. 55. In December 2013, Williams, directly and through his counsel, Barry J. Reiss, continued to press Busbice for an additional $4,000,000, representing that the total $22,000,000 had to be fully funded by the end of the year, because the ?lm was scheduled to be released in early April 2014, and the producer and distributors demanded con?rmation that the full $22,000,000 was in the bank. 56. On December 11, 2013, at the same time that Williams was attempting to induce Busbice to invest the additional $4,000,000 in Luxe One, Williams sent an e-mail to Busbice?s counsel regarding the release of Angels Sing (in which Busbice/011a had invested with Williams through Moment Factory). Williams? e- mail represented that the release had ?gone very well,? that Lions Gate (the ?lm?s distributors) reported that the film was ?performing quite well on all platforms,? and that they ?already ha[d] a network sale in place for next year which show[ed] how well [the ?lm] was and that Williams felt that both he and Busbice would ?be in good shape on this one.? 57. On December 13, 2013, through counsel, Williams sent Busbice a fully executed agreement, dated September 16, 2013, entitled ?Single Picture Prints and Advertising Credit Facility Agreement ?the Letters?? (the ?Letters Credit Facility Agreement?) between and Luxe One and Big Screen, which purportedly governed those parties? rights and obligations in relation to the ?lm?s loan. 58. In mid?December 2013, through counsel, Busbice asked Williams to confirm certain information regarding the deal. For example, Busbice asked for con?rmation that Luxe One had paid the $1,750,000 in ??nishing funds? to Big Screen and as a result owned 35 of the 400 authorized shares of Big Screen stock. In addition, Busbice asked, among other things, for confirmation that Chart and NLFI paid their respective additional $4,000,000 contributions and that the aggregate sum of $18,000,000 had been funded to that point in time. 22105507 - 14 COMPLAINT TROUTMAN SANDERS LLP RK PLAZA SUITE 1400 SPA IRVIN E, CA 92614?2545 Case Document 1 Filed 05/28/14 Page 16 of 65 Page ID #221 1 59. On December 16, 2013, William?s counsel, in an e?mail to Busbice?s 2 counsel on which Williams was copied, con?rmed among other things that: (1) 3 Chart had contributed its additional $4,000,000, bringing its total contribution to 4 $10,000,000; (2) NLFI had contributed its additional $4,000,000, bringing its total 5 contribution to $6,000,000; (3) Luxe One paid the $1,750,000 of ?nishing funds to 6 Big Screen; and (4) Luxe One had documentation re?ecting its ownership of 35 of 7 the 400 authorized units of Big Screen equity. 8 60. On December 18, 2013, Williams sent an e?mail to Busbice?s counsel, 9 with a simultaneous copy to his own counsel, attaching what was represented to be 10 a Chase online statement re?ecting Luxe One?s bank account?s balance from the 11 day before, 126. December 17, 2013 (the ?Purported 12/17 Luxe One Balance 12 Statement?). The Purported 12/ 17 Luxe One Balance Statement showed that on 13 December 17, 2013, the present balance of Luxe One?s Chase account was 14 $18,014,609.46. 15 61. Williams sent the Purported 12/17 Luxe One Balance Statement to 16 convince Busbice that both Chart and NLFI had paid their additional $4,000,000 17 contributions, bringing their combined contributions to $16,000,000 (which, when 18 combined with Busbice/Olla?s earlier $2,000,000 contribution, would have brought 19 the total to $18,000,000). 20 62. On December 18, 2013, Williams sent Busbice?s counsel, again with a 21 simultaneous copy to his own counsel, another e-mail attaching what was 22 represented to be copies of cancelled checks showing that Luxe One paid Big 23 Screen the $1,750,000 in ?nishing funds from Luxe One?s Chase Bank account to 24 obtain the 35 shares of Big Screen?s stock (the ?Purported Big Screen Cancelled 25 Checks?). 26 63. The Purported Big Screen Cancelled Checks re?ected that: (1) Luxe 27 One paid the initial $250,000 amount of the ?nishing funds by check number 1007 28 from its Chase Bank account when the check (dated 11/4/13) was deposited and 22105507 - l5 - COMPLAINT TROUTMAN SANDERS 5 PARK PLAZA SUITE 1400 JRVINE, CA 92614-2545 Case Document 1 Filed 05/28/14 Page 17 of 65 Page ID #:22 I cleared on November 6, 2013; and (2) Luxe One paid the remaining $1,500,000 2 amount by check number 1031 from its Chase Bank account when the check (dated 3 12/6/13) was deposited and cleared on December 10, 2013. 4 64. Over the ?nal two weeks of 2013, Williams and his counsel continued 5 to press Busbice for an additional $4,000,000 contribution, repeatedly stressing the 6 urgency of the situation. At Williams? urging, and based on Williams? 7 representations regarding the deal, Busbice agreed to contribute the additional 8 $4,000,000. Consequently, Olla entered into an Amendment to the Letters Term 9 Sheet with Luxe One that re?ected Busbice/Olla?s additional contribution and 10 amended the earlier agreement. 11 65. On January 2, 2014, in direct reliance on all of the foregoing, Busbice, 12 through Olla, wire transferred $4,000,000 to Luxe One?s Chase account. 13 14 F. In 2014, Williams Provides Inconsistent, Incomplete and alsified Financial 15 Documentation, While Concealing Other Kev Information 16 66. Throughout January and February and the ?rst half of March 2014, 17 Busbice and his advisors repeatedly asked Williams to provide various documents 18 and other information to verify the bona?des of the Luxe One and Moment Factory 19 investments including, but not limited to, ?nancial and accounting records for both 20 investments, a copy of the Letter of Direction that was to be signed by Lions Gate 21 for the Moment Factory deal, and information about Chart and its control persons. 22 67. Williams and his coconspirators largely ignored or deflected these 23 requests with excuses and talk of other potential deals. Despite Busbice?s repeated 24 requests, Williams failed to provide any real accounting information related to the 25 Moment Factory investment, and also failed to provide a copy of the Letter of 26 Direction from Lions Gate assuring that the loan would be paid in a first 27 position out of all distribution proceeds from Angels Sing. Plaintiffs made repeated 28 requests for financial, accounting and business information regarding the Luxe One 22105507 16 COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA HUG IRVHNE, CA 92614-2545 Case Document 1 Filed 05/28/14 Page 18 of 65 Page ID #223 transaction, including requests for speci?c information about the $10,000,000 co? investor Chart or its control persons; however, Williams constantly stalled and made excuses and no such information was provided. 68. On March 19, 2014, Plaintiffs? accountant received a letter from someone identi?ed as ?Carol Martin? on Legacy Film Crest, LLC letterhead (the ?3/19/14 Letter?). The 3/19/14 Letter was copied to Williams and Busbice and purported to enclose ?the ?nancial information requested regarding Bill Busbice?s and/or Olla Production, investment in Luxe One, Inc.? The 3/ 19/ 14 Letter enclosed purported Quick Book Reports and Chase Bank statements for July through December 2013 (the ?Purported Luxe One uly?Dec. Financial Records?). The 3/19/14 Letter represented that ?the same information regarding Moment Factory? would be sent later in the week; however, as previously stated, no information regarding Moment Factory was ever provided. 69. In addition, on or about March 28, 2014, Williams furnished Plaintiffs? accountant with what Williams represented were Luxe One?s Chase account statements for January and February 2014 (the ?Purported Luxe One an-Feb Statements?). 70. At first glance, the Purported Luxe One uly-Dec. Financial Records and the Purported Luxe One an?Feb Statements seemed to re?ect a financial picture generally consistent with the Luxe One investment described by Williams. For example, the Purported Luxe One Jan?Feb Statements re?ect that on July 1, 2013, two days before Busbice contributed his initial $2,000,000, there was $8,000,000 in the Luxe One account (representing the $6,000,000 purportedly contributed by Chart, and the $2,000,000 purportedly contributed by Williams). 71. However, upon closer examination, the ?nancial information Williams provided in March 2014 proved to contradict the information that Williams previously provided to Plaintiffs. By way of example only, whereas the Purported 12/17 Luxe One Balance Statement sent by Williams on December 18, 2013 22105507 - 17 COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE 1-100 CA 92614?2545 Case Document 1 Filed 05/28/14 Page 19 of 65 Page ID #224 represented that there was $18,014,609.46 in the Luxe One account on December 17, 2013, the Purported Luxe One July-Dec. Financial Records re?ected that there was only $9,539,103.20 in the account on that very same date. (In reality, however, as Busbice would later discover, there only was $1 12,945.09 in that account on December 17, 2013.) 72. In late March and in April 2014, Plaintiffs discovered other suspicious items about both investments. For example, the checks in early November and December 2013 purporting to represent the payment of $1 ,750,000 to Big Screen for the equity interest in Big Screen, were not accurately set forth in the Purported Luxe One July?Dec. Financial Records, and the Purported 10/28 Moment Factory Balance Statement that was sent to Busbice on October 29, 2013, to show that Williams had already invested his own $2,000,000, inexplicably listed the name ?Luxe One, Inc.? instead of ?Moment Factory, on page 2, as the apparent account holder?s name. There were many other inconsistencies and inaccuracies contained in the Purported Luxe One July-Dec. Financial Records. G. The True Luxe One and Moment Factory Bank Statements Reveal Defendants? Massive Fraud 73. In April 2014, based on these discrepancies, Defendants? ongoing evasive behavior, and complete lack of responsiveness and transparency, Plaintiffs obtained bona?de statements for Moment Factory?s Chase account from October 2013 through March 2014, and bona fide statements for Luxe One?s Chase accounts from June 2013 through March 2014 (the ?True MF/Luxe Bank Statements?). As a result, Plaintiffs discovered, among other things, that contrary to the applicable agreements and representations made by Williams, there was a second and previously undisclosed bank account for Luxe One. 74. The True MF/Luxe Bank Statements show that Defendants brazenly misrepresented and concealed material facts regarding both the Luxe One and the 22105507 - 18 - COMPLAINT 5 PARK PLAZA SUITE 1400 E. CA 9261-12545 lav Case Document 1 Filed 05/28/14 Page 20 of 65 Page ID #225 Moment Factory investments, and had sent Busbice falsi?ed bank records to induce Busbice/Olla to transfer $8,000,000 to the Moment Factory and Luxe One business accounts under Williams? control. By way of example only, the True MF/Luxe Bank Statements re?ect that: 22105507 Contrary to Williams? representation in June 2013, Williams never contributed $2,000,000 (or any other amount) toward the investment for he Letters, and Chart (to the extent that entity even exists) had not contributed $6,000,000 (or any other amount); Contrary to Defendants? repeated representations in December 2013, neither Williams nor Chart contributed an additional $4,000,000 (or any other amount) for the new and enhanced version of the investment for he Letters; The Purported 12/ 17 Luxe One Balance Statement provided by Williams on December 18, 2013 was fraudulently prepared, as there was actually only $112,945.09 in the Luxe One account on December 17, 2013 (not $18,014,609.46 or even $9,539,103.20 as shown in the Purported Luxe One July?Dec. Financial Records); The Purported Big Screen Cancelled Checks provided by Williams on December 18, 2013 also were fraudulently prepared, as, among other things, the True MF/Luxe Bank Statements show no record of check number 1031, which according to the Purported Big Screen Cancelled Checks was the $1,500,000 check that cleared on December 10, 2013; Contrary to Williams? representations prior to October 30, 2013, Williams had not contributed $2,000,000 (or any other amount) toward the investment for Angels Sing and there was no campaign as Williams described; The Purported 10/28 Moment Factory Balance Statement provided by Williams on October 29, 2013 was fraudulently prepared, as there was 19 COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE-1 1400 IRVINE, CA 92614-2545 Cas Document 1 Filed 05/28/14 Page 21 of 65 Page ID #:26 actually $0 in the Moment Factory account (not $1,903,150.24) until Olla contributed its $2,000,000; 0 The ?lm Angels Sing was never theatrically released, and following a small number of test screenings, went direct to video and video?on? demand; and 0 Plaintiffs? funds (the only funds contributed toward the Angels Sing were never used for the purposes intended, and were misapprOpriated by Williams and those acting in concert with him for personal use, other activities and self-enrichment. H. The True MF/Luxe Bank Statements Reflect Secret, Unauthorized and Fraudulent Transfers 75. The True MF/Luxe Bank Statements show that Williams and Brown secretly and without authorization expended enormous sums from the Moment Factory and Luxe One business accounts on personal matters and on matters completely unrelated to the purported investments, and transferred huge sums to entities controlled by Williams and/or Brown and to other third parties for purposes unrelated to the purported investments. 76. On July 8, 2013, less than a week after Busbice wired the initial $2,000,000 to Luxe One?s Chase Bank Account No. 222882939 (the ?Luxe One 2939 Account?), Williams, without authorization or legitimate business purpose, transferred $100,000 from the Luxe One 2939 Account to an account held by Legacy, Williams? own company. Williams similarly transferred at least another $275,000 from the Luxe One 2939 Account to Legacy in the following months. Williams also transferred funds from the Moment Factory Chase Bank account to Legacy without authorization or legitimate business purpose, including a $50,000 transfer on November 4, 2013. In all, over $982,500 was transferred into the Legacy account from Plaintiffs? investments. 22105507 20 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE1400 CA 92614-2545 Case Document 1 Filed 05/28/14 Page 22 of 65 Page ID #:27 77. Also on July 8, 2013, Williams, without authorization or legitimate business purpose, transferred $50,000 from the Luxe One 2939 Account to Bipartisan Coalition, a corporation that Plaintiffs are informed and believe is owned and/or controlled by Williams. Williams similarly transferred at least another $60,000 to Bipartisan Coalition from the Luxe One 2939 Account in the following months. In all, at least $110,000 was transferred into the Bipartisan Coalition account from Plaintiffs? investments. 78. Also on July 8, 2013, Williams transferred $10,000 from the Luxe One 2939 Account to another bank account in California that Williams and Brown secretly opened with Chase in Luxe One?s name: Chase Account No. 222881572 (the ?Luxe One 1572 Account?). Both Williams and Brown were signatories on the Luxe One 1572 Account. 79. Within a month, over $500,000 was transferred from the Luxe One 2939 Account to the Luxe One 1572 Account, and tens of thousands of dollars more were transferred from the one account to the other in the following months. 80. The Luxe One 1572 Account also was funded by unauthorized transfers from the Moment Factory Chase Bank account. For example, in November 2013, Williams, with Brown?s knowledge and assistance, transferred over $100,000 from the Moment Factory account to the secret Luxe One 1572 Account. In all, over $1,510,000 was transferred into the secret Luxe One 1572 Account from Plaintiffs? investments. 81. As an actual signatory on the account, and as the real bank statements re?ect, Brown had full access to and control over the Luxe One 1572 Account and essentially treated the account as his own personal piggy bank, freely spending the account?s contents over time on unauthorized non?business items. 82. As the real bank statements re?ect, between July 1, 2013 and February 28, 2013, Defendant Highgate received at least $164,500 in transfers from the Luxe One and Moment Factory Chase Bank accounts. These transfers, which were made 22105507 21 COMPLAINT TROUTMAN SANDERS LLP PLAZA Sum-2 HUD CA 92614?2545 SPAR Case Document 1 Filed 05/28/14 Page 23 of 65 Page ID #228 or directed by Williams, were made secretly and without authorization or legitimate business purpose. 83. In February and March 2014, Williams secretly and fraudulently transferred over $725,000 from the Moment Factory Chase Bank account to purchase a piece of real property located in Calabasas, Los Angeles County, California with Assessor Parcel Nos. 2072?030-010, 2072-025-014, 2072-025?015, 2072?025w016, 2072027003, 2072024015, 2072~024~005 and 2072-024-016 (the ?Calabasas Property?) in the name of Garuda Partners, Ltd., as Trustee of the Mulholland Ridge Trust. The funds went from the Moment Factory Chase bank account to an escrow account with First American Title Company for the purchase of the Calabasas Property. 1. Plaintiffs Uncover the Fraudulentlv?lnduced Nature and Conversion of Plaintiffs? Made in America Investment 84. Plaintiffs subsequently discovered the following facts regarding Defendants? fraud and conversion in connection with the Made in America investment: 0 The Visions 7206 Account was opened on April 10, 2013, but did not have any money in it until Ecibsub transferred $500,000 on April 26, 2013; 0 The Purported 4/15/13 Wire Con?rmation, representing that Williams transferred $500,000 to the Visions 7206 Account on April 15, 2013, was counterfeit and fraudulent; The Purported 4/24/13 Screenshot, representing that the Visions 7206 Account?s available balance exceeded $500,000 as of April 24, 2013, was counterfeit and fraudulent; 0 On April 26, 2013 the same day that Ecibsub transferred its $500,000 to the Visions 7206 Account $450,000 was immediately 22105507 - 22 COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE 1-100 IRVINE, CA 92614-2545 Case Document 1 Filed 05/28/14 Page 24 of 65 Page ID #229 rerouted to another Chase account held by Williams? wholly?owned company, Legacy; 0 Another $35,000 was transferred from the Visions account to the Legacy account three days later on April 29, 2013; The Legacy account had a negative balance before it received the $450,000 from the Visions 7206 Account on April 26, 2013, and in the months following that transfer, Williams, by and through ATM Debit Card No. 6589, spent the money transferred from the 7206 Account on unauthorized, personal and non-business items2014 more than one year after Ecibsub?s investment, Ecibsub?s $500,000 wire transfer on April 26, 2013 has been the only deposit or other addition to the Visions 7206 Account, and the vast majority, if not all, of those funds were used for personal expenses and other items completely unrelated to the Made in America documentary. J. The Fraudulent Nature of the Left Behind Investment 85. Williams has provided no information regarding Olla?s investment in the Left Behind deal since the investment was made. 86. In May 2014, Plaintiffs ?rst discovered that the film?s producers had no record of Olla?s investment under Olla?s or Busbice?s name. 87. Plaintiffs are informed and believe, and on that basis allege, that Williams? representation that Olla?s $2,400,000 wire transfer toward the investment would be governed by the Left Behind Agreement was false, and that Williams? representations and wire transfer instructions were fraudulently made so as to allow Williams and his co-conspirators to convert the wired funds for their own benefit. 88. In addition, the True MF/Luxe Bank Statements reveal that Williams caused at least $300,000 to be paid out of the Luxe One accounts to LBI and caused 22105507 23 - COMPLAINT TROUTMA SANDERS LLP 5 PARK PLAZA SUITI-Z HOG IRVINE, CA 92614-2545 Case Document 1 Filed 05/28/14 Page 25 of 65 Page ID #230 at least $500,000 to be paid to LBl?s parent company, Cloud Ten or otherwise relating to the Left Behind ?lm, notwithstanding the fact that Luxe One was a special purpose entity funded entirely by Busbice/Olla for the investment in a different ?lm The Letters). K. Defendants Have Already Wrongfullv Stripped the Business Bank Accounts of at Least $7,000,000 89. Although the full extent of Defendants? theft and conversion is not yet known, at this point it appears that Defendants have stripped the various investment entities? respective bank accounts of at least $7,000,000 through unauthorized spending and fraudulent transfers. 90. Plaintiffs transferred a total of $6,000,000 to the Luxe One 2939 Account. Today, only $683,518.51 remains. 91. Plaintiffs transferred $2,000,000 to the Moment Factory bank account. Today, only $62,904.09 remains. 92. Plaintiffs transferred $500,000 to the Visions 7206 Account. Today, only $50 remains. 93. From March 2013 through April 2014, at least $1,510,000 of Plaintiffs? money was transferred from these accounts to fund the secretly opened and concealed Luxe One 1572 Account controlled by Brown. Today, there is only $40 left in that account. The bank records Show that Brown had full access to that account, including an ATM and Debit Card on the account, and nearly completely drained all funds in the account on personal expenses and to support his lavish and jet-setting lifestyle. Brown?s expenditures from the Luxe One 1572 Account during this time period include: cash withdrawals of at least $86,000, ATM and Debit Card withdrawals of at least $66,000, payments totaling $185,000 to personal lawyers unrelated to Plaintiffs? investments; tens of thousands of dollars at fancy 22105507 - 24 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE 1-100 IRVINE, CA 926144545 Case Document 1 Filed 05/28/14 Page 26 of 65 Page ID #231 hotels and restaurants across the country; thousands of dollars more for personal expenditures; and hundreds of thousands of other transfers and payments. 94. From March 2013 through April 2014, approximately $1,000,000 of Plaintiffs? money was transferred from the Visions, Moment Factory and Luxe One bank accounts to the bank account controlled by Williams in the name of Legacy (Williams? wholly?owned entity), which had a negative balance before Plaintiffs? money began ?owing in. Today, only $34,201.17 remains in the Legacy account. The bank records show that Williams had sole and exclusive access to that account and spent nearly $1,000,000 of Plaintiffs? money through that account to cover his own personal expenses, to support his own lavish lifestyle and for matters completely unrelated to the intended use of Plaintiffs? investment. Williams? expenditures from the Legacy account during this time period include: hundreds of thousands of cash withdrawals, ATM and Debit Card withdrawals of at least $214,000, an $87,825 payment at a Jaguar dealership; an $89,394 withdrawal to pay down loans on his residence and boat; at least $37,658 in payments for his child?s private school tuition; a $22,354 payment for an unidenti?ed time-share property, over $4,000 at Louis Vuitton and over $5,000 at Neiman Marcus; tens of thousands of dollars on family vacations, hotels, restaurants and car rentals; and numerous other such expenditures. 95. The unauthorized use of funds described hereinabove, does not include the millions of dollars misappropriated from the primary accounts of Luxe One and Moment Factory. In those accounts, Williams again took hundreds of thousands of dollars in the form of cash withdrawals, check payments and ATM and Debit Card payments, and expended and/or transferred millions of dollars for purposes unrelated to the investments. 22105507 - 25 - COMPLAINT TROUTMAN SANDERS 5 PARK PLAZA SUJTE 1400 CA 92614-2545 C6181 Document 1 Filed 05/28/14 Page 27 of 65 Page ID #232 L. Alter Ego Liability Among Williams and the Williams?Related Entities 96. Plaintiffs are informed and believe, and on that basis allege, that at all relevant times mentioned herein, there existed a unity of interest and ownership between and among Williams, Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions, and Garuda, such that any individuality and separateness between these defendants ceased, with each being the alter ego of the other, in that Williams is believed to have, among other things, secretly, fraudulently and regularly transferred substantial funds from one account to another without any regard for corporate boundaries or any other limitations; commingled his and these entities? respective funds; used these entities? assets for his own personal uses; caused these entities? respective assets to be transferred to him and the other entities without substantial consideration; moved assets between and among himself and the entities in order to avoid and evade payment obligations and to suit his personal whims and expenditures; and failed to maintain minutes or other corporate records and keep legitimate accounting books and financial records. Given these and other facts and circumstances, adherence to the ?ction of the separate existence of these entities from Williams and from each other would permit an abuse of the corporate privilege and would promote injustice. FIRST CLAIM FOR RELIEF For Violations of Section 10(b) of the Exchange Act and Rule 10b-5 (Against Defendant Williams, and his Alter Egos Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions, and Garuda) 97. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 through 96, inclusive, as if fully set forth herein. 98. As hereinabove alleged, Williams fraudulently induced Plaintiffs to transfer a total of $10,900,000 in exchange for equity ownership in various entities for purported rights to participate in certain feature ?lms? net revenues, by 22105507 - 26 - COMPLAINT TROUTMAN SANDERS LLID 5 PARK PLAZA SUlTl-i HUD IRVINE, CA 92614-2545 C6181 Document 1 Filed 05/28/14 Page 28 of 65 Page ID #233 intentionally misrepresenting material facts regarding the investments and by actively concealing the truth regarding the investments, so that Williams and his cohorts could convert Plaintiffs? funds for their own unauthorized and wrongful use and enjoyment. 99. Busbice (through Olla) transferred $2,000,000 to a Luxe One Chase bank account under Williams? control on July 3, 2013, based on Williams? representations in June and early July 2013 that, inter alia: Williams had an agreement in place with Big Screen to make a $10,000,000 loan for he Letters, which was to be repaid with interest from the film?s net revenues and was to be secured in first position by such revenues; Williams, through his company NLFI, had already contributed $2,000,000 of his own money to Luxe One for purposes of the deal; Chart already contributed $6,000,000 to Luxe One for purposes of the deal; all of the representations regarding the purported loan opportunity contained in the Letters Term Sheet were true and accurate; and all of the funds contributed to Luxe One were for the sole purpose of making the purported loan for The Letters? release, and the funds would not be used for another purpose. 100. Those representations were made in connection the purchase and sale of a security, as that term is used in the Exchange Act. 101. Based on the True MF/Luxe Bank Statements and other facts alleged hereinabove, each of those representations was false. 102. Williams knew that each those representations were false when each was made. Alternatively, Williams made the representations with extreme recklessness and without any regard for their truth. 103. Williams intended that Plaintiffs rely upon each of those representations, and Williams made them to fraudulently induce Busbice/Olla to part with their $2,000,000. 22105507 - 27 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE-21400 IRVINE, CA 9261-14545 C6181 Document 1 Filed 05/28/14 Page 29 of 65 Page ID #234 104. Each of those representations was material to Plaintiffs? decision to take part in the investment presented by Williams. Plaintiffs would not have invested had they known the truth of the representations? matters. 105. As Williams? intended, Plaintiffs actually and reasonably relied upon each of those representations in parting with their $2,000,000 on July 3, 2013. 106. Busbice (through Olla) transferred an additional $4,000,000 to the Luxe One Chase Bank account under Williams? control on January 2, 2014, based on those same representations, as well as additional representations made or directed by Williams, including, inter alia: Williams? representation in the Fall of 201 3 that because he Letters was viewed as such a strong ?lm, he was able to negotiate a new and enhanced deal with Big Screen to loan up to $22,000,000 for the film?s spend and to pay Big Screen $1,750,000 in ?nishing funds in return for an equity stake in Big Screen; Williams? representations throughout the Fall of 201 3 and continuing through December 2013 that an additional $12,000,000 was needed to carry out the investment opportunity for The Letters, but that Williams (through NLFI) and Chart were both contributing an additional $4,000,000, leaving a $4,000,000 de?cit needed from Plaintiffs; that the Letters Credit Facility Agreement presented by Williams to Plaintiffs on or about December 13, 2013 was a bona?de fully executed agreement between Luxe One and Big Screen; Williams? counsel?s e?mail on December 16, 2013 and numerous confirmatory statements representing that Chart and NLF I contributed their additional $4,000,000, that Luxe One paid the $1,750,000 in ?nishing funds to Big Screen, and that Luxe One had documentation re?ecting its ownership of 35 of the 400 authorized shares of Big Screen stock; Williams? representation on December 18, 2013 that the Purported 12/ 17 Luxe One Balance Statement accurately reflected the Luxe One Chase Bank account?s current balance as of December 17, 2013; and Williams? representation on December 18, 2013 that the Purported Big Screen Cancelled Checks were genuine copies of cancelled 22105507 - 28 COMPLAINT TROUTMAN SANDERS 5 PARK PLAZA SUITE Hon CA 92614-2545 C6181 Document 1 Filed 05/28/14 Page 30 of 65 Page ID #235 checks reflecting Luxe One?s payment of the $1,750,000 in ?nishing funds to Big Screen out of existing funds prior to Plaintiffs? $4,000,000 investment. 107. Those additional representations were made in connection the purchase and sale of a security as that term is used in the Exchange Act. 108. Based on the True MF/Luxe Bank Statements and other facts alleged hereinabove, each of those representations was false. 109. Williams knew that each those representations were false when each was made. Alternatively, Williams made the representations with extreme recklessness and without any regard for their truth. 1 10. Williams intended that Plaintiffs rely upon each of those representations, and Williams made them to fraudulently induce Busbice/Olla to part with their additional $4,000,000. 1 11. Each of those representations was material to Plaintiffs? decision to participate further in the investment presented by Williams. Plaintiffs would not have invested had they known the truth of the representations? matters. 112. As Williams intended, Plaintiffs actually and reasonably relied upon each of these representations in investing an additional $4,000,000 on January 2, 2014. 1 13. Busbice (through Olla) transferred $2,000,000 to a Moment Factory Chase Bank account under Williams? control on October 30, 2013, based on Williams? representations in late October 2013 that, inter alia: Williams had a deal with DF Indie to make a $4,000,000 loan for Angels Sing, which was needed for the marketing and advertising repaid with interest from the ?lm?s net revenues, and secured in a ?rst position by such revenues; Williams, through his company Legacy, had already contributed $2,000,000 of his own money to Moment Factory for purposes of the deal; (0) all of the representations regarding the purported loan opportunity contained in the Angels Sing Term Sheet were true and accurate; DF Indie and Lions Gate had 22105507 - 29 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE HOD IRVINE. CA 92614?2545 Case Document 1 Filed 05/28/14 Page 31 of 65 Page ID #236 1 signed or would be signing the Angels Sing Credit Facility Agreement and Letter of 2 Direction; that the marketing and budget information for the film provided by 3 Williams on October 25, 2013 was genuine and the ?lm was expected to have a 4 wide initial theatrical release to more than 1,000 screens; the Purported 10/28 5 Moment Factory Balance Statement furnished by Williams on October 29, 2013 6 accurately re?ected the Moment Factory Chase bank account?s current balance as 7 of October 28, 2013; and all of the funds contributed to Moment Factory were 8 for the sole purpose of making the purported loan for Angels Sing release, 9 and that the funds would not be used for another purpose. 10 114. Those representations were made in connection the purchase and sale 11 of a security as that term is used in the Exchange Act. 12 115. Based on the True MF/Luxe Bank Statements and other facts alleged l3 hereinabove, each of those representations was false. 14 116. Williams knew that each those representations were false when each 15 was made. Alternatively, Williams made the representations with extreme 16 recklessness and without any regard for their truth. 17 1 17. Williams intended that Plaintiffs rely upon each of those 18 representations, and Williams made them to fraudulently induce Busbice/Olla to 19 part with this additional $2,000,000. 20 118. Each of those representations was material to Plaintiffs? decision to 21 participate in the investment presented by Williams. Plaintiffs would not have 22 invested had they known the truth of the representations? matters. 23 119. As Williams intended, Plaintiffs actually and reasonably relied upon 24 each of those representations in investing $2,000,000 on October 30, 2013. 25 120. Busbice (through Olla) invested $2,400,000 in the Left Behind 26 investment on August 12, 2013 based on Williams? representations in August 2013 27 that, inter alia: Williams was funding most of the ?lm?s $15,000,000 budget 28 himself; the Left Behind Agreement would govern Olla?s rights and obligations 22105507 - 30 COMPLAINT TROUTMAN SANDERS 5 PARK PLAZA SUITE 1400 IRVINE, CA 92614-2545 Case Document 1 Filed 05/28/14 Page 32 of 65 Page ID #237 Vis~a?vis the film?s producers and therefore entitle Olla to, among other things, the Participation Interest identi?ed in the agreement; and the Left Behind investment would be registered in Olla?s name and Olla, rather than Williams or any other defendant or controlled entity, would receive the benefits of that investment. 121. Those representations were made in connection the purchase or sale of a security as that term is used in the Exchange Act. 122. Based on all of the facts alleged hereinabove, each of those representations was false. 123. Williams knew that each of those representations were false when each was made. Alternatively, Williams made the representations with extreme recklessness and without any regard for their truth. 124. Williams intended that Plaintiffs rely upon each of those representations, and Williams made them to fraudulently induce Busbice/Olla to part with their $2,400,000. 125. Each of those representations was material to Plaintiffs? decision to participate in the Left Behind investment. Plaintiffs would not have invested had they known the truth of the representations? matters. 126. As Williams intended, Plaintiffs actually and reasonably relied upon each of those representations in parting with their $2,400,000 on October 12, 2013. 127. Ecibsub invested $500,000 in the Made in America investment on April 26, 2013 based on Williams? representations in April 2013 that, inter alia: Williams was contributing his own $500,000 toward the investment; the Purported 4/ 15/ 13 Wire Con?rmation sent by Williams to re?ect his own $500,000 investment was genuine; the Purported 4/24/13 Screenshot sent by Williams to reflect his own $5 00,000 investment was genuine; and all invested funds would be applied to Made in America ?3 production budget and inure to the bene?t of the film and the parties? equity ownership in Visions. 22105507 - 31 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE 1400 lleNl-I, CA 92614-2545 Case Document 1 Filed 05/28/14 Page 33 of 65 Page ID #238 128. Those representations were made in connection with the purchase and 2 sale of a security as that term is used in the Exchange Act. 3 129. Based on all of the facts alleged hereinabove, each of those 4 representations was false. 5 130. Williams knew that each those representations were false when each 6 was made. Alternatively, Williams made the representations with extreme 7 recklessness and without any regard for their truth. 8 131. Williams intended that Plaintiffs rely upon each of those 9 representations, and Williams made them to fraudulently induce Ecibsub to part 10 with its $500,000. 1 1 132. Each of those representations was material to Plaintiffs? decision to 12 participate in the Made in America investment. Plaintiffs would not have invested 13 had they known the truth of the representations? matters. 14 133. As Williams intended, Plaintiffs actually and reasonably relied upon 15 each of those representations in parting with their $500,000 on April 26, 2013. 16 134. At all relevant times, Williams also actively and deliberately concealed 17 the true facts regarding the above-alleged purported investments by, inter alia: 18 failing to provide documents and other information, including accounting and 19 ?nancial records and key contracts, despite Plaintiffs? repeated requests for such 20 information; ignoring and de?ecting Plaintiffs? repeated requests for such 21 information; creating and providing the 3/19/14 Letter and the enclosed 22 Purported Luxe One July-Dec. Financial Records, which were proved materially 23 false by the True MF/Luxe Bank Statements; and creating and sending the 24 Purported Luxe One anuF eb Statements, which were proved materially false by the 25 True MF/Luxe Bank Statements. 26 135. Williams intended to conceal the true facts regarding the above-alleged 27 deals to induce Plaintiffs to part with their funds and then to prevent Plaintiffs from 28 22105507 - 32 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE 1-100 IRVINE, CA 92614~25~15 Case Document 1 Filed 05/28/14 Page 34 of 65 Page ID #239 discovering the truth, so that Williams could continue to wrongfully convert Plaintiffs? funds and enrich himself and his cohorts without being detected. I36. Plaintiffs were and remained unaware of the concealed and true facts regarding the above?alleged investments until after Plaintiffs received the True MF/Luxe Bank Statements. 137. Despite demand, Williams has not returned and Plaintiffs have not recouped any part of the $10,900,000 transferred for the above-alleged investments. 138. In committing the above?alleged misconduct, Williams directly and indirectly used the means and instrumentalities of interstate commerce, including, but not limited to, the United States mails and interstate wire and telephone communications. 139. By virtue of the foregoing, Williams has violated Section 10(b) of the Exchange Act and Rule lOb?S promulgated thereunder. 140. The statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the allegedly false statements pleaded in this complaint. The statements alleged to be false and misleading herein all relate to then?existing facts and conditions. In addition, to the extent certain of the statements alleged to be false may be characterized as forward looking, they were not identified as ?forward-looking statements? when made and there were no meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the purportedly forward-looking statements. In the alternative, to the extent that the statutory safe harbor is determined to apply to any forward?looking statements pleaded herein, Williams is liable for those false forward?looking statements because at the time each of those forward-looking statements was made, Williams had actual knowledge that the forward?looking statement was materially false or misleading. 22105507 - 33 COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA Sunni-?00 1R v: E, CA 9261 4-2545 Case Document 1 Filed 05/28/14 Page 35 of 65 Page ID #:141. As a direct and proximate result of Williams? wrongful conduct, Plaintiffs have sustained damages in an amount not less than $10,900,000, the exact sum to be proven at trial. 142. As alleged hereinabove, Plaintiffs are informed and believe, and on that basis allege, that there existed a unity of interest and ownership between and among Williams, Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda, such that any individuality and separateness between these defendants ceased, and that adherence to the fiction of the separate existence of these entities from Williams and from each other would permit an abuse of the corporate privilege and would promote injustice. SECOND CLAIM FOR RELIEF For Violation of California Corporations Code Section 25401 (Against Defendant Williams, and his Alter Egos Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda) 143. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 through 142, inclusive, as if fully set forth herein. 144. By Virtue of the foregoing, Williams has violated California Corporations Code section 25401, and Plaintiffs are entitled to rescind the above? alleged securities purchases pursuant to California Corporations Code section 25501, and to have the total $10,900,000 purchase price reimbursed. 145. Before entry of judgment, Plaintiffs will tender the securities, from which, to date, Plaintiffs have received no income. 146. As alleged hereinabove, Plaintiffs are informed and believe, and on that basis allege, that there existed a unity of interest and ownership between and among Williams, Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda, such that any individuality and separateness between these defendants ceased and that adherence to the fiction of the separate existence 22105507 34 COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE CA 92614-2545 Case Document 1 Filed 05/28/14 Page 36 of 65 Page ID #241 of these entities from Williams and from each other would permit an abuse of the corporate privilege and would promote injustice. THIRD CLAIM FOR RELIEF For Common Law Fraud (Against Defendant Williams, and his Alter Egos Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda) 147. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 through 142, inclusive, as if fully set forth herein. 148. As hereinabove alleged, Williams fraudulently induced Plaintiffs to transfer a total of $10,900,000 for purported rights to participate in the proceeds derived from the distribution and commercial exploitation of certain feature films? in the form of priority loan repayments plus interest and net revenues, by intentionally misrepresenting material facts regarding the investments and by actively concealing the truth regarding the investments, so that Williams and his cohorts could convert Plaintiffs? funds for their own unauthorized and wrongful use and enjoyment. 149. By virtue of the foregoing, Williams has committed common law fraud. 150. As a direct and proximate result of Williams? fraudulent misrepresentations and concealment, Plaintiffs have sustained damages in an amount not less than $10,900,000, the exact sum to be proven at trial. 151. Williams? conduct, as alleged herein, was done willfully and with a conscious disregard of Plaintiffs? rights and with intent to injure, so as to constitute oppression, fraud and/or malice under California Civil Code section 3294, entitling Plaintiffs to punitive damages. 152. As alleged hereinabove, Plaintiffs are informed and believe, and on that basis allege, that there existed a unity of interest and ownership between and 22205507 - 35 - COMPLAINT TROUTMAN SAN DERS LLP 5 PARK Sun?i-i 24m: IRVINE-.1 CA 92614?2545 Case Document 1 Filed 05/28/14 Page 37 of 65 Page ID #242 pamong Williams, Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda, such that any individuality and separateness between these defendants ceased and that adherence to the ?ction of the separate existence of these entities from Williams and from each other would permit an abuse of the corporate privilege and would promote injustice. FOURTH CLAIM FOR RELIEF For Breach of Fiduciary Duty (Against Defendant Williams, and his Alter Egos Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda) 153. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 through 142, inclusive, as if fully set forth herein. 154. At all relevant times, a ?duciary relationship existed between Williams and Busbice in connection with the above-alleged investments. This relationship existed by virtue of the facts that, inter alia: Williams held himself out as an experienced ?lm industry insider, and claimed to have and control the purported deals with the ?lms? producers; Williams structured the deals, made all the arrangements and controlled the ?nances of each deal; Williams was the supposed managing director and of?cer of Luxe One, and Busbice (through Olla) was merely a minority shareholder and passive participant; Williams (through Legacy) and Busbice (through Olla) were purported co?members of Moment Factory; however, Williams in fact exercised complete control over the company; Williams exercised full control over the businesses? bank accounts and ?nancial affairs, as well as their purported negotiations and dealings with others in connection with movie deals; (D Williams exercised complete control over the companies and their affairs, whereas Busbice?s role was that of passive investor; and the parties understood that Busbice was relying on Williams? purported 22105507 - 36 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE 1-500 CA 92614-2545 Case Document 1 Filed 05/28/14 Page 38 of 65 Page ID #243 experience and expertise to manage the business affairs of the investment entities honestly, faithfully and skillfully. 155. As a result of that ?duciary relationship, at all relevant times Williams owed Plaintiffs the ?duciary duties of good faith, due care and loyalty. 156. As hereinabove alleged, Williams induced Plaintiffs to transfer a total of $10,900,000 for purported rights to participate in certain feature films? net revenues, by intentionally misrepresenting material facts regarding the investments and by actively concealing the truth regarding the investments, so that Williams and his cohorts could convert Plaintiffs? funds for their own unauthorized and wrongful use and enjoyment. 157. By engaging in the above?alleged acts and omissions, Williams breached his ?duciary duties to Plaintiffs. 158. As a direct and proximate result of Williams? breaches, Plaintiffs have sustained damages in an amount not less than $10,900,000, the exact sum to be proven at trial. 159. Williams? breaches of fiduciary duties owed to Plaintiffs were committed with fraud, oppression, and/or malice, entitling Plaintiffs to punitive damages under California Civil Code section 3294. 160. As alleged hereinabove, Plaintiffs are informed and believe, and on that basis allege, that there existed a unity of interest and ownership between and among Williams, Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda, such that any individuality and separateness between these defendants ceased and that adherence to the ?ction of the separate existence of these entities from Williams and from each other would permit an abuse of the corporate privilege and would promote injustice. 22105507 37 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE 1400 IRVINE, CA 926142545 Case Document 1 Filed 05/28/14 Page 39 of 65 Page ID #:44 FIFTH CLAIM FOR RELIEF For Constructive Fraud (Against Defendant Williams and his Alter Egos Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Vision and Garnda) 161. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 through 142, inclusive, as if fully set forth herein. 162. At all relevant times, a ?duciary relationship existed between Williams and Busbice in connection with the above?alleged investments. This relationship existed by virtue of the facts that, inter alia: Williams held himself out as an experienced ?lm industry insider, and claimed to have and control the purported deals with the ?lms? producers; Williams structured the deals, made all the arrangements and controlled the ?nances of each deal; (0) Williams was the supposed managing director and of?cer of Luxe One, and Busbice (through Olla) was merely a minority shareholder and passive participant; Williams (through Legacy) and Busbice (through Olla) were purported co-members of Moment Factory; however, Williams in fact exercised complete control over the company; Williams exercised full control over the businesses? bank accounts and ?nancial affairs, as well as their purported negotiations and dealings with others in connection with movie deals; Williams exercised complete control over the companies and their affairs, whereas Busbice?s role was that of passive investor; and the parties understood that Busbice was relying on Williams? purported experience and expertise to manage the business affairs of the investment entities honestly, faithfully and skillfully. 163. As hereinabove alleged, Williams induced Plaintiffs to transfer a total of $10,900,000 for purported rights to participate in the net revenues of certain feature ?lms by misrepresenting material facts regarding the investments and by failing to disclose material facts regarding the investments. 22105507 - 38 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUJTD-Z 1400 IRVINE. CA 92614-2545 Case Document 1 Filed 05/28/14 Page 40 of 65 Page ID #245 164. As a direct and proximate result of Williams? above?alleged misrepresentations, failures to disclose and breaches of duty, Williams has gained an advantage at Plaintiffs? expense. 165. Plaintiffs allege, in the alternative, that even if Williams? conduct did not constitute actual fraud, it constituted constructive fraud. 166. As a direct and proximate result of such constructive fraud, Plaintiffs have sustained damages in an amount not less than $10,900,000, the exact sum to be proven at trial. 167. Williams? above-alleged conduct was carried outwith fraud, oppression, and/or malice, entitling Plaintiffs to punitive damages under California Civil Code section 3294. 168. As alleged hereinabove, Plaintiffs are informed and believe, and on that basis allege, that there existed a unity of interest and ownership between and among Williams, Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda, such that any individuality and separateness between these defendants ceased and that adherence to the ?ction of the separate existence of these entities from Williams and from each other would permit an abuse of the corporate privilege and would promote injustice. SIXTH CLAIM FOR RELIEF For Negligent Misrepresentation (Against Defendant Williams and his Alter Egos Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda) 169. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 through 142, inclusive, as if fully set forth herein. 170. At all relevant times, a ?duciary relationship existed between Williams and Busbice in connection with the above?alleged investments. This relationship existed by virtue of the facts that, inter alia: Williams held himself out as an 22105507 39 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE 1400 IRVINE, CA 92614-2545 Cas p?A Document 1 Filed 05/28/14 Page 41 of 65 Page ID #:46 experienced ?lm industry insider, and claimed to have and control the purported deals with the ?lms? producers; Williams structured the deals, made all the arrangements and controlled the ?nances of each deal; Williams was the supposed managing director and of?cer of Luxe One, and Busbice (through 011a) was merely a minority shareholder and passive participant; Williams (through Legacy) and Busbice (through Olla) were purported co?members of Moment Factory; however, Williams in fact exercised complete control over the company; Williams exercised full control over the businesses? bank accounts and ?nancial affairs, as well as their purported negotiations and dealings with others in connection with movie deals; Williams exercised complete control over the companies and their affairs, whereas Busbice?s role was that of passive investor; and the parties understood that Busbice was relying on Williams? purported experience and expertise to manage the business affairs of the investment entities honestly, faithfully and skillfully. 171. As hereinabove alleged, Williams induced Plaintiffs to transfer a total of $10,900,000 for purported rights to participate in the net revenues of certain feature ?lms by misrepresenting material facts regarding the investments and by failing to disclose material facts regarding the investments. 172. Plaintiffs allege, in the alternative, that if Williams did not make the above-alleged misrepresentations intentionally, then Williams had no reasonable grounds for believing that those representations were true when made and made such representations negligently. 173. As a direct and proximate result of such negligence, Plaintiffs have sustained damages in an amount not less than $10,900,000, the exact sum to be proven at trial. 174. As alleged hereinabove, Plaintiffs are informed and believe, and on that basis allege, that there existed a unity of interest and ownership between and among Williams, Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe 22105507 - 40 COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA Stun: 1400 IRVINE, CA 92614-2545 Case Document 1 Filed 05/28/14 Page 42 of 65 Page ID #:47 One, Visions and Garuda, such that any individuality and separateness between these defendants ceased and that adherence to the ?ction of the separate existence of these entities from Williams and from each other would permit an abuse of the corporate privilege and would promote injustice. SEVENTH CLAIM FOR RELIEF For Civil Conspiracy to Defraud (Against Defendants Williams, Brown, and Seppala, and Williams? Alter Egos Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda, and Does 1-50) 175. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 through 142, inclusive, as if fully set forth herein. I76. Defendants Williams, Brown and Seppala, and each of them, knowingly and willfully conspired and agreed among themselves to fraudulently induce Plaintiffs to make the hereinabove alleged investments totaling $10,900,000. 177. As hereinabove alleged, Williams fraudulently induced Plaintiffs? investments by intentionally misrepresenting material facts regarding the investments and by actively concealing the truth regarding the investments. These misrepresentations and omissions were done pursuant to, and in furtherance of, the above-alleged conspiracy and agreement. 178. Defendant Seppala furthered the conspiracy by, inter alia, misrepresenting that Visions had received Williams? purported $500,000 contribution toward the initial Made in America deal, by failing to make certain that Plaintiffs? investment was fully and directly utilized for the purpose of the production of Made in America and for no other purpose, and by actively concealing the fraud. 179. Defendant Brown furthered the conspiracy by, inter alia: misrepresenting that Williams was investing his own $500,000 in Visions for the 22105507 41 COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA 1-100 CA 926144545 Cas yDocument 1 Filed 05/28/14 Page 43 of 65 Page ID #:48 Made in America deal; by failing to make certain that Plaintiffs? investment was fully and directly utilized for the purpose of production of Made in America and for no other purpose; by knowingly participating in the conversion and dissipation of Plaintiffs? funds; by regularly meeting with Busbice, alone or together with Williams (including an in-person meeting in Los Angeles County), and misrepresenting the status of the films, the use of the proceeds, the nature and extent of the ?nancial deception being perpetrated on Plaintiffs and the status of Plaintiffs? investments; and by actively concealing defendants? fraud and failing to disclose the true facts regarding such matters and the other facts and circumstances set forth herein. 180. Defendants continue to act in furtherance of the above?described conspiracy by continuing to conceal and misrepresent the nature and extent of their conspiracy, fraud and conversion. 181. As a direct and proximate result of the above-alleged conspiracy and wrongful acts, Plaintiffs have sustained damages in an amount not less than $10,900,000, the exact sum to be proven at trial. 182. Defendants? conduct, as herein alleged, was done willfully and with a conscious disregard of Plaintiffs? rights and with intent to injure, so as to constitute oppression, fraud and/or malice under California Civil Code section 3294, entitling Plaintiffs to punitive damages. 183. As alleged hereinabove, Plaintiffs are informed and believe, and on that basis allege, that there existed a unity of interest and ownership between and among Williams, Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda, such that any individuality and separateness between these defendants ceased and that adherence to the fiction of the separate existence of these entities from Williams and from each other would permit an abuse of the corporate privilege and would promote injustice. 22105507 - 42 COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE-21400 CA 92614?2545 IRVENEI Case Document 1 Filed 05/28/14 Page 44 of 65 Page ID #249 EIGHTH CLAIM FOR RELIEF For Accounting (Against Defendants Williams, Luxe One, Moment Factory, and Visions) 184. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 through 142, inclusive, as if fully set forth herein. 185. At all relevant times, a ?duciary relationship existed between Williams and Busbice in connection with the above-alleged investments. This relationship existed by virtue of the facts that, inter alia: Williams held himself out as an experienced ?lm industry insider, and claimed to have and control the purported deals with the ?lms? producers; Williams structured the deals, made all the arrangements and controlled the ?nances of each deal; Williams was the supposed managing director and of?cer of Luxe One, and Busbice (through Olla) was merely a minority shareholder and passive participant; Williams (through Legacy) and Busbice (through Olla) were purported commembers of Moment Factory; however, Williams in fact exercised complete control over the company; Williams exercised full control over the businesses? bank accounts and ?nancial affairs, as well as their purported negotiations and dealings with others in connection with movie deals; Williams exercised complete control over the companies and their affairs, whereas Busbice?s role was that of passive investor; and the parties understood that Busbice was relying on Williams? purported experience and expertise to manage the business affairs of the investment entities honestly, faithfully and skillfully. 186. As a result of that ?duciary relationship, at all relevant times Williams owed Plaintiffs the ?duciary duties of good faith, due care and loyalty. 187. Williams and his alter?ego entities Visions, Moment Factory and Luxe One also owed Plaintiffs the duty to account for Plaintiffs? investments and these dDefendants? use of Plaintiffs? funds. 22105507 43 COMPLAINT SANDERS LLP 5 PARK PLAZA Sum-1 140i) CA 92614-2545 Case Document 1 Filed 05/28/14 Page 45 of 65 Page ID #250 188. Williams, Visions, Moment Factory and Luxe One have wrongfully and Without proper authorization received and dealt with funds invested by and rightfully belonging to Plaintiffs. 189. Williams, Visions, Moment Factory and Luxe One owe, but have refused to provide, an accounting of such funds. 190. Plaintiffs demand that an account be taken of all of Defendants? dealings and transactions with and relating to the $10,900,000 invested by Plaintiffs from April 1, 2013 to the present, and that a judgment be entered in favor of Plaintiffs and against these defendants for any and all sums found to be rightfully due to Plaintiffs. NINTH CLAIM FOR RELIEF For Breach of Contract Implied By Law (Against Defendants Williams, and his Alter Egos Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda) 191. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 through 142, inclusive, as if fully set forth herein. 192. As hereinabove alleged, Williams fraudulently induced Plaintiffs to transfer a total of $10,900,000 for certain purported investments, by intentionally misrepresenting material facts regarding the investments and by actively concealing the truth regarding the investments, so that Williams and his cohorts could convert Plaintiffs? funds for their own unauthorized and wrongful use and enjoyment. 193. As a result of such fraud and misconduct, the law implies a promise on Williams? part to return or repay the $10,900,000 to Plaintiffs. 194. Defendant Williams has not returned, and Plaintiffs have not recouped, any part of the $10,900,000 transferred for the purported investments. 22105507 - 44 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE-C 140i) CA 926144545 Case Document 1 Filed 05/28/14 Page 46 of 65 Page ID #251 1 195. As a direct and proximate result of the above-alleged misconduct and 2 breach of the implied promise, Plaintiffs have sustained damages in an amount not 3 less than $10,900,000, the exact sum to be proven at trial. 4 196. As alleged hereinabove, Plaintiffs are informed and believe, and on 5 that basis allege, that there existed a unity of interest and ownership between and 6 among Williams, Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe 7 One, Visions and Garuda, such that any individuality and separateness between 8 these defendants ceased and that adherence to the ?ction of the separate existence 9 of these entities from Williams and from each other would permit an abuse of the 10 corporate privilege and would promote injustice. 11 12 TENTH CLAIM FOR RELIEF 13 For Conversion 14 (Against Defendants Williams, and his Alter Egos Legacy, Bipartisan 15 Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda) 16 197. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 17 through 142, inclusive, as if fully set forth herein. 18 198. Defendant Williams intentionally converted $10,900,000 of Plaintiffs? 19 money for his own use, purposes and personal gain. 20 199. Williams? conversion was done secretly, without authorization, and 21 without Plaintiffs? knowledge or consent. 22 200. Williams has not returned, and Plaintiffs have not recouped any part of 23 the wrongfully converted funds. 24 201. As a direct and proximate result of Williams? conversion, Plaintiffs 25 have suffered damages in an amount not less than $10,900,000, the exact sum to be 26 proven at trial. 27 28 22105507 - 45 COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA Sunni-100 CA 926344545 Case Document 1 Filed 05/28/14 Page 47 of 65 Page ID #252 202. Williams? conduct, as alleged herein, was done willfully and with a conscious disregard of Plaintiffs? rights, so as to constitute oppression, fraud and/or malice under California Civil Code 3294, entitling Plaintiffs to punitive damages. 203. As alleged hereinabove, Plaintiffs are informed and believe, and on that basis allege, that there existed a unity of interest and ownership between and among Williams, Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda, such that any individuality and separateness between these defendants ceased and that adherence to the ?ction of the separate existence of these entities from Williams and from each other would permit an abuse of the corporate privilege and would promote injustice. ELEVENTH CLAIM FOR RELIEF For Conversion (Against Defendant Brown) 204. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 through 142, inclusive, as if fully set forth herein 205. As re?ected in the True MF/Luxe Bank Statements, Defendant Brown, for his own use, purposes and personal gain, intentionally converted specific sums from the Luxe One 1572 Account through his use of ATM Debit Card 1507 and cash withdrawals from the account, which sums, in their aggregate, exceed $1,500,000. Such expenditures include, without limitation: payments totaling $185,000 to his own personal lawyers; tens of thousands of dollars at fancy hotels and restaurants across the country; thousands of dollars at more mundane establishments such as ?Star Liquor,? Maxx,? ?Chipotle?; and numerous other such personal expenditures. 206. Brown?s conversion was done secretly, without authorization, and without Plaintiffs? knowledge or consent. 22105507 - 46 - COMPLAINT RK PLAZA SUITE 1-100 IRVINE, CA 92614-2545 TROUTMAN SANDERS LLP 5 PA Case Document 1 Filed 05/28/14 Page 48 of 65 Page ID #253 1 207. Brown has not returned, and Plaintiffs have not recouped any part of 2 the wrongfully converted funds. 3 208. As a direct and proximate result of Brown?s conversion, Plaintiffs have 4 suffered damages in an amount not less than $1,500,000, the exact sum to be 5 proven at trial. 6 209. Brown?s conduct, as alleged herein, was done willfully and with a 7 conscious disregard of Plaintiffs? rights, so as to constitute oppression, fraud and/or 8 malice under California Civil Code 3294, entitling Plaintiffs to punitive damages. 9 10 TWELF TH CLAIM FOR RELIEF 11 For Imposition of a Constructive Trust 12 (Against Defendant Williams and his Alter Egos Legacy, Bipartisan Coalition, l3 Highgate, Moment Factory, Luxe One, Visions and Garuda) 14 210. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 15 through 142, inclusive, as if fully set forth herein. 16 21 1. Defendant Williams fraudulently converted $10,900,000 of Plaintiffs? 17 money for his own use, purposes and personal gain. 18 212. Williams has not returned, and Plaintiffs have not recouped, any part 19 of the $10,900,000. 20 213. By virtue of Williams? wrongful acts, he holds the converted funds, in 21 the amount of $10,900,000, as well as all assets, property and property interests 22 acquired in exchange for any of the converted funds, as a constructive trustee for 23 the benefit of Plaintiffs. 24 214. Williams committed the aboveualleged misconduct with fraud, 25 oppression, and/or malice, entitling Plaintiffs to punitive damages under California 26 Civil Code section 3294. 27 215. As alleged hereinabove, Plaintiffs are informed and believe, and on 28 that basis allege, that there existed a unity of interest and ownership between and 22105507 - 47 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE 1400 CA 92614?2545 Case Document 1 Filed 05/28/14 Page 49 of 65 Page ID #254 among Williams, Legacy, Bipartisan Coalition, Highgate, Moment Factory, Luxe One, Visions and Garuda, such that any individuality and separateness between these defendants ceased and that adherence to the fiction of the separate existence of these entities from Williams and from each other would permit an abuse of the corporate privilege and would promote injustice. HIRTEENT CLAIM FOR RELIEF For Imposition of a Constructive Trust (Against Defendant Brown) 216. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 through 142, inclusive, as if fully set forth herein 217. Defendant Brown intentionally and wrongfully converted speci?c sums exceeding $989,224 of Plaintiffs? money from the Luxe One 1572 Account for his own use, purposes and personal gain. 218. Brown has not returned, and Plaintiffs have not recouped, any part of the sums converted by Brown. 219. By virtue of Brown?s wrong?il acts, he holds the converted funds as well as all assets, property and property interests acquired in exchange for any of the converted funds, as a constructive trustee for the bene?t of Plaintiffs. 220. Williams committed the above-alleged misconduct with fraud, oppression, and/ or malice, entitling Plaintiffs to punitive damages under California Civil Code section 3294. FOURTEENTH CLAIM FOR RELIEF For Imposition of a Constructive Trust (Against Defendant Garuda Partners, Ltd.) 221. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 through 142, inclusive, as if fully set forth herein. 22105507 - 48 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLMA SUITE HUD IRVINE, CA 926142545 Case Document 1 Filed 05/28/14 Page 50 of 65 Page ID #255 222. In February and March 2014, Williams secretly and without authorization caused over $725,000 to be transferred from the Moment Factory Chase bank account to purchase the Calabasas Property in the name of Garuda Partners, Ltd, as Trustee of the Mulholland Ridge Trust. 223. The funds were transferred from the Moment Factory Chase bank account to an escrow account with First American Title Company for the purchase of the Calabasas Property. The transfer of the funds for the purchase of the Calabasas Property was an unconscionable and fraudulent act wholly outside the business purpose and due authority of Moment Factory. 224. Defendant Garuda Partners, Ltd. acquired the Calabasas Property, purportedly as Trustee of the Mulholland Ridge Trust, without using any of its own funds and/or with actual or constructive knowledge or notice of the facts, thereby entitling Plaintiffs to the imposition of a constructive trust over the funds used to acquire the Calabasas Property. 225. By virtue of the foregoing, Defendant Garuda Partners, Ltd. holds the Calabasas Property, all assets, property and property interests acquired in exchange for any part of the Calabasas Property, and all pro?ts and rents derived from any part of the Calabasas Property, as a constructive trustee for Plaintiffs? bene?t. FIFTEENTH CLAIM FOR RELIEF For Imposition of a Constructive Trust (Against Defendants Legacy, Bipartisan Coalition, Highgate, and Does 1?50) 226. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 through 142, inclusive, as if fully set forth herein. 227. As hereinabove alleged, Williams fraudulently induced Plaintiffs to transfer a total of $10,900,000 for certain purported investments, by intentionally misrepresenting material facts regarding the investments and by actively concealing the truth regarding the investments, and the unauthorized use of the investment 22105507 - 49 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE 1400 CA 926144.545 Case Document 1 Filed 05/28/14 Page 51 of 65 Page ID #256 1 funds, so that Williams and his cohorts could convert Plaintiffs? funds for their own 2 unauthorized and wrongful use and enjoyment. 3 228. Defendants Legacy, Bipartisan Coalition, Highgate and Does 1?50, and 4 each of them, received a part or parts of the converted funds, and/or received 5 property or property interests that were acquired in exchange for such funds, for no 6 value (or de minimis value) and/or with actual or constructive knowledge or notice 7 of the facts giving rise to the constructive trust. 8 229. By virtue of the foregoing, Defendants Legacy, Bipartisan Coalition, 9 Hi ghgate and Does 1-50 hold the funds, property and/or property interests so 10 received by them, and all assets, property and/or property interests received in 11 exchange for any part of such funds, property and/or property interests, as a 12 constructive trustee for the benefit of Plaintiffs. 13 14 SIXTEENT CLAIM FOR RELIEF 15 For Avoidance and Recovery of the Fraudulent Transfer of the Calabasas 16 Property pursuant to Civil Code 3439.01 et seq. and California Common 1 7 Law 18 (Against Defendants Williams, Moment Factory and 19 Garuda Partners, Ltd. and Does 1?50) 20 230. Plaintiffs repeat and incorporate herein by this reference paragraphs 1 21 through 142, inclusive, as if fully set forth herein 22 231. As hereinabove alleged, Williams fraudulently induced Plaintiffs to 23 transfer a total of $10,900,000 for certain purported investments, by intentionally 24 misrepresenting material facts regarding the investments and the unauthorized use 25 of the investment funds, and by actively concealing the truth regarding the 26 investments, so that Williams and his cohorts could convert Plaintiffs? funds for 27 their own unauthorized and wrongful use and enjoyment. 28 22105507 50 - COMPLAINT TROUTMAN SANDERS LLP 5 PLAZA SUITE 1400 [mum-2, CA 92614-2545 Case Document 1 Filed 05/28/14 Page 52 of 65 Page ID #257 232. In February and March 2014, Williams secretly and without authorization caused over $725,000 to be transferred from the Moment Factory Chase bank account to purchase the Calabasas Property in the name of Garuda Partners, Ltd., as Trustee of The Mulholland Ridge Trust (the ?Calabasas Property Transfer?). 233. The funds were transferred from the Moment Factory Chase bank account to an escrow account with First American Title Company for the purchase of the Calabasas Property. The transfer of the funds to effectuate the Calabasas Property Transfer was an unconscionable and fraudulent act wholly outside the business purpose and due authority of Moment Factory. 234. Williams and Moment Factory are and were each at all relevant times a debtor within the meaning of California Civil Code section 3429. 235. Plaintiffs are and were each at all relevant times a creditor within the meaning of California Civil Code section 3430. 236. The Calabasas Property Transfer constituted a fraudulent transfer under California Civil Code sections and 3439.05, and California common law, in that it was orchestrated by Williams with the actual intent to hinder, delay and defraud Plaintiffs, while Williams and Moment Factory were insolvent, and without receiving reasonably equivalent value in exchange for the Calabasas Property transfer. 237. Defendant Garuda Partners, Ltd. acquired the Calabasas Property without giving any value (or de minimis value) in return and/or with actual or constructive knowledge or notice of the above-alleged fraud. 238. Plaintiffs are informed and believe, and on that basis allege, that Garuda Partners, Ltd. is an entity owned and/or controlled by Williams. 239. Plaintiffs are informed and believe, and on that basis allege, that Garuda Partners, Ltd. colluded with Williams to accomplish the fraudulent 22105507 51 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA- Sum= 1400 CA 926144545 Case Document 1 Filed 05/28/14 Page 53 of 65 Page ID #258 1 Calabasas Property Transfer, knowing and agreeing to his fraudulent purposes, and 2 aiding in the commission of the Calabasas Property Transfer. 3 240. Pursuant to California Civil Code section 3439.07, Plaintiffs are 4 entitled to and seek a judgment declaring the Calabasas Property Transfer void as to 5 Plaintiffs, as well as to attach and/or impose a constructive trust upon the Calabasas 6 Property and/or the proceeds thereof. Plaintiffs are further entitled to and seek a 7 receiver to take hold of the Calabasas Property and/or the proceeds thereof. 8 Plaintiffs are further entitled to a preliminary and permanent injunction barring 9 transfer or dissipation of the Calabasas Property and/or the proceeds thereof, 10 whether in the hands of Garuda Partners, Ltd., any other defendant, or otherwise. 11 241. Pursuant to California Civil Code section 3439.08, Plaintiffs are 12 entitled to a recover a money judgment against Defendants Williams, Moment 13 Factory and Garuda Partners, Ltd. and any subsequent transferee other than a good 14 faith bona ?de purchaser for value. 15 242. In participating in the above?alleged fraudulent transfers, defendants 16 acted in bad faith, and with oppression, fraud and malice, entitling Plaintiffs to an 17 award of punitive damages. 18 19 PRAYER FOR RELIEF 20 WHEREFORE, Plaintiffs respectfully pray for judgment, as follows: 21 FIRST CLAIM FOR RELIEF 22 1. For compensatory damages in an amount to be proven at trial, but no 23 less than $10,900,000; 24 2. For rescission of Plaintiffs? purchase of securities and restitution in an 25 amount to be proven at trial, but not less than $10,900,000 as the original 26 consideration paid for the securities; 27 3. For prejudgment interest on the original consideration at the legal rate 28 from each date of purchase; 22105507 - 52 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA i400 CA 926144545 Case Document 1 Filed 05/28/14 Page 54 of 65 Page ID #259 4. For imposition of a constructive trust on all moneys paid to defendants and on any and all proceeds received by any defendant from any sale or transfer of the consideration paid by Plaintiffs, or from any other sale or transfer of defendants? assets or securities after the dates of Plaintiffs? purchase of securities; 5. For costs and expenses incurred in this litigation, including reasonable attorneys? fees; and 6. For such other and further relief as this Court deems just and proper. SECOND CLAIM FOR RELIEF 7. For rescission of Plaintiffs? purchase of securities and restitution in an amount to be proven at trial, but not less than $10,900,000 as the original consideration paid for the securities; 8. For prejudgment interest on the original consideration at the legal rate from each date of purchase; 9. For imposition of a constructive trust on all moneys paid to defendants and on any and all proceeds received by any defendant from any sale or transfer of the consideration paid by Plaintiffs, or from any other sale or transfer of defendants? assets or securities after the dates of Plaintiffs? purchase of securities; 10. For costs and expenses incurred in this litigation; and 11. For such other and further relief as this Court deems just and proper. THIRD CLAIM FOR RELIEF 12. For compensatory damages in an amount to be proven at trial, but no less than $10,900,000; 13. For rescission of Plaintiffs? purchase of securities and restitution in an amount to be proven at trial, but not less than $10,900,000 as the original consideration paid for the securities; 14. For prejudgment interest on the original consideration at the legal rate from each date of purchase; 22105507 .. 53 COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA Sunni-100 CA 92614-2545 Case Document 1 Filed 05/28/14 Page 55 of 65 Page ID #260 15. For imposition of a constructive trust on all moneys paid to defendants and on any and all proceeds received by any defendant from any sale or transfer of the consideration paid by Plaintiffs or from any other sale or transfer of defendants? assets or securities after the dates of Plaintiffs? purchase of securities; 16. For exemplary or punitive damages in an amount to be proven at trial; 17. For costs and expenses incurred in this litigation; and 18. For such other and further relief as this Court deems just and proper. FOURTH CLAIM FOR RELIEF 19. For compensatory damages in an amount to be proven at trial, but no less than $10,900,000; 20. For imposition of a constructive trust on all moneys paid to defendants and on any and all proceeds received by any defendant derived from such moneys received and/or from any sale or transfer of the consideration paid by Plaintiffs or from any other sale or transfer of defendants? assets or securities after the dates of Plaintiffs? purchase of securities; 21. For exemplary or punitive damages in an amount to be proven at trial; 22. For costs and expenses incurred in this litigation; and 23. For such other and further relief as this Court deems just and proper. FIFTH CLAIM FOR RELIEF 24. For compensatory damages in an amount to be proven at trial, but no less than $10,900,000; 25. For imposition of a constructive trust on all moneys paid to defendants and on any and all proceeds received by any defendant derived from such moneys received and/ or from any sale or transfer of the consideration paid by Plaintiffs or from any other sale or transfer of defendants? assets or securities after the dates of Plaintiffs? purchase of securities; 26. For exemplary or punitive damages in an amount to be proven at trial; 27. For costs and expenses incurred in this litigation; and 22105507 - 54 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SUITE Hon CA 92614-2545 Case Document 1 Filed 05/28/14 Page 56 of 65 Page ID #261 28. For such other and further relief as this Court deems just and proper. SIXTH CLAIM FOR RELIEF 29. For compensatory damages in an amount to be proven at trial, but no less than $10,900,000; 30. For costs and expenses incurred in this litigation; and 31. For such other and further relief as this Court deems just and proper. SEVENTH CLAIM FOR RELIEF 32. For compensatory damages in an amount to be proven at trial, but no less than $10,900,000; 33. For exemplary or punitive damages in an amount to be proven at trial; 34. For costs and expenses incurred in this litigation; and 35. For such other and further relief as this Court deems just and proper. EIGHTH CLAIM FOR RELIEF 36. For an accounting of Williams? dealings and transactions with and relating to the $10,900,000 invested by Plaintiffs from April 1, 2013 to the present; and 37. For such other and further relief as this Court deems just and proper. NINTH CLAIM FOR RELIEF 38. For compensatory damages in an amount to be proven at trial, but no less than $10,900,000; 39. For costs and expenses incurred in this litigation; and 40. For such other and further relief as this Court deems just and proper. TENTH CLAIM FOR RELIEF 41. For compensatory damages in an amount to be proven at trial, but no less than $10,900,000; 42. For imposition of a constructive trust on all moneys converted by defendants and on any and all proceeds, assets, property or other property interests 22105507 55 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA Sun?s HOD ERVINE. CA 9261441545 Cas Document 1 Filed 05/28/14 Page 57 of 65 Page ID #262 received or acquired by any defendant from any use or transfer of the converted funds; 43. For exemplary or punitive damages in an amount to be proven at trial; 44. For costs and expenses incurred in this litigation; and 45. For such other and further relief as this Court deems just and proper. ELEVENTH CLAIM FOR RELIEF 46. For compensatory damages in an amount to be proven at trial, but no less than $1,500,000. 47. For imposition of a constructive trust on all moneys converted by defendants and on any and all proceeds, assets, property or other property interests received or acquired by any defendant from any use or transfer of the converted funds; 48. For exemplary or punitive damages in an amount to be proven at trial; 49. For costs and expenses incurred in this litigation; and 50. For such other and further relief as this Court deems just and proper. TWELFTH CLAIM FOR RELIEF 51. For imposition of a constructive trust on all moneys paid to defendants and on any and all proceeds received by any defendant from any sale or transfer of the consideration paid by Plaintiffs or from any other sale or transfer of defendants? assets or securities after the dates of Plaintiffs? purchase of securities; 52. For exemplary or punitive damages in an amount to be proven at trial; 53. For costs and expenses incurred in this litigation; and 54. For such other and further relief as this Court deems just and proper. THIRT EENT CLAIM FOR RELIEF 55. For imposition of a constructive trust on all amounts received, diverted or taken by Brown from the moneys invested by Plaintiffs and/or from the funds in the Luxe One and/or Moment Factory Chase bank accounts, and on any and all 22105507 - 56 - COMPLAINT TROUTMAN SANDERS LLP 5 PARK PLAZA SuarE 1-100 CA 926144545 Case Document 1 Filed 05/28/14 Page 58 of 65 Page ID #263 \DOOQC?in-bwwr?A proceeds, assets, property and/or other property interests received or acquired by Brown from any use or transfer of such moneys; 56. For exemplary or punitive damages in an amount to be proven at trial; 57. For costs and expenses incurred in this litigation; and 58. For such other and further relief as this Court deems just and proper. FOURTEENTH CLAIM FOR RELIEF 59. For imposition of a constructive trust on the Calabasas Property, all property and property interests acquired in exchange for any part of the Calabasas Property, and all pro?ts, rents or other value derived from any part of the Calabasas Property; 60. For costs and expenses incurred in this litigation; and 61. For such other and further relief as this Court deems just and proper. FIFTEENTH CLAIM FOR RELIEF 62. For imposition of a constructive trust all amounts received by defendants from the moneys invested by Plaintiffs, and on any and all property, property interests or other value acquired by defendants in exchange for any such moneys; 63. For costs and expenses incurred in this litigation; and 64. For such other and further relief as this Court deems just and proper. SIXTEENTH CLAIM FOR RELIEF 65. For an order declaring the Calabasas Property Transfer avoided as to Plaintiffs; 66. For an order awarding recovery of the Calabasas Property and the proceeds thereof, or the value of the Calabasas Property transferred, in an amount necessary to satisfy defendants? debts to Plaintiffs; 67. For general damages according to proof at trial, in an amount not less than $725,000; 68. For attachment as specified; 22105507 - 57 - COMPLAINT 5 PARK PLAZA SUITE HOD IRVINE, CA 92614-2545 Case Document 1 Filed 05/28/14 Page 59 of 65 Page ID #264 trial; Dated: May 28, 2014 22105507 69. 70. 71. 72. 73. 74. For imposition of a constructive trust as speci?ed; For appointment of a receiver as speci?ed; For preliminary and permanent injunctive relief as speci?ed; For punitive and exemplary damages in an amount to be proven at For prejudgrnent interest; and For such other and ?lrther relief as this Court deems just and proper. TROUTMAN SANDERS LLP 22 2 2 2 2 Paul L. Gale Thomas H. Prouty Attorneys for Plaintiffs BILL A. BUSBICE, JR., OLLA PRODUCTIONS, LLC, and ECIBSUB, LLC -53- COMPLAINT TROUTMAN SANDERS LLP 3 PARK PLAZA SUIT 55 1-300 3-: CA 926144545 Case Document 1 Filed 05/28/14 Page 60 of 65 Page ID #265 JURY DEMAND Plaintiffs demand trial by jury on all issues and claims so triable. Dated: May 28, 2014 22105507 TROUTMAN SANDERS LLP By: Paul L. Gale Thomas H. Prouty Attorneys for Plaintiffs BILL A. BUSBICE, IR., OLLA PRODUCTIONS, LLC, and ECIBSUB, LLC COMPLAINT 00/00/2014 10: 23: 30 FAX 132499990 NATIONWIDE LEG Case 2: 14- c?v- PA- 8/14 Page 61 of 65 Page ID #2 66 ?k A0 440 (Rev. 06/12) Summons in a Civil Action UNITED STATES DISTRICT COURT for the CENTRAL DISTRICT OF CALIFORNIA BILL A. BUSBICE, JR., an individual; OLLA PRODUCTIONS, LLC, a limited liability company; and ECIBSUB, LLC, a limited liability company, Plaintif?s) v. JAMES DAVID WILLIAMS, an individual; STEVEN J. BROWN, an individual; GERALD R. SEPPALA, an individual; LEGACY FILM CREST, LLC, a limited liability company; MOMENT FACTORY, LLC, a limited liability company; LUXE ONE, INC., a corporation; VISIONS LLC, a limited liability company; BIPARTISAN COALITION FOR AMERICAN SECURITY CORPORATION, a corporation; HIGHGATE PASS, LLC, a limited liability company; GARUDA PARTNERS, LTD., an unknown entity, as Trustee of The Mulholland Ridge Trust; and DOES 1 inclusive, Defendant(.r) CV lq?Llo?i?l-r pMAa?w? Civil Action No. SUMMONS IN A CIVIL ACTION To: (Defendant '5 name and address) A lawsuit has been ?led against you. Within 21 days after service of this summons on you (not counting the day you received it) or 60 days if you are the United States or a United States agency, or an of?cer or employee of the United States described in Fed. R. Civ. P. 12 or (3) you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff?s attorney, whose name and address are: PAUL L. GALE, Bar No. 065873 TROUTMAN SANDERS LLP 5 Park Plaza, Suite 1400, Irvine, CA 92614 (949) 622-2700 If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint. You also must ?le your answer or motion with the court. CL 0F COURT Date: Slfl?? @i American LegalNet. \nwr Emigwm'?pg mm 00/00/2014 10. 23. 30 FAX 2132499990 NATIONWIDE LEGA Case 2. 14- c-v- -O-4077 PA- AJW Document 1 Filed 05/28/14 Page 62 of 65 Page ID #2 67 A0 440 (Rev. 06/12) Summons in a Civil Action (Page 2) Civil Action No. PROOF OF SERVICE (This section should not be ?led with the court unless required by Fed. R. Civ. P. 4 This summons for (name of individual and title. if any) was received by me on (date) I personally served the summons on the individual at (place) on (date) or I left the summons at the individual?s residence or usual place of abode with (name) a person of suitable age and discretion who resides there, on (date) and mailed a copy to the individual?s last known address; or I served the summons on (name ofindiw'dual) who is designated by law to accept service of process on behalf of (name of organization) on (dale) or I returned the summons unexecuted because or Other (speci?z): My fees are for travel and for services, for a total of 0.00 I declare under penalty of perjury that this information is true. Date: Server '5 signature Printed name and title Server '5 address Additional information regarding attempted service, etc: 0/0 DocumeNrIITioqj?lIgd Page 630 UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA CIVIL COVER SHEET I. PLAINTIFFS Check box if you are representing yourself I DEFENDANTS Check box if you are representing yourself BILL A. BUSBICE, JR., an individual; OLLA PRODUCTIONS, JAMES DAVID WILLIAMS, an individual: et at, LLC. a limited liability company; and ECIBSUB, LLC, a limited liability company, County of Residence of First Listed Plaintiff Wyoming County Of Residence 0? Fir 5' ?Sted Defendant L08 An eles PLAINTIFF CASES) CASES (0) Attorneys (Firm Name, Address and Telephone Number) If you are Attorneys (Firm Name, Address and Telephone Number) If you are representing yourself, provide the same information. representing yourself. provide the same Information. PAUL L. GALE. Bar No. 065873 TROUTMAN SANDERS LLP 5 Park Plaza, Suite 1400 Irvine, CA 92614 (949) 622-2700 II. BASIS OF JURISDICTION (Place an in one box only.) CITIZENSHIP OF PRINCIPAL Diversity Cases Only (Place an in one box for plaintiff and one for defendantUS. Government 8 3. Federal Question (U.S. . . . Incorporated 0! Pll?ClpaI Place . . C'I'ze? State 1 or Business in this State 4 4 Plaintiff Government Not a Party) Citizen of Another State I: 2 2 Incorporated and Principal Place I: 5 5 2 at Business in Another Slate . . . overnment 4. iversity (Indicate itizens ip Citizen or Subject of a . . . Forei Nation 5 5 Detendant of Parties in Item Ill) Foreign Country 3 3 IV. ORIGIN (Place an in one box only.) 6 . - 1 Original 2. Removed from 3. Remanded from 4. Reinstated or 5. Transferred fromAnother D'st?c' Proceeding State Cowl Appellate Court Reopened District (Specify) nggjion V. REQUESTED IN COMPLAINT: JURY DEMAND: Yes No (Check "Yes" only if demanded in complaint.) CLASS ACTION under 23: Yes No MONEY DEMANDED IN $10.9 miIlion VI. CAUSE OF ACTION (Cite the US. Civil Statute under which you are tiling and write a brief statement of cause. Do not cite jurisdictional statutes unless diversity.) Securities Fraud under 15 U.S.C 78j(b) and 17 C.F.R 240.10b-5 VII. NATURE OF SUIT (Place an in one box only). ?1 .- 3 CONTRACT, . REALPROPERTX jig.ogiMMicRATloill g. PRISONER Penrions . - l, 375 False Clalms Ad 110 Insurance 240 Tons IO L?nd 462 NaquaIizatIon Habeas Cofpus: 820 copyfighIS CI Application . 400 State 120 Marine [j 245 PdeUCt 463 A jen Detamee 830 Patent Reapportionment Liability 465 Other CI 510 Motions to Vacate 410 Antitrust 130 Miller Act 290 All Other Real Immigration Actions Sentence 84? Trademark . - Pioneny 7 Torus.- 7 530 General SOCIAL SECURITY 430 Banks and Banking ?0 Negotiable TORTS 35 [j Instrument -. . . PROPERTY 5 Beat enalty 351 (1395?) 450 CommerceIICC PERSONAL gi'ijiizt'ii El Rates/Etc. 310 Airplane 370 Other Fraud Other: 862 Black Lung (923) 460 Deportation Enforcement 0! 3,5 Airplane 371 Truth in Lending El 540 MandamusIOther 363 DIWCIDIWW (405 470 Racketeer lnilu- JUdgmem 9'00"? ?ability 330 Other Personal 550 Civil Rights 864 SSID Title XVI enced 8. Corrupt Org. 151 Medicare Act Libel 8. Property Damage 555 Prison Condition 865 RSI (405 480 Consumer Credit 152 Recove ot 385 Property Damage . . . Defaulted Sgdenl CI 3.3" fed' Product Liability 560 Detamee FEDERAL TAX mm 49? cab'e?sa? TV Loan (EXCI Veil L'ab'my BANKRUPTC gongmons 850 Securities/Com? I 340 Marine A22 A I 28Y I. aggla?raeztgu-S- 0? modi?es/Exchange 153 Recovery Of 345 Marine Product CI USC grew Overpayment or Liabim 1 625 Drug Related CI 871 le.Tniro Party 25 use 890 Other Statutory Vet. Benefits 423 Withdrawal 25 Seizure of Property 21 7609 Actions 160 Stockholders? 350 Motor Vehicle use 157 219800391; [3 891 AgriculturalActs Suits 35530301322? . RIGHTS . rout: lall CI gaggfr 360 Other Personal [j 440 Other Civil Rights DWI: his? o. Injury 441 Voting air a or an at :95 Freedom ?f Info. 195 Contract 362 Personal Injury- CI Product Liability Med Malpratlce 442 Employment 720 896 Arbitration 195 365 Personal Injury? Aizot?r??gjaggns Relations . REAL 740 Railway Labor Act 899 Admin. Procedures 357 Health Care! 445 American with CI Qcthevigw 0' Appeal Ol 210 Land CI Pharmaceutical El gisafilities- {32823}, gency ecislon Condemnation Personal Injury ml! oyment 220 Foreclosure Product 4:16 American with 7_9_0 Other Labor 950 Constitutionality of 230 Rem Leas CI 368 Asbestos Disabilities-Other ?ligation State Statutes Personal Injury 448 Education 791 Employee Ret. Inc. lec?me" Product Liability Security Act FOR OFFICE USE ONLY: Case Number: (11/13) CIVIL COVER SHEET Page 1 of 3 CU Helm?? 00/00/2014 10:23:30 FAX 2132499990 NAT ON . Case Documenti EileE Page 64 of 65 PagelD #.69 UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA CIVIL COVER SHEET VENUE: Your answers to the questions below will determine the division of the Court to which this case will most likely be initially assigned. This initial assignment is subject to change. in accordance with the Court?s General Orders, upon review by the Court of your Complaint or Notice of Removal. Question A: Was this case removed from STATE CASE WAS PENDING IN THE COUNTY OF: INITIAL DIVISION IN CACD IS: state court? Yes NO Los Angeles Western If 90 ?0 B. If check the Venture. Santa Barbara. or San Luis Obispo Western box to the right that applies, enter the corresponding division in response to Orange 30*"th Question 0. below, and skip to Section IX. [3 Riverside or San Bemardino Eastern gueSti?m 3? '5 the United States, or one of If the United States. or one of its agendas or employees, is a party. is it: its agencies or employees. a party to this action? INITIAL .A DIVISION IN . . . . CACD IS: Yes No Then check the box bebw (of the county in Then check the box?below for the county. in which the majority of DEFENDANTS reside. which the majority reside. If go to Question C. If "yes." check the Los Angeles ?3 Los Angeles Western box [0 the right "13? applies. enter the El Ventura. Santa Barbara. or San Luis Ventura, Santa Barbara. or San Luis corresponding division in response to Obispo Obispo es Question D. below. and skip to Section IX. Orange Orange Southern Riverside or San Bernardino Riverside or San Bemardino Eastern El Other Other Western A. . C. 0. E. F. Question C: Location of . . . . I plaintiffs. defendants, and claims? Los Angeles Venture. Santa Barbara. or Orange County Rwersrde or San Outsrde the Centre Ot County . District of California (Make only one selection per row) LUIS 0b?599 . Bernardino Counties. Indicate the location in which a CI majority of plaintiffs reside: Indicate the location in which a El El El El El ma'ority of defendants reside: Indicate the location in which a majority oi claims arose: ls either of the following true? If so, check the one that applies: 0.2. Is either of the following true? If so, check the one that applies: 2 or more answers in Column 2 or more answers in Column only 1 answer in Column and no answers in Column 0 only 1 answer in Column 0 and no answers in Column Your case will initially be assigned to the SOUTHERN DIVISION. Enter "Southern" in response to Question D. below. Your case will initially be assigned to the EASTERN DIVISION. Enter "Eastern" in response to Question D. below. If none applies. answer question CZ to the right. -9 Your case will initially be assigned to the WESTERN DIVISION. Enter "Western? in response to Question 0 below. If none applies. go to the box below. 1 Question 0: Initial Dlvision? . i. 1 INITIAL DIVISION IN CACD Enter the initial division determined by Question A. B. or above: WESTERN CV-71 (11/13) CIVIL COVER SHEET Page 2 of 3 American Legal?et. Inc. 00/00/28:; Page 65 of 65 Page ID #270 UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA CIVIL COVER SHEET IDENTICAL CASES: Has this action been previously filed in this court and dismissed. remanded or closed? NO YES If yes. list case number(s): lX(b). RELATED CASES: Have any cases been previously filed in this court that are related to the present case? NO YES If yes. list case number(s): Civil cases are deemed related if a previously filed case and the present case: (Check all boxes that apply) A. Arise from the same or closely related transactions. happenings. or events; or 8. Call for determination of the same or Substantially related or similar questions of law and fact; or C. For other reasons would entail substantial duplication of labor if heard by different judges; or D. Involve the same patent. trademark or copyright. and one of the factors identi?ed above in a. or also is present. I x. SIGNATURE OF ATTORNEY 44; y/ {xii (0R SELF-REPRESENTED LITIGANT): 5 9% DATE: 5/28/14 I Notice to Counsel/Parties: The CV-?r?i (JS-44) Civil Cover Sheet and the information contained herein neither replace nor supplement the tiling and service of pleadings or other papers as required by law. This form. approved by the Judicial Conference of the United States in September 1974. is required pursuant to Local Rule 3-1 is not tiled but is used by the Clerk of the Court for the purpose of statistics, venue and initiating the civil docket sheet. (For more detailed instructions, see separate instructions sheet). Key to Statistical codes relating to Social Security Cases: Nature of Suit Code Abbreviation Substantive Statement of Cause of Action All claims for health insurance benefits (Medicare) under Title 18, Part A. of the Social Security Act, as amended. Also. 861 include claims by hospitals. skilled nursing facilities. etc., for certi?cation as providers of services under the program. (42 U.S.C. 862 BL All claims for "Black Lung" benefits under Title 4. Part B. of the Federal Coal Mine Health and Safety Act of 1969. (30 U.S.C. 923) All claims ?led by insured workers for disability insurance bene?ts under Title 2 ot the Social Security Act. as amended; plus 863 all claims ?led for child's insurance benefits based on disability. (42 U.S.C. 405(9)) All claims tiled for widows or widowers insurance benefits based on disability under Title 2 of the Social Security Act, as 863 DIWW amended. (42 U.S.C. 405 864 $810 All claims for supplemental security income payments based upon disability ?led under Title 16 of the Social Security Act. as amended. 865 RSI All claims for retirement (old age) and survivors benefits under Title 2 of the Social Security Act. as amended. (42 use 405 CV-71 [11/13) CIVIL- COVER SHEET Page 3 of 3 American Legalth. Inc. mengL'Elgg min .