Case 1:17-cv-00210-RBJ Document 1 Filed 01/24/17 USDC Colorado Page 1 of 42

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 2017-CV-________
LIST INTERACTIVE, LTD. D/B/A UKNIGHT INTERACTIVE,
LEONARD S. LABRIOLA
Plaintiffs,
v.
KNIGHTS OF COLUMBUS,
THOMAS P. SMITH, JR.
MATTHEW A. ST. JOHN,
Defendants.
COMPLAINT AND JURY DEMAND

Jeffrey S. Vail
VAIL LAW LLC
5299 DTC Blvd., Suite 1101
Greenwood Village, CO 80111
Tel. (303) 800-8237
Fax. (303) 800-8237
ATTORNEY FOR PLAINTIFFS
Dated: January 24, 2017.

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TABLE OF CONTENTS

NATURE OF ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
JURISDICTION AND VENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
GENERAL ALLEGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
FIRST CLAIM FOR RELIEF
(Violation of 18 U.S.C. § 1962, Racketeer Influenced and Corrupt Organizations Act) . . . . . . 21
SECOND CLAIM FOR RELIEF
(Breach of Contract) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
THIRD CLAIM FOR RELIEF
(Promissory Estoppel) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
FOURTH CLAIM FOR RELIEF
(Misappropriation of Trade Secrets) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
FIFTH CLAIM FOR RELIEF
(Intentional Interference) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SIXTH CLAIM FOR RELIEF
(Fraudulent Misrepresentation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SEVENTH CLAIM FOR RELIEF
(Negligent Misrepresentation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
EIGHTH CLAIM FOR RELIEF
(Defamation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
RELIEF REQUESTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
DEMAND FOR JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

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Plaintiffs List Interactive, Ltd., d/b/a UKnight Interactive (“UKnight”) and Leonard S.
Labriola (“Labriola”), for their Complaint against Defendants Knights of Columbus Supreme
Council, Thomas P. Smith, Jr. (“Smith”), and Matthew A. St. John (“St. John”) (collectively,
“Defendants”), state as follows:
I.

NATURE OF ACTION
1.

This case involves an elaborate scheme of racketeering, fraud, deception, theft,

and broken promises by the Knights of Columbus Supreme Council and two of their senior
executives, Thomas Smith and Matthew St. John, which destroyed UKnight’s business and has
cost Plaintiffs millions of dollars in losses. Defendants, who ostensibly run the country’s largest
Catholic charitable fraternity, but in fact operate a highly-lucrative insurance company, have
systematically deceived their insured-members and Plaintiffs in order to prop up the viability of
their enterprise and derive substantial economic benefit to themselves.
2.
II.

Plaintiffs seek compensatory damages in excess of $100 million.

PARTIES
3.

Plaintiff UKnight is a Colorado limited liability company with its principal place

of business located at 1434 Spruce St., #100, Boulder, Colorado. The members of UKnight
include Terry Clark, a citizen of Texas, Leonard Labriola, a citizen of Colorado, and Jonathan
Michlik, a citizen of Texas. Accordingly, for diversity purposes, UKnight is a citizen of the
States of Colorado and Texas.
4.

Plaintiff Leonard S. Labriola is an individual, a member and manager of UKnight,

and a resident of the State of Colorado who resides at 179 Salina St., Lafayette, Colorado.

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5.

Defendant Knights of Columbus Supreme Council1 (“KC Supreme”) is a

501(c)(8) tax-exempt fraternal organization registered in the State of Connecticut. Its principal
place of business is 1 Columbus Plaza, New Haven, Connecticut. In this Complaint, “KC
Supreme” refers to the Defendant national headquarters council and insurance company located
in New Haven, Connecticut, whereas “Knights of Columbus” refers to the broader fraternal order
generally, including all of its constituent local councils, assemblies, independent general
insurance agents, and members.
6.

Defendant Thomas P. Smith, Jr. is an individual and employee of KC Supreme in

New Haven, Connecticut. Upon information and belief, Mr. Smith is a resident of the State of
Connecticut. Mr. Smith is the Executive Vice President and Chief Insurance Officer of KC
Supreme.
7.

Defendant Matthew A. St. John is an individual and employee of KC Supreme in

New Haven, Connecticut. Upon information and belief, Mr. St. John is a resident of the State of
Connecticut. Mr. St. John is the Director of Insurance Marketing for KC Supreme.
III.

JURISDICTION AND VENUE
8.

This Court has subject matter jurisdiction over Plaintiffs’ federal claims under 28

U.S.C. § 1331 and 18 U.S.C. § 1962. This Court has supplemental jurisdiction over Plaintiffs’

1

Defendant KC Supreme refers to the parent 501(c)(8) entity of the Knights of Columbus lodge
system. The thousands of local and state councils are, under IRS guidance, independent lodges
that fall under KC Supreme’s 501(c)(8) tax-exempt status, but that must obtain their own EINs
and file their own tax returns. Knights of Columbus local councils, assemblies, and general
agents are separate legal entities which can bring suit and be sued, raise and control their own
monies, own their own property, etc. They are essentially licensees of the “Knights of
Columbus” name, which license can be revoked by KC Supreme, but are not subsidiaries or part
of the same corporate family tree as Defendant.
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state law claims pursuant to 28 U.S.C. § 1367(a). Plaintiffs’ federal and state law claims arise
from the same events and transactions, involve substantially identical issues of fact and law, and
are so related to each other that they form part of the same case or controversy under Article III
of the United States Constitution.
9.

Additionally, this Court has subject matter jurisdiction over Plaintiffs’ claims

under 28 U.S.C. § 1332, as all Plaintiffs are diverse from all Defendants, and the amount in
controversy is in excess of $75,000.
10.

This Court has personal jurisdiction over Defendants KC Supreme, Thomas

Smith, and Matthew St. John as each has been directly involved in transacting business in the
District of Colorado with Plaintiffs, from which transactions this lawsuit directly arises.
Additionally, all Defendants have regular and ongoing business contacts with the numerous
Knights of Columbus councils, members, and insurance agents in the District of Colorado, as
well as market and sell insurance products into the District of Colorado, subjecting each to
general jurisdiction within this District.
11.

Venue is proper in this judicial district under 28 U.S.C. § 1391(b)(2). As outlined

in this Complaint, a substantial portion of the events and omissions that give rise to Plaintiffs’
claims, including the ongoing course of business between the parties, and many of the fraudulent
schemes and communications outlined herein, occurred within and were directed at Plaintiffs
within the District of Colorado.
IV.

GENERAL ALLEGATIONS
A.

KC Supreme Contracts With UKnight For Their Digital Platform

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12.

Plaintiff UKnight is a small Colorado company that specifically designed a

complex interactive system underlying easy-to-use website templates that link together and serve
the specific needs of the multi-tiered, multi-chapter, international organization the Knights of
Columbus. UKnight’s platform can dramatically enhance that organization’s ability to attract
new members, activate current members, increase fundraising, and increase sales of related
financial products.
13.

The Knights of Columbus is an international fraternal benefit society, and KC

Supreme is its leadership council and captive insurance company that coordinates with over
15,000 independent “councils,” or local groups, worldwide with a purported 1.9 million
members. It is associated with the Catholic Church and is engaged in charitable work.
14.

KC Supreme was originally founded in 1882 as a Catholic mutual benefit society.

It is now a tax-exempt fraternal insurance company, legally permitted to sell financial products
and services to Knights of Columbus members only. As an insurance company, it announced
$8.4 billion in sales in 2016, and has over $105 billion in life insurance policies in force. It is
currently ranked by Fortune Magazine as the 925th largest company in the world.
15.

In 2009, UKnight began designing and implementing websites for local Knights

of Columbus councils in the Dallas, Texas area. UKnight’s work was so successful at helping
local councils increase membership, improve communication with members, and increase sales
of insurance products that it was encouraged to make a proposal directly to KC Supreme for
adoption by the entire Knights of Columbus fraternity.
16.

On August 5, 2011, Mr. Labriola sent an email to Denise Serafini, the Director of

eBusiness for KC Supreme, outlining UKnight’s product and basic proposal for a relationship.

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He highlighted the capabilities and functions of UKnight and how its interactive system could
bring together the many, fractionated parts of the Knights of Columbus fraternity on one online
platform, significantly increase the fraternity’s membership, and increase sales of KC Supreme
financial products.
17.

Shortly after receiving the emailed proposal, Ms. Serafini contacted UKnight and

invited the company to New Haven, Connecticut for three days of high-level meetings beginning
September 8, 2011. The meetings could not have been more productive because, to the great
surprise of KC Supreme, UKnight was not only prepared to deliver far more than they had
expected, but was also prepared to deliver these services for a price that was less than half of
what KC Supreme already considered the best price available for far fewer services.
18.

After meetings between executives of KC Supreme and UKnight over two days,

on September 10, 2011 KC Supreme told UKnight that it was their choice as designated vendor
for the entire Knights of Columbus fraternity and offered to formally announce UKnight as such
in exchange for UKnight accommodating certain requests (such as adding legal disclaimers to
the websites) made by the KC Supreme legal department and UKnight allowing KC Supreme to
make certain graphic design changes to its platform. UKnight accepted this offer, and a contract
was formed. The KC Supreme legal department approved the modifications it had requested in
June 2012. The new graphic design and rollout plan were given final approval by KC Supreme
in August 2012. UKnight had done everything it had promised, and all that was left was KC
Supreme’s obligations to make the announcement and instruct the Knights of Columbus to adopt
the UKnight system.

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19.

Between the agreement made on September 10, 2011 and the completion of

graphic design changes and legal approval, Defendant KC Supreme could not have been more
clear that an agreement had been reached and that UKnight had already been selected as the
designated vendor.
20.

Both KC Supreme’s words and their course of dealing with UKnight repeatedly

confirmed that the deal was done. Ms. Serafini stated by email on September 12, 2011 that
“[w]e’re already rolling.” KC Supreme ceased their efforts to interview any potential alternative
designated vendors, ceased in-house efforts to develop the functionalities that UKnight was
designated to provide, and paid to have portions of UKnight’s graphic interface redesigned to
meet their needs, all clearly demonstrating that KC Supreme understood that an agreement had
already been reached.

KC Supreme then programmed a member list function specifically

designed to interface with the UKnight system to make it easier for local council subscribers to
download their membership lists into the UKnight database. KC Supreme sent UKnight the
necessary data files to bring all 15,392 local councils onto the UKnight network. Defendants
Thomas Smith, KC Supreme’s Chief Insurance Officer, Matthew St. John, Director of Insurance
Marketing, and Lynne Toomey, Vice President of Specialized Products all began encouraging
insurance agents to subscribe to the UKnight network.
21.

KC Supreme had only minimal performance obligations under its contract with

UKnight: formally designate UKnight as the sole approved vendor for the Knights of Columbus
fraternity as a whole, and instruct all 15,000+ local councils and assemblies to implement the
system. Notably, Defendant KC Supreme was not required to make any payment to UKnight.
Rather, fees for subscriptions to UKnight’s services would be paid individually by each

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subscribing insurance agent, local council, assembly, and others. KC Supreme could have
completed its performance obligations in a single day. Indeed, KC Supreme was so pleased with
their partnership with UKnight that they immediately proposed the parties expand and deepen
this relationship, and the parties began negotiating a second-stage contract for a product called
the “Supreme Admin Center” which would further integrate UKnight’s systems into the broader
Knights of Columbus fraternity.
C.

KC Supreme Delays Announcement, But Makes Repeated Promises and
Assurances

22.

Despite the clear agreement between the parties on September 10, 2011 that KC

Supreme would announce UKnight as the designated vendor to all of the Knights of Columbus’
local councils, assemblies, and independent agents, the announcement did not come.

Ms.

Serafini continued to express repeatedly on behalf of KC Supreme that everything was on track,
stating: “we are almost there,” “the Supreme Knight (CEO of KC Supreme) thought this
[announcement] was done last year,” “the Supreme Knight is very frustrated and wants this
[announcement] made yesterday,” and that the announcement of UKnight as the designated
vendor was imminent.
23.

During this time, UKnight remained committed to providing the best possible

service and dedication to KC Supreme and the Knights of Columbus fraternity. Additionally,
based on KC Supreme’s own projections communicated to UKnight, UKnight was anticipating
earning annual subscription fees of $300 from roughly 85% of the approximately 12,500
councils and 1,500 general agents and field agents in the US and Canada in the immediate future
(over $3.5 million/year), not to mention significantly larger future revenues from advertising

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through council websites, market centers, and other current and future cooperative fundraising
efforts.
24.

Accordingly, in contrast to its original business plan of serving a wide range of

clients each under a separate “_____ Interactive” trade name (e.g. “Rotary Interactive,” “Elks
Interactive,” etc.), UKnight turned away substantial firm offers for outside business and ceased
marketing to potential additional clients outside of the Knights of Columbus, all to ensure it
would be able to dedicate its full attention and resources to serving the Knights of Columbus as
soon as the designated vendor announcement was made. UKnight member and Plaintiff Leonard
Labriola put several other businesses on hold to focus himself full-time on UKnight. Similarly,
UKnight member Terry Clark allowed all of his existing technology consulting client contracts
to lapse in anticipation of needing to dedicate his attention full-time to UKnight following the
designated vendor announcement.
25.

After all legal and graphic design approvals were final in August of 2012, the

announcement still did not come, this time due to “scheduling” issues within KC Supreme.
Finally, in July of 2013, UKnight was called to a meeting in New Haven where Andrew Walther,
KC Supreme Communications Director, reaffirmed unequivocally that (1) UKnight had been
selected as the designated vendor; (2) that the announcement of UKnight as the designated
vendor would take place at the International State Deputy Meeting that November in Quebec; (3)
that every state council in the US and Canada would be required to use the UKnight system; and
(4) that KC Supreme would instruct all US and Canadian councils and agents to begin using the
UKnight system immediately. When UKnight asked if it could help with preparations for the

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announcement, Mr. Walther further assured UKnight that all preparation had already been
completed for the announcement scheduled in November.
26.

At this time, KC Supreme provided UKnight with their standard vendor contract

template to structure plans for the new “Supreme Admin Center” product. By the end of July
2013, KC Supreme and UKnight had tailored the document, which also recognized the existence
of the original September 2011 agreement. By mid-August the KC Supreme legal department
had approved the document, including the recognition of the former agreement, and it was sent
to Supreme Knight Carl Anderson for signature. Mr. Anderson then promised that he would
make the much-anticipated designated vendor announcement personally, and that he wanted to
make sure his announcement made a “big splash.”
27.

Again, time passed and UKnight received neither a signed version of the

formalized contract nor additional information on the announcement. In response to repeated
inquiries by UKnight, KC Supreme repeatedly assured them that despite the lack of a signed
document the deal was done, with Ms. Serafini even telling Mr. Labriola that the lack of a
signed, formalized agreement didn’t matter as the agreement was already “etched in stone.”
28.

In reliance on KC Supreme’s repeated reassurances that the deal was “etched in

stone,” that all preparations had already been made for the upcoming announcement, and in
anticipation of the upcoming November announcement, UKnight spent thousands of dollars
bolstering its email capabilities, enhancing its server hardware, and increasing its electronic ACH
payment limit to enable it to accept thousands of new council subscriptions at once.
29.

Again,

the

announcement

did

not

come.

KC

Supreme

Director

of

Communications Andrew Walther told Ms. Serafini that the announcement could not be made at

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the November meeting as KC Supreme had to focus on humanitarian needs following the recent
typhoon in the Philippines, which information was relayed to UKnight. UKnight only later
learned that this was a lie told to string Plaintiff along.
30.

In December 2013, Mr. Labriola sent a heartfelt email to Ms. Serafini explaining

the tremendous hardship these delays had caused to UKnight and to his family personally. He
explained that he and Mr. Clark had not drawn a paycheck in over 30 months, and told her that
the vast majority of local councils and agents were awaiting the formal announcement from KC
Supreme before signing up for UKnight. He asked directly if the delays in the announcement
were any indication that KC Supreme wanted out of the deal in any way. And, again, he was
reassured by Ms. Serafini in her email reply that all was on track, that recent delays had merely
been the result of unexpected staff resignations, and that “we can get back to business in the next
few days.”
D.

Meanwhile, KC Supreme Conspires To Fraudulently Inflate Membership
Numbers and Characteristics Of Their Insurance Risk Pool

31.

During this same period that UKnight’s and KC Supreme’s relationship was

developing, KC Supreme and several of its senior leadership, including Mr. Smith and Mr. St.
John, were engaged in an elaborate conspiracy to artificially inflate the Knights of Columbus’
insurable membership numbers and artificially improve the demographic structure of this riskpool.
32.

While at the local level the Knights of Columbus members are engaged in

substantial volunteer and charitable work, KC Supreme generates billions of dollars tax-free
every year selling life insurance and other financial products. As a result of these revenues, KC
Supreme and its executives, in contrast to the local councils, sit among the world’s elite power
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brokers, with its Supreme Knight (CEO) Carl Anderson drawing a seven-figure salary and sitting
on the board of the Vatican Bank. KC Supreme’s insurance products are sold exclusively to
members of the Knights of Columbus local councils in the United States and Canada only (not to
other international members).

KC Supreme is only legally permitted to sell its insurance

products to members of the Knights of Columbus fraternity.

Accordingly, the size and

demographic structure of its membership in the US and Canada is also the size and demographic
structure of its insurance risk-pool. As with any such risk-pool, a shrinking membership and
aging demographic would severely threaten its insurance rating as payouts to members’ families
upon death depend on a steady stream of new premiums and payments from younger members.
Indeed, the KC Supreme insurance program is only one step removed from a classic Ponzi
scheme—with over $105 billion of insurance in force written against only $22 billion in assets,
the KC Supreme insurance program must demonstrate that its membership is growing and that its
demographic is not aging in order to maintain the perception of viability to meet its future payout
obligations.
33.

KC Supreme recognizes the imperative of growth to the viability of its insurance

program, and is strongly motivated to demonstrate that it continues to be a growing, vibrant
organization.

For example, in 2016 Supreme Knight Carl Anderson stated that “[o]ur

responsibility as the leaders of the Knights of Columbus is to assure the continued growth and
sustainability of our Order. This is our first and primary responsibility.”
34.

And, indeed, KC Supreme as well as its Chief Insurance Officer Thomas Smith

and Director of Insurance Marketing Matthew St. John have carefully maintained just such an
illusion of growing membership and steady age-demographic. Unfortunately for the hundreds of

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thousands of Knights of Columbus members it insures, these numbers are only an illusion—the
end result of an elaborate and extensive scheme to fraudulently mischaracterize its own riskpool. In fact, and in direct contradiction to the representations it makes to members, agents,
ratings agencies, and reinsurers, the KC Supreme insurance risk-pool is actually shrinking and
aging. This is a terminal condition.
35.

Additionally, by fraudulently inflating the size and vitality of their membership,

Defendants have deceived UKnight about the potential profits it stands to make from serving,
advertising to, and fundraising with this fraternity. In the process, Defendants fraudulently
induced UKnight into its business decision to focus its efforts solely on what it has now learned
is an unstable, shrinking organization.
36.

KC Supreme, Mr. Smith, and Mr. St. John have perpetrated this fraud by

preventing local Knights of Columbus councils from dropping members from their rolls. If a
new member joins, and then quits, Defendants require local councils to maintain these
“phantom” members on their membership rolls and to continue paying nominal dues for them.
This is done by instituting cumbersome and byzantine processes to drop members from rolls, and
even by instituting requirements that a council cannot drop a member until it has a new member
to replace him, or by limiting the total number of members by which any given council can
decrease each year.
37.

For example, in one local council in New Jersey, the council reports to KC

Supreme that it has 316 members, but council members report to UKnight that the actual number
is only 54 (an overstatement of 585%), and that it is not allowed by Defendants to report the true
numbers. In another example in Dallas, a local council which reported approximately 300

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members to KC Supreme attempted to remove over 80 long-delinquent members from its rolls.
But, after months of pleading, Defendants only permitted 8 members to be removed, leaving
over 70 “phantom” members on the rolls.
38.

The vast majority of these “phantom” members are younger members who join

and then quit due to the demands of careers and raising children in families where often both
parents work, while aging, retired members tend to remain active. The fact that Defendants
fraudulently report inflated numbers of younger members artificially drops the average age of
Knights of Columbus members to 59 years of age, a critical factor in evaluation of their
insurance risk-pool.
39.

As a result of this fraud, Defendant KC Supreme falsely reports that its

membership numbers have been increasing year-on-year. The KC Supreme website states that
“our membership grew for the 44th consecutive year to a record high of 1,918,122 brother
Knights. Soon, we will number more than 2 million men.” In fact, the true membership of the
Knights of Columbus without these “phantom” members is only about 1.4 million—their
published number represents an approximate 36% overstatement! At a recent meeting held by
KC Supreme to educate its insurance agents, a representative of KC Supreme explained to the
agents present separate numbers for the various membership categories, including ‘insured
members’ and ‘uninsured members.’ At least two of the agents noticed, and one of them asked
why the numbers didn’t add up to the published numbers—they were 400,000 to 500,000 short
of published numbers.

No explanation was ever offered, and the group was quickly and

awkwardly moved on to a new topic.

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40.

Additionally, while the Knights of Columbus fraternal membership has been

growing rapidly in new territories such as South Korea, Mexico, the Philippines, Poland,
Lithuania, and the Ukraine,2 insurance products are only sold to members in the United States
and Canada. In order to fraudulently disguise the drop in its number of potential insurable
members, KC Supreme intentionally does not disclose a membership breakdown by country.
Instead, it fraudulently presents only that its overall membership is increasing as evidence that its
insurance risk-pool is healthy.
41.

Defendants self-report these deceptive membership and demographic numbers to

the insurance rating industry each year. Despite accepting KC Supreme’s fraudulent, selfreported membership numbers and demographic status as true, on September 9, 2016 insurance
rating agency A.M. Best still revised its outlook on KC Supreme to “negative,” citing its “decline
in first-year single premiums”—a symptom of a decreasing and aging membership. If A.M. Best
received the true numbers and trends of KC Supreme’s risk-pool, their credit rating would
plunge.
42.

As a result of this ongoing, fraudulent scheme, KC Supreme is able to deceive

members into believing it deserves its high insurance rating, obtains reinsurance at reduced rates,
and induces partner companies like UKnight into focusing on what they are falsely led to believe
is a large and growing membership pool. UKnight certainly would not have focused solely on
serving the Knights of Columbus at the expense of other organizations if it had been told the

2

At the 134th Supreme Convention in 2016, Supreme Knight Carl Anderson announced (as
reported on KC Supreme’s website) that “the Knights of Columbus has seen impressive
membership growth in new areas such as Ukraine, Lithuania and Poland.”
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truth: the entire Knights of Columbus organization may very well be on the verge of financial
collapse.
E.

KC Supreme Breach Agreement With UKnight And Steal Trade Secrets

43.

Meanwhile, at some point Defendant Thomas Smith, despite having never met or

spoken with Mr. Labriola, purported to develop an extreme personal animosity against him. This
animosity increased until, on January 24, 2014, in a meeting with the KC Supreme Operations
Committee in New Haven, Connecticut, Mr. Smith told the committed that Mr. Labriola had lied
to him and to his agents about money. These statements were false, and Mr. Smith knew them to
be false when he made them to the committee.
44.

This very same meeting with the KC Supreme Operations Committee was

supposed to include the long-awaited formal announcement by KC Supreme that UKnight was
its designated vendor. However, in his role as Chief Insurance Officer, Defendant Smith’s
defamatory statements against Mr. Labriola, and by association UKnight, poisoned the
atmosphere against UKnight. Mr. Smith proceeded to refuse to allow the announcement to go
forward at this meeting. Later events reveal that Mr. Smith and the other Defendants were
manufacturing reasons to delay the announcement so that they could replicate UKnight’s product
themselves and prevent UKnight’s system from exposing the extent of their membership number
fraud.
45.

Instead of making the announcement as promised, Mr. Smith demanded that

UKnight agree in writing that Mr. Labriola would never again speak with UKnight’s most
important customers, specifically (1) anyone at KC Supreme in New Haven, (2) any general
agent of the Knights of Columbus, or (3) any Knights of Columbus state council officer. By

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separating Mr. Labriola from relationships he had made over several years, Mr. Smith and Mr.
St. John would gradually be able to take control of the platform UKnight developed, provided
that they could learn the inner workings of the UKnight system.
46.

Without understanding why Mr. Smith was expressing such animosity toward Mr.

Labriola, but in an effort to maintain their business relationship, UKnight agreed to these
demands by corporate resolution.
47.

After Mr. Smith’s defamatory statements had created doubt in the mind of the KC

Supreme leadership, KC Supreme retained technology consultant Ian Kinkade to evaluate the
UKnight system. Mr. Kinkade’s comments back to the Supreme Council were favorable, and his
report motivated the KC Supreme Operations Committee to again vote to move the project
forward. However, the Committee reversed its decision the next day and instead called for a
complete survey of all current UKnight subscribers.
48.

Again, in an effort to appease KC Supreme and move the process forward,

UKnight provided a complete and unvetted list of every single UKnight subscriber. The survey
responses overwhelmingly confirmed that UKnight was an outstanding tool—it noted that
UKnight was easy to use, effective, had very responsive customer service, and helped to increase
local council membership and participation. Additionally, the survey revealed that the UKnight
system was directly responsible for significant increases in sales of insurance products among
subscribing general agents.
49.

With these survey results in hand by the summer of 2014, UKnight again waited

to be contacted about the formal announcement of its designated vendor status, and again they
were given repeated assurances by KC Supreme that the announcement was imminent.

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Reasonably believing that the leadership of the world’s largest Catholic charitable fraternity
would not be misleading them, UKnight and its management continued their commitment to
serve the Knights of Columbus and waited. But there was no announcement.
50.

Then, at an insurance sales conference in early 2015, Supreme Knight Carl

Anderson saw a presentation on the effectiveness of UKnight’s membership invitation program.
The Supreme Knight again instructed that UKnight be put on the front burner, and again Mr.
Kinkade was retained by KC Supreme to work with UKnight.
51.

Mr. Kinkade traveled to Dallas with members of the KC Supreme Operations

Committee to meet with UKnight partner and technology manager Terry Clark. However, when
the members of the committee left, Mr. St. John specifically instructed Mr. Kinkade to stay
behind to work with Mr. Clark and dive deeper into the inner workings of the UKnight system.
During one of their days of meetings the true intent of KC Supreme became clear.

At

approximately 1:30 p.m. on June 2, 2015, Mr. Kinkade received an email on his laptop which
was open in front of him. He then told Mr. Clark that this email was “really bad, and I don’t
want you to think I had anything to do with it.” With that, he showed Mr. Clark the email that
had just come in from Matthew St. John, KC Supreme’s Director of Insurance Marketing. In the
email, Mr. St. John expressly instructed Mr. Kinkade to get the specs for at least two of
UKnight’s proprietary systems so that Mr. St. John could have another developer build the
system for them! One of these systems was the member invitation program that his Supreme
Knight, Carl Anderson, had found so valuable.
52.

As discussions continued, UKnight proposed that it follow industry-standard

protocol to protect its proprietary information and asked that Mr. St. John send it a “scope of

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work” document. Mr. St. John repeatedly refused. Unaware that Mr. Kinkade had shown
UKnight his prior email, Mr. St. John then demanded that UKnight provide him with all of
UKnight’s strategies, design data, and internal system information—essentially all of UKnight’s
trade secrets. In a clear attempt to deceive UKnight, Mr. St. John falsely stated to Mr. Clark and
Mr. Labriola that he only needed this information to make sure KC Supreme understood exactly
what UKnight planned to do and how they planned to do it so that he could approve going
forward. UKnight, of course, declined this request, and instead continued to propose that its
technology manager Mr. Clark and director Mr. Labriola fly to New Haven to work
collaboratively with Mr. St. John’s team to resolve any concerns.
53.

This proposal was ignored. On December 31, 2015, KC Supreme’s Director of

eBusiness Denise Serafini, who had been working closest with UKnight and had repeatedly
advocated for UKnight within her organization, retired. On the very next business day, January
4, 2016, Mr. St. John emailed Mr. Labriola and Mr. Clark.

To the shock of UKnight’s

management, this email now fraudulently claimed that the parties “have not had any contractual
relationship,” and that “the Knights of Columbus has never conferred official or preferred vendor
status on UKnight.” These lies were a transparent attempt to get UKnight to simply fade off into
the sunset. Then, Mr. St. John revealed that “[KC Supreme] has chosen to enlarge its exploration
of potential website vendors,” and that UKnight could no longer use the Knights of Columbus
name in offering its product to any potential new council or agent subscribers.
54.

Then, KC Supreme hired Mr. Kinkade to become their new Director of

eBusiness—the very person they had sent to investigate the inner workings of UKnight’s system.
Finally, in April of 2016, KC Supreme sent a Request for Proposal (RFP) to several other

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potential vendors, which included specific design elements and internal workings of the system
UKnight had developed for the Knights of Columbus and that were observed by Mr. Kinkade or
disclosed by UKnight in reliance on KC Supreme’s repeated promises that UKnight had already
been selected as its designated vendor.
55.

Defendants took these actions despite having previously and unequivocally stated

to UKnight that it had always been very cooperative and accommodating, that its customer
Knights of Columbus councils were very satisfied with every aspect of UKnight’s services, that
it had helped their insurance agents become more successful, and that they felt UKnight was
underpricing its services and should actually double the fees it charged each Knights of
Columbus subscribing council given the value that UKnight provided.
56.

Defendants KC Supreme, Mr. Smith, and Mr. St. John, as outlined in this

complaint, acted willfully, wantonly, and maliciously with the knowledge that their actions
would destroy UKnight as a company, and with the specific intent to achieve exactly that result
so that UKnight’s system would not uncover and reveal Defendants’ fraud.

FIRST CLAIM FOR RELIEF
(Violation of 18 U.S.C. § 1962(c) – By UKnight Against All Defendants)
57.

Plaintiffs incorporate all of the allegations of this Complaint as if fully rewritten

58.

Here, all Defendants are RICO persons within the meaning of 18 U.S.C. §§

herein.

1961(3) and 1964(c).

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59.

At all relevant times, the Knights of Columbus fraternity as a whole, including the

KC Supreme council, its officers and directors, the state councils, local councils, assemblies,
independent insurance agents, and members constituted an “association-in-fact” enterprise as
defined in 18 U.S.C. § 1861(4), consisting of thousands of individuals and separate legal entities.
At all relevant times, this enterprise has been engaged in, and its activities affected, interstate and
foreign commerce. Such enterprise furnished the vehicle for the commission of a pattern of
racketeering activity by Defendants.
60.

The enterprise, consisting of the Knights of Columbus fraternity as a whole, has a

unifying purpose: to bring together “practical Catholic men” for the mutual benefit of its
members in fraternity, and to engage in charitable work and giving. The enterprise has a
relationship among those associated with it in that each is a Catholic man engaged in charitable
work, fraternity, and mutual benefit, or a council of such men coming together to fulfill the
purpose of the enterprise as a whole. The enterprise, established in 1882 and in continuous
operation since that time, has sufficient longevity to permit these associates to pursue the
enterprise’s purpose. Additionally, the enterprise has an ascertainable structure consisting of its
Catholic faith, its lodge-system, its fraternal nature, and its focus on charitable giving and
volunteer work that is wholly distinct from that inherent in the fraudulent scheme evidenced by
Defendants’ conduct of the pattern of racketeering activity described below.
61.

Defendant KC Supreme is associated with the enterprise and manages its central

operations and insurance activities. Defendants Smith and St. John are also associated with the
enterprise as officers and directors of KC Supreme, and assisted in the management and
operations of the affairs of the enterprise including its insurance activities. All Defendants

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conducted and/or participated in the conduct of the Enterprise’s affairs, directly or indirectly,
through a pattern of racketeering activity as outlined in this Complaint. These Defendants are
separate and distinct from the enterprise itself. KC Supreme is a separate legal entity from the
Knights of Columbus fraternity (itself comprised of over 15,000 distinct legal entities), and is the
only portion of the Knights of Columbus system that issues insurance policies. KC Supreme is
an insurance company and the 925th largest company in the world. In contrast, the individual
local councils of the Knights of Columbus are distinct legal entities engaged primarily in
volunteer work and charitable fundraising, and their members are simply “practical catholic men
over the age of 18.” Defendants Smith and St. John are distinct from the enterprise itself as they
are individuals and officers/directors of KC Supreme.
62.

Alternatively, Defendants Smith and St. John conducted and/or participated in the

conduct of the Enterprise’s affairs, directly or indirectly, through a pattern of racketeering
activity as outlined in this Complaint. They are distinct from the enterprise themselves as they
are individuals and officers/directors of KC Supreme.
63.

As outlined below, Defendants engaged in an ongoing pattern of numerous

predicate acts of racketeering as defined in 18 U.S.C. § 1961:
A.

Theft And Attempted Theft Of Trade Secrets

64.

Defendants illegally engaged in the racketeering acts of attempting to steal and

stealing UKnight’s trade secrets, in violation of 18 U.S.C. § 1832.
65.

The proprietary system designed by UKnight and offered for subscription to the

Knights of Columbus constitutes a protected trade secret, as explained in Paragraphs 108-110,
infra, intended for use in interstate and international commerce pursuant to 18 U.S.C. § 1832.

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66.

Defendants KC Supreme, Thomas Smith, and Matthew St. John, for their

economic benefit, and intending and knowing that their actions would injure UKnight, stole,
appropriated without authorization, and by fraud and deception obtained UKnight’s trade secrets.
67.

Mr. Smith, acting as an officer of KC Supreme, knowingly, intentionally, and

repeatedly sabotaged the announcement of UKnight as designated vendor to permit Defendants
to steal these trade secrets for themselves.
68.

Mr. Smith additionally fabricated the need for technical evaluations of UKnight’s

proprietary system to create a pretense to allow his agent Mr. Kinkaid to gain access to
UKnight’s trade secrets.
69.

Mr. St. John, acting as an officer and employee of KC Supreme, instructed his

agent Mr. Kinkade to steal UKnight’s trade secrets.
70.

KC Supreme, Mr. Smith, and Mr. St. John then conspired to hire Mr. Kinkade to

acquire his knowledge of UKnight’s trade secrets.
71.

Mr. St. John then demanded UKnight send all of its trade secrets to him under the

fraudulent pretense of needing this information to approve the announcement of UKnight as
designated vendor, constituting an attempt to steal whatever portions of UKnight’s trade secrets
Mr. Kinkade had not already acquired.
72.

Mr. St. John and KC Supreme then transferred these trade secrets to third parties

by issuing an RFP for other companies to reproduce UKnight’s proprietary system based on this
stolen information, and, upon information and belief, by hiring one of these companies to
develop a system for KC Supreme based directly upon UKnight’s trade secrets. The basis for
Plaintiff’s belief is that Defendants, during settlement negotiations, sought to have Plaintiff

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indemnify an unnamed third-party developer, the only reasonable explanation for which is that
KC Supreme communicated the stolen trade secrets to this third party.
73.

Through this theft of UKnight’s trade secrets, Defendants have enabled the

enterprise to avoid the sum total of all monies potentially paid by and through the Knights of
Columbus fraternity to UKnight.
B.

Interstate Transport Of Stolen Goods

74.

Defendants illegally engaged in the racketeering acts of transporting UKnight’s

stolen trades secrets across state borders in violation of 18 U.S.C. §§ 2314 and 2315.
75.

Defendants sent Mr. Kinkade to Dallas, Texas to steal UKnight’s trade secrets,

arranged for his travel back to New Haven, Connecticut, and subsequently hired him to work for
KC Supreme in New Haven. In so doing, Defendants transported these stolen wares, which are
valued at well in excess of $1 million, across state lines in violation of 18 U.S.C. § 2314.
76.

Defendants additionally transported UKnight’s trade secrets across state lines by

sending this information to other software developers outside Connecticut as part of their RFP
process, and, upon information and belief, sending this information to their new development
partner to copy, all in violation of 18 U.S.C. § 2314.
77.

Finally, by receiving in Connecticut this stolen information Mr. Kinkade obtained

in Texas, Defendants have received stolen wares valued well in excess of $1 million from across
state lines in violation of 18 U.S.C. § 2315.
78.

Through this theft of UKnight’s trade secrets, Defendants have enabled the

enterprise to avoid the sum total of all monies potentially paid by and through the Knights of
Columbus fraternity to UKnight.

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C.

Wire Fraud

79.

Defendants illegally engaged in the racketeering acts of wire fraud in violation of

18 U.S.C. § 1343.
80.

Defendants devised and executed a scheme to defraud vendors such as UKnight,

to defraud and obtain money from insurance customers, and to defraud reinsurers and ratings
agencies by fraudulently inflating the size and demographic structure of their member insurance
risk-pool.
81.

Defendants used the US interstate wire system in furtherance of this scheme to

defraud by:
a.

Continuously marketing KC insurance products online, such as by
KC Supreme publishing on its website the materials at
http://www.kofc.org/un/en/insurance/index.html
to
market
insurance products continuously to hundreds of thousands of
member-visitors.

b.

Continuously attempting to induce its members to purchase KC
Supreme insurance products by falsely stating on its website that
“[w]hile other companies were making ethically questionable and
unnecessarily risky decisions, we were not.” Unquestionably, the
intentional deception of its own customers as to the risk of the
insurance products sold by KC Supreme is an unethical decision.

c.

Continuously advertising false and misleading membership
numbers online to its members while intentionally failing to
disclose the number of insurable members in the US and Canada
in order to fraudulently induce members to purchase insurance
products, such as at their website where KC Supreme falsely clams
that “[m]ore than 1.9 million men in over a dozen countries across
the globe are proud to call themselves Knights.” In fact, after
accounting for “phantom” members in the US and Canada, the
Knights of Columbus membership numbers are materially lower
than stated, and the number of insurable members in the US and
Canada are a shrinking portion of this membership.

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82.

d.

Similarly, on a May 5, 2010 press release on the KC Supreme
website (that has remained continually published on the KC
Supreme website through the date of this filing), Defendants state
that the Knights of Columbus saw over 45,000 new members in
2010 (not net membership growth), while intentionally omitting
the large number of members who died or withdrew in the US
during that same time. In fact, after addressing phantom members,
withdrawals, and deaths the net membership numbers shrank
during this period.

e.

Using the interstate wires to submit these false membership
numbers and trends to insurance rating agencies such as A.M. Best
on an annual basis, which resulted in KC Supreme fraudulently
obtaining A.M. Best’s A++ rating.

Defendants knew that the UKnight system worked and was effective at helping

increase membership and sell insurance products—something they desperately needed.
However, they found themselves stuck between a rock and a hard place in light of their fraud
noted above, because the UKnight system would have necessarily resulted in the identification
and elimination of “phantom members” and duplicate members who had moved councils.
Defendants knew that they had to stall the UKnight system deployment until they could
ultimately kill it and recreate its functionality under their own control in order to cover up their
fraud while still deriving the benefits of the system. Accordingly, Defendants’ fraudulent actions
described herein were with the specific intent to defraud UKnight.
83.

Defendants additionally devised and executed a scheme to defraud UKnight into

revealing its trade secrets, and into accepting repeated delays in announcing it as the designated
vendor, using the US interstate wires in furtherance of this scheme by:
a.

KC Supreme’s Communication Director Andrew Walther’s
November 2013 statement relayed by Ms. Serafini to Mr. Labriola
by phone falsely stating that the formal announcement of UKnight
as designated vendor had to be postponed due to the recent

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typhoon in the Philippines, when he in fact knew that he was not
prepared to make the announcement.
b.

KC Supreme’s Director of eBusiness Denise Serafini’s December
12, 2013 email reply to Mr. Labriola falsely stating that delays
were caused by an unexpected staff resignation, and that “we can
get back to business in the next few days,” when KC Supreme in
fact knew that no announcement was imminent, or at least that it
did not know whether an announcement was imminent or whether
it was possible to ‘get back to business’ at all.

c.

Mr. St. John’s June 2nd, 2015 email to Mr. Kinkade instructing him
to obtain UKnight’s trade secrets in furtherance of Defendants’
scheme to defraud UKnight of their property.

d.

Mr. St. John’s June 2015 phone call with Terry Clark and Leonard
Labriola where he demanded that UKnight send him all of their
trade secret information under the false pretense that this was to
approve their partnership going forward, when in fact the purpose
of this request was to steal the remainder of UKnight’s trade
secrets.

e.

Mr. St. John’s July 10, 2015 phone conversation with Mr. Labriola
where, despite ordering the theft of UKnight’s trade secrets just a
month prior, he reassured Mr. Labriola that he will tell all of the
local councils “this [UKnight] is the only system they’re going to
get . . . with Supreme Council backing,” and that “85% [of all
councils] . . . you’re going to get [to subscribe].” In fact, at this
time Mr. St. John already knew that KC Supreme was not going to
announce UKnight as its designated vendor, and he and the other
Defendants had already initiated their plan to steal UKnight’s trade
secrets and hire a third-party developer to produce a copy of
UKnight’s system for them.

f.

Mr. St. John’s January 4, 2016 email to Mr. Labriola and Mr.
Clark falsely stating that the parties “have not had any contractual
relationship” and falsely stating that “[KC Supreme] never
conferred official or preferred vendor status on UKnight” made for
the purpose of furthering Defendants’ scheme to defraud UKnight
of its property. In fact, Mr. St. John knew that a contractual
relationship did exist between KC Supreme and UKnight, that
UKnight was an official vendor of KC Supreme, and that KC
Supreme had conferred preferred vendor status on UKnight (even
if the formal announcement was never made).

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g.

Mr. St. John’s April 2016 RFP emailed to numerous potential
vendors other than UKnight soliciting a developer to build a copy
of UKnight’s system based on its stolen trade secrets, which was in
furtherance of Defendants’ scheme to defraud UKnight of its
property.

D.

Receipt Of Funds Obtained By Fraud

84.

Defendants engaged in the racketeering acts of receiving funds obtained by fraud

in violation of 18 U.S.C. § 2314.
85.

As a result of their scheme to fraudulently skew the size and demographic

structure of their insurance member risk-pool, as described above, Defendants fraudulently
induced hundreds of thousands of members of the Knights of Columbus to send monthly
insurance premium payments from all 50 states and Canada to KC Supreme in Connecticut, in
the aggregate amount of hundreds of millions of dollars per year.
E.

Financial Institution Fraud

86.

Defendants engaged in the racketeering acts of financial institution fraud in

violation of 18 U.S.C. § 1344 by obtaining funds under the custody & control of financial
institutions through a fraudulent scheme.
87.

As outlined above, Defendants engaged in a scheme to fraudulently induce

members of the Knights of Columbus to purchase life insurance products from KC Supreme and
to make and continue making monthly payments in furtherance thereof.
88.

As a result of this scheme to defraud, hundreds of thousands of members of the

Knights of Columbus make monthly payments to KC Supreme from their personal checking
accounts, which monies come out of the custody or control of countless banks throughout the
United States and Canada and are obtained by KC Supreme.

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89.

Defendants maintain sole custody and control of the vast majority of the details

surrounding their fraudulent statements, and have intentionally concealed information and data
that will, upon information and belief, further support and expand the allegations of fraud
contained above.
F.

Racketeering Acts Comprise A Pattern Of Racketeering Activity

90.

The racketeering acts engaged in by Defendants form a pattern because they are

related in nature, continued over a period of at least five years, and will continue for the
foreseeable future.
91.

The racketeering acts listed above are related because they served a similar

purpose and have similar results: to artificially inflate the membership ranks and artificially
skew the demographic structure of the Knights of Columbus insurance risk-pool, and to
wrongfully bring under the control of Defendants the tools developed by UKnight to prevent this
system from revealing their fraud and to enhance their ability to effectively continue this fraud.
These acts are further related because they have the same participants—Defendants KC
Supreme, Mr. Smith, and Mr. St. John, as well as the personnel within the Knights of Columbus
involved in the reporting of member numbers and demographics. And these acts are additionally
related as they have the same set of victims and methods of commission: member insurance
customers, reinsurers, and vendors such as UKnight are fraudulently deceived as to the size and
vibrancy of the Knights of Columbus membership in order to induce them to rely on Defendants.
This pattern protects the financial position of and enriches the Defendants.
92.

The racketeering activity engaged in by Defendants has continued unabated for at

least the more than five years that UKnight was directly involved with them. During this entire

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period Defendants have engaged in racketeering activity to artificially inflate the insurable
membership numbers of the Knights of Columbus, and have used these inflated numbers to
induce members to purchase insurance and to induce UKnight to remain committed to KC
Supreme while Defendants conspired to steal from UKnight the technology needed to further
control and manipulate their membership data. This pattern also threatens to continue for an
indefinite duration, as it has become the regular method (even if known only to the select few
Defendants) for the enterprise to conduct this critical aspect of its business. Defendants show no
intention of stopping their practice of fraudulently inflating their insurable membership
numbers—in fact, all of the above internet representations listed in this Complaint remain on KC
Supreme’s website as of the time of this filing. Additionally, because KC Supreme is actively
seeking a new vendor to implement an internal system using UKnight’s stolen trade secrets, this
activity is ongoing.
G.

Proximate Injury To Plaintiff UKnight

93.

Plaintiff UKnight has been directly, concretely, and proximately injured in its

business and property as a result of the foregoing overt acts in furtherance of the conspiracy, and
as a result of the racketeering acts outlined above. By Defendants’ racketeering acts, UKnight
was wrongfully induced to enter into a contractual relationship with KC Supreme, was
wrongfully induced to focus exclusively on KC Supreme and to endure its scheme of delays due
to the potential for and promises of substantial (but illusory) business, all of which led to
UKnight being set up and pilfered of its trades secrets by Defendants so that they could use
UKnight’s product to maintain and enhance their ability to continue their conspiracy.

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94.

Plaintiff’s damages as a result of Defendants’ racketeering activity are in an

amount to be determined at trial.
WHEREFORE, Plaintiffs seek relief as set forth at the end of this Complaint.

SECOND CLAIM FOR RELIEF
(Breach of Contract – By Plaintiff UKnight Against Defendant Knights of Columbus)
95.

Plaintiff incorporates all of the allegations in this Complaint as if fully rewritten

96.

KC Supreme and UKnight entered into an express contract on September 10,

herein.

2011, that could be performed in less than one year. Indeed, KC Supreme’s only performance
obligation was to announce UKnight as its designated vendor and direct its state and local
councils, assemblies, and agents to subscribe to the UKnight system. This contract was
confirmed by numerous emails, including from Denise Serafini stating that “the Supreme Knight
thought this was done last year.”
97.

In the alternative, a contract between KC Supreme and UKnight must be implied

in fact here based on the course of dealing of the parties as outlined above.
98.

This contract contained adequate consideration in the form of mutual exchange of

promises by both sides, including KC Supreme’s promise to announce UKnight as its designated
vendor, and UKnight’s agreement to let KC Supreme redesign portions of the graphical interface
and add legal disclaimers to their web platform to meet KC Supreme’s specific wishes.
99.

Defendant failed to perform its obligation under that contract by never formally

announcing that UKnight was its designated vendor, and never directing state and local councils,
assemblies, and agents to subscribe to the UKnight system.
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100.

Plaintiff substantially performed all of its obligations under the contract.

101.

Plaintiff suffered damages as a result of this breach by Defendant in the form of

lost revenues and profits from subscription fees, its lost share of advertising and fundraising
revenues, missed business opportunities while it focused on preparing exclusively to serve the
Knights of Columbus, and other economic damages in an amount to be proven at trial.
WHEREFORE, Plaintiff seeks relief as set forth at the end of this Complaint. 
 
THIRD CLAIM FOR RELIEF
(Promissory Estoppel – By Plaintiff UKnight Against Defendant Knights of Columbus)
102.

Plaintiffs incorporate all of the allegations in this Complaint as if fully rewritten

103.

Defendant KC Supreme made numerous promises to UKnight, including:

herein.

a.

The promise by KC Supreme on September 10, 2011 that it would
announce UKnight as its designated vendor and instruct all state
and local councils to subscribe to the UKnight system.

b.

The promise by KC Supreme in September 2011 that the
announcement of UKnight as designated vendor would take place
in February 2012.

c.

Ms. Serafini’s promise that KC Supreme was committed to the
deal by stating that “the Supreme Knight thought this was done last
year,” that “he knows this (the announcement of UKnight as the
designated vendor) is the right thing to do,” and telling Mr.
Labriola that the Supreme Knight had instructed that this was to be
“done yesterday.”

d.

Andrew Walther’s promise in July of 2013 that UKnight had
already been selected as the designated vendor, that all
preparations were already completed for the announcement, and
that the formal announcement would take place at the International
State Deputy meeting in November 2013.
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104.

e.

Supreme Knight Carl Anderson’s promise in mid-August 2013 that
he would make the formal designated vendor announcement
personally, and that it would make a “big splash.”

f.

KC Supreme’s promise, in response to inquiries about delays, that
the deal was “etched in stone” and the announcement was
imminent.

g.

Ms. Serafini’s promise, on December 12, 2013, in response to Mr.
Labriola’s inquiry about whether KC Supreme was trying to back
out of the deal, that this was not the case, and that “we can get
back to business in the next few days.”

Defendant KC Supreme should have, and did, reasonably expected these promises

would induce UKnight to take definite and substantial actions to its detriment by preparing for
this increased workload, investing in their internal infrastructure, accepting delays, forbearing
from accepting work from other potential customers, and forbearing from seeking out additional
partners organizations. UKnight did, in fact, reasonably rely on these promises to their detriment
by taking such actions and forbearing from such actions.
105.

Indeed, in a July 28, 2015 phone conversation between Mr. St. John and Mr.

Labriola, Mr. St. John confirmed that he understood that “[UKnight] are a company that solely
exist for us [the Knights of Columbus],” acknowledging that the very existence of UKnight
depended on Defendants keeping their promises.
106.

In the circumstances presented in this Complaint, Defendant’s promises must be

enforced to prevent injustice.
WHEREFORE, Plaintiffs seek relief as set forth at the end of this Complaint.

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FOURTH CLAIM FOR RELIEF
(Violation of C.R.S. § 7-74-101, et seq. – Misappropriation of Trade Secrets – By Plaintiff
UKnight Against Defendant Knights of Columbus and Matthew St. John)
107.

Plaintiff incorporates all of the allegations in this Complaint as if fully rewritten

108.

Plaintiff UKnight developed extensive trade secrets consisting of their platform's

herein.

relational architecture, database relationships, information flow scheme, and the programming
and code underpinning these elements of the platform's software, as well as the related hardware
architecture design developed specifically to meet the unique needs of the Knights of Columbus
organization over a period of over 8 years. These designs, technical information, processes,
procedures, and architecture constitute protected trade secrets within the meaning of C.R.S. § 774-102.
109.

Plaintiff made reasonable commercial efforts under the circumstances to maintain

the secrecy of these trade secrets, including (1) advising all partners within UKnight that this
information constitutes trade secrets; (2) access to these trade secrets was strictly limited on a
need-to-know basis with access limited exclusively to UKnight member and technology manager
and designer Terry Clark and to his assistant Jim Goode who was required to sign a binding nondisclosure agreement before being given access to this information; (3) access to the computer
systems containing the trade secrets was controlled by secure login and password known only to
Mr. Clark. Additionally, Plaintiff’s trade secrets are novel, not generally known, and cannot be
ascertained or reverse engineered without tremendous effort, expertise, and expense. This is
demonstrated by the fact that no other vendor was able to offer to KC Supreme a comparably
capable system even at double the price, and ultimately KC Supreme chose to steal Plaintiff’s

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trade secrets rather than attempt to develop their own system or reverse engineer Plaintiff’s from
the publicly viewable façade of the system.
110.

Plaintiff’s trade secrets have economic value in excess of $1 million, as

demonstrated (1) by the fact that it took approximately 8 years of effort by UKnight’s three
partners to develop the trade secrets, including nearly full-time technical development by Mr.
Clark over that time; and (2) these trade secrets granted UKnight substantial competitive
advantage in the field, as shown by KC Supreme’s immediate interest in their system and later
KC Supreme’s extraordinary efforts to steal these trade secrets rather than simply develop a
comparable system on its own.
111.

As stated in detail in Paragraphs 64-83, above, KC Supreme and Matthew St.

John knowingly, intentionally, fraudulently, and maliciously acquired Plaintiff’s trade secrets by
improper means and disclosed those improperly acquired trade secrets to a third-party without
any consent from Plaintiff. Defendants’ improper means included, but were not limited to, theft,
bribery, misrepresentation, and breach of a duty to UKnight to maintain secrecy.
112.

As a direct result of this misappropriation, Plaintiff suffered damages in an

amount to be proven at trial.
WHEREFORE, Plaintiff seeks relief as set forth at the end of this Complaint.

FIFTH CLAIM FOR RELIEF
(Intentional Interference with Prospective Business Relations – By Plaintiff UKnight
Against Defendant KC Supreme)
113.

Plaintiffs incorporate all of the allegations in this Complaint as if fully rewritten

herein.

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114.

As a result of KC Supreme’s contract with and promises made to UKnight, KC

Supreme knew that UKnight had a reasonable expectation of entering into subscription business
relationships with a high percentage of Knights of Columbus local councils, assemblies, and
general agents. In fact, Mr. St. John told Mr. Labriola that he expected “you’re going to get . . .
85% [of all councils].”
115.

Defendant KC Supreme intentionally and improperly interfered with these

prospective business relationships of UKnight by, among other things:

116.

a.

Inducing or otherwise causing the local councils, assemblies, and
general agents to not subscribe to the UKnight system by defaming
UKnight and Mr. Labriola;

b.

Inducing or otherwise causing the local councils, assemblies, and
general agents to not subscribe to the UKnight system by
unreasonably and fraudulently postponing the announcement of
UKnight as the designated vendor repeatedly over a period of four
years;

c.

Preventing UKnight from acquiring the prospective subscribers by
falsely and wrongfully telling UKnight it was not an approved
vendor for the Knights of Columbus, and falsely and wrongfully
telling UKnight that it was not permitted or licensed to use the
Knights of Columbus name in delivering its system to any new
Knights of Columbus subscribers;

d.

Stealing UKnight’s trade secrets and engaging a third-party
developer to create a copy of that system that KC Supreme would
own so that it could provide these services directly in lieu of
UKnight.

These wrongful and intentional actions induced 10,000 or more councils,

assemblies and general agents to not subscribe to the UKnight platform, causing economic
damages to UKnight in an amount to be proven at trial.
WHEREFORE, Plaintiff seeks relief as set forth at the end of this Complaint.

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SIXTH CLAIM FOR RELIEF
(Fraudulent Misrepresentation – By Plaintiff UKnight Against Defendant KC Supreme)
117.

Plaintiffs incorporate all of the allegations in this Complaint as if fully rewritten

118.

Defendant made false representation of past or present facts to UKnight, including

herein.

those listed in Paragraphs 78-83, above.
119.

Defendant additionally made fraudulent statements of future intention or promise

despite knowing that it did not intend to keep the promise or did not intend to take the action
promised in the future at the time the statement(s) were made, including those listed in Paragraph
103, above.
120.

Each of these fraudulent statements concerned a material fact, as a reasonable

person under the circumstances would have regarded each of them as important in making
business decisions and deciding on UKnight’s future course of action.
121.

Each of these fraudulent statements was made by an employee, officer, or director

of KC Supreme acting within the scope of their employment by Defendant. Accordingly,
Defendant is responsible for these statements.
122.

At the time each of the above misrepresentations was made, the Defendant knew

that it was false or was aware that it did not know whether the representation was true or false.
Defendant KC Supreme made each of the above representations with the intent that Plaintiff
would rely on them to its detriment, and to the benefit of KC Supreme.
123.

Plaintiff in fact relied upon these representation by taking actions it would not

have otherwise taken, or not taking actions it would have otherwise taken, as stated in this
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Complaint. Plaintiff’s reliance on each of these misrepresentations was reasonable and justified
under the circumstances.
124.

Plaintiff’s reliance on each of these misrepresentations directly and proximately

caused it economic damages, including lost revenues and profits, the economic burden of
accepting delays without seeking other business in order to focus on serving the Knights of
Columbus, the refusal of outside work and the business decision to not seek other clients, and
other economic damages in an amount to be proven at trial.
WHEREFORE, Plaintiff seeks relief as set forth at the end of this Complaint.

SEVENTH CLAIM FOR RELIEF
(Negligent Misrepresentation – By Plaintiff UKnight Against Defendant KC Supreme)
125.

Plaintiffs incorporate all of the allegations in this Complaint as if fully rewritten

126.

Defendant, in the course of its business and in regards to a transaction in which it

herein.

had a pecuniary interest, supplied false information for the guidance of Plaintiff in this business
transaction, including the information contained in the statements listed at Paragraphs 79-83, and
103, above.
127.

Each of these false statements was made by an employee, officer, or director of

KC Supreme acting within the scope of their employment by Defendant. Accordingly,
Defendant is responsible for these statements. Defendant failed to exercise reasonable care as to
the truth and accuracy of each of these statements in communicating them to Plaintiff.
128.

Plaintiff reasonably and justifiably relied on this information to its detriment as

stated in this Complaint.
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129.

Plaintiff’s reliance on each of these misrepresentations directly and proximately

caused it economic damages, including lost revenues and profits, the economic burden of
accepting delays without seeking other business in order to focus on serving the Knights of
Columbus, the refusal of outside work and the business decision to not seek other clients, and
other economic damages in an amount to be proven at trial.
WHEREFORE, Plaintiff seeks relief as set forth at the end of this Complaint.

EIGHTH CLAIM FOR RELIEF
(Defamation – Slander Per Quod – By Plaintiffs UKnight and Leonard Labriola against
Defendants Thomas Smith and Knights of Columbus)
130.

Plaintiffs incorporate all of the allegations in this Complaint as if fully rewritten

131.

On January 24, 2014, in a meeting with the KC Supreme Operations Committee

herein.

in New Haven, Connecticut, Defendant Thomas Smith told the committed that Mr. Labriola had
lied to him and to his insurance agents about money. This statement was false when made, and
Mr. Smith knew it to be false when made. Indeed, Mr. Smith made this statement with the intent
of defaming Mr. Labriola and UKnight to prevent KC Supreme from adopting the UKnight
system, which would have inevitably uncovered Defendants’ fraudulent scheme as outlined in
this Complaint.
132.

Defendant Thomas Smith made this statement both in his individual capacity and

on behalf of Defendant KC Supreme as he was speaking within the scope of his duties as its
officer.

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133.

The statement was defamatory because it harmed Mr. Labriola’s and UKnight’s

reputation in the estimation of at least a substantial and respectable minority of the potential
subscriber base for UKnight, including state and local councils, assemblies, and insurance
agents.
134.

Because this defamatory statement poisoned the relationship between Mr.

Labriola and UKnight and many of its prospective customers causing them to not subscribe to
the UKnight system, its publication directly and proximately caused monetary damages to
Plaintiffs in an amount to be proven at trial.
WHEREFORE, Plaintiffs seek relief as set forth at the end of this Complaint.

RELIEF REQUESTED
WHEREFORE, Plaintiffs request judgment in their favor, and against Defendants, jointly
and severally, as follows:
A.

Economic damages to Plaintiffs in an amount to be proven at trial;

B.

Treble damages on Plaintiff’s civil RICO claim pursuant to 18
U.S.C. § 1964;

C.

Statutory damages on Plaintiff’s misappropriation of trade secrets
claim pursuant to C.R.S. § 7-74-104(2);

D.

Reasonable attorney’s fees pursuant to 18 U.S.C. § 1964(c), and
C.R.S. § 7-74-105;

E.

Costs of suit and pre- and post-judgment interest at the highest
allowable legal rates; and

F.

Such other and further relief as the Court deems just and proper.

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DEMAND FOR JURY TRIAL
Plaintiffs hereby demand a trial by jury on all issues so triable.
Dated: January 24, 2017.
/s/ Jeffrey S. Vail
______________________________
Jeffrey S. Vail
VAIL LAW LLC
5299 DTC Blvd., Suite 1101
Greenwood Village, CO 80111
Tel/Fax: (303) 800-8237
E-mail: jvail@vail-law.com
ATTORNEY FOR PLAINTIFFS
Plaintiffs’ Address:
List Interactive, Ltd.
1434 Spruce St., #100
Boulder, Colorado 80302
Leonard S. Labriola
179 Salina St.
Lafayette, Colorado 80026

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