SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF RICHMOND

FRANK DAMATO,

Index No. ______/2013

Plaintiff,
VERIFIED COMPLAINT
- against -

STUART SIMONSEN and SOREN NIELS

MANAGEMENT, LLC
Defendants.

Plaintiff Frank DAmato, for his Complaint against Defendants Stuart Simonsen and
Soren Niels Management LLC, a Montana limited liability company, alleges as follows:
INTRODUCTION
1.

Plaintiff Frank DAmato (DAmato) brings these claims against Defendants to

recover amounts equal to or in excess of $1,200,000 that Defendants solicited and induced
DAmato to transfer to Defendants control, purportedly to purchase a 1.5% capital interest and a
preferred interest in Axiodyn Capital Partners LLC from Defendant Simonsen in exchange for a
perpetual interest of five percent (5%) in any future revenue derived by Defendant Simonsen
from his computer trading systems and know-how, whether or not captured in algorithms,
databases and software programs (the Simonsen Intellectual Property), both already in
existence or created in the future.
2.

By and through these claims, and in addition to the recovery of the money which

Defendants solicited and induced DAmato to transfer to their control, DAmato also seeks to
recover accrued and unpaid interest, punitive damages, expenses, attorneys fees, costs, and any
other relief the Court deems proper.

PARTIES
3.

Plaintiff Frank DAmato is an individual who resides in the County of Richmond,

State of New York.

4.

Defendant Stuart Simonsen is an individual who resides in the State of Montana

at 865 Paintbrush Place, Billings Montana 59106.

5.

Upon information and belief that Defendant Soren Niels Management, LLC

(Soren Niels) is a Montana limited liability company, with a business address of 865
Paintbrush Place, Billings, Montana 59106, whose sole member and manager is Defendant
Simonsen.
6.

Upon information and belief, Defendant Simonsen controls Defendant Soren

Niels, which is an alter ego for Defendant Simonsen.

FACTUAL ALLEGATIONS
7.

In 2009, Plaintiff DAmato became acquainted with Defendant Simonsen through

a mutual friend, Tony Birbilis (Birbilis).

8.

In the course of discussions in the summer and fall of 2009, Defendant Simonsen

represented to plaintiff and others that he was engaged in the computerized trading of
commodities and securities and in managing and advising firms engaged in that segment of the
securities business; as a result of this work, he claimed to have developed successful trading
strategies.
9.

Defendant Simonsen advised Plaintiff that he had formed one or more entities for

the purpose of trading based upon his strategies and ideas, and had brought in other investors to
purchase ownership interests in such entities on the promise of future profits from trading
strategies.

10.

Axiodyn Capital Partners LLC (Axiodyn) is a Delaware limited liability

company formed by Simonsen in the State of Delaware on or about December 9, 2008. The
founding members of Axiodyn included Simonsen, Birbilis, Simon Posen (Posen) and Betra
Trading S.A. (Betra). Axiodyn became qualified to do business in the State of New York on
May 20, 2009.
11.

Upon information and belief, the business of Axiodyn was to act as an investment

manager for certain Axiodyn investment funds which were to execute trading strategies using a
subset of the Simonsen Intellectual Property known as the Jarvis Trader trading platform, a
black box computer trading system, and all the related commentary, documentation, trading
models, trading strategies, and algorithms.
12.

On May 15, 2009, the Axiodyn members executed an operating agreement for

Axiodyn, which allocated a 40% capital interest to Defendant Simonsen, with Birbilis, Posen and
Betra each receiving a 20% capital interest.
13.

Upon information and belief, Defendant Simonsen was to contribute, on an

exclusive basis, his know-how and computer trading platform and related trading strategies and
algorithms to Axiodyn as partial consideration for his membership interest.
14.

Upon information and belief, Defendant Simonsen promised that, on behalf of

Axiodyn, he was going to develop additional software based on his valuable proprietary
strategies and ideas about trading.
15.

Upon information and belief, Defendant Simonsen promised that he would create

a database of the software, algorithms and trading strategies developed for Axiodyn.
16.

On May 15, 2009, Defendant Simonsen assigned all of his right, title and interest

in the Jarvis Trader trading platform, including all related trading models, trading strategies,

algorithms, source code, commentary and documentation (the Axiodyn Intellectual Property)
to Axiodyn to be used in its capacity as investment manager of the Axiodyn funds.
17.

In Section 10.3 of the Axiodyn operating agreement, Simonsen confirmed that the

Intellectual Property defined in the assignment is the sole property of [Axiodyn] and that no
Member has any personal ownership in such Intellectual Property. This Section further restricts
any member, including Simonsen, from, among other things, publishing, divulging,
communicating, or making available the Axiodyn Intellectual Property to any person, except in
furtherance of Axiodyns business.
18.

In or about June 2012, Plaintiff DAmato became interested in the possibility of

placing funds under management by Axiodyn as well as in purchasing an equity interest in

Axiodyn.
19.

Plaintiff DAmato met with Defendant Simonsen in the State of New York on

multiple occasions to discuss the purchase.

20.

In or about June 22-25, 2009, DAmato, Defendant Simonsen, and Birbilis met at

the New York office of R.J. OBrien & Associates, 1 North End Avenue, New York, New York.
During these meetings, Simonsen solicited DAmato to invest money in the funds managed by
Axiodyn as well as purchase an equity interest in the company.
21.

Discussions between Simonsen and DAmato continued during the summer of

2009 and continued into the fall of 2009. During these meetings, Simonsen represented to
DAmato that Axiodyn was the owner of the Jarvis Trader trading platform and had exclusive
rights to trade using the software and its proprietary algorithms, which was critical to Axiodyns
success and distinguished Axiodyn from other investment funds.

22.

On July 27, 2009 DAmato wired $500,000 to Axiodyn to be invested on his

behalf in one of the investment funds managed by Axiodyn.

23.

In or about late August 2009, R.J. OBrien & Associates, which is headquartered

in Chicago, Illinois, contacted Axiodyn and expressed an interest in utilizing the Jarvis Trader
platform as a trade execution platform.
24.

Based upon Simonsens representations regarding Axiodyns ownership and

exclusive access to the Jarvis Trader trading platform and all related formulae, algorithms and
trading strategies, DAmato agreed to make a $1 million equity investment in Axiodyn acquiring
1.5% of Defendant Simonsens remaining 38% capital interest. Because DAmato was investing
such a large sum of money, he sought additional security on his investment. Thus, the parties
negotiations of the terms of the purchase continued.
25.

Meanwhile, the other members of Axiodyn began preparing the appropriate

documentation to consent to DAmato becoming a member of the LLC. On or about October 8,

2009, the members of Axiodyn consented to DAmatos purchase of the 1.5% capital interest
from Simonsen and to DAmatos becoming a member of the LLC. No written agreement
between Simonsen and DAmato detailing the terms of the purchase had yet been memorialized,
however, though the Axiodyn operating agreement itself confirms key representations made by
Simonsen.

Section 10.3 of Axiodyn operating agreement, for example, confirms that the

Axiodyn Intellectual Property, which is described in Simonsens assignment to Axiodyn, is the

sole property of [Axiodyn] and that no Member has any personal ownership in such Intellectual
Property. This provision also provides that the Axiodyn Intellectual Property shall not be
published, divulged, communicated, or made available to any person, except in furtherance of
Axiodyns business.

26.

On October 15, 2009, in anticipation of signing a definitive agreement covering

the specific terms of the purchase, DAmato wired $1,000,000 through Yellowstone Bank in
Laurel Montana to Soren Niels Management on behalf of Defendant Simonsen, to fund his
purchase of an equity interest in Axiodyn.
27.

On October 21, 2009, Simonsen returned to New York City and had lunch with

DAmato.

At this lunch DAmato and Simonsen worked out the balance of the terms of

DAmatos purchase. In exchange for the $1,000,000 purchase price, DAmato received the
1.5% equity interest in Axiodyn, and to serve as further security for the investment, Simonsen
promised DAmato a perpetual interest, of at least five percent (5%), in any securities tradingrelated business undertaken by Simonson outside of Axiodyn (collectively, the DAmato
Preferred Interest).
28.

While the parties orally agreed to the terms of the agreement, it had yet to be

memorialized in writing.
29.

In or about June 2010, at a point in time during which Axiodyn required

additional funding, Simonsen solicited DAmato to advance an additional $200,000 to Axiodyn.

DAmato agreed to do so, provided that Simonsen documented DAmatos ownership interest in
the Simonsen Preferred Interest. DAmato in fact advanced the additional $200,000 in funds, yet
Simonsen failed and refused to document the Simonsen Preferred Interest.
30.

Upon information and belief, in the summer of 2011, the business of Axiodyn

failed, and Axiodyn began to wind down operations.

31.

Although Axiodyn exists as an entity, it no longer conducts business.

32.

Axiodyn lacks sufficient funds to make distributions to investors or members.

33.

Plaintiff DAmato recently learned that, at the same time that Simonsen was

making representations to DAmato that the Jarvis Trader trading platform and all related
formulae, algorithms and trading strategies had been assigned to Axiodyn on an exclusive basis
(Section 10.3 of the Axiodyn Operating Agreement expressly providing that Axiodyn has sole
ownership and no member has any personal property interest), Defendant Simonsen, upon
information and belief, was engaged in selling, licensing, and using the Axiodyn Intellectual
Property, including the Jarvis Trader trading platform, for his own personal gain to others.
34.

Upon information and belief, Simonsen, among other things:

a.

used the Axiodyn Intellectual Property for the personal benefit of

Simonsen in executing trading strategies for the Krohne Fund, L.P., which
has sued Simonsen in federal court in Montana for securities fraud, breach
of contract, and other wrongs, in the action captioned, Krohne Fund, L.P.
v. Simonsen, Civil Action No.12-cv-00004 (D. Mont.);

b.

made some or all of the Axiodyn Intellectual Property available to

Kapidiya Partners, LLC, the entity through which Simonsens dealings
with the Krohne Fund L.P. occurred, and a named defendant in Krohne
Fund, L.P. v. Simonsen, Civil Action No.12-cv-00004 (D. Mont.);

c.

sought to employ parts of the Axiodyn Intellectual Property to trade on the

Korea Composite Stock Price Index (KOSPI) through one or more entities
or vehicles created by Simonsen for that purpose;

d.

granted another individual, Elisha Rothman, a security interest in the

Simonsen Intellectual Property, which encompassed the Axiodyn
Intellectual Property; and

e.

purported to license some or all of the Axiodyn Intellectual Property to

Transcend Investments LLC, which has sued Simonsen in the action
captioned, Transcend Investments LLC v. Simonsen, Civil Action No. 12cv-0403312 (N.D. Ill.) (the Transcend Litigation) for breach of contract,
breach of fiduciary duty, and unjust enrichment, in regard to trading
strategies utilizing all or part of the Axiodyn Intellectual Property.

35.

The complaint in the Transcend Litigation, which was filed on May 23, 2012,

disclosed to DAmato that on August 1, 2009 Transcend entered into a license agreement with
Simonsen for use of his computer trading software, and subsequently funded an account that
Simonsen managed, on behalf of Transcend, by utilizing the licensed computer trading software
to trade futures. The complaint in the Transcend Litigation further alleges that the licensing
agreement required Transcend to pay Simonsen a monthly fee equal to fifty percent (50%) of the
net profits earned by Transcend each month from Simonsens trading through the licensed
software.
36.

Upon information and belief, the intellectual property which Simonsen licensed to

Transcend consisted of the Axiodyn Intellectual Property, in whole or in part and, therefore, such
assignment to Transcend violated Section 10.3 of the Axiodyn Operating Agreement. Upon
information and belief, this assignment to Transcend took place before Simonsen entered into the
agreement with Plaintiff DAmato in October of 2009, as part of which Simonsen represented to
DAmato that Axiodyn owned and had exclusive rights to use the Jarvis Trader trading platform
and DAmato would receive a perpetual interest in all income Simonsen received from the sale
and from the license or use of Simonsen Intellectual Property outside of Axiodyn.

37.

Upon information and belief, Simonsen, in violation of Section 10.3 of the

Axiodyn Operating Agreement, has used and licensed the Axiodyn Intellectual Property for his
personal benefit and, in violation of his agreement with DAmato, has failed to provide DAmato
with an interest in the income derived from these transactions.
38.

Upon information and belief, Simonsen has created, sold, and licensed Simonsen

Intellectual Property outside of Axiodyn and, in violation of his express agreement with
DAmato, has failed to provide DAmato with an interest in the income derived from these
transactions.
39.

Defendant Soren Niels has breached its fiduciary obligation to ensure the proper

treatment and handling of plaintiff DAmatos funds, and instead has permitted DAmatos funds
to be dissipated without any benefit to plaintiff DAmato and with no accounting or reporting of
the treatment of expenditures.
40.

Plaintiff DAmato has fully performed by paying $1,000,000 to Defendant

Simonsen for his equity interest in Axiodyn and $100,000 for the DAmato Preferred Interest.
41.

In addition to the conduct alleged above, Defendant Simonsen also has breached

his contractual and fiduciary obligations, and his duty to deal in good faith with DAmato, by
failing and refusing to memorialize the agreement between DAmato and Defendant pertaining
to the perpetual interest in the Simonsen Intellectual Property DAmato was to receive as a result
of his purchase of the 1.5% interest in Axiodyn and the DAmato Preferred Interest.
FIRST COUNT
Breach of Contract
(As to DAmatos purchase of the 1.5% interest in Axiodyn)
42.

Plaintiff DAmato re-alleges and incorporates by reference the preceding

paragraphs of this Complaint as if again set forth in full.

43.

Simonsen, individually and through his alter ego Soren Niels, entered into a valid

and binding contract with DAmato in October of 2009.

44.

Simonsen represented to DAmato that, for a purchase price of $1,000,000,

DAmato would receive a 1.5% share of Simonsens capital interest in Axiodyn and a percentage
of the income Simonsen derived from the Simonsen Intellectual Property as used outside of
Axiodyn.
45.

In reliance upon Simonsens representations as to the terms of their agreement,

DAmato transferred $1,000,000 to Simonsen, through the care of Soren Niels, as acceptance of
Simonsens offer, thereby providing consideration and forming a valid and legally binding
contract requiring Simonsen to pay DAmato a percentage of future income derived from the
Simonsen Intellectual Property as used outside of Axiodyn.
46.

Simonsen, individually and through his alter ego Soren Niels, breached the terms

of the agreement formed by DAmatos acceptance, requiring payment of income to DAmato

from October 2009 to the present.
47.

Simonsen has failed and refused to make payment to DAmato in respect of the

income derived from the Simonsen Intellectual Property.

48.

The breach of contract by Simonsen and Soren Niels has caused Plaintiff to suffer

immense economic loss in an amount to be determined at trial but that is believed to exceed
$1,000,000 plus accrued or unpaid interest.
SECOND COUNT
Breach of the Implied Covenant of Good Faith and Fair Dealing
(As to DAmatos purchase of the 1.5% interest in Axiodyn)
49.

Plaintiff DAmato re-alleges and incorporates by reference the preceding

paragraphs of this Complaint as if again set forth in full.

10

50.

Simonsen, individually and through his alter ego Soren Niels, entered into a

contract with Plaintiff DAmato that required him to pay DAmato a percentage of the income
derived from the Simonsen Intellectual Property as used outside of Axiodyn as consideration for
DAmatos purchase of a 1.5% interest in Axiodyn.
51.

Simonsen attempted to change the terms of the contract after DAmato had

accepted Simonsens offer, and acted in bad faith.

52.

Among other things, Simonsen has:

a.

failed to memorialize his agreement with DAmato with respect to the

interest in the Simonsen Intellectual Property,

b.

continually changed his view on the scope and breadth of the interest
DAmato is to receive in the Simonsen Intellectual Property income.

c.

failed to provide DAmato with any income from the Simonsen

Intellectual Property since DAmatos payment of valuable consideration
in the amount of $1,000,000 in October of 2009.

53.

As a result of Simonsens bad faith DAmato has failed to receive the fruits of the

agreement, for which he bargained and reasonably expected, including any return on his
investment of $1,000,000.
54.

By reason of the foregoing, Simonsen, individually and through his alter ego

Soren Niels, has breached the covenant of good faith and fair dealing implied within the
DAmato agreement.

11

THIRD COUNT
Misrepresentation
(As to DAmatos purchase of the 1.5% interest in Axiodyn)
55.

Plaintiff DAmato re-alleges and incorporates by reference the preceding

paragraphs of this Complaint as if again set forth in full.

56.

Simonsen, individually and through his alter ego Soren Niels, entered into a

binding agreement with Plaintiff DAmato by which DAmato would purchase a 1.5% interest in
Axiodyn for $1,000,000 and Simonsen, in return, would provide DAmato with a perpetual
interest in all income Simonsen earned for the sale, license or use of the Simonsen Intellectual
Property outside of Axiodyn.
57.

Simonsen induced DAmato to transfer $1,000,000 to Soren Niels and

Simonsens control pursuant to the contract between the parties.

58.

At a minimum, Simonsen misstated what DAmato would receive in return for his

$1,000,000 investment. Simonsen represented that DAmato would receive a 1.5% capital
interest in Axiodyn, which owned and exclusively used the Jarvis Trader trading platform, and as
an assurance on the investment DAmato would also receive a percentage of the future income
Simonsen derived from the Simonsen Intellectual Property, as used outside of Axiodyn. Upon
information and belief, at the time of his agreement with DAmato, Simonsen had already begun
to use and license the Axiodyn Intellectual Property, including the Jarvis Trader trading
platform, for his own personal benefit in violation of Section 10.3 of the Axiodyn Operating
Agreement and in direct contravention to the representations made to DAmato about Axiodyn.
More particularly, at the time of his representations to DAmato in the summer and fall of 2009,
Simonsen failed to disclose that he had

12

a.

used the Axiodyn Intellectual Property for the personal benefit of

Simonsen in executing trading strategies for the Krohne Fund, L.P., which
has sued Simonsen in federal court in Montana for securities fraud, breach
of contract, and other wrongs, in the action captioned, Krohne Fund, L.P.
v. Simonsen, Civil Action No.12-cv-00004 (D. Mont.);

b.

made some or all of the Axiodyn Intellectual Property available to

Kapidiya Partners, LLC, the entity through which Simonsens dealings
with the Krohne Fund L.P. occurred, and a named defendant in Krohne
Fund, L.P. v. Simonsen, Civil Action No.12-cv-00004 (D. Mont.);

c.

sought to employ parts of the Axiodyn Intellectual Property to trade on the

Korea Composite Stock Price Index (KOSPI) through one or more entities
or vehicles created by Simonsen for that purpose;

d.

granted another individual, Elisha Rothman, a security interest in the

Simonsen Intellectual Property, which encompassed the Axiodyn
Intellectual Property; and

e.

purported to license some or all of the Axiodyn Intellectual Property to

Transcend Investments LLC, which has sued Simonsen in the action
captioned, Transcend Investments LLC v. Simonsen, Civil Action No. 12cv-0403312 (N.D. Ill.) (the Transcend Litigation) for breach of contract,
breach of fiduciary duty, and unjust enrichment, in regard to trading
strategies utilizing all or part of the Axiodyn Intellectual Property.

59.

Simonsen has continued to use, license and profit from the Axiodyn Intellectual

Property outside of Axiodyn, despite the express language of the Axiodyn Operating Agreement

13

and his representations to Plaintiff DAmato, and has failed to provide DAmato with any
percentage of the income derived from these transactions. Simonsen has further engaged in the
sale and license of other Simonsen Intellectual Property for his own personal benefit and failed
to provide DAmato an interest in the income he has derived.
60.

The foregoing misrepresentations were material to the valid and binding contract

between Simonsen and DAmato, because DAmato was induced to enter into the agreement
under the mistaken belief that Axiodyn had exclusive use of the Jarvis Trader trading platform,
which was the key to its profitability, and he believed his investment to nonetheless be protected
by the interest he was to receive in the Simonsen Intellectual Property as used by Simonsen in
any and every other venture outside of Axiodyn.
61.

DAmato reasonably relied upon the foregoing material misrepresentations when

he entered into the valid and binding contract between the parties.
62.

Simonsen, individually and through his alter ego Soren Niels, knew or should

have known that DAmato would rely upon the foregoing misrepresentations.
63.

Because DAmato reasonably relied upon Simonsens foregoing material

misrepresentations when entering into the valid and binding contract between the parties,
DAmato seeks rescission of the contract and return of his $1,000,000.
FOURTH COUNT
Unjust Enrichment
(As to DAmatos purchase of the 1.5% interest in Axiodyn )
(Pleaded in the Alternative to the First Count)
64.

Plaintiff DAmato re-alleges and incorporates by paragraphs 1 through 41 of this

Complaint as if again set forth in full.

65.

Defendants Simonsen and Soren Niels accepted $1,000,000 from Plaintiff

DAmato.

14

66.

Defendants Simonsen and Soren Niels have retained such amount and thereby

have been unjustly enriched because Simonsen and Soren Niels have failed to pay DAmato any
income derived from the Simonsen Intellectual Property.
67.

By reason of the foregoing, Simonsen and Soren Niels have been unjustly

enriched by retaining DAmatos $1,000,000 and failing to provide DAmato with any Simonsen
Intellectual Property income.
FIFTH COUNT
Quantum Meruit
(As to DAmatos purchase of the 1.5% interest in Axiodyn)
(Pleaded in the Alternative to the First Count)
68.

Plaintiff DAmato re-alleges and incorporates by paragraphs 1 through 41 of this

Complaint as if again set forth in full.

69.

Defendant Simonsen, individually and through his alter ego Soren Niels, induced

DAmato transfer $1,000,000 to the control of Simonsen and Soren Niels; in other words,
DAmato reasonably changed his position to his detriment based upon the statements,
inducements and representations made by Simonsen.
70.

In connection with and as a result of the foregoing:

a.

DAmato transferred $1,000,000 to Simonsen and Soren Niels in good

faith;

b.

Simonsen and Soren Niels accepted DAmatos $1,000,000;

c.

DAmato reasonably expected compensation in the form of a percentage

of the income Simonsen derived from the Simonsen Intellectual Property
in return for his payment of $1,000,000;

d.

DAmato is entitled to return of his $1,000,000.

15

71.

By reason of the foregoing, Simonsen and Soren Niels are liable to DAmato

under the theory of quantum meruit.

SIXTH COUNT
Breach of Fiduciary Duty
(As to DAmatos purchase of the 1.5% interest in Axiodyn)
(Pleaded in the Alternative to the First Count)
72.

Plaintiff DAmato re-alleges and incorporates by paragraphs 1 through 41 of this

Complaint as if again set forth in full.

73.

Simonsen, individually and through the use of his alter ego Soren Niels, induced

DAmato to entrust Soren Niels with $1,000,000 as payment for DAmatos purchase of a 1.5%
capital interest in Axiodyn and a percentage of the income derived from the Simonsen
Intellectual Property as used outside of Axiodyn.
74.

Defendant Soren Niels breached its fiduciary obligation to ensure the proper

treatment and handling of plaintiff DAmatos funds, and instead has permitted DAmatos funds
to be spent without any benefit to plaintiff DAmato and with no accounting or reporting of the
treatment of expenditures.
75.

Soren Niels, through its alter ego Simonsen, breached its fiduciary duty owing to

DAmato and DAmato has been damaged in the amount to be proven at trial and known to
exceed the $1,000,000 transferred to Soren Niels exclusive control.
SEVENTH COUNT
Breach of Contract
(As to the DAmato Preferred Interest)
76.

Plaintiff DAmato re-alleges and incorporates by paragraphs 1 through 41 of this

Complaint as if again set forth in full.

16

77.

Simonsen, individually and through his alter ego Soren Niels, entered into a valid

and binding contract with DAmato in June of 2010 for the purchase of the DAmato Preferred
Interest.
78.

Simonsen represented to DAmato that for a purchase price of $200,000 DAmato

would receive a five percent (5%) interest in the income Simonsen derived from the Simonsen
Intellectual Property as used outside of Axiodyn.
79.

In reliance upon Simonsens representations as to the terms of their agreement,

DAmato transferred $200,000 to Simonsen, through the care of Soren Niels, as acceptance of
Simonsens offer, thereby providing consideration and forming a valid and legally binding
contract requiring Simonsen to pay DAmato a five percent (5%) interest in the future income
derived from the Simonsen Intellectual Property as used outside of Axiodyn.
80.

Simonsen, individually and through his alter ego Soren Niels, breached the terms

of the agreement formed by DAmatos acceptance requiring payment of income to DAmato

from June 2010 to the present.
81.

DAmato has received no payments from Simonsen for income derived from the

Simonsen Intellectual Property.

82.

The breach of contract by Simonsen and Soren Niels has caused Plaintiff to suffer

economic loss in an amount to be determined at trial but that is believed to exceed $200,000 plus
accrued or unpaid interest.
EIGHT COUNT
Breach of the Implied Covenant of Good Faith and Fair Dealing
(As to the DAmato Preferred Interest)
83.

Plaintiff DAmato re-alleges and incorporates by reference the preceding

paragraphs of this Complaint as if again set forth in full.

17

84.

Simonsen, individually and through his alter ego Soren Niels, entered into a

contract with Plaintiff DAmato that required him to pay DAmato a five percent (5%) interest in
the income derived from the Simonsen Intellectual Property as used outside of Axiodyn as
consideration for DAmatos $200,000 purchase of the DAmato Preferred Interest.
85.

Simonsen attempted to change the terms of the contract after DAmato had

accepted Simonsens offer, and acted in bad faith.

86.

Among other things, Simonsen has:

d.

failed to memorialize his agreement with DAmato with respect to the

interest in the Simonsen Intellectual Property,

e.

continually changed his view on the scope and breadth of the interest
DAmato is to receive in the Simonsen Intellectual Property income.

f.

failed to provide DAmato with any income from the Simonsen

Intellectual Property since DAmatos payment of valuable consideration
in the amount of $200,000 in June of 2010.

87.

As a result of Simonsens bad faith DAmato has not received the fruits of the

agreement, for which he bargained and reasonably expected to receive, including any return on
his investment of $200,000.
88.

By reason of the foregoing, Simonsen, individually and through his alter ego

Soren Niels, has breached the covenant of good faith and fair dealing implied within the
DAmato agreement.

18

NINETH COUNT
Misrepresentation
(As to the DAmato Preferred Interest)
89.

Plaintiff DAmato re-alleges and incorporates by reference the preceding

paragraphs of this Complaint as if again set forth in full.

90.

Simonsen, individually and through his alter ego Soren Niels, entered into a

binding agreement with Plaintiff DAmato by which DAmato paid $200,000 to purchase a
preferred interest in Axiodyn and in return Defendant Simonsen would provide DAmato with a
perpetual five percent (5%) interest in all income Simonsen earned for the sale, license or use of
the Simonsen Intellectual Property outside of Axiodyn.
91.

Simonsen induced DAmato to transfer $200,000 to Soren Niels and Simonsens

control pursuant to the contract between the parties.

92.

Simonsen misrepresented to DAmato and the other Axiodyn members that more

capital was required to maintain and continue to build the Jarvis Trader trading platform, which
was the exclusive property of Axiodyn. In an effort to raise the additional capital Defendant
Simonsen solicited funds from DAmato who agreed to purchase a preferred interest for
$200,000, believing the funds to be necessary to the success of the Jarvis Trader trading
platform. Upon information and belief, Defendant Simonsen had already begun to license and
use the Jarvis Trader trading platform and other elements of the Axiodyn Intellectual Property
for his own personal benefit and did not invest the capital raised by the sale of the preferred
interest to perfect the Jarvis platform, but rather used the funds for his own personal benefit.
93.

The foregoing misrepresentations were material to the valid and binding contract

between Simonsen and DAmato, because DAmato was induced to purchase the preferred
interest under the mistaken belief that additional capital was required to ensure Axiodyns

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successful use of the Jarvis Trader trading platform, which was considered imperative to
Axiodyns profitability.
94.

DAmato reasonably relied upon the foregoing material misrepresentations when

he entered into the valid and binding contract between the parties for purchase of the DAmato
Preferred Interest.
95.

Simonsen, individually and through his alter ego Soren Niels, knew or should

have known that DAmato would rely upon the foregoing misrepresentations.
96.

Because DAmato reasonably relied upon Simonsens foregoing material

misrepresentations when entering into the valid and binding contract between the parties,
DAmato seeks rescission of the contract and return of his $200,000.
TENTH COUNT
Unjust Enrichment
(As to the DAmato Preferred Interest)
(Pleaded in the Alternative to the Seventh Count)
97.

Plaintiff DAmato re-alleges and incorporates by paragraphs 1 through 41 of this

Complaint as if again set forth in full.

98.

Defendants Simonsen and Soren Niels accepted $200,000 from Plaintiff

DAmato.
99.

Defendants Simonsen and Soren Niels have retained such amount and thereby

have been unjustly enriched because Simonsen and Soren Niels have failed to pay DAmato any
income derived from the Simonsen Intellectual Property.
100.

By reason of the foregoing, Simonsen and Soren Niels have been unjustly

enriched by retaining DAmatos $200,000 and failing to provide DAmato with any Simonsen
Intellectual Property income.

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ELEVENTH COUNT
Quantum Meruit
(As to the DAmato Preferred Interest)
(Pleaded in the Alternative to the Seventh Count)
101.

Plaintiff DAmato re-alleges and incorporates by paragraphs 1 through 41 of this

Complaint as if again set forth in full.

102.

Defendant Simonsen, individually and through his alter ego Soren Niels, induced

DAmato to transfer $200,000 to the control of Simonsen and Soren Niels; in other words,
DAmato reasonably changed his position to his detriment based upon the statements,
inducements and representations made by Simonsen.
103.

In connection with and as a result of the foregoing:

e.

DAmato transferred $200,000 to Simonsen and Soren Niels in good faith;

f.

Simonsen and Soren Niels accepted DAmatos $200,000;

g.

DAmato reasonably expected compensation in the form of a five percent

(5%) interest in the income Simonsen derived from the Simonsen
Intellectual Property in return for his payment of $200,000;

h.
104.

DAmato is entitled to return of his $200,000.

By reason of the foregoing, Simonsen and Soren Niels are liable to DAmato

under the theory of quantum meruit.

TWELVETH COUNT
Breach of Fiduciary Duty
(As to the DAmato Preferred Interest)
(Pleaded in the Alternative to the Seventh Count)
105.

Plaintiff DAmato re-alleges and incorporates by paragraphs 1 through 41 of this

Complaint as if again set forth in full.

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106.

Simonsen, individually and through the use of his alter ego Soren Niels, induced

DAmato to entrust Soren Niels with $200,000 as payment for DAmatos purchase of the
DAmato Preferred Interest, in exchange for which DAmato was to receive a five percent (5%)
perpetual interest in the income Defendant derived from the Simonsen Intellectual Property.
107.

Defendant Soren Niels breached its fiduciary obligation to ensure the proper

treatment and handling of plaintiff DAmatos funds, and instead has permitted DAmatos funds
to be spent without any benefit to plaintiff DAmato and with no accounting or reporting of the
treatment of expenditures.
108.

Soren Niels, through its alter ego Simonsen, breached its fiduciary duty owing to

DAmato and DAmato has been damaged in the amount to be proven at trial and known to
exceed the $200,000 transferred to Soren Niels exclusive control.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff Frank DAmato prays for judgment against Defendants Stuart
Simonsen and Soren Niels Management LLC as follows:
a. As to the First and Second Counts (Breach of Contract and Breach of the Implied
Covenant of Good Faith and Fair Dealing as to DAmatos purchase of the 1.5%
interest in Axiodyn):
i. For damages in the amount to be proven at trial but believed to exceed
$1,000,000 plus interest;
ii. For the reasonable costs of the suit as provided by law;
iii. For reasonable attorneys fees as provided by law; and
iv. For such other and further relief as the Court may deem just and proper.
b. As to the Third Count (Misrepresentation as to DAmatos purchase of the 1.5%
interest in Axiodyn):

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i. For rescission of the contract between the parties and the return of
DAmatos $1,000,000 transferred to Simonsen and Soren Niels, plus
interest;
ii. For the reasonable costs of the suit as provided by law;
iii. For reasonable attorneys fees as provided by law; and
iv. For such other and further relief as the Court may deem just and proper.
c. As to the Fourth, Fifth, and Sixth Counts (Unjust Enrichment, Quantum Meruit, and
Breach of Fiduciary Duty as to DAmatos purchase of the 1.5% interest in Axiodyn):
i. For damages in the amount to be proven at trial but believed to exceed
$1,000,000;
ii. For punitive damages;
iii. For the reasonable costs of the suit as provided by law;
iv. For reasonable attorneys fees as provided by law; and
v. For such other and further relief as the Court may deem just and proper.
d. As to the Seventh and Eighth Counts (Breach of Contract and Breach of the Implied
Covenant of Good Faith and Fair Dealing as to the DAmato Preferred Interest):
i. For damages in the amount to be proven at trial but believed to exceed
$200,000 plus interest;
ii. For the reasonable costs of the suit as provided by law;
iii. For reasonable attorneys fees as provided by law; and
iv. For such other and further relief as the Court may deem just and proper.
e. As to the Ninth Count (Misrepresentation as the DAmato Preferred Interest):
i. For rescission of the contract between the parties and the return of
DAmatos $200,000 transferred to Simonsen and Soren Niels, plus
interest;
ii. For the reasonable costs of the suit as provided by law;
iii. For reasonable attorneys fees as provided by law; and
iv. For such other and further relief as the Court may deem just and proper.
f. As to the Tenth, Eleventh and Twelfth Counts (Unjust Enrichment, Quantum Meruit,
and Breach of Fiduciary Duty as to the DAmato Preferred Interest):
i. For damages in the amount to be proven at trial but believed to exceed
$200,000;
ii. For punitive damages;
iii. For the reasonable costs of the suit as provided by law;
iv. For reasonable attorneys fees as provided by law; and

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