Counterclaim Misappropriation of Trade Secrets

Case 3:15-cv-00057-L-AGS Document 108 Filed 12/28/16 Page 1 of 37
1 Scott L. Metzger, Esq. (Bar No. 89718)

metzger@dsmw.com
2 William P. Keith, Esq. (Bar No. 270587)
keith@dsmw.com
3 DUCKOR SPRADLING METZGER & WYNNE
A Law Corporation
4 101 West Broadway, Suite 1700
San Diego, California 92101
5 Tel: (619) 209-3000; Fax: (619) 209-3043
6 Gerald A. Klein, Esq. (Bar No. 107727)
klein@kleinandwilson.com
7 Michael S. LeBoff, Esq. (Bar No. 204612)
leboff@kleinandwilson.com
8 KLEIN & WILSON
4770 Von Karman Avenue
9 Newport Beach, CA 92660
Tel: (949) 631-3300; Fax: (949) 631-3703
10
11 Attorneys for Defendant and Counterclaimant,
THE RETIREMENT GROUP, LLC
12
13 UNITED STATES DISTRICT COURT
14 SOUTHERN DISTRICT OF CALIFORNIA
15 JEREMY L. KEATING; CASE NO.: 3:15-cv-00057-L-AGS
RICHARD P. GIGLIOTTI; and
16 ALEXANDER J. MELE,
THE RETIREMENT GROUP, LLC’S
17 Plaintiffs, FIRST AMENDED COUNTERCLAIM
FOR:
18 v.
1. MISAPPROPRIATION OF
19 JOHN A. JASTREMSKI; TRADE SECRETS;
THE RETIREMENT GROUP, 2. BREACH OF CONTRACT;
20 LLC,; and DOES 1-5, 3. BREACH OF CONTRACT;
4. UNFAIR TRADE PRACTICES;
21 Defendants. 5. CAL. COMPREHENSIVE
COMPUTER DATA ACCESS
22 AND FRAUD ACT, CALIFORNIA
PENAL CODE SECTION 502
23
JURY TRIAL DEMANDED
24
25 CAPTION CONTINUED ON NEXT PAGE
26
27
28
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THE RETIREMENT GROUP, LLC’S FIRST AMENDED COUNTERCLAIM
1284816v5 Case No. 3:15-cv-00057-L-AGS
1 THE RETIREMENT GROUP,

L.L.C., a California limited liability
2 company, Magistrate: Hon. Andrew G. Schopler
Courtroom: 5B
3 Counterclaimant,
4 v. Action Filed: January 12, 2015
Trial Date: None Set
5 JEREMY KEATING, an individual;
RICHARD GIGLIOTTI, an
6 individual; ALEXANDER MELE,
an individual; STEVEN DALTON,
7 an individual; SECURITIES
AMERICA, INC., a Delaware
8 corporation; SEAN SULLIVAN, an
individual; LLOYD SILVERS, an
9 individual; ARDENT
RETIREMENT PLANNING, LLC, a
10 limited liability company; CAPITAL
INCOME ADVISORS, LLC, a
11 California limited liability company;
and DOES 1 through 25, inclusive,
12
13 Counter-Defendants.
14
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1284816v5 Case No. 3:15-cv-00057-L-AGS
1 Counterclaimant The Retirement Group, LLC (hereinafter,

2 “Counterclaimant” or “TRG”) alleges as follows:
3 I. SUMMARY OF COUNTERCLAIMS
4 1. Counter-Defendants Jeremy Keating (“Keating”), Richard Gigliotti
5 (“Gigliotti”), Alexander Mele (“Mele”), Steven Dalton (“Dalton”), Lloyd Silvers
6 (“Silvers”), and their cohorts engaged in an orchestrated scheme to attempt to
7 destroy TRG and take for themselves the business that TRG created. Keating,
8 Gigliotti, Mele, and Dalton plotted for over a year to steal TRG’s most valuable
9 customers, prospects, and financial advisors and its business plans, and, in the
10 process, destroy TRG as a competitor by financially and legally crippling TRG so it
11 could not stop Keating, Gigliotti, Mele, and Dalton. In addition to stealing TRG’s
12 confidential information and using those trade secrets to steal TRG’s customers and
13 prospective customers, Keating, Gigliotti, Mele and Dalton initiated a cavalcade of
14 unwarranted accusations against TRG to the Finance Industry Regulatory Authority
15 (“FINRA”), with the goal of having TRG so distracted with a FINRA investigation
16 that it could devote the attention and resources necessary to stop Keating, Gigliotti,
17 Mele, and Dalton from pillaging TRG’s business.
18 II. PARTIES
19 2. TRG is a limited liability company created under the laws of the State
20 of California with its principal place of business in San Diego, California. TRG is a
21 Registered Investment Advisor (“RIA”) firm which is registered with the Securities
22 and Exchange Commission (“SEC”) and works with Independent Advisor
23 Representatives (“IAR” or “Advisor”) in the conduct of its business. TRG is the
24 owner of various copyrights and trademarks relating to the use of the name The
25 Retirement Group and is the effective successor-in-interest to contract and property
26 rights developed by predecessor individual owners or entities operating under the
27 name The Retirement Group, whether a sole proprietorship, partnership, or other
28 individual/entity.
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1 3. Counter-Defendant Keating is an individual residing at all relevant

2 times in San Diego County, California. Keating entered into various agreements
3 with TRG in San Diego, California. Keating received substantial training and
4 access to TRG’s trade secret database at TRG’s offices in San Diego, California.
5 4. Counter-Defendant Gigliotti is an individual residing at all relevant
6 times in San Diego County, California. Gigliotti entered into various agreements
7 with TRG in San Diego, California. Gigliotti received substantial training and
8 access to TRG’s trade secret database at TRG’s offices in San Diego, California.
9 5. Counter-Defendant Mele is an individual who resided at relevant times
10 in San Diego County, California. Mele entered into various agreements with TRG
11 in San Diego, California. Mele received substantial training and access to TRG’s
12 trade secret database at TRG’s offices in San Diego, California.
13 6. TRG is informed and believes and on that basis alleges that Counter-
14 Defendant Dalton is an individual residing at all times in the state of Indiana.
15 7. Counter-Defendant Securities America, Inc. (“Securities America”) is
16 a corporation incorporated under the laws of the State of Delaware and authorized
17 to conduct business in the State of California.
18 8. Counter-Defendant Sean Sullivan (“Sullivan”) is an individual residing
19 at all relevant times in Connecticut. Sullivan entered into various agreements with
20 TRG or for which TRG was a third-party beneficiary.
21 9. Counter-Defendant Silvers (“Silvers”) is an individual residing at all
22 relevant times in San Diego County, California. Silvers entered into various
23 agreements with TRG in San Diego, California.
24 10. Counter-Defendants Sullivan and Silvers have an ownership interest in
25 or are affiliated with counter-defendant Ardent Retirement Planning, LLC.
26 (“Ardent”), a limited liability company created under the laws of the State
27 Delaware with its principal place of business in Indiana. Counterclaimant is
28 informed and believes that Ardent has solicited and employed or contracted
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1 counter-defendants Keating, Gigliotti, and Mele and, after counter-defendants

2 induced them to leave TRG, Ardent employed or contracted with former employees
3 of TRG, James White, and Hannah Lujano. Dalton is the sole managing member of
4 Ardent.
5 11. Counter-Defendant Capital Income Advisors, LLC (“CIA”) is a
6 limited liability company created under the laws of the State of California.
7 Counterclaimant alleges, on information and belief, that CIA conspired with
8 counter-defendants Keating, Gigliotti, Mele, Dalton, Sullivan, and Silvers in
9 performing the acts alleged herein.
10 12. Counterclaimant alleges, on information and belief, that, at all material
11 times herein mentioned, each of the counter-defendants was the co-conspirator,
12 agent and/or employee of each of the remaining counter-defendants and was, at all
13 relevant times, acting within the course and scope of such conspiracy, agency, and
14 employment.
15 13. Dalton, Sullivan, Silvers, Ardent, CIA, and Securities America are
16 proper parties in this case, and TRG’s rights to relief against all counter-defendants
17 arise out of the same transactions or occurrences, and questions of law and/or fact
18 common to all counter-defendants will arise in this action.
19 III. JURISDICTION AND VENUE
20 14. Jurisdiction and venue are proper in this Court because this lawsuit
21 originally was instituted against Counterclaimant in this Court based on alleged
22 federal question jurisdiction pursuant to 28 U.S.C. § 1331 (2016). TRG has
23 answered the complaint herein and now counterclaims in this action pursuant to
24 jurisdiction authorized under 28 U.S.C. § 1367 (2016).
25 15. Venue also is appropriate under 28 U.S.C. § 1391(b)(2) (2016)
26 because the contracts at issue were entered into and partially performed in this
27 judicial district and because several of the contracts entered into by TRG and
28 counter-defendants Keating, Gigliotti, Mele, and Silvers specifically require that
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1284816v5 Case No. 3:15-cv-00057-L-AGS
1 any dispute be resolved in this judicial district with the application of California
2 law. The trade secret database at issue is also maintained in this district and
3 contains substantial information generated by TRG, who is located in this district.
4 IV. BACKGROUND
5 16. TRG is a RIA, operating in a niche market which specializes in
6 providing investment advice to retirees and soon-to-be retirees. Because TRG offers
7 its clients products that can only be sold through a broker-dealer, TRG sometimes
8 uses the services of FSC Financial (“FSC”) to provide those products for its
9 customers. TRG has developed a specific and proprietary method of learning the
10 identity of and soliciting persons who are about to receive retirement plans or lump
11 sum distributions, which TRG hopes the prospective customer will retain it to
12 manage. This represents the top 5-10% most sizeable retirement funds of an
13 employer database.
14 A. TRG’s Trade Secrets
15 17. TRG’s trade secrets, which include the information in its database,
16 discussed below, fall within the following categories, typically in combination:
17 a. Customer identity and contact information;
18 b. Customer account information and current holdings;
19 c. Customer investment preferences;
20 d. Customer employment status;
21 e. Prospective customer identity and contact information;
22 f. Prospective customer employment information;
23 g. Prospective customer retirement account status and probability of
24 retiring;
25 h. Referral information;
26 i. Interest in taking a “lump sum” offer; and
27 j. Date of hire and anticipated date of retirement.
28 ///
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1284816v5 Case No. 3:15-cv-00057-L-AGS
1 18. TRG has developed a comprehensive and propriety business model to

2 target its niche market. Through its marketing and client service efforts, TRG has
3 developed extensive databases of confidential, non-public information on its clients
4 and niche prospective clients who will be retiring in the next five (5) years, with
5 over $500,000 in pension and 401(k) assets, and are likely to use the services of a
6 financial advisor, who represent the top 5-10% of employees at an employer. These
7 employees have the highest probability of retiring with the most money. TRG
8 developed these databases through many thousands of man-hours of its proprietors,
9 employees, agents, and contractors contacting and interacting with TRG’s clients
10 and prospective clients through telemarketing, seminars, one-on-one meetings, and
11 interactions with TRG’s operations staff. TRG incurs virtually all expenses
12 associated with the employment of the necessary staff, training its Advisors
13 (including the analysis, details, and nuances of specific companies’ and divisions’
14 lump sum distribution offers and individual retirement plans for TRG’s clients and
15 prospective clients in the niche market that TRG services) arranging travel to and
16 from client and prospective client meetings, preparation for and conducting
17 seminars for potential and current pre-retirement clients considering lump sum
18 packages, preparation of specialized retirement plans for prospective clients and
19 pre-retirement clients (TRG’s proprietary program referred to as “Retirekit”
20 provides a client-specific cash flow and a post-retirement financial needs analysis)
21 and servicing of client accounts. Many of the TRG employees and contractors
22 obtaining and inputting information into the TRG databases work in TRG’s San
23 Diego offices and reside in San Diego County, California. TRG’s database
24 information and the source documents (e.g., seminar sign-in sheets and Retirement
25 Planning Menus) generally include the following information: (1) the name,
26 address, home phone number, work phone number, e-mail address, birth date, and
27 social security number of the client or prospect; (2) the client or prospect’s spouse’s
28 name, company, branch, department, position within the company, birth date, and
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1 retirement date; (3) the amount and type of the client’s or prospect’s pension;
2 (4) the amount and type of the client or prospect’s savings plan, including their
3 preferences and risk tolerance; (5) the client or prospect’s employment data,
4 including his or her actual or anticipated retirement date, hire date, average salary,
5 and income needs after tax; (6) information on the client or prospect’s other
6 investments; (7) a log of the various contacts TRG personnel have had with the
7 client or prospect, listed chronologically by date and time with a description of the
8 contact and an identification of the TRG Advisors who made the contact either by
9 initials or by name; and (8) referrals to other prospective clients within their
10 company. TRG maintains all this information as proprietary and confidential to it.
11 19. The information contained in TRG’s client and prospective client
12 database is not generally known and is extremely valuable because it gives TRG a
13 competitive advantage when dealing with its prospects and clients. Through
14 substantial efforts and processes, TRG has, for numerous companies, identified the
15 top 5-10% of employees with the most sizeable retirement funds at a company,
16 meaning those employees with the most sizeable retirement funds, most likely to
17 engage the services of financial advisor, and most likely to retire in a relatively
18 short time period. The target retirees are about to receive lump sum distributions
19 from their employers (averaging approximately $500,000), have been employed for
20 over 20 years, are over the age of 50, and are likely to employ the services of a
21 financial advisor. These individuals have the top 1% to 5% net worth among
22 individuals in their companies and are the Holy Grail in the financial services
23 market. The database information on TRG’s pre-retirement clients and prospects
24 are especially valuable because a substantial portion of TRG’s income is
25 determined by the quantity of lump-sum distributions it ultimately manages. Each
26 pre-retirement client and prospective client represents a potential increase in the
27 total assets TRG manages and significant revenue compared to revenue earned from
28 retired clients with established investments. Moreover, because of the unique nature
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1 of TRG’s business, each client and prospect also represents a substantial and
2 valuable opportunity for referral business. From TRG’s experience, it has found
3 that each client, on average, will refer two or three additional soon-to-be retiring
4 employees to TRG. Many of the pre-retirement clients and prospective clients will
5 not become a significant revenue source to TRG until they retire and have the
6 ability to roll over their company retirement plans into privately managed plans.
7 Through the development and use of its databases, TRG can target the most
8 attractive pre-retirement clients and prospective clients (i.e., those closest to
9 retirement with the largest amount of assets to invest) and the needs, wants, likes
10 and dislikes of these individuals, which allows TRG to foster relationships with the
11 individuals that will lead to securing them as lump sum distribution clients. TRG is
12 in a highly competitive industry and the information TRG has developed
13 concerning its prospects, clients and referrals, if disclosed, would give a competitor
14 a distinct advantage by allowing the competitor to target TRG’s best candidates
15 through the confidential information TRG has invested substantial effort and money
16 to develop. TRG spends over $2 million per year identifying, screening, and
17 attracting new clients, as well as maintaining existing clients. TRG’s database and
18 trade secrets form the very basis for the practice of its business and also enhances
19 its ability to service and build a relationship with existing clients. Further, the client
20 information contained in TRG’s database is subject to substantial state and federal
21 laws and regulations to protect the confidentiality of the personal information of the
22 clients and prospects - including, but not limited to, SEC, 17 Code of Federal
23 Regulations § 248 (2016) and the even more restrictive California Financial Code
24 section 4050, et seq. (West 2004). TRG’s database is unique and cannot be found
25 anywhere other than at TRG because individual pieces of data are useless unless it
26 is connected to other data TRG collects and joins together.
27 20. TRG makes every reasonable effort to maintain the secrecy of its
28 confidential database and derivative information mandated to be stored on
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1 databases maintained by third parties, as required for regulatory purposes

2 (e.g., TRG’s broker dealer, and RIA affiliates). As described in more detail below
3 and prior to any employee (whether trainees, operations staff, or support staff) or
4 contracted Advisor being given access to TRG’s confidential, proprietary, and trade
5 secret information, they must execute a number of documents which confirm the
6 confidentiality and trade secret nature of the information and prohibit its disclosure
7 or use – other than in support of TRG’s business. Access to FSC’s database, for
8 example, requires a username and password, which credentials are issued, and
9 database access is allowed only pursuant to TRG’s permission and only after these
10 agreements are signed. TRG’s agreements with its Advisors and employees
11 emphasize that the clients generated from TRG’s marketing efforts are clients of
12 TRG and not of the individual Advisors. By contrast, if an Advisor comes to TRG
13 with the Advisor’s own clients, those clients are considered to be “portable” and
14 expected to move from TRG if that Advisor moves to another firm.
15 Counter-Defendants brought no such clients with them when they joined TRG, and
16 all clients they serviced while at TRG were generated from the efforts of TRG
17 which they understood and agreed were “nonportable.” Neither Keating, Gigliotti,
18 nor Mele had clients prior to affiliating with TRG. They also did not generate any
19 clients independent of TRG. At all times, TRG had, at its sole discretion, the
20 ability to transfer a client account to another Advisor for a variety of reasons
21 (e.g., when an Advisor leaves the firm if the client is nonportable; when an Advisor
22 fails to have sufficient personal contact, as per regulatory requirements, with a
23 client; when a client requests a new Advisor, etc.).
24 B. The Marketing and License Agreement Signed by TRG’s Advisors
25 21. TRG’s Advisors, such as Keating, Gigliotti, Mele, and Silvers and
26 others who provided services to them, each have a marketing and license agreement
27 (the “Marketing and License Agreement”) with TRG which contains the following
28 provisions:
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1 “8.3 Title to TRG Confidential Information. Licensee

understands and agrees that pursuant to this Agreement,
2 TRG shall disclose substantial amounts of TRG
Confidential Information to Licensee. Licensee
3 understands and agrees that the TRG Confidential
Information is the sole and exclusive property of TRG.
4 During the Term of this Agreement and at all times
thereafter, Licensee shall hold the TRG Confidential
5 information in the strictest confidence, and shall not
disclose or use the TRG Confidential Information except
6 as provided under this Agreement. Licensee
acknowledges that TRG has taken reasonable precautions
7 to keep TRG Confidential Information protected from
disclosure.
8
9 8.4 Protection of TRG Confidential Information and TRG
Property-Non Solicitation. During the Term of this
10 Agreement, and for a period of thirty six (36) months
following the expiration or earlier termination of this
11 Agreement (with or without cause), Licensee shall not use
TRG Property or TRG Confidential Information for any
12 purpose whatsoever including but not limited to directly
or indirectly: (i) engaging in any activity (within a
13 Territory in which noncompete agreements are
enforceable) which competes, or is in conflict with TRG’s
14 business (ii) soliciting TRG Client’s or TRG Prospects to
purchase products or services that may be directly or
15 indirectly competitive to products and services of TRG or
its designated broker-dealer or designated insurance
16 company, as determined by TRG; or (iii) soliciting the
contractors, distributors, or others with whom TRG has a
17 relationship to enter into a contract that may be directly or
indirectly competitive to any contract of TRG. Licensee
18 acknowledges that this provision is material to TRG’s
commitment to provide training and other services to
19 Licensee, and that Licensee will strictly adhere to the
terms of this section.
20
21 8.5 Equitable Relief. Licensee understands and agrees
that, because of the unique nature of the TRG
22 Confidential Information, TRG Property, TRG Products,
TRG Marks, TRG Clients, TRG Prospects and TRG’s
23 business protected under Section 8 of this Agreement,
TRG will suffer immediate irreparable harm if Licensee
24 fails to strictly comply with any of the obligations under
Section 8 of this Agreement. Accordingly, Licensee
25 agrees that the TRG shall, in addition to any other
remedies available to it at law or in equity (including,
26 without limitation, consequential and exemplary
damages), be entitled to injunctive relief to enforce the
27 terms of Section 8 of this Agreement, without the
necessity of posting a bond or undertaking and without
28 the need of any proof of actual harm or damages to TRG.
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1 This relief is cumulative with any and all other

appropriate legal relief.”
2
3 A copy of the Marketing and License Agreements entered into by the named
4 counter-defendants is attached hereto as exhibits in the following order: (1) Keating
5 Marketing and License Agreement; (2) Gigliotti Marketing and License Agreement;
6 (3) Mele Marketing and License Agreement; and (9) Silvers Marketing and License
7 Agreement.
8 22. The Marketing and License Agreements also provide, at paragraph 9.3,
9 that upon termination the Advisors are to return to TRG all equipment, notes,
10 documents, memoranda, reports, files, books, correspondence, lists or other written,
11 electronic or graphic records and the like relating to TRG’s business which are or
12 have been in Licensee’s possession or control.
13 C. The TRG Confidentiality Agreements and User Agreements
14 23. In addition to the Marketing and Licensing Agreements, all employees
15 and Advisors are required to sign confidentiality agreements (“Confidentiality
16 Agreements”) that prohibit them from reproducing, distributing, disclosing, or
17 preparing derivative works from TRG’s trade secret materials and required them to
18 return all documents containing confidential information, to TRG upon the
19 termination of their relationship with TRG. A copy of the Confidentiality
20 Agreement executed by Keating is attached hereto as Exhibit 4. Each of the
21 individual named counter-defendants executed an identical form – as well as former
22 employees of TRG who have joined the individual counter-defendants and which
23 include Hannah Lujano (“Lujano”), James White (“White”), Samuel Goerss
24 (“Goerss”), Jessie Reinle (“Reinle”), and Matt Nelson (“Nelson”).
25 24. Additionally, TRG requires Advisors and employees to sign Corporate
26 Online Systems User Agreements, which contain an extensive confidentiality
27 provision in Section 6 that prohibits Advisors and employees from, among other
28 things, transmitting client and prospect information on online systems other than
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1 TRG’s in-house system. A copy of the Keating Corporate Online Systems

2 User Agreement is attached hereto as Exhibit 5. Each of the individual
3 counter-defendants and the former TRG employees associated with them signed
4 identical Corporate Online Systems User Agreements with TRG.
5 25. Access to any TRG trade secrets, including access to TRG’s databases,
6 is only granted after independent contractors and employees have executed the
7 Confidentiality Agreement and Online User Agreement, discussed above.
8 D. Confidentiality Protections Covering the TRG’s Trade Secrets on TRG
9 and FSC Databases
10 26. TRG Advisors and employees gain daily access to TRG’s online
11 computer system through a secured program called Sales Force. While in Sales
12 Force, the individual is able to access records of clients, and any clients belonging
13 to TRG are specifically labeled as TRG clients. Before an employee or Advisor is
14 allowed to sign-on to TRG’s databases through Sales Force with their user name
15 and password, the individual is confronted with a “splash screen” that they must
16 acknowledge to proceed. A copy of the splash screen is attached hereto as
17 Exhibit 6. The splash screen requires the Advisor or employee to affirm and agree
18 that he or she will keep TRG’s proprietary information confidential, including
19 information derived from the database and which is included on necessary
20 third-party databases such as those maintained by TRG’s broker dealer (FSC) and
21 other affiliated providers.
22 27. The splash screen specifically provides as follows:
23 “Further and continued access to this website is granted
only by the pre-authorization of The Retirement Group,
24 LLC. Use of the information on this website or any
computer system of The Retirement Group, LLC is only
25 allowed if consistent with the TRG Confidentiality and
Online User agreements.
26
. . . Accessing data through third parties including, but not
27 limited to Vision 20/20 . . . does not invalidate the trade
secret nature of the database that exists on this website.
28 This information is supplied by The Retirement Group,
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1 LLC to third parties under the confidentiality provisions

of Regulation SP.”
2
3 28. As discussed above, TRG Advisors affiliate with FSC, a broker-dealer,
4 to be able to offer brokerage products and services and compliance supervision for
5 TRG clients. During the relevant time frame, counter-defendants Keating, Gigliotti,
6 Mele, Sullivan, and Silvers each executed Registered Representative Agreements
7 with FSC. These individuals could not enter into a Registered Representative
8 Agreement with FSC to service TRG clients absent their business relationship and
9 signed agreements with TRG, and the Registered Representative Agreements with
10 FSC were terminated upon the termination of the Advisor’s business relationship
11 with TRG.
12 29. In order for the Advisors to effect securities trades and carry out
13 investment activities through FSC, TRG would provide FSC information from its
14 databases so that TRG Advisors could access it directly from FSC’s computer
15 system, using a program called Vision 20/20.
16 30. Critically, the only individuals who had access to TRG’s trade secrets
17 that were placed on Vision 20/20 were TRG Advisors and representatives who had
18 already been cleared to access the information through Sales Force. And, in the
19 event of termination of the Advisor’s business relationship with TRG, the Advisors
20 are immediately barred from the access to the TRG Sales Force program and
21 programs used by FSC, such as Vision 20/20.
22 31. In addition to the fact that Advisors have acknowledged the
23 restrictions on access to TRG’s confidential trade secrets located on its Sales Force
24 database as well as those shared on FSC’s Vision 20/20 database numerous times
25 by acknowledging the splash screens multiple times a day when accessing the TRG
26 database, the restrictions are also memorialized in TRG’s agreements with its
27 Advisors and FSC. For example, in the Online User Agreement, the Advisors
28 specifically acknowledged that the information being provided for the Vision 20/20
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1 program, among others, was shared under the confidentiality provisions of

2 Regulation SP. Paragraph 6.1 in the Online User Agreement, provides as follows:
3 “You are legally and ethically responsible for protecting
and preserving TRG’s proprietary rights. . . This includes
4 data that TRG was required to populate with third party
vendors. . . These third parties are supplied with this
5 information by The Retirement Group, LLC under the
confidentiality provisions of Regulation SP.”
6
7 E. The TRG Privacy Policy Provided to Clients
8 32. TRG has a privacy policy in place with regard to the use of non- public
9 information obtained from its clients. This privacy policy is provided to TRG’s
10 clients on an annual basis and is available on its website. A copy is attached as
11 Exhibit 7. The privacy policy specifically provides: “It is a policy of The
12 Retirement Group, LLC not to share nonpublic personal and financial information
13 with affiliated or unaffiliated third parties except under the circumstances noted
14 above. Since sharing under the circumstances noted above is necessary to service
15 customer accounts or is mandated by law, there are no allowances made for clients
16 to opt out. Under no circumstances can any advisor of The Retirement Group, LLC
17 take non-public client information to any third party without written approval from
18 The Retirement Group, LLC.” A link for this privacy policy was and is included at
19 the bottom of each e-mail sent by TRG Advisors to clients and prospective clients.
20 F. The Departure of Counter-Defendant Advisors from TRG
21 33. By early 2014, Keating, Gigliotti and Mele were secretly meeting with
22 Ardent to devise a scheme for these TRG representatives to leave TRG and join
23 Ardent. On information and belief, each of the counter-defendants named in this
24 first amended counter-claim was acting in concert and in conspiracy with each of
25 the other counter-defendants.
26 34. In furtherance of this scheme, Dalton and Securities America
27 developed a plan and advised Keating and the others on how to work around their
28 agreements with TRG and avoid paying for the assets they took in violation of their
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1 contractual and legal obligations, and ultimately schemed to destroy TRG in the
2 market. Dalton’s and Securities America’s two-part plan involved filing numerous,
3 anonymous complaints with FINRA in an attempt to initiate a FINRA investigation
4 on TRG. The complaint were frivolous. Dalton and Securities America also
5 assisted and advised Keating, Mele, and Gigliotti on how to take clients from TRG,
6 thus reducing TRG’s business on the financial side.
7 35. In the summer of 2014, while they were still a TRG representative,
8 Ardent set up an office in San Diego for Keating, Mele, and Gigliotti. Ardent paid
9 operations staff, callers, and several former and current TRG employees to prepare
10 for the transition.
11 36. In 2014, Ardent began populating its parallel databases with client and
12 prospective client information taken from TRG that Ardent obtained from Keating,
13 Mele, and Gigliotti.
14 37. In early 2015, Dalton, Keating, Mele, Silvers, Gigliotti, and potentially
15 the other named counter-defendants discussed how they needed to destroy evidence
16 of the transfer of client and prospective client data to Ardent and others which
17 would be discovered in litigation they anticipated TRG would initiate to protect its
18 trade secrets and recover its losses.
19 38. Also in early January 2015, TRG learned that three counter-defendants
20 Keating, Gigliotti, and Mele intended to leave TRG to join Ardent and Securities
21 America. TRG learned and/or formed the belief that these Advisors intended to
22 breach their various agreements with TRG, and to use TRG’s trade secrets to take
23 and solicit TRG clients and prospects. Pending regulatory investigation, TRG
24 terminated its business relationship with Keating, Gigliotti, and Mele on
25 January 10, 2015.
26 39. TRG is informed and believes that, prior to leaving TRG,
27 counter-defendants Keating, Gigliotti, and Mele and/or their agents removed highly
28 confidential financial documents from TRG’s databases and offices relating to TRG
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1 clients and prospective clients. Later, they refused to return substantial amounts of
2 documents maintained at their home offices which included the above-mentioned
3 documents and other confidential client and prospective client information. TRG is
4 further informed and believes that these counter-defendants and/or their agents
5 removed or copied substantial electronic files from TRG’s computers, computer
6 systems, computer network, and databases with TRG marketing plans and other
7 confidential and proprietary business information and with substantial non-public,
8 confidential TRG client and prospective client information for the purposes of a
9 seamless transition to their new firm(s).
10 40. By way of example, on his last day of work with TRG, Keating
11 obtained copies of critical TRG trade secret prospective client information in the
12 form of sign-in sheets from two TRG retirement seminars presented for TRG
13 prospective clients in December 2014. TRG is informed and believes that, since his
14 departure, Keating has aggressively solicited prospective clients in the TRG
15 database (Sales Force). As another example of trade secrets theft, Mele maintained
16 bound notebooks with detailed notes of his meetings with TRG clients and
17 prospective clients, refused to return said notebooks to TRG after the termination of
18 his business relationship with TRG, and now claims to have shredded all of the
19 bound notebooks and the information they contained. TRG is informed and believes
20 that each of the former TRG Advisors refused to return Retirekits prepared for TRG
21 pre-retirement clients and prospective clients by TRG operations staff, and other
22 confidential information obtained from these prospective and soon-to-be retiring
23 clients, such as assets values, anticipated retirement dates, interests in lump sum
24 distributions, social security numbers, etc.
25 41. In 2013, TRG had communicated with Securities America with regard
26 to the departure of an Advisor who eventually affiliated with this company. TRG
27 provided Securities America with copies of the agreements utilized in its business
28 to protect its client and prospective client information and other confidential,
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1 proprietary, and trade secret information. Counterclaimant is informed and believes

2 that Securities America was fully aware of the efforts of counter-defendants Dalton,
3 Sullivan, Ardent, and Silvers to improperly solicit employees/Advisors of TRG in
4 violation of their respective agreements with TRG and/or the applicable law and in
5 an effort to misappropriate TRG’s business. On information and belief, Securities
6 America helped plan, fund, and encourage this theft as a co-conspirator.
7 42. On its website, Securities America includes specific guidelines for
8 Advisors who are leaving another broker-dealer and entering into a Registered
9 Representative relationship with Securities America, which includes the following
10 provisions:
11 “Under an unfavorable privacy policy, the ability for a
representative to share client data inventory with
12 Securities America IS NOT possible . . . .”
13 “Securities America’s policy is to abide by any non-
compete or non-solicitation agreements entered into by
14 prospective representatives. Most such agreements state
representatives will not solicit any client that held an
15 account with the prior broker-dealer . . . .”
16 43. Securities America actively participated in the activities of the other
17 counter-defendants by instructing their recruiter, Michael Dalton to grant a
18 $300,000 bonus to Dalton for enticing TRG Advisors to breach their contracts with
19 TRG; by funding the departure of Keating, Gigliotti, Mele, White, and Lujano from
20 TRG; and by paying an estimated amount in excess of $1 million to
21 counter-defendants and their co-conspirators to facilitate the transition from TRG to
22 Securities America and ratify. According to the information contained on the
23 bottom of the e-mails from Securities America officers, Securities America offers
24 strong financial incentive for Advisors to leave their current firms and bring
25 clients/business to Securities America. The exact quote is:
26 “DOUBLE YOUR FIRST PAYMENT! – Securities
America is doubling the first bonus payment for any rep
27 referrals delivered by Feb. 28th, 2015 and effective by
April 30th, 2015! Call and speak with a member of
28
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1 Branch Office Development at 1-800-989-8441 for more

details!”
2
3 44. Further, Securities America has previously expressed unique interest in
4 TRG and its niche business model. More specifically, in or around July 2013,
5 Securities America’s president contacted TRG to solicit TRG to move its niche
6 business model to Securities America, which Securities America’s president desired
7 to pursue and implement at Securities America. TRG, however, declined the offer.
8 45. Prior to the counter-defendants Keating, Gigliotti, and Mele being
9 announced as registered representatives of Securities America on January 12, 2015,
10 TRG placed Securities America on notice of the agreements that these individuals
11 had entered with TRG and concerns about breach of said agreements in e-mailed
12 correspondence with the chief executive officer of Securities America. During the
13 week of January 12, 2015, TRG placed Securities America on further notice that
14 Mele, Gigliotti, and Keating were in breach of their agreements with TRG and
15 provided substantial evidence of the breach. During a phone call on January 16,
16 2015, counsel for TRG informed the vice-president and general counsel for
17 Securities America, Kevin Miller (“Miller”), that the counter-defendants Keating,
18 Mele, and Gigliotti had systematically breached their agreements with TRG by
19 taking and using TRG’s trade secrets. Miller assured TRG’s counsel that it was the
20 policy of Securities America to have all Advisors who join their company abide
21 with their contractual commitments and that he had informed TRG’s former
22 Advisors of that policy. Securities America also requested a copy of the trailing
23 twelve months of business, which is not authorized by the broker protocol (the
24 broker protocol would not apply anyway because, among other things, TRG is not a
25 signatory to the broker protocol), breaches the client’s confidentiality rights, and
26 violates California Financial Code section 4050, et seq. (West 2004).
27 46. Despite the representations of general counsel for Securities America
28 and the affirmative statements in the Securities America transition guide, Securities
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1 America has encouraged and endorsed the wrongful acts of the individual
2 counter-defendants named in this action, Dalton, Sullivan, Silvers, Mele, Keating,
3 and Gigliotti who have accepted the full benefits of this wrongful conduct. TRG is
4 informed and believes that Securities America has encouraged the other
5 counter-defendants to continue to use TRG’s proprietary and confidential
6 information for improper purposes. TRG is informed and believes that Securities
7 America engaged in this course of action because of the size of the book of business
8 being targeted, which represented well over 50 percent (50%) of the business of
9 TRG and over $500 million in assets under management. TRG is informed and
10 believes and on that basis alleges that Securities America has engaged in other
11 wrongful and improper conduct designed to induce other TRG Advisors to
12 terminate their relationship with TRG in a manner that inflicts substantial harm to
13 TRG.
14 G. Counter-Defendants’ Improper Use of TRG’s Trade Secrets to Solicit
15 Clients and Prospective Clients
16 47. Beginning on or before the date of their termination by TRG/FSC on
17 January 10, 2015, through obtaining securities licenses with counter-defendant
18 Securities America on January 12, 2015, and continuing thereafter, counter-
19 defendants Keating, Gigliotti, and Mele used TRG’s trade secrets to systematically
20 contact TRG clients and prospects to solicit their securities business in violation of
21 their agreements with TRG, in violation of the broker protocol, and in derogation of
22 California Financial Code section 4050, et seq. During this time period,
23 counter-defendants Keating, Gigliotti and Mele were also assisted by James White,
24 who was employed as a member of TRG’s operations staff. As a licensed
25 Independent Advisor Representative of TRG, White, at the direction of the
26 individual counter-defendants and Ardent, was assisting Keating, Gigliotti and
27 Mele in their efforts.
28 ///
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1 48. There was a tacit or express agreement by and among all of the named
2 counter-defendants and co-conspirators to misappropriate TRG’s confidential,
3 proprietary and trade secret information and to utilize TRG’s client and prospective
4 client non-public information, and to violate SEC, 17 Code of Federal Regulations
5 § 248 (2016) and California Financial Code section 4050, et seq. (West 2004), to
6 take TRG’s business and to interfere with its prospective business advantage with
7 clients and prospective clients. The named counter-defendants have taken actions to
8 accomplish these goals either individually or in concert with others.
9 49. At the time that counter-defendants Gigliotti and Mele initially joined
10 TRG, they did not have securities licenses or clients. While Keating had a securities
11 license, he had been unable to generate any substantial income in the securities
12 industry and brought no clients to TRG. While working for TRG, neither Keating,
13 Gigliotti, or Mele were able to secure any of their own clients independent of
14 TRG’s resources.
15 50. TRG provided extensive individual training and experience for these
16 Advisors, funded any licensing requirements, gave them access to TRG’s trade
17 secrets (after a number of agreements had been signed to protect confidentiality),
18 paid for their participation in seminars and prospective client meetings, assigned
19 clients and prospective clients to them, prepared detailed Retirekit retirement plans
20 for prospective clients, and transferred clients from other Advisors to them. But
21 key to their success, was imparting to counter-defendants TRG’s proven trade
22 secrets which have generated substantial income for TRG as well as counter-
23 defendants.
24 51. State and federal laws, including SEC, 17 Code of Federal Regulations
25 § 248 (2016), and California Financial Code section 4050, et seq. (West 2004),
26 regulate the use of client non- public information. The use of the client information
27 is also regulated by TRG’s privacy policy which is provided to its clients on an
28 annual basis. Since their departure from TRG, counter-defendants Keating,
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1 Gigliotti, and Mele have systematically used and disclosed client information to
2 other counter-defendants and third parties in violation of California Financial Code
3 section 4050, et seq. (West 2004), their agreements with TRG and the TRG privacy
4 policy. As a part of their defense in this matter, Keating, Gigliotti, and Mele have
5 claimed that FSC’s privacy policy expressly allowed them to take certain customer
6 information with them upon departure and thus such conduct is permissible under
7 SEC, 17 Code of Federal Regulations § 248 (2016). California Financial Code
8 section 4050, et seq. (West 2004), however, requires affirmative “opt in”
9 affirmations from customers, none of which have been obtained.
10 52. Additionally, counter-defendants have used TRG’s trade secret
11 information and false and misleading representations and omissions to
12 systematically solicit TRG clients and prospective clients using mass e-mails,
13 robocalls, and calls from third-party telemarketers in Jamaica and Mexico. For
14 example, Keating has called several TRG clients and prospective clients making the
15 following misrepresentations:
16 • If they moved over to Securities America, Inc., the
only change for the client is in the “back office
17 operations.”
18 • “This has no effect on your financial accounts.”
19 • “Everyone will remain the same.”
20 • “[B]ecause there’s a new back office compliance
company we do have to have your authorization to
21 share your information . . . .”
22 53. Counter-Defendants have failed to disclose to TRG’s clients that the
23 identity of the new company for which they were soliciting business for was
24 Ardent, a California start-up branch office of a start-up Connecticut company,
25 which is affiliated with the RIA, Arbor Point Advisors. During this time, clients
26 were under the assumption that the Advisors were still affiliated with TRG.
27 54. TRG is informed and believed that counter-defendants have violated
28 additional securities laws and breached their agreements with TRG by contacting
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1 clients to move their accounts to Securities America while counter-defendants were

2 still licensed at TRG, a practice known as “selling away”; timing their defection
3 until after TRG paid for seminars for prospective clients in December 2014, so that
4 counter-defendants could take that prospective client information; and encourage
5 prospective clients who were receiving retirement distribution checks to wait to
6 deposit those checks until after counter-defendants had left TRG.
7 55. The acts of the counter-defendants are causing irreparable harm to
8 TRG, its business and its reputation in the industry, affecting future referrals, and it
9 is difficult to calculate the damage being suffered.
10 H. Counter-Defendants’ Violations of FINRA Rules
11 1. Standards of Commercial Honor and Principles of Trade
12 56. At all times relevant hereto, counter-defendants Keating, Gigliotti, and
13 Mele were members of the FINRA, and were governed by its rules and regulations.
14 57. At all times relevant hereto, FSC was also a FINRA member firm.
15 58. FINRA Rule 2010 provides as follows:
16 “2010. Standards of Commercial Honor and Principles
of Trade
17
A member, in the conduct of its business, shall observe
18 high standards of commercial honor and just and
equitable principles of trade.”
19
20 59. Counter-Defendants Keating, Gigliotti, and Mele have used TRG’s
21 trade secret information to systematically solicit TRG clients and prospective
22 clients using mass e-mails and robocalls which solicit TRG clients and prospective
23 clients with false and misleading representations and omissions, as alleged in detail
24 above.
25 60. These actions violated the standards of commercial honor and
26 principles of fair trade in FINRA Rule 2010.
27 ///
28 ///
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1 2. Counter-Defendants’ Outside Business Activities

2 61. FINRA Rule 3270 provides as follows:
3 “3270. Outside Business Activities of Registered
Persons
4
No registered person may be an employee, independent
5 contractor, sole proprietor, officer, director or partner of
another person, or be compensated, or have the reasonable
6 expectation of compensation, from any other person as a
result of any business activity outside the scope of the
7 relationship with his or her member firm, unless he or she
has provided prior written notice to the member, in such
8 form as specified by the member. Passive investments and
activities subject to the requirements of Rule 3280 shall
9 be exempted from this requirement.”
10 62. FINRA Rule 3280 prohibits any person associated with a member
11 from participating in a “private securities transaction,” unless done in accordance
12 with the requirements of FINRA Rule 3280. FINRA Rule 3280(a). The rule
13 defines such a transaction as follows:
14 “Private securities transaction” shall mean any securities
transaction outside the regular course or scope of an
15 associated person’s employment with a member,
including, though not limited to, new offerings of
16 securities which are not registered with the
Commission . . . .” FINRA Rule 3828(e)(i).
17
18 63. According to the California Secretary of State website, on
19 November 15, 2010 – during the time he was at TRG – Keating created CIA.
20 Keating is listed as CIA’s agent for service of process, and upon information and
21 belief, Keating is also an employee, independent contractor, officer, and/or director
22 of that entity.
23 64. Upon information and belief, Keating has been compensated and/or
24 has a reasonable expectation of compensation by CIA as a result of business
25 activities outside the scope of the relationship with his member firm, FSC. Upon
26 information and belief, Keating’s outside business activities include, but are not
27 limited to buying and selling securities and providing investment advice.
28 ///
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1 65. Keating failed to disclose the existence of CIA and his outside
2 business activities in connection with that entity to TRG, FSC, or to the Office of
3 Supervisory Jurisdiction (“OSJ”) in his annual disclosure statement or otherwise.
4 Upon information and belief, Keating also failed disclose his outside business
5 activities to FINRA or the SEC.
6 66. Silvers has been an employee of CIA since November 2013.
7 67. According to the California Secretary of State website, on January 14,
8 2014 – during the time he was at TRG – Gigliotti created a business called Richard
9 Gigliotti, Inc. Upon information and belief, Gigliotti is an employee, independent
10 contractor, officer, and/or director of that entity.
11 68. Upon information and belief, Gigliotti has been compensated and/or
12 has a reasonable expectation of compensation by Richard Gigliotti, Inc. as a result
13 of business activities outside the scope of the relationship with his member firm,
14 FSC. Upon information and belief, Gigliotti’s outside business activities include,
15 but are not limited to buying and selling securities and providing investment advice.
16 69. Gigliotti failed to disclose the existence of Richard Gigliotti, Inc. and
17 his outside business activities in connection with that entity to TRG, FSC, or to the
18 OSJ in his annual disclosure statement or otherwise. Upon information and belief,
19 Gigliotti also failed disclose his outside business activities to FINRA or the SEC.
20 70. According to the California Secretary of State website, on May 19,
21 2014 – during the time he was at TRG – Mele created a business called Mele
22 Wealth Management, Inc. Upon information and belief, Mele is an employee,
23 independent contractor, officer, and/or director of that entity.
24 71. Upon information and belief, Mele has been compensated and/or has a
25 reasonable expectation of compensation by Mele Wealth Management, Inc. as a
26 result of business activities outside the scope of the relationship with his member
27 firm, FSC. Upon information and belief, Mele’s outside business activities include,
28 but are not limited to buying and selling securities and providing investment advice.
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1 72. Mele failed to disclose the existence of Mele Wealth Management,

2 Inc. and his outside business activities in connection with that entity to TRG, FSC,
3 or to the OSJ in his annual disclosure statement or otherwise. Upon information
4 and belief, Mele also failed disclose his outside business activities to FINRA or the
5 SEC.
6 3. Improper Use of Customers’ Securities or Funds
7 73. FINRA Rule 2150 provides in relevant part as follows:
8 “2150. Improper Use
9 No member or person associated with a member shall
make improper use of a customer’s securities or funds.”
10
11 74. Upon information and belief, shortly before his departure from TRG,
12 Gigliotti received a request for a client to roll over the client’s funds to be managed
13 by TRG. However, Gigliotti, waited one month until his departure from TRG, so
14 that he would be able to manage the client’s account independent of TRG. Against
15 the client’s best interest, Gigliotti left the client’s funds not invested for
16 approximately one month.
17 75. These activities of Gigliotti violated the provision of FINRA
18 Rule 2150.
19 4. Lack of Supervision by Member Firms
21 “3110. Supervision
22 (a) Supervisory System
Each member shall establish and maintain a system to
23 supervise the activities of each associated person that is
reasonably designed to achieve compliance with
24 applicable securities laws and regulations, and with
applicable FINRA rules. Final responsibility for proper
25 supervision shall rest with the member.”
26 77. Upon information and belief, Michael Dalton was paid by Securities
27 America to give approximately $300,000 in bonuses to Dalton for enticing TRG
28 Advisors to breach their contract with TRG and join Securities America.
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1 Additionally, Securities America approved the sending of misleading documents

2 and letters to former TRG clients and TRG prospects, and allowed Keating, Mele,
3 and Gigliotti to transfer TRG client accounts to Securities America before obtaining
4 the proper consent acknowledgements from these clients. Securities America
5 retained client documents and information received from Keating, Gigliotti, and
6 Mele from clients who did not consent to be transferred.
7 78. These actions and the failure to supervise Keating, Gigliotti, and Mele
8 violated the provision of FINRA rule 3110.
9 5. Improper Rewards to Employees of Others
11 “3220. Influencing or Rewarding Employees of Others
12 (a) No member or person associated with a member shall,
directly or indirectly, give or permit to be given anything
13 of value, including gratuities, in excess of one hundred
dollars per individual per year to any person, principal,
14 proprietor, employee, agent or representative of another
person where such payment or gratuity is in relation to the
15 business of the employer of the recipient of the payment
or gratuity. A gift of any kind is considered a gratuity.
16
* * *
17
(c) A separate record of all payments or gratuities in any
18 amount known to the member, the employment agreement
referred to in paragraph (b) and any employment
19 compensation paid as a result thereof shall be retained by
the member for the period specified by SEA Rule 17a-4.”
20
21 80. Upon information and belief, shortly before his departure from TRG,
22 Keating enticed Lujano with a bonus of $10,000, during which time Lujano was
23 Keating’s assistant and a TRG employee. As alleged above, after Keating’s
24 departure from TRG, Ardent employed Lujano.
25 81. Upon information and belief, the bonus payment to Lujano was clearly
26 in relation to the business of her employer, TRG. Also upon information and
27 belief, the bonus payment induced Lujano to assist Keating in stealing confidential
28 and trade secret materials from TRG.
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1 82. Upon information and belief, Keating failed to keep a separate record
2 of the payments or gratuities known to him, including the $10,000 bonus to Lujano.
3 83. Keating’s actions, alleged above, violated FINRA Rule 3220.
4 FIRST CLAIM FOR RELIEF
5 (Misappropriation of Trade Secrets against all Counter-Defendants)
6 84. TRG incorporates by reference paragraphs 1 through 83 above as
7 though fully set forth herein.
8 85. TRG has created substantial intellectual property rights and
9 confidential/proprietary, trade secret business information relating to clients and
10 prospective clients and has an ownership interest in said proprietary information.
11 This business information is not generally known in the industry and has substantial
12 value. If obtained by a competitor, this information could be used to directly solicit
13 and obtain business from TRG clients and prospects and could allow a competitor
14 to unfairly compete with Counterclaimant. The information is contained in the
15 Sales Force database maintained by TRG, seminar sign-up sheets (such as those
16 misappropriated by Keating), and other computer and hard copy files. The
17 confidential and trade secret information taken by the counter-defendants has been
18 compiled at great expenditure of time and money by TRG, its employees and its
19 Advisors, for TRG’s benefit.
20 86. Counterclaimant has engaged in substantial efforts to maintain the
21 secrecy of its proprietary and trade secret client and prospective client information.
22 87. In violation of California law, counter-defendants have
23 misappropriated TRG’s trade secret information in order to solicit business from
24 TRG clients and prospective clients, and some of the counter-defendants have
25 already engaged in direct solicitation of clients and prospective clients with the use
26 of these trade secrets. At the time of the use and disclosure, counter-defendants
27 knew that their knowledge of the trade secrets was acquired under circumstances
28 giving rise to a duty to maintain its secrecy. counter-defendants have made
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1 numerous false and misleading statements in their solicitation efforts directed at

2 TRG clients and prospective clients.
3 88. As a direct and proximate cause of counter-defendants’
4 misappropriation of Counterclaimant’s trade secrets, Counterclaimant’s clients and
5 prospective clients have altered or will alter their economic relationships with
6 Counterclaimant and Counterclaimant will lose business from said clients and
7 prospective clients in the future. Counterclaimant accordingly has suffered and is
8 suffering damages proximately caused by counter-defendants’ conduct in an
9 amount to be proven at trial and seeks recovery of all proximately caused damages
10 and unjust enrichment obtained by counter-defendants.
11 89. Counter-Defendants’ misappropriation of Counterclaimant’s trade
12 secrets was and is willful and malicious entitling Counterclaimant to double
13 damages and an award of attorneys’ fees and costs.
14 SECOND CLAIM FOR RELIEF
15 (Breach of Contract against Keating, Gigliotti, and Mele)
16 90. TRG incorporates by reference paragraphs 1 through 83 and
17 85 through 89 above as though fully set forth herein.
18 91. Counter-Defendants Keating, Gigliotti, and Mele entered into various
19 written contractual agreements with TRG (or its effective predecessor-in-interest)
20 including, but not limited to, the attached Marketing and License Agreements
21 (Exhibits 1-3), Confidentiality Agreement (Exhibit 4), On-Line User’s Agreement
22 (Exhibit 5) and Sales Force Legal Disclaimer (Exhibit 6). As consideration for
23 entering into these agreements, these named counter-defendants were given
24 substantial training, were given access to TRG’s trade secret database, were
25 supplied with administrative and operations support and were given the opportunity
26 to and did earn substantial revenue.
27 ///
28 ///
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1 92. Implied in every contract is a duty of good faith and fair dealing not to
2 engage in any conduct that is intended to deprive other parties to the contract of the
3 benefits of the contract.
4 93. Counter-Defendants Keating, Gigliotti, and Mele’s respective
5 performance under their written contractual agreements with Counterclaimant was
6 neither waived nor excused, and Counterclaimant fully performed under the terms
7 of the respective agreements.
8 94. Counter-Defendants Keating, Gigliotti, and Mele have systematically
9 breached the express terms of their written agreements with TRG and their
10 respective duties of good faith and fair dealing by misappropriating non-public
11 client and prospective client information, by misappropriating hard, electronic, and
12 photographic copies of client and prospective client files and documents, by
13 actively soliciting business from the clients and prospective clients of
14 Counterclaimant, by making false or misleading statements in their efforts to solicit
15 business and by inducing other TRG Advisors and employees to terminate their
16 employment and/or business relationship with TRG.
17 95. TRG has demanded that these counter-defendants comply with their
18 contractual requirements regarding any notices to clients and agree to pay for the
19 transfer of any client accounts in the event that clients elected to transfer accounts
20 to counter-defendants new broker-dealer and/or RIA under the terms of the
21 Marketing and License Agreements. (Exhibits 1-3) counter-defendants Keating,
22 Gigliotti, and Mele have refused to comply with their Agreements and have
23 systematically breached material terms.
24 96. As a proximate result of the breach of their respective Marketing and
25 License Agreements by Keating, Gigliotti, and Mele, TRG has lost critical
26 employee and contractor staff, has lost or will lose clients and/or prospective
27 clients, and has suffered damage to reputation. TRG’s has suffered monetary
28 damages in an amount to be proven at trial.
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1 97. Unless enjoined, counter-defendants Keating, Gigliotti, and Mele will

2 continue to violate their agreements and will continue to cause irreparable harm to
3 TRG for which monetary relief is inadequate. In their Marketing and License
4 Agreements, attached as Exhibits 1-3, counter-defendants Keating, Gigliotti, and
5 Mele agreed that injunctive relief would be appropriate in the event of the material
6 breaches alleged in this counterclaim, and TRG seeks injunctive relief.
7 THIRD CLAIM FOR RELIEF
8 (Breach of Contract against Sullivan and Silvers)
9 98. TRG incorporates by reference paragraphs 1 through 83, 85 through
10 89, and 91 through 97 above as though fully set forth herein.
11 99. Counter-Defendants Sullivan and Silvers entered into various written
12 contractual agreements with TRG and/or for which TRG was a third-party
13 beneficiary including, but not limited to, the attached Marketing and License
14 Agreement (Exhibits 9), the attached Independent Contractor Agreement for
15 Registered Principal/OSJ (Exhibit 8), Confidentiality Agreement (Exhibit 4), and
16 the On-Line User’s Agreements (Exhibit 5). As consideration for entering into
17 these agreements, these named counter-defendants were given loans, substantial
18 training, access to TRG’s trade secret information, were given user names and
19 passwords to access databases maintained by necessary third parties, were supplied
20 with administrative and operations support to assist with appointment setting and
21 financial transactions and were given the opportunity to and did earn significant
22 monetary commissions.
23 100. Implied in every contract is a duty of good faith and fair dealing not to
24 engage in any conduct that is intended to deprive other parties to the contract of the
25 benefits of the contract.
26 101. Counter-Defendants Sullivan and Silvers’ performance under
27 their written contractual agreements with Counterclaimant was neither waived nor
28 ///
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1 excused, and Counterclaimant fully performed under the terms of the respective
2 agreements.
3 102. Counter-Defendants Sullivan and Silvers systematically breached their
4 duty of good faith and fair dealing as well as section 11 of their respective
5 Marketing and License Agreements with TRG by actively soliciting TRG Advisors
6 and employees to terminate their employment with TRG and to work for these
7 counter-defendants and their company, counter-defendant Ardent. These counter-
8 defendants actively solicited the TRG employees/Advisors in order to
9 misappropriate TRG’s business and its confidential, proprietary and trade secret
10 information, have misappropriated said information and have used said information
11 to assist in the disruption of TRG’s relationships with its clients and prospective
12 clients. The Advisors solicited include, but are not limited to, counter-defendants
13 Keating, Gigliotti, and Mele, and the employees solicited include, but are not
14 limited to, White and Lujano. TRG has or will lose clients and prospective clients
15 and will incur substantial expense replacing the employees/Advisors.
16 103. As a proximate result of the breach of their contractual obligations and
17 duty of good faith and fair dealing, Sullivan, and Silvers have caused TRG to suffer
18 damages in an amount to be proven at trial.
19 FOURTH CLAIM FOR RELIEF
20 (Unfair Trade Practices against all Counter-Defendants)
22 89, 91 through 97, and 99 through 103 above as though fully set forth herein.
23 105. The conduct of counter-defendants, as described above, including,
24 without limitation, their use of mass e-mails and robocalls to solicit TRG clients
25 and prospective clients with false and misleading representations and omissions,
26 not only breached agreements entered into with TRG, but, also, in the case of
27 the clients, violated California Financial Code section 4050, et seq. (West 2004)
28 ///
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1284816v5 Case No. 3:15-cv-00057-L-AGS
1 through the unlawful disclosure of TRG’s customer’s nonpublic information.

2 These acts were unlawful, unfair, and/or fraudulent.
3 106. In addition, counter-defendants’ conduct violated FINRA Rules 2010,
4 3270, 3280, and 3220 related to standards of commercial honor and principles of
5 trade, outside business activities of registered persons, “selling away,” and
6 influencing or rewarding employees of others. These acts were unlawful, unfair
7 and/or fraudulent.
8 107. Further, counter-defendants’ conduct violated the California
9 Comprehensive Computer Data Access and Fraud Act, California Penal Code
10 section 502 (West 2016), as alleged herein. These acts were unlawful, unfair,
11 and/or fraudulent.
12 108. Counter-Defendants’ conduct constitutes unlawful and unfair trade
13 practices. Counterclaimant, seeks recovery from counter-defendants for violations
14 of California Business and Professions Code section 17200, et seq. (West 2016), as
15 a result of counter-defendants’ fraudulent and unlawful activities as alleged herein.
16 109. By reason of the foregoing, counter-defendants have been improperly
17 and unjustly enriched, at the expense of Counterclaimant, in an amount as yet
18 unascertained and to be proven at the time of trial so that counter-defendants can
19 make appropriate restitution.
20 110. Counterclaimant further requests the award of all attorneys’ fees and
21 costs associated with the bringing of this action under California Business and
22 Professions Code section 17200, et seq. (West 2016).
23 FIFTH CLAIM FOR RELIEF
24 (California Comprehensive Computer Data Access and Fraud Act,
25 California Penal Code section 502, against Keating, Gigliotti, and Mele)
27 89, 91 through 97, 99 through 103, and 105 through 110 above as though fully set
28 forth herein.
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1284816v5 Case No. 3:15-cv-00057-L-AGS
1 112. Counter-Defendants Keating, Gigliotti, and Mele knowingly accessed

2 and without permission altered, damaged, deleted, destroyed, and used TRG’s data,
3 computers, computer systems and/or computer network in order to: (a) devise
4 and/or execute a scheme to defraud and deceive; (b) to wrongfully control or obtain
5 property and/or data; and (c) with the help of Silvers and Ardent, destroyed
6 computers and carried out a “scorched Earth” policy on computers and electronic
7 equipment, in violation of California Penal Code section 502(c)(1) (West 2016).
9 and without permission took, copied, and/or used data and supporting
10 documentation from TRG’s computers, computer systems and/or computer network
11 in violation of California Penal Code section 502(c)(2) (West 2016).
12 114. Counter-Defendants Keating, Gigliotti, and Mele knowingly and
13 without permission used or caused to be used TRG’s computer services in violation
14 of California Penal Code section 502(c)(3) (West 2016).
16 and without permission altered, damaged, deleted, and destroyed data on TRG’s
17 computers, computer systems and/or computer network in violation of California
18 Penal Code section 502(c)(4) (West 2016).
19 116. Counter-Defendants Keating, Gigliotti, and Mele knowingly and
20 without permission accessed or caused to be accessed TRG’s computers, computer
21 systems, and/or computer network in violation of California Penal Code
22 section 502(c)(7) (West 2016).
23 117. TRG suffered and continues to suffer damage as a result of counter-
24 defendants Keating’s, Gigliotti’s, and Mele’s violations of the California Penal
25 Code section 502 (West 2016), identified above.
26 118. Counter-Defendants Keating’s, Gigliotti’s, and Mele’s conduct also
27 caused irreparable and incalculable harm and injuries to TRG (including, but not
28 ///
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1284816v5 Case No. 3:15-cv-00057-L-AGS
1 limited to, TRG’s reputation and goodwill), and, unless enjoined, will cause further
2 irreparable and incalculable injury, for which TRG has no adequate remedy at law.
3 119. Counter-Defendants Keating, Gigliotti, and Mele willfully violated
4 California Penal Code section 502 (West 2016) in disregard and derogation of
5 TRG’s rights and exceeded their authorization to access TRG’s computers,
6 computer systems, computer network, and/or data for legitimate purposes.
7 Counter-Defendants’ actions as alleged above were carried out with oppression,
8 fraud, and malice.
9 120. Pursuant to California Penal Code section 502(e) (West 2016), TRG is
10 entitled to injunctive relief, compensatory damages, punitive, or exemplary
11 damages, attorneys’ fees, costs and other equitable relief.
12 PRAYER FOR RELIEF
13 WHEREFORE, TRG prays for judgment against counter-defendants, and
14 each of them, as follows:
15 1. For compensatory damages (including restitution and unjust
16 enrichment) according to proof;
17 2. For special damages according to proof;
18 3. For treble damages under California Business and Professions Code
19 section 17082 (West 2016);
20 4. For double damages under California Civil Code section 3426.3
21 (West 2016);
22 5. For reasonable attorneys’ fees under any statute or law providing such
23 entitlement, including but not limited to California Civil Code section 3426.4
24 (West 2016) and Penal Code section 502 (West 2016);
25 6. For pre-judgment interest on all damages at the maximum legal rate;
26 7. For costs of suit;
27 8. For punitive and exemplary damages in a sum sufficient to punish
28 counter-defendants, and deter future repetitions of said or similar conduct; and
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1284816v5 Case No. 3:15-cv-00057-L-AGS
1 9. For such other further relief as the court may deem just and proper.
2 JURY DEMAND
3 Counterclaimant hereby demands trial by jury as to all issues so triable in this
4 action.
5 MICHAEL S. LEBOFF
KLEIN & WILSON
6 _
7 Dated: December 28, 2016 /s/ Michael S. LeBoff
8 Michael S. LeBoff
Attorneys for Defendant and
9 Counterclaimant The Retirement
10 Group, LLC
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1284816v5 Case No. 3:15-cv-00057-L-AGS
1 INDEX OF EXHIBITS
2 EX. DESCRIPTION
3 1 Marketing and License Agreement executed by Keating
4 2 Marketing and License Agreement executed by Gigliotti
5 3 Marketing and License Agreement executed by Mele
6 4 Sample Confidentiality Agreement executed by Keating (all TRG
7 Advisors executed the same document)
8 5 Sample On-Line User’s Agreement executed by Keating (all TRG
9 Advisors executed the same document)
10 6 Sales Force Legal Disclaimer – splash screen for client and
11 prospective client database utilized by TRG and which appeared each time the
12 former Advisors of TRG accessed the database
13 7 Privacy of TRG provided to all clients on an annual basis
14 8 Independent Contractor Agreement for Registered Principal/OSJ
15 executed by Sullivan
16 9 Marketing and License Agreement executed by Silvers
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1284816v5 Case No. 3:15-cv-00057-L-AGS

Counterclaim Misappropriation of Trade Secrets

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Case 3:15-cv-00057-L-AGS Document 108 Filed 12/28/16 Page 1 of 37

1 Scott L. Metzger, Esq. (Bar No. 89718)

1 THE RETIREMENT GROUP,

1 Counterclaimant The Retirement Group, LLC (hereinafter,

1 3. Counter-Defendant Keating is an individual residing at all relevant

1 counter-defendants Keating, Gigliotti, and Mele and, after counter-defendants

1 18. TRG has developed a comprehensive and propriety business model to

1 databases maintained by third parties, as required for regulatory purposes

1 “8.3 Title to TRG Confidential Information. Licensee

1 This relief is cumulative with any and all other

1 TRG’s in-house system. A copy of the Keating Corporate Online Systems

1 LLC to third parties under the confidentiality provisions

1 program, among others, was shared under the confidentiality provisions of

1 proprietary, and trade secret information. Counterclaimant is informed and believes

1 Branch Office Development at 1-800-989-8441 for more

1 clients to move their accounts to Securities America while counter-defendants were

1 2. Counter-Defendants’ Outside Business Activities

1 72. Mele failed to disclose the existence of Mele Wealth Management,

1 Additionally, Securities America approved the sending of misleading documents

1 numerous false and misleading statements in their solicitation efforts directed at

1 97. Unless enjoined, counter-defendants Keating, Gigliotti, and Mele will

1 through the unlawful disclosure of TRG’s customer’s nonpublic information.

1 112. Counter-Defendants Keating, Gigliotti, and Mele knowingly accessed

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