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Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 1 of 21 Page ID #:1

1 Brandon S. Reif, Esq. (State Bar No. 214706) E-


Mail: Docket@ReifLawGroup.com
2 REIF LAW GROUP, P.C.
1925 Century Park East - Suite 1700
3 Los Angeles, California 90067
Telephone: (310) 494-6500
4
David C. Silver, Esq. (pro hac vice forthcoming)
5 SILVER MILLER
11780 W. Sample Road
6
Coral Springs, Florida 33065
7 Telephone: (954) 516-6000
DSilver@SilverMillerLaw.com
8
Attorneys for Plaintiff Craig Clemens
9
UNITED STATES DISTRICT COURT
10
FOR THE CENTRAL DISTRICT OF CALIFORNIA
11

12 CRAIG CLEMENS, an individual; Case No. 2:19-cv-07834

13 Plaintiff, COMPLAINT FOR:


(1) VIOLATION OF SECTION 5(a) and (c)
14 v. OF THE SECURITIES ACT
15 ULEDGER, INC., a Delaware corporation; (2) BREACH OF CONTRACT
JOSH McIVER, an individual; TAULANT (3) FRAUDULENT MISREPRESENTATION
16 (4) NEGLIGENT MISREPRESENTATION
RAMABAJA, an individual;
PETE ANEWALT, an individual; and LORIEN (5) FRAUDULENT CONCEALMENT
17 (6) UNJUST ENRICHMENT
NEWMAN, an individual;
18 (7) BREACH OF IMPLIED DUTY OF GOOD
Defendants. FAITH AND FAIR DEALING
19 (8) ALTER EGO LIABILITY
(9) CIVIL CONSPIRACY
20

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 2 of 21 Page ID #:2

1 Plaintiff CRAIG CLEMENS, an individual (hereafter referred to as “Plaintiff”), by and through


2 undersigned counsel, sues Defendants ULEDGER, INC., a Delaware corporation (“ULEDGER”);
3 JOSH McIVER, an individual; TAULANT RAMABAJA, an individual; PETE ANEWALT, an
4 individual (McIVER, RAMABAJA, and ANEWALT collectively the “Management Team
5 Defendants”) and LORIEN NEWMAN, an individual, for damages. As grounds therefor, Plaintiff
6 alleges the following:
7 PRELIMINARY STATEMENT
8 1. ULEDGER is a start-up technology company that purports to have succeeded in
9 “leveraging blockchain’s capability to create an immutable history of data” to give its customers “a
10 secure, private, tamper-proof, mathematically verifiable record of the content of their data at a point
11 in time.” By doing so, ULEDGER claims to provide its clients’ data “greater integrity and makes it
12 easily verifiable in the event of audit, legal challenge, or regulatory inquiry.”
13 2. Between late-2017 and late-2018, ULEDGER offered and sold to numerous investors
14 the future right to digital tokens called “ULD” tokens (hereafter, “ULDs” or “ULD Tokens”) created
15 by ULEDGER for use on ULEDGER’s electronic network.
16 3. Through these efforts, Defendants raised approximately Thirty Million Dollars
17 ($30,000,000.00), while also artificially inflating the value of ULDs that Defendants retained for their
18 own profit.
19 4. Plaintiff was one of the investors who purchased ULDs from Defendants, having
20 invested Three Hundred Thousand Dollars ($300,000.00) in Defendants’ venture.
21 5. Defendants’ offer and sale of ULDs was rife with misleading and misrepresentative
22 material statements, omissions of material information, involved breaches of binding agreements, failed
23 to include proper disclosures, and was not registered with the SEC.
24 6. To date, Defendants have failed to produce any viable product, good, or service; and
25 without any utility or viable resale market, the ULD Tokens sold to investors (including Plaintiff) are
26 essentially worthless.
27

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 3 of 21 Page ID #:3

1 7. Defendants pocketed large sums of money for their promotional efforts, and – due to
2 their many misrepresentations, factual omissions, and unlawful action – Plaintiff will not see any return
3 on his investment.
4 8. In sum, Defendants, as insiders, enriched themselves at the expense of their investors.
5 9. As a result of Defendants’ pattern of wrongful conduct, Plaintiff seeks damages in the
6 principal sum of Three Hundred Thousand Dollars ($300,000.00), plus attorneys’ fees and costs, along
7 with any other relief that this Court deems equitable and appropriate.
8 THE PARTIES
9 PLAINTIFF
10 10. Plaintiff CRAIG CLEMENS (“Plaintiff”) is a natural person domiciled in West
11 Hollywood, California and is sui juris.
12 DEFENDANTS
13 11. Defendant ULEDGER, INC. (“ULEDGER”) is a Delaware corporation founded in May
14 2016, and it has its principal place of business in Boise, Idaho. ULEDGER also promotes that it
15 maintains offices in New York City [USA], Prishtina [Kosovo], Milan [Italy], and Linz [Austria].
16 12. Defendant JOSH McIVER (“McIVER”) is a natural person domiciled in Boise, Idaho
17 and is sui juris. Defendant McIVER is a control person of ULEDGER, co-founded ULEDGER along
18 with Defendants RAMABAJA and ANEWALT, served until August 2019 as the company’s CEO, and
19 is a member of ULEDGER’s Management Team. Although shortly before the date of this filing
20 ULEDGER advised its investors that McIVER would be resigning as Chief Operating Officer,
21 ULEDGER also advised that McIVER would retain his position on the company’s Board of Directors.
22 Upon information and belief, McIVER remains a control person of the company.
23 13. Defendant TAULANT RAMABAJA (“RAMABAJA”) is a natural person domiciled in
24 Kosovo and is sui juris. Defendant RAMABAJA is a control person of ULEDGER; co-founded
25 ULEDGER along with Defendants McIVER and ANEWALT, serves as the Chief Technology Officer
26 of ULEDGER, and is a member of ULEDGER’s Management Team.
27 14. Defendant PETE ANEWALT (“ANEWALT”) is a natural person domiciled in Boise,
28 Idaho and is sui juris. Defendant ANEWALT is a control person of ULEDGER; co-founded

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 4 of 21 Page ID #:4

1 ULEDGER along with Defendants McIVER and RAMABAJA, serves as the Chief Operating Officer
2 of ULEDGER, and is a member of ULEDGER’s Management Team.
3 15. Defendant LORIEN NEWMAN (“NEWMAN”) is a natural person domiciled in Israel
4 and is sui juris. Defendant NEWMAN served ULEDGER from October 2017 through and including
5 April 2019 as a “Security Token Adviser.”
6 16. Upon information and belief, ULEDGER was a mere instrumentality to pay personal
7 expenses of, and provide benefits to, the Management Team and Token Advisors like NEWMAN.
8 JURISDICTION AND VENUE
9 17. This Court has original jurisdiction over the subject matter of this action pursuant to 28
10 U.S.C. § 1331, because the matter in controversy arises under the laws of the United States.
11 18. This Court also has supplemental jurisdiction over the state law claims pursuant to 28
12 U.S.C. § 1367.
13 19. This Court has personal jurisdiction over Defendants because: (a) at least one Defendant
14 is operating, present, and/or doing business within this District, and (b) Defendants’ breaches and
15 unlawful activity occurred within this District.
16 20. Venue is proper pursuant to 28 U.S.C. § 1391 in that at least one Defendant resides in
17 this judicial district and at least one Defendant is subject to the court’s personal jurisdiction with respect
18 to this action. In light of the foregoing, this District is a proper venue in which to adjudicate this dispute.
19 GENERAL FACTUAL ALLEGATIONS
20 BIRTH OF ULEDGER
21 21. Co-founded by Defendants McIVER, RAMABAJA, and ANEWALT in 2016,
22 ULEDGER set out “to provide digital solutions for our customers who require increasing levels of
23 protection and trust in today's regulated environment, via Blockchain technology.”
24 22. Through a slew of promotions including speaking engagements, social media postings,
25 and self-published articles purporting that ULEDGER satisfied a growing need in the marketplace,
26 Defendants set out to increase awareness of ULEDGER’s services and to heighten interest in investing
27 in ULEDGER’s efforts.
28 23. The following are examples of promotional tactics utilized by Defendants.

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 5 of 21 Page ID #:5

PUBLIC PROMOTIONAL TACTICS


1

2 A. Spreading the Word: Conferences and Panels.


24. In November 2016, ULEDGER promoted its appearance at the first of many
3
technology-focused conferences and panel discussions at which ULEDGER would expand awareness
4
of its services and attempt to generate credibility in what its company had to offer:
5

7
8

9
10

11 25. ULEDGER continued that “brand-building” approach by having Defendants McIVER


12 and ANEWALT, among others, each appear at numerous conferences -- promoting those appearances
13 via social media.
14 B. Podcasts, Radio, and Print Media Appearances.
15 26. Likewise, Defendants leveraged their contacts to attract favorable press coverage and
16 promoted ULEDGER through numerous appearances by Defendants McIVER, RAMABAJA, and
17 ANEWALT in widespread media such as podcasts, radio, and print.
18 27. Defendants used this favorable press to advertise their company and to increase interest
19 in their ultimate offer and sale of ULD Tokens.
20
C. Bold Representations and Declarations.
21 28. To enhance the public’s belief in the effectiveness of ULEDGER’s services, the
22 company made bold promotional representations that utilizing ULEDGER’s “three-factor, event-
23 based” security features would “ensure you know who you are communicating with” and would make
24 computer attacks like phishing “nearly impossible”:
25

26

27

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 6 of 21 Page ID #:6

7
8 29. Bold representations such as these continued throughout Defendants’ promotion of their
9 services and the offer and sale of ULD Tokens.
10
D. Communicating with Potential/Actual Investors on Reddit and Other Messaging
11 Channels.

12 30. Defendants encouraged and solicited investment in ULD Tokens with potential and

13 actual investors through various social media and messaging channels, such as Reddit.

14 31. Upon information and belief, Defendants, among others, served as “admins” of the

15 ULEDGER Reddit community under the name “u/ULedger”, where they regularly promoted to the

16 members of their community of followers information about ULEDGER, including investment

17 information and other promotional materials:

18
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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 7 of 21 Page ID #:7

E. Publishing Articles on its own Blog to Promote Investment in ULedger.


1
32. Defendants’ promotional efforts further included publishing content, like articles, on
2
ULEDGER’s own self-published blog and on websites popular among, and targeted to, potential
3
investors.
4
33. For example, McIVER published an article in July 2018 on ULEDGER’s own blog titled
5
“Why is ULedger Raising Capital?” to promote the company’s credentials and to induce investment.1
6
34. In the article, McIVER represented that there was “a lot interest from investors in
7
ULEDGER,” that ULEDGER would offer investors “security tokens” issued by the company that are
8
fully compliant with U.S. securities regulations, and that ULEDGER’s “projects and joint ventures
9
with companies like Deloitte, The City of Boise, AmerisourceBergen, Thomson Reuters, Brickschain,
10
and many more” ensured that the company had “working products, IP, and some recurring revenue.”
11
35. Most significantly, McIVER explicitly represented in the article that ULD Tokens had
12
“multi-faceted value” that would provide profit to investors, to wit:
13

14

15

16

17

18
36. Plaintiff detrimentally relied on Defendants’ misstatements, misrepresentations and
19
omissions of material facts when Defendants obtained favorable press, such as online articles about
20
Defendants’ team and capabilities when Plaintiff decided to purchase, acquire, hold, and not sell ULD
21
Tokens.
22
37. Plaintiff detrimentally relied on Defendants’ misstatements, misrepresentations and
23
omissions of material facts when Defendants indicated that ULD Tokens would follow the most popular
24
monetary-policy features of bitcoin (e.g., finite supply, anti-inflationary, etc.) when Plaintiff decided
25
to purchase, acquire, hold, and not sell ULD Tokens.
26

27

28 1
https://www.uledger.co/uledger-raising-capital/.

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 8 of 21 Page ID #:8

PRIVATE REPRESENTATIONS BY ULEDGER TO PLAINTIFF TO INDUCE HIS INVESTMENT


1
38. Commencing in or about November 2017, Plaintiff engaged in regular correspondence
2
on a Telegram channel with ULEDGER representative NEWMAN, who communicated under the
3
pseudonym “Martin Gore” to induce Plaintiff’s interest in purchasing ULD Tokens.
4
39. According to ULEDGER’s website, NEWMAN is a “Token Advisor” for the company. 2
5
40. According to NEWMAN’s own profile on LinkedIn, he served ULEDGER from
6
October 2017 through and including April 2019 as a “Security Token Adviser.” 3
7
41. Throughout their correspondence, NEWMAN -- on behalf of ULEDGER -- made
8
numerous false statements and misrepresentations of material facts about ULEDGER to induce
9
Plaintiff’s investment in ULD Tokens.
10
42. Among the false representations and misrepresentations NEWMAN made to Plaintiff
11
on ULEDGER’s behalf are the following:
12
13 a. ULEDGER would be able to remove the “lock-up” period restricting
Plaintiff’s ability to sell his ULD Tokens following the date on which
14 Plaintiff were to purchase them, while other ULEDGER investors would not
have that freedom;
15
b. “[E]ven with a lockup, you are still up for huge profits, as there is no way
16 ETH will drop but [ ] only go up”;
17 c. Plaintiff’s investment was projected to bring Plaintiff a profit in the range of
18 200% - 400%;

19 d. “[T]his is a real project[,] with [ ] current clients[,] a working product[,] super


hard to end up losing here”;
20
e. “based on the entry price . . . easy to make a profit”;
21
f. “i don’t believe there are better opertunituies [sic.] out there . . . this is a
22 solid serious [sic.] project”;
23
g. Investing is ULD Tokens is “a super safe investment”;
24
h. ULEDGER was “waiting for radien network to go live which will 100%
25 prove that their token is not a security . . . as they are an ameri[c]an company
100% operating with regulations”;
26

27 2
https://www.uledger.co/team/lorien-newman/.
28 3
https://www.linkedin.com/in/lorien-n-18aa83110/.

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 9 of 21 Page ID #:9

i. “this is pretty low risk based on all that is offered. It more or lesss [sic.] has
1
its road paived [sic.]”;
2
j. “your ETH is protected. [A]nd so is your 100% bonus no matter what the
3 rate is”;

4 k. “the hard cap is very reasonable and ETH cap of 87000 will most likely
drop.. making your 1000 even more valuable”;
5
l. “can[’]t think of anything that has been more promising than this one.
6 especaly [sic.] as it 100% works with regualtion [sic.] which is a HUGE BIG
7 DEAL right now”;

8 m. “msot [sic.] other projects are all at risk.. this one? zero”;

9 n. “how can u u end up not making big money here?”;

10 o. “there is nothing about this project which leaves open ques[t]ions or doubt.
that is the beauty. low risk”;
11
p. “ULEDGER doesn’t “have any flashy scammers as advisors”; and
12
13 q. “[I’d] drop 1500 on uledger as that is a safe spot!! and unlike $$ .. will make
u a very nice profit:).”
14 43. NEWMAN -- on behalf of ULEDGER -- further induced Plaintiff’s interest and
15 investment in ULEDGER by promoting ULEDGER’s business partnerships with multinational
16 accounting and professional services firm Deloitte; the local government for the City of Boise, ID;
17 fraud prevention company Simility; as well as a potentially imminent partnership with Wells Fargo.
18 44. In addition, McIVER, RAMABAJA, and ANEWALT each individually made express
19 representations directly to Plaintiff about the viability of investing in ULEDGER and that ULEDGER’s
20 Network Launch and public sale would happen in January 2018 or February 2018 -- which would
21 increase the value and marketability of any investment Plaintiff were to make in the company.
22 RELIANCE
23 45. At all times material, Defendants enticed Plaintiff to purchase ULD Tokens by publicly
24 and privately making misstatements, misrepresentations, and omissions of material fact, including but
25 not limited to foregoing, non-exhaustive examples.
26 46. At all times material, Plaintiff conducted due diligence before making his investment;
27 and Plaintiff’s due diligence included a review of Defendants’ public misstatements,
28 misrepresentations, and omissions of material fact, including those published and made on social

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 10 of 21 Page ID #:10

1 media, social networks, paid-for press, public and private conferences, and other media. For example,
2 Plaintiff relied on Defendants’ statements concerning:
3 a. The purportedly high value of, and ability to profit from, ULDs;

4 b. Defendants’ credence as purportedly credible innovators in blockchain and


distributed ledger technology based on their favorable media coverage and
5 their “strategic partnerships” with prominent corporate and government
6 users of ULEDGER’s services; and

7 c. Defendants’ representation that they had created a viable product that would
make blockchain and distributed ledger technology more accessible for
8 businesses and individuals alike.

9 47. Plaintiff further relied to his detriment on the misstatements, misrepresentations, and
10 omissions of material fact made directly to him by NEWMAN, McIVER, RAMABAJA, and
11 ANEWALT on ULEDGER’s behalf.
12 48. Plaintiff’s detrimental reliance on Defendants’ public and private misstatements,
13 misrepresentations, and omissions of material fact, includes but is not limited to, causing Plaintiff to
14 purchase, acquire, own, hold, and refrain from selling his ULDs before and after ULDs lost all of their
15 value.
16 THE AGREEMENT
17 49. On or about November 21, 2017, Plaintiff and ULEDGER executed a written agreement

18 (the “Simple Agreement for Future Tokens” or “SAFT”) memorializing Plaintiff’s purchase of

19 11,000,000 ULD Tokens from ULEDGER. Attached hereto as Exhibit “A” is a true and correct copy

20 of the ULEDGER SAFT.

21 50. The ULEDGER SAFT specifically recognized that the instrument being sold to Plaintiff

22 is a security.

23 51. The ULEDGER SAFT further conceded that:

24 The Purchaser enters into this SAFT with the predominant expectation that
he, she or it, as the case may be, will profit upon the successful development
25 and Network Launch arising from the efforts of the Company and its
employees to develop and market the Network and the Network Launch and
26 related sale of the Tokens.
27

28

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 11 of 21 Page ID #:11

1 52. The ULEDGER SAFT also represented that upon launch of the ULEDGER network
2 (the “Network Launch”) -- pursuant to which the company would sell ULD Tokens to the general
3 public in a publicized product launch of ULD Tokens -- ULEDGER would pay Plaintiff an additional
4 collection of bonus tokens that would “represent at least a 100% bonus to the Public Token Price.”
5 53. The promise of bonus tokens served as a further enticement to induce Plaintiff’s
6 investment in ULEDGER.
7 54. ULEDGER further represented to Plaintiff that upon the ULEDGER Network Launch
8 and public sale of ULD Tokens, ULEDGER would create only 90,000,000 ULD Tokens, representing
9 the total, finite supply of ULD Tokens.
10 55. Limiting the total supply of ULD Tokens also enticed Plaintiff, as his aggregate ULD
11 Token holdings would be more valuable in a finite inventory of ULDs than if ULDs were limitless in
12 number.
13 56. Pursuant to the multiple representations of fact made to him, Plaintiff paid to ULEDGER
14 1,000 Ethereum (ETH) -- with a market value at the time of purchase of Three Hundred Thousand
15 Dollars ($300,000.00 USD) -- in exchange for the future right to 11,000,000 ULD Tokens.
16 THE PRIVATE OFFERING AND SALE OF ULD TOKENS

17 57. Based on information and belief, Defendants closed at least Thirty Million Dollars

18 ($30,000,000.00) in funding in connection with ULEDGER’s private offer and sale of ULD Tokens.

19 58. Additionally, Defendants have publicly represented: “The founding team will maintain

20 the majority stake in the project and has a majority vote, thus complete control over the strategy as

21 well as day-to-day decision making.”

22 59. Under the federal securities laws, Defendants offered and sold securities from the initial

23 announcement of ULD Tokens through October 2018; however, Defendants never filed with the SEC

24 a registration statement for its offer and sale of securities or obtained from the SEC an exemption that

25 would excuse Defendants from registering the ULD Tokens.

26 60. By failing to prepare and file a registration statement, Defendants were able to withhold

27 from investors important information regarding the investment opportunity promoted by Defendants,

28 such as information about ULEDGER’s current financial condition, future plans of operation and

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 12 of 21 Page ID #:12

1 budget, the proposed use of investor proceeds, and detailed disclosure of material trends and the most
2 significant factors that made the offering speculative and risky.
3 61. Defendants thus failed to disclose information relevant for investors to evaluate
4 Defendants’ promises about the investment potential of ULEDGER and the ULD Tokens.
5 62. By engaging in the conduct set forth in this Complaint without a registration statement
6 being in effect or filed and without obtaining from the SEC any exemption from registration,
7 Defendants engaged in the unlawful offer and sale of securities in violation of Sections 5(a) and 5(c)
8 of the Securities Act [15 U.S.C. §§ 77e(a), 77e(c)].
9 AFTER GETTING PLAINTIFF’S INVESTMENT,
DEFENDANTS FULFILLED NONE OF THEIR PROMISES
10
63. Approximately four months after he had invested in ULEDGER, Plaintiff
11
communicated with ULEDGER Token Advisor NEWMAN and inquired why Plaintiff had not received
12
any status updates from ULEDGER following his investment and had not seen any material
13
development in the ULEDGER network that was promoted to induce Plaintiff’s investment.
14
64. In his March 2018 response to Plaintiff, NEWMAN gave equivocal information; sought
15
to induce Plaintiff’s confidence by promoting yet another purported partnership that ULEDGER had
16
“closed” with Thompson Reuters; and did what he could to forestall further inquiry (or legal action)
17
from Plaintiff.
18
65. NEWMAN further stated to Plaintiff: “I will keep you fully updated from now on. I
19
apologize for not doing so. you are right, you deserve to be personally [sic.] updated as a big investor.
20
I will make sure of that onwards myself.”
21
66. Notwithstanding ULEDGER’s promises of further updates, no such information was
22
provided to Plaintiff.
23
67. More alarmingly, Defendants failed to produce any viable good or service; ULEDGER
24
never had its “Network Launch”; and the company never conducted its sale of ULD Tokens to the
25
general public.
26
68. As of the date of this filing, ULD Tokens are not tradeable on any cryptocurrency
27
exchange, which reduces their value to being essentially worthless.
28

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 13 of 21 Page ID #:13

1 69. Moreover, ULEDGER’s social media engagement with its community of investors has
2 all but ceased -- suggesting that ULEDGER will never hold its Network Launch.
3 70. Plaintiff has duly performed all of his duties and obligations, and any conditions
4 precedent to Plaintiff bringing this action have occurred, have been performed, or else have been
5 excused or waived.
6 71. To enforce his rights, Plaintiff has retained undersigned counsel and is obligated to pay
7 counsel a reasonable fee for its services, for which Defendants are liable as a result of their bad faith
8 and otherwise.
CLAIMS FOR RELIEF
9
Count I
10 Violations of Section 5(a) and (c) of the Securities Act
(All Defendants)
11
Plaintiff realleges and incorporates by reference each and every allegation in paragraphs 1
12
through 71 inclusive, as if they were fully set forth herein.
13
72. Federal securities laws require that companies disclose certain information through the
14
registration with the SEC of the offer or sale of securities. This information allows investors to make
15
informed judgments about whether to purchase a company’s securities.
16
73. By engaging in the conduct described above, Defendants offered and sold securities
17
without a registration statement in effect and without an exemption from registration.
18
74. From late-2017 to late-2018, Defendants conducted an offering of securities, in the form
19
of an offering of ULD Tokens.
20
75. In connection with this offering, Defendants sold a portion of the ULD Tokens at a
21
discount to certain investors (including Plaintiff) and sold another portion of the tokens through a
22
process culminating in or about June 2018.
23
76. Notwithstanding Defendants’ claims to the contrary, the offering and component sales
24
were required to be registered with the SEC unless an exemption applied.
25
77. However, neither the offering nor component sales were registered with the SEC, and
26
no registration exemption applied to the offering or to any of these sales.
27

28

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 14 of 21 Page ID #:14

1 78. Defendants received a total of approximately Thirty Million Dollars ($30,000,000.00)


2 as a result of the ULD Token offering and related sales.
3 79. Investors who bought ULDs through the offering and component sales made an
4 investment of money in a common enterprise with Defendants and with each other, and reasonably
5 would have been led to expect profits derived from the entrepreneurial and managerial efforts of
6 ULEDGER and its agents.
7 80. As noted above, Defendants have publicly represented: “The founding team will
8 maintain the majority stake in the project and has a majority vote, thus complete control over the
9 strategy as well as day-to-day decision making.”
10 81. In reliance on the representations made to Plaintiff by Defendants, Plaintiff was one of
11 the investors who purchased ULD Tokens.
12 82. Although several months after Plaintiff had invested in ULEDGER, ULEDGER did file
13 a Form D with the SEC claiming an exemption to the federal securities laws’ requirements concerning
14 disclosures and registration with respect to the ULD Tokens offered and sold; the claimed exemption
15 under Regulation D does not apply because the ULD Tokens are undoubtedly securities.
16 83. Plaintiff invested in ULD Tokens based on the future user interest so heavily promoted
17 and directly represented to Plaintiff by Defendants.
18 84. Plaintiff made his investment in ULD Tokens with the expectation that, based on the
19 efforts of the developers/individuals/entities in control of the ULEDGER network, he would profit from
20 that investment.
21 85. As a result of the conduct described above, Defendants violated Section 5(a) of the
22 Securities Act, which states that unless a registration statement is in effect as to a security, it shall be
23 unlawful for any person, directly or indirectly, to make use of any means or instruments of
24 transportation or communication in interstate commerce or of the mails to sell such security through
25 the use or medium of any prospectus or otherwise; or to carry or cause to be carried through the mails
26 or in interstate commerce, by any means or instruments of transportation, any such security for the
27 purpose of sale or for delivery after sale.
28

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 15 of 21 Page ID #:15

1 86. Also as a result of the conduct described above, Defendants violated Section 5(c) of the
2 Securities Act, which states that it shall be unlawful for any person, directly or indirectly, to make use
3 of any means or instruments of transportation or communication in interstate commerce or of the mails
4 to offer to sell or offer to buy through the use or medium of any prospectus or otherwise any security,
5 unless a registration statement has been filed as to such security.
6 87. As a direct and proximate result of Defendants’ acts and omissions, Plaintiff has suffered
7 damage.
8 Count II
Breach of Contract
9 (Defendant ULedger)
10 Plaintiff realleges and incorporates by reference each and every allegation in paragraphs 1
11 through 71 inclusive, as if they were fully set forth herein.
12 88. Plaintiff and Defendant ULEDGER entered into the Agreement.
13 89. Plaintiff performed all of his obligations under the Agreement.
14 90. Defendant ULEDGER breached the contract when Defendants, inter alia, accepted and
15 retained Plaintiff’s transfer of value, and then ULEDGER failed to perform any of its obligations under
16 the Agreement, such as but not limited to, producing a viable, decentralized application that made
17 utilizing blockchain technology easy and accessible for businesses, among other material breaches.
18 91. As a result, Plaintiff was injured in the approximate principal sum of no less than
19 $300,000.00.
20 Count III
Fraudulent Misrepresentation
21 (All Defendants)
22 Plaintiff realleges and incorporates by reference each and every allegation in paragraphs 1

23 through 71 inclusive, as if they were fully set forth herein.

24 92. Defendants made false representations of material facts regarding their products, goods,

25 and services; their involvement in the production and development of ULEDGER; the profitability of

26 investments in ULEDGER; and Plaintiff’s ability to exit his investment in ULEDGER as soon as he

27 wanted, without any re-sale restriction; among other fraudulent misrepresentations.

28

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COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 16 of 21 Page ID #:16

1 93. Defendants knew the statements were false when making such statements and knew that
2 they had no intent to perform their obligations under the Agreement.
3 94. Defendants intended for Plaintiff to rely on the false statements.
4 95. Plaintiff justifiably relied on the false statements when Plaintiff performed all of his
5 obligations under the Agreement.
6 96. Plaintiff suffered damages in the approximate principal sum of no less than $300,000.00
7 due to his reliance on Defendants’ false statements and Defendants’ refusal to satisfy any of their agreed
8 obligations.
9 Count IV
Negligent Misrepresentation
10 (All Defendants)
11 Plaintiff realleges and incorporates by reference each and every allegation in paragraphs 1
12 through 71 inclusive, as if they were fully set forth herein.
13 97. Defendants consistently provided false information for the purpose of manipulating
14 Plaintiff’s performance and inducing him into his obligations under the Agreement.
15 98. Defendants falsely represented that Defendants would reward Plaintiff with a return on
16 his investment in exchange for Plaintiff’s investment and efforts at furthering the Defendants’
17 blockchain project.
18 99. Defendants failed to exercise reasonable care or competence when they relayed
19 inaccurate information to Plaintiff regarding Defendants’ blockchain project and ICO.
20 100. Plaintiff was injured the approximate principal sum of no less than $300,000.00 as a
21 result of his justifiable reliance on Defendants’ negligent misrepresentations.
22 Count V
Fraudulent Concealment
23 (All Defendants)
24 Plaintiff realleges and incorporates by reference each and every allegation in paragraphs 1

25 through 71 inclusive, as if they were fully set forth herein.

26 101. Defendants had a duty to disclose to Plaintiff material information when they made

27 partial disclosures that conveyed a false impression regarding the entity that would actually conduct

28 the ICO and receive funds therefrom.

- 16 -
COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 17 of 21 Page ID #:17

1 102. Defendants intentionally concealed material information that was otherwise unknown
2 to Plaintiff and intended to deceive Plaintiff by concealing such information.
3 103. Plaintiff acted in justifiable reliance on the Defendants’ concealment when he performed
4 his obligations under the Agreement.
5 104. Plaintiff suffered damages the approximate principal sum of no less than $300,000.00
6 as a result of his justifiable reliance on Defendants’ concealment.
7 Count VI
Unjust Enrichment
8 (ULedger and the Management Team Defendants)
9 Plaintiff realleges and incorporates by reference each and every allegation in paragraphs 1
10 through 71 inclusive, as if they were fully set forth herein.
11 105. Plaintiff conferred a benefit upon ULEDGER and the Management Team Defendants
12 when he provided his investment capital to Defendants in connection with the Agreement.
13 106. ULEDGER and the Management Team Defendants knowingly received this benefit.
14 107. ULEDGER and the Management Team Defendants retained these benefits – and
15 continue to enjoy the fruits of this labor at Plaintiff’s expense.
16 108. ULEDGER and the Management Team Defendants are liable to Plaintiff in an amount
17 to be proven at trial which is the approximate principal sum of no less than $300,000.00.
18 Count VII
Breach of Implied Duty of Good Faith and Fair Dealing
19 (Defendant ULedger)
20 Plaintiff realleges and incorporates by reference each and every allegation in paragraphs 1

21 through 71 inclusive, as if they were fully set forth herein.

22 109. The covenant of good faith and fair dealing requires that neither party shall do anything

23 that will have the effect of destroying or injuring the right of the other party to the fruits of the contract.

24 110. Defendants invited Plaintiff to serve as an investor and contributor for their blockchain

25 project in exchange for investment.

26 111. ULEDGER, by and through the Management Team Defendants, used ULEDGER as a

27 shell company to conduct an ICO and raise funds in an attempt to shield Defendants from

28 accountability.

- 17 -
COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 18 of 21 Page ID #:18

1 112. ULEDGER breached the covenant of good faith and fair dealing when ULEDGER
2 misrepresented to Plaintiff numerous facts as a way to induce his investment in ULEDGER under the
3 false promise of profit and a highly desirable new blockchain network, and thereafter refused to
4 generate any return on Plaintiff’s investment.
5 113. Defendants were well aware of Plaintiff’s reasonable expectation of generating a return
6 on his investment.
7 114. Plaintiff was injured the approximate principal sum of no less than $300,000.00 as a
8 result of Defendants’ breach of the covenant of good faith and fair dealing.
9 Count VIII
Alter Ego Liability
10 (Management Team Defendants)
11 Plaintiff realleges and incorporates by reference each and every allegation in paragraphs 1
12 through 71 inclusive, as if they were fully set forth herein.
13 115. Upon information and belief, at all times material hereto, the Management Team
14 Defendants were the principals, agents, managers, alter-egos, officers, directors, advisors, or employees
15 of ULEDGER.
16 116. At all times material, the Management Team Defendants acted within the scope of their
17 agency, affiliation, management, alter-ego relationship and/or employment of Defendant ULEDGER.
18 117. At all times material, the Management Team Defendants actively participated in or
19 subsequently ratified and adopted, or both, all of the acts or conduct taken by Defendant ULEDGER,
20 with full knowledge of all of the facts and circumstances, including, but not limited to, full knowledge
21 of each and every violation of Plaintiff’s rights and the damages to Plaintiff proximately caused thereby.
22 118. Upon information and belief, there exists, and at all times material hereto existed, a unity
23 of interest and ownership by the Management Team Defendants with respect to Defendant ULEDGER,
24 such that any individuality and/or separateness between them has ceased to exist.
25 119. Upon information and belief, Defendant ULEDGER was a mere shell, instrumentality,
26 and conduit through which the Management Team Defendants carried on their business for their sole
27 benefit. Defendant ULEDGER was and is controlled, dominated, and operated by the Management
28 Team Defendants as their individual businesses and alter egos.

- 18 -
COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 19 of 21 Page ID #:19

1 120. Upon information and belief, Defendants have intermingled their assets and obtained
2 assets from other Defendants to suit their convenience and to evade liability to Plaintiff, if not other
3 additional obligations.
4 121. Upon information and belief, the Management Team Defendants have used their own
5 assets, and those of other Defendants, for personal use and obtained funds from other Defendants’
6 business accounts for their own personal use.
7 122. Under the facts and circumstances present herein, adhering to the fiction of separate
8 entities would sanction a fraud and/or promote injustice, because Plaintiff, as a victim of Defendants’
9 wrongdoing, would suffer injury.
10 123. In light of the foregoing, Plaintiff is entitled to a judgment against the Management
11 Team Defendants jointly and severally, in a sum according to proof at trial, plus interest at the
12 maximum rate allowed by law and reimbursement of costs.
13 124. As a result thereof, Plaintiff was injured the approximate principal sum of no less than
14 $300,000.00.
Count IX
15
Civil Conspiracy
16 (All Defendants)

17 Plaintiff realleges and incorporates by reference each and every allegation in paragraphs 1

18 through 71 inclusive, as if they were fully set forth herein.

19 125. Since in or around November 2016, Defendants agreed and combined to engage in a

20 conspiracy in the following manner:


a. Defendants McIVER, RAMABAJA, ANEWALT, and NEWMAN heavily promoted
21
the offering and sale of an unregistered, non-exempt security;
22
b. Defendants McIVER, RAMABAJA, ANEWALT, and NEWMAN hosted conferences,
23 panel discussions, published videos, generated favorable press, and made false
statements and misrepresentations to induce Plaintiff (and others) to purchase ULD
24 Tokens; and
25 c. Defendants McIVER, RAMABAJA, ANEWALT, and NEWMAN, among others,
administered online chatrooms, including Telegram, where the solicited and encouraged
26
the purchase of ULD Tokens.
27

28

- 19 -
COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 20 of 21 Page ID #:20

1 126. Defendants agreed and combined to engage in a civil conspiracy to commit the unlawful
2 acts as described herein.
3 127. Defendants combined to engage in a civil conspiracy of which the principal element was
4 to inflict wrongs against and injury on Plaintiff and the public at large as described in this Complaint.
5 128. Defendants combined to engage in a civil conspiracy that was furthered by overt acts.
6 129. Defendants understood, accepted, or explicitly or implicitly agreed to the general
7 objectives of their scheme to inflict the wrongs and injuries on the Plaintiff as described in this
8 Complaint.
9 130. Defendants acquired, possessed, and maintained a general knowledge of the
10 conspiracy’s objectives to inflict wrongs against and injury on Plaintiff as described in this Complaint.
11 131. Defendants combined to engage in a scheme that was intended to violate the law, and
12 Defendants concealed and secreted such violations.
13 132. Defendants combined to engage in a scheme which was intended to violate the rights of
14 Plaintiff.
15 133. The Management Team, by virtue of their offices, stock ownership, agency, agreements
16 or understandings, and specific acts had the power and influence and exercised the same to cause the
17 unlawful offer and sale of ULD Tokens as described herein.
18 134. The Management Team, separately or together, possess, directly or indirectly, the
19 directed or cause the direction of the management and policies of ULEDGER, through the ownership
20 of voting securities, by contract, subscription agreement, or otherwise.
21 135. The Management Team, separately or together, separately or together, jointly
22 participated in, and/or aided and abetted, ULEDGER’s misconduct.
23 136. Plaintiff was injured the approximate principal sum of no less than $300,000.00 as a
24 result of Defendants’ conspiracy.
25 PRAYER FOR RELIEF
26 WHEREFORE, Plaintiff CRAIG CLEMENS, an individual, respectfully requests that this
27 Court enter a final judgment on all of Plaintiff’s claims awarding damages in favor of Plaintiff and
28 jointly and severally against Defendants ULEDGER, INC., a Delaware corporation; JOSH McIVER,

- 20 -
COMPLAINT
Case 2:19-cv-07834-GW-JEM Document 1 Filed 09/10/19 Page 21 of 21 Page ID #:21

1 an individual; TAULANT RAMABAJA, an individual; PETE ANEWALT, an individual; and


2 LORIEN NEWMAN, an individual; in an amount to be determined at trial, but in no event less than
3 the approximate principal sum of $300,000.00, plus interest, attorneys’ fees, and costs.
4 DEMAND FOR JURY TRIAL
5 Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff demands trial by jury in
6 this action of all issues so triable.
7 RESERVATION OF RIGHTS
8 Plaintiff reserves his right to further amend this Complaint, upon completion of his investigation
9 and discovery, to assert any additional claims for relief against Defendants or other parties as may be
10 warranted under the circumstances and as allowed by law.
11

12 Respectfully submitted,

13 By: /s/ Brandon S. Reif


Brandon S. Reif, Esq. (State Bar No. 214706)
14 E-Mail: BReif@ReifLawGroup.com
REIF LAW GROUP, P.C.
15 1925 Century Park East - Suite 1700
Los Angeles, California 90067
16 Telephone: (310) 494-6500

17 David C. Silver, Esq. (pro hac vice forthcoming)


SILVER MILLER
18 11780 W. Sample Road
Coral Springs, Florida 33065
19 Telephone: (954) 516-6000
E-Mail: DSilver@SilverMillerLaw.com
20
Attorneys for Plaintiff Craig Clemens
21
Dated: September 10, 2019
22

23

24

25

26

27

28

- 21 -
COMPLAINT