First Amended Complaint Page 1 of 137 IN THE CIRCUIT COURT OF THE TWENTIETH JUDICIAL CIRCUIT IN AND FOR COLLIER COUNTY STATE OF FLORIDA, OFFICE OF THE ATTORNEY GENERAL, DEPARTMENT OF LEGAL AFFAIRS, Plaintiff, v. ACTIVELIGHT, INC. f/k/a ACTIVISION TV, INC., a Delaware corporation, DAVID GOTHARD, an individual, AD MEDIA DISPLAYS, INC., a Wyoming corporation, ACTIVISION DISPLAYS, INC., a Nevada corporation, LOCKE CONSULTING GROUP, INC., a Nevada corporation, CONNECT HDTV, INC., a Florida corporation, ADCO FINANCIAL CORP., a Nevada corporation, ACTIVELIGHT TV, LLC, a Florida limited liability company, and DENICE HETKOWSKI, an individual, Defendants. _______________________________________/ Case No. 2014-ca-2774 FIRST AMENDED COMPLAINT 1. Plaintiff, STATE OF FLORIDA, OFFICE OF THE ATTORNEY GENERAL, DEPARTMENT OF LEGAL AFFAIRS, brings this civil action under the Florida RICO (Racketeer Influenced and Corrupt Organization) Act, Chapter 895, Florida Statutes; the Florida Securities and Investor Protection Act, Chapter 517, Florida Statutes; the Florida Deceptive and Unfair Trade Practices Act, Chapter 501, Part II, Florida Statutes; and the Florida Anti-Fencing Act, Sections 812.012-812.037, Florida Statutes, against Defendants as set more fully below, and alleges: Filing # 33349133 E-Filed 10/16/2015 03:50:29 PM
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First Amended Complaint
Page 1 of 137
IN THE CIRCUIT COURT OF THE TWENTIETH JUDICIAL CIRCUIT IN AND FOR COLLIER COUNTY
STATE OF FLORIDA, OFFICE OF THE ATTORNEY GENERAL, DEPARTMENT OF LEGAL AFFAIRS, Plaintiff, v. ACTIVELIGHT, INC. f/k/a ACTIVISION TV, INC., a Delaware corporation, DAVID GOTHARD, an individual, AD MEDIA DISPLAYS, INC., a Wyoming corporation, ACTIVISION DISPLAYS, INC., a Nevada corporation, LOCKE CONSULTING GROUP, INC., a Nevada corporation, CONNECT HDTV, INC., a Florida corporation, ADCO FINANCIAL CORP., a Nevada corporation, ACTIVELIGHT TV, LLC, a Florida limited liability company, and DENICE HETKOWSKI, an individual, Defendants. _______________________________________/
Case No. 2014-ca-2774
FIRST AMENDED COMPLAINT
1. Plaintiff, STATE OF FLORIDA, OFFICE OF THE ATTORNEY GENERAL,
DEPARTMENT OF LEGAL AFFAIRS, brings this civil action under the Florida RICO
(Racketeer Influenced and Corrupt Organization) Act, Chapter 895, Florida Statutes; the Florida
Securities and Investor Protection Act, Chapter 517, Florida Statutes; the Florida Deceptive and
Unfair Trade Practices Act, Chapter 501, Part II, Florida Statutes; and the Florida Anti-Fencing
Act, Sections 812.012-812.037, Florida Statutes, against Defendants as set more fully below, and
alleges:
Filing # 33349133 E-Filed 10/16/2015 03:50:29 PM
First Amended Complaint
Page 2 of 137
I. INTRODUCTION
2. The Defendants engaged in a pattern of racketeering and other illegal activity in Florida
from at least 2003 until the present as set forth more fully below.
3. The DEPARTMENT brings this civil action to impose all available civil remedies against
the Defendants, subject to the rights of innocent persons, including Defendants’ victims.
II. PARTIES
4. Plaintiff, OFFICE OF THE ATTORNEY GENERAL, DEPARTMENT OF LEGAL
AFFAIRS, STATE OF FLORIDA (“DEPARTMENT”), is authorized to bring this action by
20. Shortly before incorporating AMD, GOTHARD filed a utility patent application
(09/132,456) on August 11, 1998 with the United States Patent and Trademark Office entitled
“Remote Control Electronic Display System.” While this application was later abandoned, it is
the parent application for the following patents used or owned at various times by GOTHARD,
LCG, AMD, ACTIVISION NEVADA, the Locke International Trusts (described in subsection
V.D.) and ACTIVISION DELAWARE:
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a. U.S. Patent number 6,215,411, entitled “Remote Control Electronic Display System”
(patent application filed February 8, 2000; patent awarded April 10, 2001) (hereafter the
“’411 Patent”).
b. U.S. Patent number 6,384,736, entitled “Remote Control Electronic Display System”
(patent application filed April 21, 1999; patent awarded May 7, 2002) (hereafter the “’736
Patent”).
c. U.S. Patent number 7,369,058 entitled “Remote Control Electronic Display System”
(patent application filed June 21, 2004; patent awarded May 6, 2008) (hereafter the “’058
Patent”).
d. U.S. Patent number 8,330,613 entitled “Remote Control Electronic Display System”
(patent application filed May 6, 2008; patent awarded December 11, 2012) (hereafter the
“’613 Patent”).
21. The ’411 Patent, the ’736 Patent, the ’058 Patent, and the ’613 Patent are hereafter
referred to as the “Remote Control Electronic Display System Patents.”
22. The Remote Control Electronic Display System Patents relate to common, ubiquitous
business practices described by agents of ACTIVISION DELAWARE as “generally relate[d] to
remote control digital signage technology.”
a. Beginning on a date unknown to the DEPARTMENT, but from at least 2010 to 2014,
GOTHARD, the Locke International Trust, and ACTIVISION DELAWARE have used
these patents to solicit the payment of monies from businesses across industries, including
restaurants, theaters, banks, hotels, and a motorcycle manufacturer.
b. As one example, in a demand letter to a restaurant (Glory Days Grill) dated March 15,
2013, Farney Daniels P.C. (agents of GOTHARD and ACTIVISION DELAWARE)
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described the restaurant’s infringement of the Remote Control Electronic Display System
Patents as follows:
Activision has learned that [you] … are infringing one or more claims of the Activision Patents by using remotely controlled digital signage products and services that practice the patented solution (the “Accused Instrumentalities”). The Accused Instrumentalities include but are not limited to [your] digital display network digital signs. The Accused Instrumentalities infringe at least claim 1 of the '058 Patent by virtue of a combination of features. In particular, for example, the Accused Instrumentalities consist of multiple components which together comprise a display system covered generally by the Activision Patents and specifically, the '058 Patent. In particular, the Accused Instrumentalities consist of generally flat display panels with an outer housing. Further, the Accused Instrumentalities are operated and controlled by a computer running software which controls the content and scheduling of the images via Content Manager software. The computer also runs the Content Player software which displays the images on the Accused Instrumentalities display. Together, these components comprise the patented Remote Control Electronic Display System found in at least claim 1 of the '058 Patent. (emphasis added).
23. While the Remote Control Electronic Display System Patents are presumed to be valid
under federal patent law, and the validity of these patents is not in question in this proceeding,
there is evidence to suggest that GOTHARD based these patents on widely available products in
existence before GOTHARD applied for the patents (and as observed by GOTHARD at
technology trade shows), and that GOTHARD did not disclose relevant prior art to the patent
examiner when he prosecuted the ‘411, ‘736, and ‘058 Patents.
24. On or about November 10, 2003, GOTHARD filed a patent application relating to a high
resolution digital display system with recording capability. On or about June 20, 2006, the
United States Patent and Trademark Office granted the application, and issued U.S. Patent
number 7,064,672 entitled “High Resolution Digital Display System with Recording Capability”
(hereafter the “‘672 Patent”).
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25. On or about February 2, 2011, GOTHARD filed a patent application relating to an
interactive media display. On or about May 6, 2014, the United States Patent and Trademark
Office granted the application, and issued U.S. Patent number 8,717,316 entitled “Interactive
Media Display” (hereafter the “‘316 Patent”).
2. Defendants Begin “The AMD Scheme”
26. GOTHARD incorporated AMD on or about July 6, 1999.
a. GOTHARD and AMD held AMD out to be a corporation that was incorporated to
further the research, development and marketing of the flat panel plasma display
technology developed and patented by GOTHARD, as set forth in Exhibits 1 and 2.
b. GOTHARD and AMD held out AMD as a corporation that could bring into
production and market a “multiple ad” Digital Plasma Display and Digital Plasma HDTV
System, as set forth in Exhibits 1 and 2.
c. According to GOTHARD and AMD, AMD would manufacture and market the
displays, as set forth in Exhibits 1 and 2.
d. According to GOTHARD and AMD, AMD would arrange lease/rental
agreements with customers, as set forth in Exhibits 1 and 2.
e. According to GOTHARD and AMD, these customers included supermarkets,
drug stores, and trade shows display companies, as set forth in Exhibits 1 and 2.
f. According to GOTHARD and AMD, AMD would pursue licensing and royalties
agreements using the Remote Control Electronic Display System Patents, as set forth in
Exhibits 1 and 2.
g. In reality, AMD has never had any revenues or facilities capable of manufacturing
these products on any profitable scale.
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27. Shortly after incorporating AMD, on August 1, 1999, LCG purportedly entered into an
exclusive license agreement with AMD, whereby LCG “as the owner of certain patents and
know-how pertaining to remote control electronic display systems” would license to AMD on a
worldwide, exclusive basis the ability to produce and market certain licensed products and
components of such products.
28. Beginning at a time unknown to the DEPARTMENT but known by GOTHARD and
AMD, but no later than September, 2003, AMD began to target investors. Many of these
investors were elderly and had little understanding of the technology involved, if any.
29. AMD referred to itself as “AMD” to investors from at least 2003 until at least May 18,
2007.
a. AMD refers to itself as “AMD” in Exhibit 1 and Exhibit 2.
b. AMD was operating out of Naples, Florida at the time, and had its sales office in Naples,
Florida.
c. The DEPARTMENT does not know all the potential investors that received Exhibits 1
and 2, because the DEPARTMENT deposed GOTHARD during its pre-suit investigation of
all of the Defendants, but GOTHARD refused to answer any questions relating to the
operation of AMD on the grounds that his answers might incriminate him, and because the
DEPARTMENT subpoenaed records from AMD during the DEPARTMENT’s pre-suit
investigation that would include all copies of Exhibits 1 and 2, but AMD did not produce all
copies.
d. Upon information and belief, the initialism “AMD” was used intentionally by
GOTHARD and AMD from at least 2003 until at least May 18, 2007 to confuse investors in
a material way by conflating AMD with a well-known (and successful) technology company
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named Advanced Micro Devices, which is also commonly referred to as “AMD” and trades
under the New York Stock Exchange symbol “AMD.”
e. GOTHARD knew about the existence of the company named Advanced Micro Devices
because on or about February 15, 2011, ACTIVISION DELAWARE stated publicly that
ACTIVISION DELAWARE had “teamed up” with “AMD” to create a “set top box of the
future.” Upon information and belief, ACTIVISION DELAWARE was referring to
Advanced Micro Devices, not Defendant Ad Media Displays, Inc.
f. By creating investor confusion, GOTHARD and AMD gave the appearance to the
investing public that AMD was a legitimate business investment, as described throughout
this Complaint.
g. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation of AMD on the
grounds that his answers might incriminate him.
30. Beginning on or about September, 2003, AMD and GOTHARD misrepresented to
potential investors, including investor R.N.,1 that the company was soon preparing to become a
publicly-traded company. GOTHARD would later use this sales technique scheme, known as a
“Pre-IPO” scheme (telling investors that a lucrative, initial public offering was forthcoming)
over the next decade to solicit investors in the AMD Scheme, the ACTIVISION NEVADA
Scheme, and the ACTIVISION DELAWARE Scheme, as set forth more fully below, to obtain
and use monies unlawfully.
1 The undersigned counsel is contemporaneously serving upon counsel for the Defendants a list of investors’ names used in this Complaint, by paragraph, pending the resolution of the DEPARTMENT’s Motion for Protective Order Under Section 517.2015(2), Florida Statutes (Dkt 55) (filed Feb. 6, 2015) (still pending).
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31. Beginning on or about September, 2003, AMD misrepresented the potential investment
returns of AMD, telling potential investors such as R.N. that AMD was a six-month slam dunk.
32. Beginning on or about September, 2003, AMD misrepresented the safety of investing in
AMD.
a. AMD told potential investor R.N. before R.N. invested in 2003 that AMD was “no risk”
and a “9 out of 10,” with “10” being the least risky.
b. On or about March, 2004, GOTHARD told investor E.W. in Florida (before E.W.
invested in AMD) that AMD was a “sure thing.”
33. Beginning on or about September, 2003, AMD misrepresented the timing of investment
returns, telling potential investors such as R.N. that they would receive their money back in 90
days.
34. Beginning on or about 2003, AMD and GOTHARD used GOTHARD’s connection with
religious organizations to target and solicit investors, such as R.N., R.L. and E.W., and made
material misrepresentations that AMD was going to spread “the gospel,” and also that proceeds
of AMD would go towards a church in Naples, Florida that he (and other investors such as R.L.
and E.W.) attended.
a. After receiving proceeds from churchgoers, GOTHARD stopped his attendance at church
and stopped communicating with these investors on or about 2005.
b. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation of AMD on the
grounds that his answers might incriminate him, and the DEPARTMENT has no record of
any religious institution receiving any proceeds from AMD.
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c. On a date unknown to the DEPARTMENT, but known by GOTHARD, GOTHARD
handed potential investor R.L. a brochure for the Activision System after church, telling
R.L. that “God told me to give this to you.” R.L. later invested in AMD on or about June,
2005.
d. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation of AMD on the
grounds that his answers might incriminate him, and refused to answer questions about the
identities of AMD investors.
35. As a debtor, AMD and GOTHARD executed unsecured loans with investors in the form
of “convertible debentures,” but have not recorded many of these investments in its corporate
books, and have not kept track of investors’ identities or interest owed on their corporate books.
Under the terms of the debenture, the holder of the debenture (the creditor, many of whom were
individuals) could “electric [sic] to convert Debenture” by converting the debt into shares
through the issuance of “multiple trenches [sic]” of various principal amounts.
36. AMD and GOTHARD would unilaterally decide the form of investors’ investments. In
at least one instance, an investor (R.N.) transferred additional monies in 2004 to AMD under the
same terms as a previous investment (a convertible debenture). AMD and GOTHARD
unilaterally made the decision to send stock certificates to the investor, telling the investor that
stock would give the investor the “best of both worlds.”
37. ACTIVISION DELAWARE, AMD, and GOTHARD commingled their debts.
a. As one example, AMD investor K.C. bought $5,000 in shares of AMD in 2005.
b. AMD did not keep any record of an investment by K.C. on its corporate books.
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c. After not hearing from AMD, K.C. demanded his investment back on or about
December, 2009.
d. On or about May 13, 2011, ACTIVISION DELAWARE, AMD, GOTHARD, and
HETKOWSKI acknowledged K.C.’s investment, referred to purchases of AMD stock as
“deposits,” and made the material misrepresentation to investor K.C. that he could get a
“refund” from ACTIVISION DELAWARE if he sent a certified letter requesting same.
e. ACTIVISION DELAWARE, AMD, GOTHARD, and HETKOWSKI then ignored
K.C.’s requests for a return of his investment from on or about May 13, 2011, until the
present.
f. The false statement was made by ACTIVISION DELAWARE, AMD, GOTHARD, and
HETKOWSKI.
g. ACTIVISION DELAWARE, AMD, GOTHARD, and HETKOWSKI knew or should
have known that the statement was false, because K.C.’s investment was not a deposit, and
because they had no intention of refunding K.C.’s investment, and have not refunded K.C.’s
investment.
h. The substance of the false statement was that investor K.C.’s investment was a deposit,
that he could have his money refunded to him.
i. The time frame in which the false statement to investor K.C. was made was on or about
May 13, 2011.
j. The context in which the statement was made was a request by an investor (K.C.) as to
the status of his investment and demand for his money back from companies AMD and/or
ACTIVISION DELAWARE, and company representatives GOTHARD and HETKOWSKI,
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who then gave the investor reassurances that his investment was recognized, safe, available,
and refundable.
k. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation of ACTIVISION
DELAWARE or AMD on the grounds that his answers might incriminate him, and because
the DEPARTMENT subpoenaed records from ACTIVISION DELAWARE and AMD
during the DEPARTMENT’s pre-suit investigation, but ACTIVISION DELAWARE and
AMD did not produce or identify these communications relating to K.C. and ACTIVISION
DELAWARE and AMD.
38. Beginning at a time unknown to the DEPARTMENT but known by AMD and
GOTHARD, but no later than September, 2003, and continuing until the present, AMD and
GOTHARD solicited investors in AMD, but did not reveal GOTHARD’s criminal past involving
securities violations to investors of AMD.
39. AMD, ACTIVISION NEVADA, ACTIVISION DELAWARE, and GOTHARD created
multiple private placement memoranda to distribute to investors from at least March 1, 2004 (see
Exhibit 1) until at least March 1, 2009 (see Exhibit 8).
a. These memoranda contained material, false statements, and were repeatedly created by
AMD, ACTIVISION NEVADA, ACTIVISION DELAWARE, and GOTHARD to stimulate
investors’ interest and to give the impression that the operations of AMD, ACTIVISION
NEVADA, and ACTIVISION DELAWARE were legitimate. Upon information and belief,
the memoranda were created (detailing a bogus “offering” of shares) whenever AMD,
ACTIVISION NEVADA, ACTIVISION DELAWARE, and GOTHARD felt they could
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lure a large investor. This allegation is supported by the sheer number of memoranda that
were created, detailed more fully below.
b. The false statements in the memoranda were made by AMD, ACTIVISION NEVADA,
ACTIVISION DELAWARE, and GOTHARD.
c. The substance of the false statements is identified below in paragraphs 48, 68, 84, and 93.
d. AMD, ACTIVISION NEVADA, ACTIVISION DELAWARE, and GOTHARD knew, or
should have known, that these statements were false.
e. The time frame in which these false statements were made was from at least March 1,
2004 until at least March 1, 2009.
f. The context in which the statements were made was an offer by a company representative
(GOTHARD) and companies (AMD, ACTIVISION NEVADA, and ACTIVISION
DELAWARE), to potential investors and/or existing investors.
g. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation of AMD,
ACTIVISION NEVADA or ACTIVISION DELAWARE on the grounds that his answers
might incriminate him. Also, the DEPARTMENT subpoenaed records from AMD,
ACTIVISION NEVADA (as a company named “Activision TV, Inc.”) and ACTIVISION
DELAWARE during the DEPARTMENT’s pre-suit investigation, but AMD and
ACTIVISION DELAWARE did not produce all of their memoranda, including Exhibit 8,
and ACTIVISION NEVADA did not produce any documents at all.
40. Beginning at a time unknown to the DEPARTMENT, but no later than March 1, 2004,
GOTHARD and AMD created and subsequently distributed a document entitled “Private
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Placement Memorandum” to potential investors, which purported to offer 500,000 shares of
preferred stock at $1.50 per unit (1 share), with a $10,000 minimum investment (hereafter “2004
Memorandum”).
41. A true and accurate copy of the 2004 Memorandum is attached as Exhibit 1 to this
Complaint.
42. The 2004 Memorandum was prepared for investors interested in purchasing shares of
AMD.
43. The 2004 Memorandum made the following representations to investors:
a. AMD was incorporated in July 1999 “to further the research, development and
marketing of the flat panel plasma display technology developed and patented by the
Company’s founder [GOTHARD].”
b. GOTHARD licensed his patents to AMD, including the ‘411 Patent and the ‘736
Patent. AMD had also “just received word from legal council [sic] that the third patent
has been allowed . . . .”
c. According to AMD’s “Descripiton [sic] of Business,” AMD’s principal product line
was the “Activision ™ Systems,” which are the advertising display system and Digital
HDTV. The Activision Systems “has been extensively tested in the Marketplace [sic] . . .
.” The “Activision Systems consist of two main computer-controlled, gas plasma, flat
panel display systems, that are patented, and contain proprietary software.” The
Activision Systems “have the ability to be connected by modem to the Company offices,
allowing remote control for the displays without involvement of client personnel.”
d. AMD’s Research and Development Department was bringing to market its new
Digital HDTV product in the fall of 2004.
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e. AMD had a favorable long-term competitive outlook “due to the lack of intellectual
property held by competitors,” and AMD would extend patent licensing rights into
Europe, Japan and Canada. AMD’s licensing and royalty fees were “expected to be in
excess of 50% of the Company’s gross revenue in the next three to four years.”
f. AMD’s target market included large retailers such as supermarkets and chain stores,
drug stores, trade shows, and exhibit halls.
44. Beginning at a time unknown to the DEPARTMENT, but no later than March 1, 2005,
AMD created and subsequently distributed a similar document entitled “Private Placement
Memorandum” to potential investors, which purported to offer 500,000 shares of common stock
at $1.00 per unit (1 share), with a $5,000 minimum investment (hereafter “2005 Memorandum”).
45. A true and accurate copy of the 2005 Memorandum is attached as Exhibit 2 to this
Complaint.
46. The 2005 Memorandum was prepared for investors interested in purchasing shares of
AMD.
47. The 2005 Memorandum made the following representations to investors, many of which
were similar to the 2004 Memorandum:
a. AMD was incorporated in July 1999 “to further the research, development and
marketing of the flat panel plasma display technology developed and patented by the
Company’s founder [GOTHARD].”
b. GOTHARD licensed his patents to AMD, including the ‘411 Patent and the ‘736
Patent. AMD had also “just received word from legal council [sic] that the third patent
has been allowed . . . .”
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c. According to AMD’s “Descripiton [sic] of Business,” AMD’s principal product line
was the “Activision ™ Systems,” which are the advertising display system and Digital
HDTV. The Activision Systems “has been extensively tested in the Marketplace [sic] . . .
.” AMD’s product line “consists of two main computer-controlled, gas Plasma/LCD flat
panel display systems that are patented, and contain proprietary software.” AMD’s
display systems “have the ability to be connected by modem to the Company offices,
allowing remote control for the displays without involvement of client personnel.”
d. AMD’s Research and Development Department was bringing to market its new
Digital HDTV product in the fall of 2005.
e. AMD had a favorable long-term competitive outlook “due to the lack of intellectual
property held by the competition.” AMD’s licensing and royalty fees were “expected to
be in excess of 50% of the Company’s gross revenue in the next three to five years.”
f. AMD’s target market included large retailers such as supermarkets and chain stores,
drug stores, trade shows, and exhibit halls.
48. The 2004 and 2005 Memoranda were replete with material misrepresentations:
a. The purported reason for incorporating AMD was also used by ACTIVISION
NEVADA and ACTIVISION DELAWARE, as set forth more fully below.
b. The licensing arrangement between GOTHARD and AMD was subject to the whim
of GOTHARD, who repeatedly transferred the patents, and created licensing agreements,
with different entities to maximize investments for his personal benefit, but to the
detriment of investors.
c. AMD had no intention of sharing any licensing profits with its investors.
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d. AMD’s “product line,” to the extent it existed, was not functional, and had not been
“extensively tested in the Marketplace [sic]” or elsewhere.
e. AMD did not have the capability to bring to market a Digital HDTV product in the
fall of 2004 (per the 2004 Memorandum), or the fall of 2005 (per the 2005
Memorandum).
f. AMD did not have the capability to extend patent licensing rights into Asia and
Europe, and AMD was not going to realize any such licensing and royalty fees.
49. To date, AMD has received no revenue from its patent licensing; has not licensed its
intellectual property to unrelated third parties; has not sold any products in the marketplace; and
has not received any revenue from any of its products.
50. GOTHARD and AMD made material false representations about AMD’s business
relationships to investors on or about March 1, 2004 (see Exhibit 1) and on or about March 1,
2005 (see Exhibit 2), falsely telling investors that AMD was working with Fujitsu on a new
generation of flat panel technology, that the new glass plasma displays would be brighter, last
longer, and consume less energy, and that it was having ongoing discussions with Fujitsu to
incorporate the Companies [sic] technology into their [sic] displays at the factory. In the
(March) 2004 Memorandum, AMD told investors that this technology first appeared in the
summer of 2004 [sic]. In the 2005 Memorandum, AMD told investors that this technology first
appeared in the “summer of2002 [sic].”
a. The false statement was made by GOTHARD and AMD.
b. The substance of the false statement was that AMD had a business relationship with a
well-known and successful company (Fujitsu) and was working with Fujitsu on new, break-
through display technology, and that it was having ongoing discussions with Fujitsu to
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incorporate the Companies [sic] technology into their [sic] displays at the factory. The other
false statement was that a product appeared in the summer of 2004 before the 2004
Memorandum was written (in March, 2004).
c. GOTHARD and AMD knew, or should have known, that these statements were false.
d. The time frame in which the false statement was made was from on or about March 1,
2004 and March 1, 2005.
e. The context in which the statement was made was a financial solicitation by a company
representative (GOTHARD) and a company (AMD), to induce potential investors.
f. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to any questions relating to the operation of AMD or whether AMD
was working with Fujitsu on the grounds that his answers might incriminate him, and
because the DEPARTMENT subpoenaed records from AMD during the DEPARTMENT’s
pre-suit investigation, but AMD did not produce any documentation that supported any such
agreements with Fujitsu, or that GOTHARD or AMD had any technology that was
marketable to Fujitsu, or otherwise not already available to Fujitsu.
51. Beginning on a date unknown to the DEPARTMENT but known by AMD and
GOTHARD, but no later than 2005, GOTHARD and AMD made material false representations
to investors R.N. and K.C. about interest by other companies in acquiring AMD. When investors
made inquiries about the status of their investments in AMD, GOTHARD and AMD made false
representations, including false statements to R.N. and K.C. that Cisco, Microsoft, Intel and/or
Dell Computer were interested in acquiring AMD.
a. The false statement was made by GOTHARD and AMD.
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b. The substance of the false statement was that Cisco, Microsoft, Intel and/or Dell
Computer was interested in acquiring AMD, when Cisco, Microsoft, Intel and/or Dell
Computer had no interest in acquiring AMD.
c. GOTHARD and AMD knew, or should have known, that these statements were false.
d. The time frame in which the false statement was made was from on or about 2005.
e. The context in which the statement was made was a financial solicitation by a company
representative (GOTHARD) and a company (AMD), to potential investors, as well as an
update by a company representative (GOTHARD) and a company (AMD), to existing
investors.
f. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operations of AMD, or whether
he told any investors that Cisco, Microsoft, Intel and/or Dell Computer was interested in
acquiring AMD on the grounds that his answers might incriminate him, and because the
DEPARTMENT subpoenaed records from AMD during the DEPARTMENT’s pre-suit
investigation, but AMD did not produce any documentation that supported any such interest
by Cisco, Microsoft, Intel and/or Dell Computer.
52. GOTHARD and AMD made material misrepresentations to investors regarding the
number of products AMD was producing and its production capabilities, falsely stating to
investor R.N. on or before 2006 that it was producing 100 units a week at a production plant in
Ohio. When investor R.N. visited the so-called “production plant” in 2006, he found a nearly
vacant airport hangar with two men working on a “prototype,” and was told that production was
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not ready. In the course of the DEPARTMENT’s investigation, AMD denied in 2014 that it ever
had a facility in Ohio.
a. The false statement was made by GOTHARD and AMD.
b. The substance of the false statement was that AMD was producing, or had the capability
to produce, 100 units a week at a production plant in Ohio, when it did not.
c. GOTHARD and AMD knew, or should have known, that these statements were false.
d. The time frame in which the false statement was made was from on or about 2006.
e. The context in which the statement was made was an update by a company representative
(GOTHARD) and a company (AMD), to its investors.
f. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operations of AMD, or that he
had told an investor that AMD had a facility capable of producing 100 units a week, on the
grounds that his answers might incriminate him, and because the DEPARTMENT
subpoenaed records from AMD during the DEPARTMENT’s pre-suit investigation, but
AMD specifically denied having a facility in Ohio.
53. Unbeknownst to investors of AMD, GOTHARD, ACTIVISION NEVADA and LCG
then transferred the ‘411 and ‘736 Patents on or about April 28, 2006, out of Defendant LCG
(the purported licensor of the patents to AMD) and into ACTIVISION NEVADA. Despite this
apparent transfer of intellectual property outside the exclusive license purportedly granted to
AMD, AMD continued to disburse stock certificates in AMD, and AMD unlawfully received
monies from AMD investors after April 28, 2006. The transfer of intellectual property outside of
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the exclusive license purportedly given to AMD robbed AMD of any value, especially since it
had no customers or working installations of its products, or any revenues of any kind.
54. Beginning on a date unknown to the DEPARTMENT but known by HETKOWSKI,
GOTHARD, ACTIVISION NEVADA, AMD and ACTIVISION DELAWARE, but no later than
January 12, 2006, GOTHARD and ACTIVISION NEVADA began the ACTIVISION NEVADA
Scheme (detailed in the next subsection of this Complaint) in conjunction with the AMD Scheme
to increase the amount of money it obtained from investors, and to avoid the scrutiny of
securities regulators and investors.
a. While the ACTIVISION NEVADA Scheme was operating, AMD and GOTHARD
continued to receive AMD investor funds under the AMD Scheme until an unknown date,
but no earlier than March, 2007, while GOTHARD also ran the ACTIVISION NEVADA
Scheme.
b. Operating the ACTIVISION NEVADA Scheme in conjunction with the AMD Scheme
had the intent, and effect, of soliciting and receiving investors’ funds for two companies that
were supposed to perform the same functions, selling the same products, and had the same
intellectual property portfolio, without investors’ knowledge or approval of these competing
and conflicting interests.
c. After collecting monies from AMD investors, beginning on a date unknown but no later
than December, 2006, GOTHARD and AMD decided to wind down the AMD Scheme and
switch to the ACTIVISION DELAWARE Scheme, described in Section V.C.
d. By operating multiple schemes, GOTHARD has confused investors as to what has
happened to their investments:
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i. AMD investor R.R. (who is also GOTHARD’s commercial landlord for the
Alter Ego Defendants) believes, incorrectly, that AMD changed its name, and
became Activision TV, Inc., which then became “Activelight and AMD Global.”
ii. AMD investor K.C. believes, incorrectly, that AMD changed its name to
“Activision.TV” in 2006 or 2007.
iii. AMD investor, and former employee or independent contractor of AMD, J.C.
believes, incorrectly, that AMD changed its name to Activision in 2007.
e. The material false statements and omissions were made by GOTHARD, AMD and
ACTIVISION NEVADA to all of their respective investors during the time period in this
paragraph.
f. GOTHARD, AMD and ACTIVISION NEVADA knew, or should have known, that these
statements were false.
g. The substance of the false statements was that AMD and ACTIVISION NEVADA were
separately viable investment vehicles, and the omissions were to AMD and ACTIVISION
NEVADA investors that AMD and ACTIVISION NEVADA were receiving funds at the
same time for the same products and intellectual property portfolio.
h. GOTHARD, AMD, and ACTIVISION NEVADA were responsible for the omissions,
who gained additional funds than they would have absent the omission.
i. The time frame in which the false statements were made was from on or about January,
2006, until on or about March, 2007. The time frame in which the omissions were made
was from on or about January, 2006 until the present.
j. The context in which the statements were made was a financial solicitation by a company
representative (GOTHARD) and a company (AMD and ACTIVISION NEVADA), to all of
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their respective investors during this time period. The context in which the omissions were
made was a financial solicitation by a company representative (GOTHARD) and a company
(AMD and ACTIVISION NEVADA), to all of their respective investors during this time
period, as well as omissions by a company representative (GOTHARD) and a company
(AMD and ACTIVISION NEVADA) to all of its existing shareholders.
k. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation of AMD,
ACTIVISION NEVADA, or ACTIVISION DELAWARE on the grounds that his answers
might incriminate him, and because the DEPARTMENT subpoenaed records from
ACTIVISION NEVADA during the DEPARTMENT’s pre-suit investigation, but
ACTIVISION NEVADA did not produce any records.
55. Since AMD knew its stock was worthless, it would disburse its worthless stock
certificates with impunity, including handing them out to unsuspecting investors, employees,
officers, board members and/or consultants.
56. It is not possible to quantify the number of AMD investors or the extent of their
investments at this time due to the lack of records produced by AMD in response to the
DEPARTMENT’s subpoenas, and the state of disarray in which they were produced, in addition
to AMD’s practice of commingling funds. However, AMD’s own records suggest that over $1
million was received from the AMD Scheme.
57. Upon information and belief, switching to the ACTIVISION NEVADA scheme avoided
the scrutiny of federal and state regulators, and helped GOTHARD, AMD, and ACTIVISION
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NEVADA avoid detection. Employees of AMD automatically assumed the status of Activision
TV, Inc. employees.
58. In a sworn deposition given by GOTHARD in Naples, Florida, on July 23, 2012,
GOTHARD gave sworn testimony that AMD is “dormant, yes, but I kept it alive,” and that
“we’ll keep that one [AMD] for the digital signs, and license people through that, which we’re
doing now.” This sworn statement was false, and GOTHARD knew it was false. According to
AMD in its response to the DEPARTMENT’s pre-suit subpoena (submitted with a cover letter
under GOTHARD’s name and signature), AMD did not have any employees from May 17, 2007
“to the present” (where the response date was February, 2014). It also withdrew from
transacting business in Florida from January 11, 2008 until August 12, 2013, and has not
licensed anything to anyone for value.
B. The “ACTIVISION NEVADA Scheme”
59. GOTHARD began looking at using the name “Activision” in 1999. Upon information
and belief, GOTHARD chose the “Activision” name because it contains part of the name of an
unrelated (and successful) company named Activision Publishing, Inc., which has developed,
marketed, and distributed hundreds of popular video and computer game products since 1979,
including Call of Duty® and Guitar Hero®. Defendants used the “Activision” name to capitalize
on the brand recognition of Activision Publishing, Inc., using internet keywords and metatags on
ACTIVISION DELAWARE’s website. For example, the Defendants advertised the use of their
products to play games such as World of Warcraft®, a game produced and distributed by an
affiliate of Activision Publishing, Inc.
a. Throughout 2011, GOTHARD and ACTIVISION DELAWARE sent Business Plans
from Naples, Florida, to potential investors (including M.D.) in ACTIVISION
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DELAWARE, stating that ACTIVISION DELAWARE had a “great marketing advantage
and instantaneous brand awareness due to the wildly known Activision Blizzard Inc [sic]
games publisher name. Activision Blizzard Inc [sic] has revenues of $3 billion.
Discussions are in progress to obtain a significant payment for Activision Blizzard to
purchase the trademark from Activision TV.”
b. These Business Plans were sent to investors to entice them to invest in ACTIVISION
DELAWARE.
c. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation ACTIVISION
DELAWARE on the grounds that his answers might incriminate him, and because the
DEPARTMENT subpoenaed records that would include these 2011 Business Plans from
ACTIVISION DELAWARE, but ACTIVISION DELAWARE did not produce them and
specifically denied having any investors or stock transactions in its corporate ledger after
2009. The DEPARTMENT only has a copy of these business plans, and knows the
identities of these 2011 investors, because it obtained them from investors.
60. ACTIVISION NEVADA was incorporated in October 2000. It was the first of no fewer
than three domestic corporations in various U.S. states with the name “Activision TV, Inc.” that
co-existed at the same time (the others being ACTIVISION DELAWARE and ACTIVISION
FLORIDA). These three “Activision TV, Inc.” companies commingled funds, commingled bank
accounts, used their tax identification numbers interchangeably for corporate filings, and were
controlled by GOTHARD. Upon information and belief, GOTHARD, ACTIVISION NEVADA,
ACTIVISION DELAWARE, and ACTIVISION FLORIDA repeatedly used “Activision” in their
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corporate names to confuse investors, to hide monies and assets from investors, and to evade
detection, as set forth more fully in this Complaint.
61. Unbeknownst to the AMD investors, while the AMD Scheme was running GOTHARD
and ACTIVISION NEVADA were also running the same scheme under the name ACTIVISION
NEVADA beginning on a date unknown to the DEPARTMENT, but no later than January 12,
2006.
62. The transfer of the ‘411 and ‘736 Patents by GOTHARD, LCG, and ACTIVISION
NEAVADA to ACTIVISION NEVADA on or about April 28, 2006, without the knowledge of
AMD investors, gave credence to the ACTIVISION NEVADA Scheme for potential investors of
ACTIVISION NEVADA. ACTIVISION NEVADA marketed the intellectual property as a
valuable asset.
a. In a document titled “Business Overview 2006,” dated January 12, 2006, and sent to
potential investor J.M., ACTIVISION NEVADA described the ‘411 and the ‘736 patents as
“The Company’s issued patents . . . .”
b. There is no evidence that ACTIVISION NEVADA owned the ‘411 and the ‘736 patents
on January 12, 2006.
c. In response to interrogatories issued by the DEPARTMENT in this civil action,
ACTIVISION NEVADA served unsigned answers to these interrogatories on or about
September 21, 2015, falsely stating that “Activision Displays, Inc. was a shell Company and
had no interest in the Patents” and “Activision Displays, Inc. never owned Patents.”
63. Beginning at a time unknown to the DEPARTMENT, but no later than June 15, 2006,
ACTIVISION NEVADA created and subsequently distributed a document to potential investors
(such as J.C.) entitled “Private Placement Memorandum,” which purported to offer “securities”
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in the form of “Convertible Debenture [sic] with Warrants,” with a $30,000 minimum
investment (hereafter “2006 Memorandum”).
64. A true and accurate copy of the 2006 Memorandum is attached as Exhibit 3 to this
Complaint.
65. The 2006 Memorandum was prepared by ACTIVISION NEVADA to lure investors.
66. The 2006 Memorandum was not produced to the DEPARTMENT in its investigation,
despite the fact that the DEPARTMENT subpoenaed documents that would have included the
2006 Memorandum during the DEPARTMENT’s pre-suit investigation. The DEPARTMENT
has a copy of the document because it obtained it from an investor in ACTIVISION NEVADA.
67. The 2006 Memorandum made the following representations to investors of ACTIVISION
NEVADA, copying many passages from AMD’s 2004 and 2005 Memoranda verbatim
(including typographical errors):
a. ACTIVISION NEVADA was incorporated in October 2000 “to further the research,
development and marketing of the flat panel plasma display technology developed and
patented by the Company’s founder [GOTHARD].”
b. ACTIVISION NEVADA has patents, including the ‘411 Patent and the ‘736 Patent.
The ‘411 Patent and the ‘736 Patent are described as “the company’s patents.” Also,
“[s]even additional patents including four foreign patents are in various stages of being
issued,” and ACTIVISION NEVADA anticipates that these patents will issue “within the
next six to eighteen months.” ACTIVISION NEVADA plans “to extend license rights
for its products world wide [sic].”
c. According to ACTIVISION NEVADA’s “Descripiton [sic] of Business,”
ACTIVISION NEVADA has a standard flat panel display system with “it’s [sic] patented
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‘Works in a Drawer’ that has been extensively tested in the marketplace, known as
Activision ™ Systems.” The Activision™ Systems, which are the digital advertising
display system and Digital HDTV, are the principal product lines.
d. ACTIVISION NEVADA’s product line “consists of two main computer-controlled
devices, the gas plasma, flat panel display system and the LCD system.” The
Activision™ System is “digitally controlled.”
e. ACTIVISION NEVADA’s HDTV product line was being introduced the summer of
2006.
f. ACTIVISION NEVADA had a favorable long-term competitive outlook “due to the
lack of intellectual property held by competitors and the high cost of entry into this
market.” ACTIVISION NEVADA’s business plan was based on obtaining funds through
licensing and royalties.
g. ACTIVISION NEVADA’s target market included large retailers such as
supermarkets and chain stores, hotels, lodging, drug stores, malls and restaurants.
h. ACTIVISION NEVADA was going public “this year [in 2006],” at which point
additional funds would be raised through a secondary offering.
68. The 2006 Memorandum from ACTIVISION NEVADA, just like the 2004 and 2005
Memoranda from AMD that preceded it, was replete with material misrepresentations:
a. The purported reason for incorporating ACTIVISION NEVADA was the same reason
also used by GOTHARD and AMD in the AMD Scheme.
b. The licensing arrangement between GOTHARD and ACTIVISION NEVADA was
subject to the whim of GOTHARD, who repeatedly transferred the patents and created
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licensing agreements with different entities to maximize investments for his personal
benefit, but to the detriment of investors.
c. ACTIVISION NEVADA’s “product line,” to the extent it even existed, was not
functional, and had not been extensively tested in the marketplace or elsewhere.
d. Just like the misrepresentations AMD made to its investors in 2004 and 2005,
ACTIVISION NEVADA did not have the capability to bring to market a Digital HDTV
product in the summer of 2006.
e. ACTIVISION NEVADA had no intention of sharing any licensing profits with its
investors.
f. ACTIVISION NEVADA did not have the capability to extend patent licensing rights
worldwide.
69. ACTIVISION NEVADA sold at least 10 debentures for $30,000 each to investor J.C. by
June 2006. ACTIVISION NEVADA falsely promised to pay interest at grossly, above-market
interest rates of 20% per annum, compounded annually, when it knew it could not pay such
interest rates. ACTIVISION NEVADA has not kept track of the interest accruing on these
debentures in its corporate books or financial records, and has no intention of repaying any
interest.
a. ACTIVISION NEVADA has also issued stock to investors, including investor J.C. (who
owns 400,000 shares), but has not recorded any these transactions on its corporate records.
b. In response to interrogatories issued by the DEPARTMENT in this civil action,
ACTIVISION NEVADA served answers to these interrogatories on or about September 21,
2015, falsely stating that “[t]here were no shares issued in the name of Activision Displays,
Inc.” (where Activision Displays, Inc. was formerly known as Activision TV, Inc.).
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70. Due to the lack of production of any records of ACTIVISION NEVADA during the
DEPARTMENT’s pre-suit investigation, or discovery conducted to date, it is not possible to
quantify the number of investors or the extent or nature of their investments at this time. Further
information is not available to the DEPARTMENT because the DEPARTMENT deposed
GOTHARD during its pre-suit investigation of all of the Defendants, but GOTHARD refused to
answer any questions relating to the operation of ACTIVISION NEVADA on the grounds that
his answers might incriminate him. However, records obtained by the DEPARTMENT indicate
that ACTIVISION NEVADA received at least $300,000 from the ACTIVISION NEVADA
Scheme during its operation.
71. Unbeknownst to investors of AMD or ACTIVISION NEVADA, shortly after
ACTIVISION NEVADA unlawfully obtained investor monies, GOTHARD and ACTIVISION
NEVADA then transferred the ‘411 and ‘736 Patents out of ACTIVISION NEVADA on or
about October 6, 2006 “for $10,” and into GOTHARD’s name to begin the ACTIVISION
DELAWARE scheme.
a. GOTHARD used ACTIVISION NEVADA funds to pay for fees relating to the transfer
of the Patents into GOTHARD’s name.
b. After GOTHARD and ACTIVISION NEVADA transferred the Patents to GOTHARD
individually, GOTHARD continued to use ACTIVISION NEVADA’s accounts to pay for
fees related to the Patents, including during March and April, 2007.
c. Upon information and belief, switching to the ACTIVISION DELAWARE scheme
(detailed in the next subsection) avoided the scrutiny of federal and state regulators, and
helped GOTHARD, AMD, ACTIVISION NEVADA, and ACTIVISION DELAWARE
avoid further detection.
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C. The “ACTIVISION DELAWARE Scheme”
72. ACTIVISION DELAWARE executed articles of incorporation on or about October 6,
2006, and filed the articles with the Delaware Department of State on October 10, 2006, listing
5400 Yahl Street, Suite D, Naples, Florida, as the mailing address of the incorporator.
ACTIVISION DELAWARE would later take various positions on the date of its incorporation,
telling investors orally and in presentations to them that it had incorporated in 2005. When
GOTHARD was deposed on July 23, 2012 in a trademark dispute (brought by Activision
Publishing, Inc.), he falsely stated under oath that ACTIVISION DELAWARE was incorporated
in 2005.
73. In filings with the Florida Department of State, ACTIVISION DELAWARE falsely
stated, through HETKOWSKI as its corporate Secretary, that the first date it transacted business
in Florida was September 1, 2007. ACTIVISION DELAWARE and HETKOWSKI knew this
statement was not true because it operated in Naples, Florida, since a date unknown, but no later
than January 1, 2007, according to Exhibit 5. ACTIVISION DELAWARE, through
HETKOWSKI as its corporate Secretary, did not apply to transact business in Florida as a
foreign corporation until on or about September 7, 2007.
74. Beginning at a time unknown to the DEPARTMENT but known by GOTHARD,
ACTIVISION NEVADA and/or ACTIVISION DELAWARE, but no later than on or about
December 2006, GOTHARD, ACTIVISION NEVADA and/or ACTIVISION DELAWARE
created and subsequently distributed a document to potential investors G.A., S.B., J.B., L.J., J.M.
and S.M., T.M., J.M. and A.M., P.M. and L.M., R.M., R.D., B.S., D.W., D.T., D.J., and J.M.,
and possibly others, entitled “Private Placement Memorandum,” which made material
representations to investors and purported to offer units of common stock at $1/unit (where each
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unit consists of one share of common stock), with a $20,000 minimum investment (hereafter
“December 2006 Memorandum”).
a. During the DEPARTMENT’s pre-suit investigation, ACTIVISION DELAWARE
represented to the DEPARTMENT that the December 2006 Memorandum related to
investors in ACTIVISION DELAWARE.
b. Monies from these investors were not placed into an escrow account in violation of the
terms of the December 2006 Memorandum (or in any Bank of America account). Nor were
the funds held until May 31, 2007 pending the outcome of the offering. Instead, the
investors’ funds were immediately deposited into ACTVISION NEVADA’s money market
and business accounts with Fifth Third Bank from December 16, 2006 until May, 2007.
i. HETKOWSKI and GOTHARD were signatories on these accounts as corporate
officers of ACTIVISION NEVADA, and immediately used these funds for their
own benefit.
ii. GOTHARD continued to use these ACTIVISION NEVADA funds to pay for
fees relating to the Patents, which he and ACTIVISION NEVADA had
transferred into GOTHARD’s name individually.
iii. These investors’ funds in ACTIVISION NEVADA accounts were also used to
pay debts of AMD on or about March, 2007.
c. Further information, such as the author or disseminator or date disseminated, is not
available to the DEPARTMENT because the DEPARTMENT deposed GOTHARD during
its pre-suit investigation of all of the Defendants, but GOTHARD refused to answer any
questions relating to the operation of ACTIVISION NEVADA or ACTIVISION
DELAWARE on the grounds that his answers might incriminate him, and because the
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DEPARTMENT subpoenaed all memoranda sent from ACTIVISION DELAWARE and
ACTIVISION NEVADA to investors during the DEPARTMENT’s pre-suit investigation,
but ACTIVISION DELAWARE and ACTIVISION NEVADA did not produce the entire
document.
75. A true and accurate copy of the first page of the December 2006 Memorandum is
attached as Exhibit 4 to this Complaint.
76. A complete copy of this document was not produced to the DEPARTMENT by
ACTIVISION DELAWARE or ACTIVISION NEVADA during the DEPARTMENT’S pre-suit
investigation of all of the Defendants. The first page of the December 2006 Memorandum
purports to offer 2,000,000 shares of common stock of a company named “Activision TV, Inc.”
for $1.00 per share.
77. Beginning at a time unknown to the DEPARTMENT but known by ACTIVISION
DELAWARE, but no later than on or about January 1, 2007, ACTIVISION DELAWARE
created and subsequently distributed a document entitled “Private Placement Memorandum” to
potential investors, which made material representations to investors and purported to offer
2,000,000 units of common stock at $1/unit (where each unit consists of one share of common
stock), with a $5,000 minimum investment (hereafter “January 2007 Memorandum”).
a. Further information, such as the date of dissemination or recipients of the January 2007
Memorandum, is not available to the DEPARTMENT because the DEPARTMENT deposed
GOTHARD during its pre-suit investigation of all of the Defendants, but GOTHARD
refused to answer any questions relating to the operation of ACTIVISION DELAWARE on
the grounds that his answers might incriminate him, and because the DEPARTMENT
subpoenaed all memoranda sent from ACTIVISION DELAWARE to investors during the
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DEPARTMENT’s pre-suit investigation, but ACTIVISION DELAWARE did not produce
all memoranda.
78. A true and accurate copy of the January 2007 Memorandum is attached as Exhibit 5 to
this Complaint.
79. Beginning at a time unknown to the DEPARTMENT but known by ACTIVISION
DELAWARE, but no later than July 15, 2007, ACTIVISION DELAWARE created and
subsequently distributed a document entitled “Private Placement Memorandum,” which made
material representations to investors and purported to offer 2,000,000 units for $1/unit (where
each unit consists of one share of common stock), with a $10,000 minimum investment
(hereafter “July 2007 Memorandum”).
a. Further information, such as the date of dissemination or recipients of the July 2007
Memorandum, is not available to the DEPARTMENT because the DEPARTMENT deposed
GOTHARD during its pre-suit investigation of all of the Defendants, but GOTHARD
refused to answer any questions relating to the operation of ACTIVISION DELAWARE on
the grounds that his answers might incriminate him, and because the DEPARTMENT
subpoenaed all memoranda sent from ACTIVISION DELAWARE to investors during the
DEPARTMENT’s pre-suit investigation, but ACTIVISION DELAWARE did not produce
all memoranda.
80. A true and accurate copy of the July 2007 Memorandum is attached as Exhibit 6 to this
Complaint.
81. Each unit consisted of one share of common stock and one warrant to purchase one share
of common stock at any time until July 15, 2012 at an exercise price of $1.25, “subject to
adjustment.” The warrants are redeemable by ACTIVISION DELAWARE at $.05 per warrant if
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the average of the closing bid price of the common stock, as reported by NASDAQ exceeds
$2.00 per share (subject to adjustment) for a certain period of time.
82. The January 2007 Memorandum and July 2007 Memorandum (collectively “2007
Memoranda”) were prepared by ACTIVISION DELAWARE to lure investors.
83. The 2007 Memoranda made the following representations to investors:
a. “AMD was formed to [sic] for the purpose of manufacturing and marketing the flat
panel display technology for the remote control electronic display systems developed by
Mr. Gothard,” but since “AMD was unable to raise the necessary operating capital with
which to pay its obligations to Mr. Gothard or to market the technology or devices
created using the patent rights licensed to it” GOTHARD formed ACTIVISION
DELAWARE on October 10, 2006 “for the purpose of raising funds to market the
technology represented by the patents.”
b. ACTIVISION DELAWARE holds several patents, and the patents are “valuable
assets.” The patents include the ‘411 Patent, the ‘736 Patent, and the ‘672 Patent, which
covers the “Works in a Box™” product. ACTIVISION DELAWARE relies on licensing
revenues.
c. ACTIVISION DELAWARE’s target markets are the retail (supermarkets, chain drug
stores, department stores), hospitality and government.
d. ACTIVISION DELAWARE’s primary products and services (currently in its third
generation of design) are: 1) its digital ready Computer Integrated Television (CIT); 2)
its patented Works-In-A-Box™ computer; and 3) its Digital Media Delivery Systems.
i. The CIT is a plasma or LCD television with a small format computer (the
patented “Works-in-a-Box™”);
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ii. The “Works-in-a-Box™” (WIB) is a component of the CIT which is being
marketed as a separate product that can be combined with customers’ existing flat
panel display to permit delivery of advertising, information, programming, and
entertainment to retail and individual consumers. The WIB was formerly known
as the “Works-In-a-Drawer” product.
iii. The Digital Media Delivery System (DMDS) products are a complete turn-key
solution combining hardware, software, content, content management and
connectivity for narrowcast applications. It can be combined with CIT’s and
communications systems to offer a one-stop package for creating, managing and
delivery advertising content and information.
e. Demand for ACTIVISION DELAWARE’s products and services are “varied and
immense.”
84. The 2007 Memoranda were replete with misrepresentations:
a. The formation of ACTIVISION DELAWARE presented no advantage over AMD in
raising operating capital, other than unlawfully “reselling” the value of the same property
(here, intellectual property and products that did not work) repeatedly to investors.
b. The licensing arrangement between GOTHARD and ACTIVISION DELAWARE
was subject to the whim of GOTHARD, who repeatedly transferred the patents, and
created licensing agreements, with different entities to maximize investments for his
personal benefit, but to the detriment of investors.
c. ACTIVISION DELAWARE had no intention of repaying any investors’ principal
through its licensing efforts.
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d. ACTIVISION DELAWARE’s products, to the extent they even existed, were not
functional and have not produced any revenue. Any marketplace “demand” was due to
GOTHARD’s misrepresentations about the products’ capabilities as set forth more fully
in this Complaint.
85. GOTHARD and ACTIVISION DELAWARE made material false representations to
investors about the nature of ACTIVISION DELAWARE’s facilities and its manufacturing
capabilities. For example, in a letter addressed to “Stockholders” dated August 24, 2007,
GOTHARD falsely told investors that it had expanded its production capabilities in its Toledo
(OH) facility, and that it “opened an office in the Washington DC area for Government [sic]
contracts and patent work.” During the course of the DEPARTMENT’s investigation,
ACTIVISION DELAWARE denied having any Washington, D.C.-area facility, and it does not
appear to have had any government contracts.
a. The false statements were made by GOTHARD and ACTIVISION DELAWARE to
investors, including E.J. and J.M.
b. The substance of the false statements was that ACTIVISION DELAWARE had
expanded its production capabilities in its Toledo (OH) facility, when it had not, and that it
“opened an office in the Washington DC area for Government [sic] contracts and patent
work” when it did not.
c. The time frame in which the false statements were made was from on or about August
24, 2007.
d. The context in which the statements were made was an update of the financial condition
of a company (ACTIVISION DELAWARE) by a company (ACTIVISION DELAWARE)
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and a company representative (GOTHARD) to investors, to create excitement among
investors and to get them to retain their investments.
e. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation of ACTIVISION
DELAWARE on the grounds that his answers might incriminate him, and because the
DEPARTMENT subpoenaed correspondence from ACTIVISION DELAWARE to investors
during the DEPARTMENT’s pre-suit investigation, but ACTIVISION DELAWARE did
not produce any copies of this document.
86. A true and accurate copy of the August 24, 2007 letter is attached as Exhibit 7 to this
Complaint.
87. In the August 24, 2007 letter, GOTHARD and ACTIVISION DELAWARE made the
following material false representations to investors such as E.J. and J.M. about ACTIVISION
DELAWARE and the extent of ACTIVISION DELAWARE’s partnerships with third persons to
investors, none of which were true:
a. ACTIVISION DELAWARE had entered into contracts with two software companies for
content creation and delivery as well as content management;
b. ACTIVISION DELAWARE had teamed up with Kerner/Lucas to develop 3-D TV and
advertising displays (without glasses). Upon information and belief, ACTIVISION
DELAWARE was referring to Kerner 3D Technologies and Lucasfilm;
c. ACTIVISION DELAWARE has a new manufacturing partner in Silicon Valley,
California, and they have the capability of producing ACTIVISION DELAWARE’s “Works
in a Drawer” in large volumes at competitive prices.
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d. ACTIVISION DELAWARE had a glass panel company in China that it will be buying its
monitors from to meet the demand for ACTIVISION DELAWARE’s products at
competitive prices.
e. The false statements were made by GOTHARD and ACTIVISION DELAWARE to
investors, including E.J. and J.M.
f. The substance of the false statements was that ACTIVISION DELAWARE had the
partnerships listed in this paragraph, when it did not.
g. The time frame in which the false statements were made was from on or about August
24, 2007.
h. The context in which the statements were made was an update of the financial condition
of a company (ACTIVISION DELAWARE) by a company (ACTIVISION DELAWARE)
and a company representative (GOTHARD) to investors, to create excitement among
investors and to get them to retain their investments.
i. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation of ACTIVISION
DELAWARE on the grounds that his answers might incriminate him, and because the
DEPARTMENT subpoenaed correspondence from ACTIVISION DELAWARE to investors
during the DEPARTMENT’s pre-suit investigation, but ACTIVISION DELAWARE did
not produce this document or any such third-party contracts.
88. Shortly after disseminating the August 24, 2007 letter, internal documents of
ACTIVISION DELAWARE reference yet another 2007 private placement memorandum
(purportedly from September 18, 2007), not produced to the DEPARTMENT in its investigation.
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Upon information, the placement offered 3,000,000 Units at $1.00 per Unit, where each Unit is
one share of ACTIVISION DELAWARE’s “common and one Class A Warrant to purchase one
share of common stock at $1.25 per share.”
89. The DEPARTMENT has obtained another private placement memorandum dated March
1, 2009 (hereafter “2009 Memorandum”).
90. A true and accurate copy of the 2009 Memorandum is attached as Exhibit 8. Exhibit 8
was not produced to the DEPARTMENT in its investigation, despite the fact that the
DEPARTMENT subpoenaed all documents sent to investors of ACTIVISION DELAWARE
during the DEPARTMENT’s pre-suit investigation.
91. The 2009 Memorandum sent by ACTIVISION DELAWARE to at least one investor
(J.C.) made material representations and purported to offer 80 “bridge-to-market” Units. Each
unit was $25,000 per unit, and the minimum investment was one unit. Each unit “consists of a
Promissory Note bearing interest at eight percent (8%) per annum and a Royalty Right returning
an additional $37,500 per unit [for a total of $2,000,000] and redeemable Warrants to purchase
25,000 shares of Common Stock (the “Warrants”)” of ACTIVISION DELAWARE.
a. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation of ACTIVISION
DELAWARE on the grounds that his answers might incriminate him, and because the
DEPARTMENT subpoenaed all memoranda from ACTIVISION DELAWARE to investors
during the DEPARTMENT’s pre-suit investigation, but ACTIVISION DELAWARE did
not produce any version of this document.
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92. ACTIVISION DELAWARE made the following material representations in the 2009
Memorandum to at least one investor (J.C.) on or about March 1, 2009, the exact date being
unknown to the DEPARTMENT:
a. ACTIVISION DELAWARE is “now set to reap a rich harvest of licensing arrangements
with major partners in digital Broadcast and Narrowcast (POP) on LCD and plasma screens,
advertising over the internet, and the emerging markets worldwide in the HD and 3-D
arenas.”
b. ACTIVISION DELAWARE “provides a competitively priced digital media delivery
system (DMDS) for use in a wide variety of applications in both the Narrowcasting Point of
Purchase (POP) and Broadcasting (HDTV/IPTV) markets.”
c. “Together with the DMDS, [ACTIVISION DELAWARE’s] patented Computer
Integrated Television (CIT) and ‘Works-in-a-Box’ (tm) (WIB) provide the basis for its In-
Room Convergence System solutions for the hospitality industry (more than 2 million
rooms in the US alone), its Digital Signage solutions for stores, malls, and convention
centers, and its home TV solutions.”
d. ACTIVISION DELAWARE “is currently negotiating a strategic relationship with the
leading developer of 3-D technology for digital displays. Together, this team will develop
the technology to display 3-D video content using [ACTIVISION DELAWARE’s] patented
Computer Integrated Television (CIT) system.”
e. “The Activision strategic initiative expects to achieve the ‘Holy Grail’ for 3-D viewing
(i.e. superior quality with no glasses needed) in the fourth quarter 2009, with production
units available in 2010.”
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f. ACTIVISION DELAWARE is deploying its In-Room Convergence System solution
with the Miramar at Waikiki Hotel, “followed by other Oahu hotels accessible via line-of-
sight.”
g. ACTIVISION DELAWARE “is involved in licensing discussions with a satellite and
cable TV providers to provide the set-top-box [sic] which enables digital broadcast as well
as 3-D viewing of TV content to millions of home consumers who subscribe to the satellite
and cable TV networks.”
h. ACTIVISION DELAWARE “expects significant revenue from the licensing of IDTV
technology.”
i. ACTIVISION DELAWARE “expects to show positive cash flow within six to eight
months, and several millions of dollars of annual revenues (at 30%-40% margins) within
eighteen months from hotel revenue combined with advance license payments received from
satellite and cable TV providers and Narrowcast revenue. In supporting both the TV
providers as well as the hospitality industry, [ACTIVISION DELAWARE] will become a
major set-top box and IDTV provider.”
j. ACTIVISION DELAWARE “will complete installations in Hawaii in early second
quarter 2009. In the second and third quarters 2009, [ACTIVISION DELAWARE] will
expand on its success in Hawaii and expand installations in the Caribbean and in Europe
under contracts that are currently being negotiated. During the second half 2009 and into
2010, [ACTIVISION DELAWARE] will continue with new installations in Hawaii,
mainland U.S., the Caribbean, and Europe. In the second quarter 2009, [ACTIVISION
DELAWARE] expects to complete licensing agreements with at least one satellite and/or
cable TV provider. In 2010, [ACTIVISION DELAWARE] expects to complete licensing
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agreements with several more satellite and cable TV providers and to expand its installation
operations. [ACTIVISION DELAWARE] expects to see significant returns on its 3-D
technology in 2010 and following years. In 2011 and 2012, [ACTIVISION DELAWARE]
will continue expanding its presence in the hospitality, Narrowcasting, and home TV
markets.”
k. “Recognizing that the market for digital TV is so large that [ACTIVISION
DELAWARE] cannot possibly grow fast enough to be a major player in the critical
transition period just ahead, [ACTIVISION DELAWARE] has identified two strategies to
proceed . . . .”
l. “After the first two patents had issued which focused primarily on digital advertising and
delivery systems [upon information and belief, the ‘411 Patent and the ‘736 Patent], the
Company engaged Synergy Management Group, Inc. of British Columbia, Canada to
complete an extensive appraisal of these patents. This was done to establish a value on the
technology in order to raise money. The valuations ranged from a low of $43,005,000 to a
high of $57,031,000, averaging out at $49,048,000. Since that time, two additional patents
have issued which are focused heavily on IPTV/IDTV for the hotel and home markets. The
Company feels these patents are more than double the valuation of the first two patents.”
m. Further information is not available to the DEPARTMENT, such as the number or
identity of the recipients, because the DEPARTMENT deposed GOTHARD during its pre-
suit investigation of all of the Defendants, but GOTHARD refused to answer any questions
relating to the operation of ACTIVISION DELAWARE on the grounds that his answers
might incriminate him, and because the DEPARTMENT subpoenaed all memoranda from
ACTIVISION DELAWARE to investors during the DEPARTMENT’s pre-suit
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investigation, but ACTIVISION DELAWARE did not produce any version of this
document.
93. The material statements made by ACTIVISION DELAWARE in paragraph 92 to
investor J.C., or to any other investor, from the 2009 Memorandum were not true:
a. ACTIVISION DELAWARE did not have any licensing arrangements with major
partners, nor did it have the ability to realize revenue through sales, advertising over the
internet, or any emerging markets worldwide in the HD and 3-D arenas.
b. ACTIVISION DELAWARE could not have a functional digital media delivery system
(DMDS).
c. ACTIVISION DELAWARE did not have a working CIT or WIB, nor did it have any
solutions for the hospitality industry, digital signage solutions (which, according to
GOTHARD’s prior sworn testimony in a trademark dispute in 2012, was supposed to be
revenue realized by AMD), or the home.
d. ACTIVISION DELAWARE was not negotiating a strategic relationship with the leading
developer of 3-D technology for digital displays.
e. ACTIVISION DELAWARE was not going to achieve the “Holy Grail” for 3-D viewing,
nor would it have, or produce, any such units the following year (2010).
f. ACTIVISION DELAWARE was not deploying its In-Room Convergence System
solution at the Miramar at Waikiki Hotel “followed by other Oahu hotels accessible via line-
of-sight.”
g. ACTIVISION DELAWARE was not involved in licensing discussions with a satellite
and cable TV providers to provide any set-top box for digital broadcast to millions of home
consumers who subscribe to the satellite and cable TV networks.
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h. ACTIVISION DELAWARE did not expect significant revenue from the licensing of
IDTV technology.
i. ACTIVISION DELAWARE did not expect to show positive cash flow within six to eight
months, and several millions of dollars of annual revenues (at 30%-40% margins) within
eighteen months from any source, much less hotels.
j. ACTIVISION DELAWARE was not going to expand on its success in Hawaii or expand
installations in the Caribbean and in Europe, nor were any contracts currently being
negotiated. It was not going to “continue” with new installations in Hawaii, mainland U.S.,
the Caribbean, or Europe, because it did not have any installations.
k. ACTIVISION DELAWARE’s valuation was grossly overstated and had no reasonable
basis in fact.
l. ACTIVISION DELAWARE knew, or should have known, that the statements in
paragraph 92 were false.
m. The context in which these statements were made was to potential investors (such as J.C.)
by a company (ACTIVISION DELAWARE) in order to solicit an investment.
n. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation of ACTIVISION
DELAWARE on the grounds that his answers might incriminate him, and because the
DEPARTMENT subpoenaed records from ACTIVISION DELAWARE during the
DEPARTMENT’s pre-suit investigation, but ACTIVISION DELAWARE did not produce
this memorandum, and the documents it did produce do not support any of the assertions
made in this paragraph by ACTIVISION DELAWARE to any investors, including J.C.
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94. On or about October 13, 2009, HETKOWSKI sent a letter invitation to a limited number
of ACTIVISION DELAWARE investors, including R.M. and C.R., for an informal stockholder
meeting on or about October 25, 2009, in her capacity as Secretary of ACTIVISION
DELAWARE. HETKOWSKI listed her return address as Naples, Florida. The purpose of the
October 25, 2009, meeting was to discuss the performance of “Activision.”
a. In her October 13, 2009 letter, HETKOWSKI told investors that new developments were
taking place in the company “in this economic downturn.” Upon information and belief, by
“Activision” HETKOWSKI was referring to ACTIVISION DELAWARE.
b. At the meeting, at least one investor (E.J.) was told by ACTIVISION DELAWARE that
ACTIVISION DELAWARE was in excellent position, expanding its facilities, moving into
new markets, and expected to provide investors with excellent returns in the near future.
None of these statements were true, and HETKOWSKI, GOTHARD, and ACTIVISION
DELAWARE knew they were not true.
c. The material, false statements and omissions were made by HETKOWSKI, GOTHARD,
and ACTIVISION DELAWARE.
d. The substance of the false statements was that new developments were happening for
ACTIVISION DELAWARE, and that it was in excellent position, expanding its facilities,
moving into new markets, and expected to provide investors with excellent returns in the
near future, when these statements were not true.
e. HETKOWSKI, GOTHARD, and ACTIVISION DELAWARE knew, or should have
known, that these statements were false.
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f. The persons responsible for the omissions were HETKOWSKI, GOTHARD, and
ACTIVISION DELAWARE, who retained more investors’ funds than they would have
absent the omission.
g. The time frame in which the false statements were made was from on or about October
13, 2009 to October 25, 2009.
h. The context in which the statements were made was an update by a company
(ACTIVISION DELAWARE) and company representatives (HETKOWSKI and
GOTHARD) to a limited number of existing investors (C.R., R.E., and E.J.) regarding the
company’s (ACTIVISION DELAWARE) performance.
i. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation of ACTIVISION
DELAWARE on the grounds that his answers might incriminate him, and because the
DEPARTMENT subpoenaed records from ACTIVISION DELAWARE during the
DEPARTMENT’s pre-suit investigation, but ACTIVISION DELAWARE did not produce
all copies of the October 13, 2009 letter.
95. The balance sheets and profit and loss statements provided by ACTIVISION
DELAWARE to the DEPARTMENT in its investigation are in such a state of disarray as to
make the true financial condition of the company incomprehensible. Upon information and
belief, the balance sheets and profit and loss statements do not accurately reflect the financial
condition of the company.
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96. ACTIVISION DELAWARE and GOTHARD continued to make material, false
representations about ACTIVISION DELAWARE and the extent of its partnerships to investors
in 2011 and 2012 as follows:
a. On or about July 2012, GOTHARD stated in a sworn deposition in Naples, Florida,
that Sysco [sic] was going to partner with ACTIVISION DELAWARE.
i. The false statement was made by GOTHARD.
ii. The substance of the false statements was that Sysco was going to partner with
ACTIVISION DELAWARE, when this statement was not true.
iii. The time frame in which this false statement was made was on or about July
2012.
iv. The context in which the statements were made was a sworn deposition in which
GOTHARD had to tell the truth in defending a trademark challenge by Activision
Publishing, Inc. against ACTIVISION DELAWARE.
v. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him.
b. On or about February 15, 2011, ACTIVISION DELAWARE stated publicly on a
website that it had “teamed up” with Microsoft and “AMD” to create a “set top box of the
future.” Upon information and belief, ACTIVISION DELAWARE was referring to
Advanced Micro Devices, not Defendant AD MEDIA DISPLAYS, INC., and there
were/are no such partnerships.
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i. The false statement was made by ACTIVISION DELAWARE.
ii. The substance of the false statements was that ACTIVISION DELAWARE had
“teamed up” with Microsoft and “AMD” to create a set top box of the future,
when this statement was not true.
iii. The time frame in which this false statement was made was on or about February
15, 2011.
iv. The context in which the statements were made was a statement by a company
(ACTIVISION DELAWARE) to the public, including investors and potential
investors, regarding its future projects with well-known companies.
v. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT subpoenaed records from
ACTIVISION DELAWARE during the DEPARTMENT’s pre-suit investigation,
but ACTIVISION DELAWARE did not produce records of these statements, or
any documents that would support the statements’ veracity.
97. ACTIVISION DELAWARE continued to make the following material, false
representations that ACTIVISION DELAWARE’s products and services worked in 2012:
a. Beginning at a time unknown to the DEPARTMENT but known by ACTIVISION
DELAWARE, but no later than January 2012, ACTIVISION DELAWARE represented
to potential and existing investors that Fountainstone [sic] Theater [sic] was
ACTIVISION DELAWARE’s “first Narrowcasting solution for the Goodrich chain of
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twenty-seven (27) theaters” and that ACTIVISION DELAWARE’s “digital signage in
the lobby of the theater will display local and national advertisements and upcoming
movie trailers.”
i. The false statement was made by ACTIVISION DELAWARE.
ii. The substance of the false statement was ACTIVISION DELAWARE had a
working installation in a theater and was a solution for a chain of theaters, when
this statement is not true.
iii. ACTIVISION DELAWARE knew, or should have known, that this statement
was false.
iv. The equipment referenced in this statement was not supplied by ACTIVISION
DELAWARE and GOTHARD until approximately the summer of 2009 and never
worked properly. Fountain Stone Theaters, Inc. returned all of the money for the
pre-paid advertising to the local businesses. Eventually, Fountain Stone Theaters,
Inc. discarded the hardware as “junk.”
v. The time frame in which the false statement was made was on or about January,
2012.
vi. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) in its 2012 business valuation, which was used by
ACTIVISION DELAWARE to disseminate information about ACTIVISION
DELAWARE to current and potential investors of ACTIVISION DELAWARE.
vii. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
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operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT subpoenaed records from
ACTIVISION DELAWARE during the DEPARTMENT’s pre-suit investigation,
but ACTIVISION DELAWARE did not produce any documents that would
support the statements’ veracity.
b. Beginning at a time unknown to the DEPARTMENT but known by ACTIVISION
DELAWARE, but no later than on or about March 12, 2012, ACTIVISION
DELAWARE represented that ACTIVISION DELAWARE was installing its interactive
“In-Room System” in four Anna Maria Island Resorts.
i. According to ACTIVISION DELAWARE, the In-Room System was supposed
to provide guests a personal on-screen menu offering “a new level of service –
from selecting movies to finding restaurants and local events – to surfing the
internet – all from the privacy and convenience of an in-room 40 inch HDTV with
a built-in computer.”
ii. ACTIVISION DELAWARE installed televisions and “Activision ™ System”
boxes in rooms at two resorts, but the system did not work and was never
operational.
iii. To promote this bogus, non-working installation of ACTIVISION
DELAWARE’s products, ACTIVISION DELAWARE created a press release
with a digitally-altered photograph featuring the principal of the Anna Maria
Island Resorts (D.T.) standing in front of what appears to be a working
installation of an ACTIVISION DELAWARE product.
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iv. The press release also attributes quotations to the principal of the Anna Maria
Island Resorts (D.T.) touting the success of the installation by ACTIVISION
DELAWARE.
v. However, the picture and quotations were false and created by ACTIVISION
DELAWARE, and the principal of the Anna Maria Island Resorts (D.T.) did not
participate in the creation of the fake press release or authorize its dissemination.
vi. The false statement was made by ACTIVISION DELAWARE.
vii. The substance of the false statements was ACTIVISION DELAWARE had a
working installation in a hotel, when this statement is not true.
viii. ACTIVISION DELAWARE knew, or should have known, that this statement
was false.
ix. The time frame in which the false statement was made was on or about March
12, 2012.
x. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) to existing and potential investors.
xi. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT subpoenaed records from
ACTIVISION DELAWARE during the DEPARTMENT’s pre-suit investigation,
but ACTIVISION DELAWARE did not produce records of these statements, or
any documents that would support the statements’ veracity.
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c. Beginning at a time unknown to the DEPARTMENT but known by ACTIVISION
DELAWARE, but no later than January 2012, ACTIVISION DELAWARE represented
that ACTIVISION DELAWARE was installing its products and services in the Queen
Kapiolani Hotel in Honolulu, Hawaii.
i. Upon information and belief, this system did not work and was never
operational.
ii. The false statement was made by ACTIVISION DELAWARE.
iii. The substance of the false statements was ACTIVISION DELAWARE had a
working installation in this hotel, when this statement is not true.
iv. ACTIVISION DELAWARE knew, or should have known, that this statement
was false.
v. The time frame in which the false statement was made was on or about January,
2012.
vi. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) in its 2012 business valuation, which was used by
ACTIVISION DELAWARE to disseminate information about ACTIVISION
DELAWARE to current and potential investors of ACTIVISION DELAWARE.
vii. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT subpoenaed records from
ACTIVISION DELAWARE during the DEPARTMENT’s pre-suit investigation,
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but ACTIVISION DELAWARE did not produce any documents that would
support the statements’ veracity.
d. On a date unknown to the DEPARTMENT, but after March, 2011, GOTHARD and
ACTIVISION DELAWARE told investor M.D. that ACTIVISION DELAWARE had
secured contracts with hotel chains in Thailand and was moving forward and that business
was looking good.
i. The false statement was made by ACTIVISION DELAWARE and GOTHARD.
ii. The substance of the false statements was ACTIVISION DELAWARE had
contracts with hotels in Thailand, and that the business was looking good, when
these statements were not true.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was after March 2011.
v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to an
investor (M.D.).
vi. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT subpoenaed records from
ACTIVISION DELAWARE during the DEPARTMENT’s pre-suit investigation,
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but ACTIVISION DELAWARE did not produce any documents that would
support the statements’ veracity.
98. GOTHARD and ACTIVISION DELAWARE made material, false representations that its
public offering was imminent since 2007:
a. On or about August 24, 2007, GOTHARD and ACTIVISION DELAWARE told
unnamed “stockholders” that ACTIVISION DELAWARE had “top of the line staff
members” which was “very important for the company when we go public” and that
ACTIVISION DELAWARE was having discussions with its underwriter to “find the right
vehicle and set a date.”
i. The false statement was made by ACTIVISION DELAWARE and GOTHARD
to stockholders, such as E.J. and J.M.
ii. The substance of the false statements was that ACTIVISION DELAWARE was
going public, when this statement is not true.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was on or about August
24, 2007.
v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to
update and excite investors such as E.J. and J.M.
b. On or about February, 2011, Shari Boyer (BOYER) told P.E.P. about ACTIVISION
DELAWARE, and that ACTIVISION DELAWARE was going public soon and that she
could make a lot of money. Shortly thereafter, but on a date unknown, P.E.P. met with
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GOTHARD in his Naples, Florida office, and GOTHARD and ACTIVISION DELAWARE
told P.E.P. that ACTIVISION DELAWARE was a solid company and moving forward to
go public soon, and that P.E.P. could purchase stock and make a lot of money.
i. The false statement was made by ACTIVISION DELAWARE and GOTHARD
to P.E.P.
ii. The substance of the false statements was that ACTIVISION DELAWARE was
going public soon and would make a lot of money, when this statement is not
true.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was on or about
February, 2011.
v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to
potential investor P.E.P.
c. On or about March, 2011, GOTHARD and ACTIVISION DELAWARE falsely told
potential investor M.D. that ACTIVISION DELAWARE was going public soon, and that
the shares would be worth $5 a share when he took ACTIVISION DELAWARE public.
i. The false statement was made by ACTIVISION DELAWARE and GOTHARD
to M.D.
ii. The substance of the false statements was that ACTIVISION DELAWARE was
going public soon and that the shares would be worth $5 a share, when this
statement is not true.
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iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was on or about March,
2011.
v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to
potential investor M.D.
d. On or about April 2011, GOTHARD and ACTIVISION DELAWARE falsely told
investors K.M. and K.M. that ACTIVISION DELAWARE was going to take off and that if
they invested now they could make money when his company went public, and that
ACTIVISION DELAWARE’s initial public offering would be no later than September,
2011.
i. The false statement was made by ACTIVISION DELAWARE and GOTHARD
to K.M. and K.M.
ii. The substance of the false statements was that ACTIVISION DELAWARE was
going public no later than September, 2011, and they could make money if they
invested.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was on or about April,
2011.
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v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to
potential investors K.M. and K.M.
e. On or about May 6, 2011, GOTHARD and ACTIVISION DELAWARE falsely told
investor S.S. that he was off to the United Kingdom for meetings to “get things started in
Europe.”
i. The false statement was made by ACTIVISION DELAWARE and GOTHARD
to S.S.
ii. The substance of the false statements was that ACTIVISION DELAWARE was
getting business ready in Europe.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was on or about May 6,
2011.
v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to
potential investor S.S.
f. On or about June, 2011, GOTHARD and ACTIVISION DELAWARE falsely told
investors C.J.G. and S.E. that if they invested in ACTIVISION DELAWARE, they could
make a lot of money when the stock goes public in one year.
i. The false statement was made by ACTIVISION DELAWARE and GOTHARD
to C.J.G. and S.E.
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ii. The substance of the false statements was that ACTIVISION DELAWARE was
going public in one year and that C.J.G. and S.E. could make a lot of money.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was on or about June,
2011.
v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to
potential investors C.J.G. and S.E.
g. On or about December 19, 2011, GOTHARD and ACTIVISION DELAWARE falsely
told investor P.F. that GOTHARD had met with underwriters in Berlin and was going to
take ACTIVISION DELAWARE public on the Frankfurt Exchange, and that he would be
back in Germany the following month for ACTIVISION DELAWARE to go public.
i. The false statement was made by ACTIVISION DELAWARE and GOTHARD
to P.F.
ii. The substance of the false statements was that ACTIVISION DELAWARE was
that GOTHARD was taking ACTIVISION DELAWARE public on the Frankfurt
Exchange shortly.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was on or about
December 19, 2011.
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v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to
investor P.F.
h. On or about January 2012, ACTIVISION DELAWARE made false representations to
unknown investors that it was exploring the viability and timing to potentially list on the
“Frankfurt Exchange [sic], followed later by a listing on the New York Stock Exchange.”
i. The false statement was made by ACTIVISION DELAWARE to unknown
investors.
ii. The substance of the false statements was that ACTIVISION DELAWARE was
going to potentially be listed on the Frankfurt Exchange, followed by the NYSE.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was on or about January,
2012.
v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) to investors.
i. On or about March 7, 2012, GOTHARD and ACTIVISION DELAWARE falsely told
AMD investor B.B. that the European Union was not a good place to start an initial public
offering (IPO), so ACTIVISION DELAWARE has decided to go public on the Hong Kong
Exchange, which worked well for ACTIVISION DELAWARE’s venture into Asia in 2012
and in particular, Thailand.
i. The false statement was made by GOTHARD and ACTIVISION DELAWARE
to investor B.B.
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ii. The substance of the false statements was that ACTIVISION DELAWARE was
going public in Hong Kong, and had a venture into Asia in 2012.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was on or about March 7,
2012.
v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to
investor B.B.
j. On or about March 26, 2012, GOTHARD and ACTIVISION DELAWARE falsely told
ACTIVISION DELAWARE investor P.F. that his outstanding shares would be included
“with the new shares when we go public” and that “we are in the process of completing
this.”
i. The false statement was made by GOTHARD and ACTIVISION DELAWARE
to investor P.F.
ii. The substance of the false statements was that ACTIVISION DELAWARE was
in the process of completing an IPO.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was on or about March
26, 2012.
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v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to
investor P.F.
k. On a date unknown to the DEPARTMENT, GOTHARD and ACTIVISION
DELAWARE falsely told investor R.R. that ACTIVISION DELAWARE was going public
on a Canadian exchange.
i. The false statement was made by GOTHARD and ACTIVISION DELAWARE
to investor R.R.
ii. The substance of the false statements was that ACTIVISION DELAWARE was
going public on a Canadian exchange.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to
investor R.R.
l. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation of ACTIVISION
DELAWARE on the grounds that his answers might incriminate him, and because the
DEPARTMENT subpoenaed records from ACTIVISION DELAWARE during the
DEPARTMENT’s pre-suit investigation, but ACTIVISION DELAWARE did not produce
any documents that would support the statements’ veracity or the existence of any
shareholders after 2009. Moreover, ACTIVISION DELAWARE had executed a loan and
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note with a 24% interest rate in August, 2011, placing ACTIVISION DELAWARE in a
“vulnerable” position given the interest rate of the loan and note, which eventually went into
default.
99. GOTHARD and ACTIVISION DELAWARE made the following material, false
representations about ACTIVISION DELAWARE’s product sales or potential sales to investors:
a. On or about August 24, 2007, GOTHARD and ACTIVISION DELAWARE told
investors that it entered the medical display business.
i. The false statement was made by GOTHARD and ACTIVISION DELAWARE.
ii. The substance of the false statements was ACTIVISION DELAWARE had
entered the medical display business, when this statement is not true.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was on or about August
24, 2007.
v. The context in which the statements were made was an update of the financial
condition of a company (ACTIVISION DELAWARE) by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to
investors.
vi. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT subpoenaed correspondence
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from ACTIVISION DELAWARE to investors during the DEPARTMENT’s pre-
suit investigation, but ACTIVISION DELAWARE did not produce this document
or produce any documents that would support the statements’ veracity.
b. On or about January 2012, ACTIVISION DELAWARE represented that Fountainstone
[sic] Theater [sic] was ACTIVISION DELAWARE’s “first Narrowcasting solution for the
Goodrich chain of twenty-seven (27) theaters” and that ACTIVISION DELAWARE’s
“digital signage in the lobby of the theater will display local and national advertisements and
upcoming movie trailers.”
i. The false statement was made by ACTIVISION DELAWARE.
ii. The substance of the false statements was ACTIVISION DELAWARE had a
working installation in a theater and was a solution for a chain of theaters, when
this statement is not true.
iii. ACTIVISION DELAWARE knew, or should have known, that this statement
was false.
iv. The equipment referenced in this statement was not supplied by ACTIVISION
DELAWARE and GOTHARD until approximately the summer of 2009 and never
worked properly. Fountain Stone Theaters, Inc. returned all of the money for the
pre-paid advertising to the local businesses.
v. The time frame in which the false statement was made was on or about January,
2012.
vi. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) in its 2012 business valuation, which was used by
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ACTIVISION DELAWARE to disseminate information about ACTIVISION
DELAWARE to current and potential investors of ACTIVISION DELAWARE.
vii. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT subpoenaed records from
ACTIVISION DELAWARE during the DEPARTMENT’s pre-suit investigation,
but ACTIVISION DELAWARE did not produce any documents that would
support the statements’ veracity.
c. On or about January 2012, ACTIVISION DELAWARE represented that ACTIVISION
DELAWARE was planning to implement its system in the Peacock Hotel in San Francisco.
i. The false statement was made by ACTIVISION DELAWARE.
ii. The substance of the false statements was that ACTIVISION DELAWARE was
implementing its system in a hotel, when this statement is not true.
iii. ACTIVISION DELAWARE knew, or should have known, that this statement
was false.
iv. The time frame in which the false statement was made was on or about January,
2012.
v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) in its 2012 business valuation, which was used by
ACTIVISION DELAWARE to disseminate information about ACTIVISION
DELAWARE to current and potential investors of ACTIVISION DELAWARE.
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vi. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT subpoenaed records from
ACTIVISION DELAWARE during the DEPARTMENT’s pre-suit investigation,
but ACTIVISION DELAWARE did not produce any documents that would
support the statements’ veracity.
d. On or about June, 2011, GOTHARD and ACTIVISION DELAWARE told potential
investors C.J.G. and S.E. that ACTIVISION DELAWARE’s products were used in grocery
stores.
i. The false statement was made by GOTHARD and ACTIVISION DELAWARE.
ii. The substance of the false statements was ACTIVISION DELAWARE’s
products were used in grocery stores.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was on or about June,
2011.
v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD),
which was used by ACTIVISION DELAWARE to disseminate information about
ACTIVISION DELAWARE to potential investors of ACTIVISION
DELAWARE.
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vi. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT subpoenaed records from
ACTIVISION DELAWARE during the DEPARTMENT’s pre-suit investigation,
but ACTIVISION DELAWARE did not produce any documents that would
support the statements’ veracity.
e. On or about March, 2011, GOTHARD and ACTIVISION DELAWARE told potential
investor M.D. that ACTIVISION DELAWARE’s products were in grocery stores and
hotels, and that hotels were using its products to provide online services to hotel guests.
GOTHARD also told M.D. that ACTIVISION DELAWARE was making money from its
contracts with hotels and grocery stores.
i. The false statement was made by GOTHARD and ACTIVISION DELAWARE.
ii. The substance of the false statements was ACTIVISION DELAWARE’s
products were used in grocery stores and hotels, and were profitable.
iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false.
iv. The time frame in which the false statement was made was on or about March,
2011.
v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to
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potential investor M.D to disseminate information about ACTIVISION
DELAWARE.
vi. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT subpoenaed records from
ACTIVISION DELAWARE during the DEPARTMENT’s pre-suit investigation,
but ACTIVISION DELAWARE did not produce any documents that would
support the statements’ veracity, and specifically denied having any such
revenues.
100. ACTIVISION DELAWARE and GOTHARD made the following material, false, and
unrealistic financial statements about ACTIVISION DELAWARE to investors that had no
reasonable basis in fact:
a. On or about September 2010, ACTIVISION DELAWARE stated to investors that it
would be worth between $253 million and $319 million in “year 2 after roll out” of
ACTIVISION DELAWARE’s products and services, and between $2.446 and $2.899
billion in year four after roll out.
i. The false statement was made by ACTIVISION DELAWARE.
ii. The substance of the false statements was that ACTIVISION DELAWARE had
a valuation of hundreds of millions in two years that would explode to billions in
year four, when this statement is not true.
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iii. ACTIVISION DELAWARE knew, or should have known, that this statement
was false.
iv. The time frame in which the false statement was made was on or about
September, 2010.
v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) in its 2010 business plan, which was used by
ACTIVISION DELAWARE to disseminate information about ACTIVISION
DELAWARE to current and potential investors of ACTIVISION DELAWARE.
vi. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT subpoenaed records from
ACTIVISION DELAWARE during the DEPARTMENT’s pre-suit investigation,
but ACTIVISION DELAWARE did not produce this document.
b. ACTIVISION DELAWARE utilized the services of Synergy Management Group Ltd., a
company purportedly operating out of Beijing, Hong Kong, and Vancouver, to generate a
Business Valuation Report in January 2012.
i. Upon information and belief, ACTIVISION DELAWARE circulated this
business valuation report to the public, including potential investors, repeating the
unrealistic valuation projections it made in its September 2010 business plan.
ii. Synergy Management Group Ltd. does not appear to have a presence in the
United States, and does not appear to employ accountants. Instead, it advertises
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that it performs consulting and marketing services, advertising its services to
companies like ACTIVISION DELAWARE to “Inspire Investors” in order to
attract and keep investors.
iii. Synergy Management Group Ltd. relied on information, documentation, and
reports supplied by ACTIVISION DELAWARE, and did not perform an
independent audit or appraisal.
c. The Business Valuation Report in January 2012 states that ACTIVISION DELAWARE
was initiating its rollout phase, and estimated that it would have total revenues of over $12
million in year one after “roll out,” rising to over $392 million in year four. As of January,
2012, the valuation of ACTIVISION DELAWARE “for the USA and Canada . . . has been
quantified at a range of $193 million to $238 million.”
i. The false statement was made by ACTIVISION DELAWARE.
ii. The substance of the false statements was that ACTIVISION DELAWARE
would have millions in revenues in “year one,” rising to hundreds of millions of
dollars in “year four,” and is valued at hundreds of millions of dollars.
iii. ACTIVISION DELAWARE knew, or should have known, that this statement
was false.
iv. Months prior to the creation of the Business Valuation Report, as set forth more
fully in this Complaint, ACTIVISION DELAWARE executed a loan and note for
up to $5 million at an interest rate of 24%, which placed ACTIVISION
DELAWARE in a “vulnerable” position, and later went into default on or about
August, 2014.
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v. The Business Valuation Report in January 2012 makes no mention of the 24%
interest rate of the note or the purported collateralization of all of the property of
ACTIVISION DELAWARE under the loan.
vi. The time frame in which the false statement was made was on or about January,
2012.
vii. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) in its 2012 business valuation, which was used by
ACTIVISION DELAWARE to disseminate information about ACTIVISION
DELAWARE to current and potential investors of ACTIVISION DELAWARE.
viii. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT subpoenaed records from
ACTIVISION DELAWARE during the DEPARTMENT’s pre-suit investigation,
but ACTIVISION DELAWARE did not produce any documents that would
support the statement’s veracity.
d. On or about March 26, 2012, GOTHARD and ACTIVISION DELAWARE told investor
P.F. that “[w]e just completed an appraisal of the company in January and it came in at
$238,000,000, which is much higher than we expected.”
i. The false statement was made by GOTHARD and ACTIVISION DELAWARE.
ii. The substance of the false statements was that ACTIVISION DELAWARE was
appraised, and is valued at hundreds of millions of dollars.
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iii. GOTHARD and ACTIVISION DELAWARE knew, or should have known, that
this statement was false. Months prior to the creation of the Business Valuation
Report, as set forth more fully in this Complaint, ACTIVISION DELAWARE
executed a loan and note for up to $5 million at an interest rate of 24%, which
placed ACTIVISION DELAWARE in a “vulnerable” position, and later went into
default on or about August, 2014.
iv. The time frame in which the false statement was made was on or about March
26, 2012.
v. The context in which the statements were made was by a company
(ACTIVISION DELAWARE) and a company representative (GOTHARD) to
disseminate information to an investor (P.F.).
vi. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT subpoenaed documents such as
this correspondence, but was not produced by ACTIVISION DELAWARE to the
DEPARTMENT’s pre-suit investigation.
e. On or about March 2, 2015, GOTHARD told investor R.R. that GOTHARD had a plan to
repay R.R., and possibly other investors, and to pay back all overdue commercial rent owed
by the Alter Ego Defendants by exchanging foreign currency into dollars. Upon
information and belief, GOTHARD was referring to Iraqi currency (dinars).
i. The false statement was made by GOTHARD.
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ii. The substance of the false statements was that GOTHARD had the ability to
repay investors with an exchange of foreign currency, when he does not.
iii. GOTHARD knew, or should have known, that this statement was false.
iv. The time frame in which the false statement was made was on or about March
15, 2015.
v. The context in which the statements were made was by a company
representative (GOTHARD) to an existing investor.
vi. Further information is not available to the DEPARTMENT because the
DEPARTMENT deposed GOTHARD during its pre-suit investigation of all of
the Defendants, but GOTHARD refused to answer any questions relating to the
operation of ACTIVISION DELAWARE on the grounds that his answers might
incriminate him, and because the DEPARTMENT deposed R.R., who refused to
provide additional information about the transaction to the DEPARTMENT
because R.R. had agreed with GOTHARD not to disclose details about the alleged
exchange of foreign currency.
101. GOTHARD and ACTIVISION DELAWARE made material, false reports to
ACTIVISION DELAWARE investors about the performance of ACTIVISION DELAWARE’s
stock. For example, investor B.B. believed she was purchasing $2,500.00 of ACTIVISION
DELAWARE stock in 2011 for $.50/share. Her check to GOTHARD cleared on or about
September 2011. GOTHARD gave her false reports about the performance of the stock, telling
her in 2012 that the stock was worth more than $7.00/share. In reality, the stock, which was not
even recorded in the corporate records by GOTHARD, HETKOWSKI, or ACTIVISION
DELAWARE, was worthless.
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a. The false statement was made by GOTHARD and ACTIVISION DELAWARE.
b. The substance of the false statement was that investor B.B. had stock on the corporate
records of ACTIVISION DELAWARE, and that the stock was worth more than
$7.00/share.
c. The time frame in which the false statement that B.B. had stock was on or about 2011,
and the time frame in which the false statement that the stock was worth more than
$7.00/share was made was on or about 2012.
d. The context in which the statement was made was a financial solicitation by a company
representative (GOTHARD) and a company (ACTIVISION DELAWARE), to an individual
(B.B.), and an update by a company representative (GOTHARD) and a company
(ACTIVISION DELAWARE) to an individual (B.B.) as to the performance of her stock.
e. Further information is not available to the DEPARTMENT because the DEPARTMENT
deposed GOTHARD during its pre-suit investigation of all of the Defendants, but
GOTHARD refused to answer any questions relating to the operation of ACTIVISION
DELAWARE on the grounds that his answers might incriminate him, and because the
DEPARTMENT subpoenaed records from ACTIVISION DELAWARE during the
DEPARTMENT’s pre-suit investigation, but ACTIVISION DELAWARE did not produce
ADCO FINANCIAL, LCG, GOTHARD, and the Locke International Trust have been further
tolled from April 23, 2014 to the date of the filing of the original Complaint (December 22,
2014) pursuant to an executed tolling agreement with these parties.
COUNT I: VIOLATIONS OF THE FLORIDA RICO ACT (Section 895.03(1), Florida Statutes)
(Use of Proceeds from a Pattern of Racketeering) (Defendants GOTHARD, ACTIVISION DELAWARE, AMD, LCG, ACTIVISION FLORIDA, ACTIVISION NEVADA, ADCO FINANCIAL, and ACTIVELIGHT TV)
160. This is a claim for civil relief for violations of Section 895.03(1), Florida Statutes, against
NEVADA, ADCO FINANCIAL, and ACTIVELIGHT TV (hereafter for purposes of Count V the
“Count V Defendants”). This action is in excess of $15,000, exclusive of attorneys’ fees and
costs. Should the investments or securities described in paragraphs 184 through 193 not qualify
as an “investment” under Section 517.301(2), Florida Statutes, or a “security” under Section
517.021(21), Florida Statutes, then the conduct described in Count IV is a violation of the
Florida Deceptive and Unfair Trade Practices Act.
196. Plaintiff realleges and incorporates by reference herein the allegations contained in
paragraphs 1 through 159, above.
197. Section 501.204(1), Florida Statutes, declares that unfair or deceptive acts or practices in
the conduct of any trade or commerce are unlawful.
198. The Count V Defendants have committed the following acts or practices that are unfair,
deceptive, or unconscionable in willful violation of Chapter 501, Part II, Florida Statutes:
a. GOTHARD employed devices, schemes, or artifices to defraud, in violation of
Section 501.204(1), Florida Statutes. GOTHARD operated the AMD Scheme beginning
on a date unknown and known only by the Defendants, but no later than September 2003,
and continuing until the present. The AMD Scheme, set forth more fully above in
Section V.A., was structured so as to give the appearance to potential/existing investors
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that AMD was positioned to reap profits from the value of the Patents and other products
using the Patents. Based on these representations, investors invested monies in the AMD
Scheme until a date unknown to the DEPARTMENT and known only by the Defendants,
but no earlier than March, 2007. While operating the AMD Scheme, GOTHARD then
operated other schemes designed to reap the same alleged profits from the same Patents,
and transferred Patents outside of any licenses AMD had. GOTHARD continues to
employ this scheme to the present. By continuing to perpetuate the AMD Scheme,
GOTHARD gives investment advice to existing investors that creates the appearance to
AMD investors that their investment has/had value, which it does not. GOTHARD’s
scheme perpetuates the AMD Scheme, leading investors to retain their investments.
b. GOTHARD obtained money or property by means of untrue statements of a material
fact or omitted material facts necessary in order to make the statements made, in the light
of the circumstances under which they were made, not misleading, in violation of Section
501.204(1), Florida Statutes. Beginning on a date unknown and known only by the
Defendants, but no later than September 2003, and continuing until a date unknown to the
DEPARTMENT and known only by the Defendants, but no earlier than March, 2007,
GOTHARD obtained monies for AMD from investors by misrepresenting to investors
the extent of AMD’s sales, its operation, that its products worked, the identities of its
customers, its manufacturing capabilities, its locations, its business partnerships or
relationships, its investors’ rates of return, its intellectual property portfolio, that it had a
pending initial public offering, the safety of investing in AMD, the timing of returns and
payoff dates, that AMD had a religious mission and would contribute to a church,
customer demand for their (non-working) products, interest in AMD by foreign investors,
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the extent to which they performed product testing, and other companies’ interest in
acquiring AMD.
c. Beginning on a date unknown and known only by the Defendants, but no later than
September 2003, and continuing until the present, GOTHARD knowingly and willfully
concealed or covered up, by his schemes, a material fact that AMD was worthless, and
that GOTHARD was operating multiple schemes in violation of Section 501.204(1),
Florida Statutes. GOTHARD created false writings and documents and used them, such
as Exhibits 1 and 2, and also made false statements or representations during the
execution of the AMD Scheme that concealed the ACTIVISION NEVADA Scheme and
the ACTIVISION DELAWARE Scheme. GOTHARD knew these writings and
documents and statements were false.
d. GOTHARD employed devices, schemes, or artifices to defraud, in violation of
Section 501.204(1), Florida Statutes, with respect to ACTIVISION NEVADA investors.
GOTHARD operated the ACTIVISION NEVADA Scheme beginning on a date unknown
and known only by the Defendants, but no later than January, 2006, and continuing until
the present. The ACTIVISION NEVADA Scheme, set forth more fully above in Section
V.B., was structured so as to give the appearance to potential investors that ACTIVISION
NEVADA was positioned to reap profits from the value of the Patents and other products
using the Patents. Based on these representations, investors invested monies in the
ACTIVISION Scheme until a date unknown to the DEPARTMENT and known only by
the Defendants, but no earlier than June, 2006. While operating the ACTIVISION
NEVADA Scheme, GOTHARD then operated other schemes designed to reap the same
alleged profits from the same Patents, and transferred Patents outside of any licenses
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ACTIVISION NEVADA had. GOTHARD continues to employ this scheme to the
present. By continuing to perpetuate the ACTIVISION NEVADA Scheme, GOTHARD
gives investment advice to existing investors that creates the appearance to ACTIVISION
NEVADA investors that their investment has/had value, which it does not. GOTHARD’s
scheme perpetuates the ACTIVISION NEVADA Scheme, leading investors to retain
their investments.
e. GOTHARD obtained money or property from ACTIVISION NEVADA investors by
means of untrue statements of a material fact or omitted material facts necessary in order
to make the statements made, in the light of the circumstances under which they were
made, not misleading, in violation of Section 501.204(1), Florida Statutes. Beginning on
a date unknown and known only by the Defendants, but no later than June, 2006, and
continuing until a date unknown to the DEPARTMENT and known only by GOTHARD
and ACTIVISION NEVADA, GOTHARD obtained monies for ACTIVISION NEVADA
from investors by misrepresenting to investors the extent of ACTIVISION NEVADA’s
sales, its operation, that its products worked, its manufacturing capabilities, its locations,
its business partnerships or relationships, its investors’ rates of return, its stock price, that
it had a pending initial public offering, and customer demand for their (non-working)
products.
f. Beginning on a date unknown and known only by the Defendants, but no later than
January, 2006, and continuing until the present, GOTHARD knowingly and willfully
concealed or covered up, by his schemes, a material fact that ACTIVISION NEVADA
was worthless, and that GOTHARD was operating multiple schemes in violation of
Section 501.204(1), Florida Statutes. GOTHARD created false writings and documents
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and used them, such as Exhibit 3, which was a copy of the same false documents used in
the AMD Scheme. GOTHARD also made false statements or omissions during the
execution of the ACTIVISION NEVADA Scheme that concealed the AMD Scheme and
the ACTIVISION DELAWARE Scheme. GOTHARD knew these writings and
documents and statements were false. GOTHARD also created multiple domestic
companies with the name “Activision TV, Inc.” that served to confuse investors and hide
his schemes, and secretly moved assets across these entities.
g. GOTHARD employed devices, schemes, or artifices to defraud in violation of
Section 501.204(1), Florida Statutes, with respect to investors in ACTIVISION
DELAWARE. GOTHARD operated the ACTIVISION DELAWARE Scheme beginning
on a date unknown to the DEPARTMENT and known only by the Defendants, but no
later than January, 2006, and continuing until the present. The ACTIVISION
DELAWARE Scheme, set forth more fully above in Section V.C., was structured so as to
give the appearance to potential/existing investors that ACTIVISION DELAWARE was
positioned to reap profits from the value of the Patents and other products using the
Patents. Based on these representations, investors invested monies in the ACTIVISION
DELAWARE Scheme until a date unknown to the DEPARTMENT and known only by
the Defendants, but no earlier than August, 2011. While operating the ACTIVISION
DELAWARE Scheme, GOTHARD also operated the ACTIVISION NEVADA Scheme,
which was designed to reap the same alleged profits from the same Patents. GOTHARD
continues to employ this scheme to the present. By continuing to perpetuate the
ACTIVISION DELAWARE Scheme, GOTHARD gives investment advice to existing
investors that creates the appearance to AMD investors that their investment has/had
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value, which it does not. GOTHARD’s scheme perpetuates the ACTIVISION
DELAWARE Scheme, leading investors to retain their investments. GOTHARD also
solicited funds on behalf of ACTIVISION DELAWARE (including investors B.B., D.T.,
K.M.) in 2010 and 2011. GOTHARD told these investors they were buying stock in
ACTIVISION DELAWARE. GOTHARD then deposited these funds from the investors
of ACTIVISION DELAWARE (including the funds of investors B.B., D.T., K.M.) into
his personal banking account, and did not record any of these investments in the
corporate records of ACTIVISION DELAWARE. He then spent these monies for his
own personal use.
h. GOTHARD obtained money or property from ACTIVISION DELAWARE investors
by means of untrue statements of a material fact or omitted material facts necessary in
order to make the statements made, in the light of the circumstances under which they
were made, not misleading, in violation of Section 501.204(1), Florida Statutes.
Beginning on a date unknown and known only by the Defendants, but no later than May,
2007, and continuing until a date unknown to the DEPARTMENT and known only by
the Defendants, but no earlier than August, 2011, GOTHARD obtained monies for
ACTIVISION DELAWARE from investors by misrepresenting to investors the extent of
ACTIVISION DELAWARE’s sales, its operation, that its products worked, the identities
of its customers, its manufacturing capabilities, its locations, its business partnerships or
relationships, its investors’ rates of return, its intellectual property portfolio, that it had a
pending initial public offering, the timing of returns and payoff dates, customer demand
for their (non-working) products, interest in ACTIVISION DELAWARE by foreign
investors, the extent to which they performed product testing, and other companies’
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interest in acquiring ACTIVISION DELAWARE. GOTHARD also deposited investors’
funds (including the funds of investor B.B., D.T., K.M.) and into his personal banking
account, and did not record any of these investments in the corporate records of
ACTIVISION DELAWARE. He then spent these monies for his own personal use.
i. Beginning on a date unknown and known only by the Defendants, but no later than
January 2006, and continuing until the present, GOTHARD knowingly and willfully
concealed or covered up, by his schemes, a material fact that GOTHARD was operating
multiple schemes in violation of Section 501.204(1), Florida Statutes. GOTHARD
created false writings and documents and used them, such as Exhibits 4-8, and also made
false statements or omissions during the execution of the ACTIVISION DELAWARE
Scheme that concealed the AMD Scheme, the ACTIVISION NEVADA Scheme and the
ACTIVISION DELAWARE Scheme. GOTHARD knew these writings and documents
and statements were false.
j. Beginning on a date unknown and known only by the Defendants, but no later than
August, 2011, and continuing until January, 2012, GOTHARD knowingly and willfully
concealed or covered up, by his schemes, a material fact that ACTIVISION
DELAWARE was not a viable investment in violation of Section 501.204(1), Florida
Statutes, and that AMD and ACTIVISION NEVADA had interests in the Patents.
GOTHARD created false writings and documents and used them, and also made false
statements or representations during the execution of the ACTIVISION DELAWARE
Scheme, holding out Activelight, LLC (upon information and belief, ACTIVELIGHT
TV), ADCO FINANCIAL, ACTIVISION NEVADA, ACTIVISION FLORIDA, and
AMD to be subsidiaries of ACTIVISION DELAWARE and to artificially inflate the size
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and sophistication of ACTIVISION DELAWARE. GOTHARD knew these writings and
documents and statements were false.
k. GOTHARD took investor funds by knowingly obtaining money from investors with
the intent to either temporarily or permanently deprive the persons of the money and
appropriate the money to his own use or the use of others not entitled to the use of the
money.
199. The acts and practices of the Count V Defendants have caused injury, damages, and
prejudice to consumers and the public and constitute unconscionable acts or practices or unfair or
deceptive acts and trade practices within the intent and meaning of Section 501, Part II, Florida
Statutes.
200. Defendant GOTHARD is a direct participant in the activities of the Count V Defendants.
201. Unless the Count V Defendants are temporarily and permanently enjoined from engaging
further in the acts and practices alleged herein, the continued activities of Defendants will result
in irreparable injury to the public for which there is no adequate remedy at law. The public
interest also favors the entry of injunctive relief to protect the public and investors from the
Defendants’ fraudulent scheme.
WHEREFORE, the DEPARTMENT requests the following relief:
A. Entering judgment in its favor and against the Count V Defendants;
B. Entering temporary and permanent injunctions enjoining current and future violations of
Chapter 501, freezing Defendants’ bank accounts;
C. Appointing a receiver;
D. Entering other injunctive relief;
E. Assessing civil penalties against Defendants;
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F. Ordering disgorgement of the proceeds received by the Count V Defendants;
G. Ordering divestment or forfeiture of assets;
H. Ordering restitution;
I. Awarding damages;
J. Dissolving the Count V business-entity Defendants;
K. Awarding attorneys’ fees and costs to Plaintiff, and
L. Such other and further relief that this Court deems just and proper.
COUNT VI: VIOLATIONS OF THE FLORIDA ANTI-FENCING ACT (Section 812.014, Florida Statutes)
(Defendant GOTHARD)
202. This is a claim for civil relief for violation of Section 812.014, Florida Statutes, against
Defendant GOTHARD.
203. Plaintiff realleges and incorporates by reference herein the allegations contained in
paragraphs 1 through 159, above.
204. Beginning on a date unknown and known only by the Defendants, but no later than April,
2011, and continuing until a date unknown to the DEPARTMENT and known only by the
Defendants, but no earlier than August, 2011, GOTHARD solicited funds on behalf of
ACTIVISION DELAWARE (including investors B.B., D.T., K.M.). GOTHARD told these
investors they were buying stock in ACTIVISION DELAWARE. Investors B.B., D.T., and
K.M. believed they were buying stock in ACTIVISION DELAWARE.
205. GOTHARD then knowingly obtained or used, or endeavored to obtain or use, the
property of investors B.B., D.T., and K.M. with intent to, either temporarily or permanently,
deprive these investors of a right to his property or a benefit therefrom, or appropriate the
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property to GOTHARD’s own use or to the use of a person not entitled thereto, in violation of
Section 812.014, Florida Statutes.
206. GOTHARD deposited these funds from the investors of ACTIVISION DELAWARE
(including the funds of investors B.B., D.T., K.M.) into his personal banking account, and did
not record any of these investments in the corporate records of ACTIVISION DELAWARE. He
then spent these monies for his own personal use.
WHEREFORE, the DEPARTMENT requests the following relief:
A. Order divestiture of GOTHARD of any interest in any enterprise;
B. Permanently enjoin GOTHARD from engaging in any activities involving or connected
with the solicitation and collection of investments or securities;
C. Permanently enjoin GOTHARD from violating, aiding or abetting the violation of, and
conspiring to violate any provisions of the Florida Anti-Fencing Act;
D. Impose reasonable restrictions upon the future activities or investments of GOTHARD,
including, but not limited to, prohibiting GOTHARD from engaging in the same type of
endeavor as the enterprise in which GOTHARD was engaged in;
E. Order the dissolution of the enterprise;
F. Order forfeiture of all property, including the Patents and cash, used in the course of,
derived from, or realized through the conduct of GOTHARD, subject to the rights of any
innocent persons duly established in this cause, pursuant to Section 812.035(2), Florida Statutes;
G. Order GOTHARD to divest or disgorge any ill-gotten proceeds;
H. Retain jurisdiction to direct the proper distribution of the proceeds of forfeiture pursuant
to Section 812.035, Florida Statutes;
I. Award other relief the Court deems appropriate.
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JURY TRIAL DEMAND
Plaintiff hereby demands a trial by jury on all issues so triable.
Respectfully submitted this 16th day of October, 2015, s/ Nicholas J. Weilhammer Nicholas J. Weilhammer Assistant Attorney General FBN 479322 R. Scott Palmer Chief of Complex Enforcement FBN 220353 Office of the Attorney General PL-01 The Capitol Tallahassee, Florida 32399-1050 Telephone: (850)414-3300 Facsimile: (850) 488-9134 Primary: [email protected] Secondary: [email protected]
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on October 16, 2015, a true and correct copy hereof
was served by an automatic email generated by the Florida Courts E-Filing Portal to all
parties entitled to receive electronic service in this matter:
Mark B. Cohn, Esq. Attorney for all Defendants 3021 Airport Pulling Road North