Earlier this week BehindMLM reported on Brian Shuster’s RICO fraud lawsuit, filed in opposition to Josh Denne, his firm Blockchain Alliance and Jeremy Roma.
Within the article we famous Denne had filed an earlier state-level Californian swimsuit in opposition to Shuster. Sadly California doesn’t present public entry to state-level courtroom filings.
A reader has since offered BehindMLM with a duplicate of Denne’s November sixth, 2024 filed Grievance. As such, immediately we’re in a position to report on the case.
Along with Denne (proper), a resident of Arizona, named plaintiffs within the case embody:
- Nima Momayez (California)
- Blockchain Funding Inc. (Delaware)
- MasterNode Companions LLC (Wyoming) and
- Blockchain Alliance LLC (Wyoming)
Named defendants within the swimsuit are:
- Brian Suster (Vancouver, BC)
- Utherverse Inc. (Nevada)
- Utherverse Digital Inc. (Vancouver, BC)
- Utherverse Gaming (New York)
- Peter Gantner (Arizona)
- Nexus Enterprise LLC (Arizona)
- Ari Good (Florida) and
- Gary Shuster (California)
Within the Grievance Denne and co-Plaintiffs accuse the Utherverse defendants of operating an “orchestrated a scheme to defraud traders, together with the Plaintiffs.”
Since a minimum of 2022 and persevering with by means of the current, the Defendants engaged in a scientific and intentional sample of fraudulent conduct, misappropriating investor funds, concealing materials info, and making a number of false statements in regards to the nature and profitability of their investments.
The Defendants unlawfully induced Plaintiffs to spend money on Utherverse by promising outsized returns, misrepresenting the state of Utherverse’s monetary well being, and touting fictitious market success.
Plaintiffs have been deceived into believing that their investments could be used to develop digital metaverse applied sciences and safe monetization alternatives by means of blockchain-based merchandise.
In actuality, the Defendants misappropriated investor funds for private acquire and undisclosed functions, together with funds to non-licensed brokers, private journey, and unrelated enterprise ventures.
Defendants additional misrepresented key monetary metrics resembling person numbers, transaction quantity, and proprietary know-how. Their fraudulent conduct has induced vital monetary hurt to the Plaintiffs.
To maintain issues easy, we’ll seek advice from the Plaintiff’s by means of Denne until in any other case denoted. Defendants might be grouped as UI beneath the identical phrases.
In a nutshell, Denne’s Grievance is an “Uno reverse” of the collapse of Blockchain Alliance, as alleged by Shuster (proper).
Whereas Shuster blames Denne, Momayez and Gantner for the collapse, Denne’s criticism alleges the other.
Denne’s Grievance begins by referencing an April 2022 Promissory Word settlement between Momayez and UI;
On or about April 11, 2022, Defendant Brian Shuster, on behalf of Defendant Utherverse., executed a Senior Secured Convertible Promissory Word with Plaintiff Nima Momayez.
This settlement was executed by Plaintiff Nima Momayes [sic] in Newport Seaside, California.
Pursuant to this settlement, Plaintiff Nima Momayez transferred $1,350,000 to Defendant Utherverse.
Denne alleges Shuster didn’t repay again the word and as a substitute “stole the funds”.
Due to this fact, on info and perception, Plaintiff Nima Momayez alleges that Defendant Brian Shuster by no means meant to honor the Promissory Word or repay the funds, however all the time meant to defraud and steal the cash from Plaintiff Nima Momayez.
Denne then alleges breach of a “SAFT Settlement” (sale of tokens that don’t exist) for $12,000.
This settlement was executed by Plaintiff Joshua Denne in Huntington Seaside, California. Plaintiff Blockchain Funding, Inc. fulfilled its obligations and made fee to Defendant Utherverse in accordance with the SAFT Settlement.
Nonetheless, Defendant Brian Shuster now takes the place that Plaintiff Blockchain Funding, Inc. doesn’t personal any tokens by any means.
Due to this fact, on info and perception, Plaintiff Blockchain Funding, Inc. alleges that Defendants Brian Shuster and Utherverse by no means meant to meet their obligations beneath the SAFT Settlement and as a substitute meant to defraud Plaintiff Blockchain Funding, Inc. of the cash paid.
Denne claims, as of September 2024, the 360 million tokens he bought by means of Blockchain Funding are value $684 million.
The same settlement by means of Masternode Companions, one other firm Denne owns, is alleged to have been executed in Could 2022 for 150 million tokens for $5000.
Denne claims these tokens, once more as of September 2024, are value $285 million.
Via his firm Blockchain Funding, Denne additionally claims to have purchases 2.8 million Utherverse Inc. shares for $350,000.
Plaintiff Blockchain Funding, Inc. fulfilled its obligations and offered $350,000.00 to Defendant Utherverse in accordance therewith; and Plaintiff Blockchain Funding, Inc. understood that possession of the shares had been transferred accordingly.
Nonetheless, Defendant Brian Shuster now takes the place that Plaintiff Blockchain Funding, Inc. doesn’t personal any shares by any means.
Due to this fact, on info and perception, Plaintiff Blockchain Funding, Inc. alleges that Defendants Brian Shuster and Utherverse by no means meant to switch the shares, however as a substitute meant to defraud Plaintiff Blockchain Funding, Inc. of the
$350,000.00.
Denne claims, as of September 2024, the bought shares are value $7 million.
An angle not introduced up in Shuster’s Grievance is, after the Denne Plaintiffs allegedly spent $1.37 million to additional the “enterprise and operations of Utherverse”, Shuster
used Utherverse in a means that tied it to the pornography trade, which was severely detrimental to its status.
Denne doesn’t elaborate on the alleged use of Utherverse. I ran a seek for “utherverse porn” and whereas a bunch of seemingly associated utherverse porn hyperlinks got here up…
…I’m unclear on what particularly Denne is referring to.
In any occasion, Denne alleges he spent one other $65,000 on a PR company and $165,000 on “social media promotions” after Shuster’s alleged porn use of Utherverse.
Denne additionally claims UI’s ties to porn made it troublesome to amass “banking relationships”.
Previous to Plaintiff Joshua Denne’s involvement, Utherverse was experiencing problem securing a banking relationship because of Defendant Brian Shuster’s participation within the pornography trade.
Nonetheless, Plaintiff Joshua Denne aided Utherverse in securing a good banking relationship with Fresno Financial institution, the place Utherverse nonetheless banks to at the present time.
Denne reiterates the “disgruntled former worker spoils a $25 million funding” story, which Shuster claims is fictitious (Shuster claims the worker doesn’t exist).
Particulars of Shuster allegedly not cooperating with “consultants” and executives Denne dropped at Utherverse are additionally detailed.
First we now have Todd Pritcher, who Denne cites as ” an professional on taking the required steps to make an organization investable”;
Mr. Pritcher was unable to confirm possession of quite a few patents that Defendant Brian Shuster had represented have been owned by himself and Utherverse.
This realization was alarming, as Defendant Brian Shuster’s misrepresentations have been relied upon by traders and left Utherverse with potential liabilities. In the end, regardless of this understanding, Defendant Brian Shuster refused to reveal these misrepresentations.
Then there’s Rob Hackett, an “achieved CEO within the Web3 area”;
After 4 months, the CEO refused to proceed working with Defendant Brian Shuster and resigned because of a scarcity of fee for his work, a scarcity of efficient company governance, and a reliable concern of liabilities.
Mr. Hackett continues to be owed $75,000 for his work on behalf of Defendants Brian Shuster and Utherverse.
Joseph Ramelli, Utherverse’s proposed CEO;
Brian Shuster refused to rent Mr. Ramelli, in an effort to take care of management over, and conceal, his misappropriation
of investor funds.
PCAOB accounting agency “to supply audited monetary statements to allow the corporate to take part in crowdfunding”;
This initiative was achieved; nonetheless, it was found that the corporate’s income was not $8-10 million per 12 months—as Defendant Brian Shuster had beforehand represented, and which was relied upon by the events in turning into concerned with Utherverse and offering vital funding funding.
Reasonably, Utherverse’s income was lower than $1.5 million per 12 months. Moreover, the accounting agency was unable to verify in any means that Defendant Brian Shuster had invested $45 million of his personal funds—as he had beforehand represented, and which was relied upon by the events in turning into concerned with Utherverse and offering funding funding.
As to Shuster’s personal hires, Denne alleges a developer was employed for $30,000 a month;
It was later found that this “Professional-Developer” was outsourcing the work abroad for $1,500 per 30 days, submitting the work as his personal, and retaining the remaining $28,500.
After allegedly lacking “over twenty vital developmental deadlines … and over a dozen “launch dates”, Denne claims he “parted methods” with Shuster in April 2024.
In the course of the separation course of, Defendant Brian Shuster offered written acknowledgment of Plaintiff Joshua Denne’s efforts to additional the event and success of Utherverse—together with the monies spent on behalf of Utherverse, in addition to Plaintiff Joshua Denne’s possession of 510,000,000 tokens and a couple of,800,000 shares of Utherverse Inc.
Defendant Brian Shuster and Plaintiff Joshua Denne engaged in detailed discussions, each oral and in writing, relating to this separation, and Plaintiff Joshua Denne offered an extra $160,000 in furtherance of those efforts—which was paid to promotion teams with a purpose to create the required settlement liquidity.
Unsurprisingly, after agreeing in writing on an in depth exit technique for Plaintiffs, Defendant Brian Shuster reneged and took the place that Plaintiffs personal nothing with regard to Utherverse.
Denne then alleges Shuster knowledgeable Utherverse traders that Denne has “dedicated fraud”.
In or about September 2024, Defendant Brian Shuster, as President and Chairman of Utherverse, Inc., despatched formal letters to a number of of the traders …
In these letters, Defendant Brian Shuster falsely states that Plaintiff Joshua Denne dedicated fraud on the traders
of Utherverse.Defendant Brian Shuster falsely claims that Plaintiff Joshua Denne fraudulently altered paperwork, stole investor funds, and stole Utherverse cash and inventory.
Defendant Brian Shuster implored recipients of those letters to maintain it a secret and to “undertake any investigation, prison reporting, and civil litigation in opposition to the fraudsters.”
Defendant Brian Shuster claims that he has all proof of this alleged fraud and theft. Plaintiff Josua Denne denies the reality of those defamatory statements and alleges that Defendant Brian Shuster knew the falsity of those claims and the hurt they’d trigger on the time he made them.
Denne additional alleges Shuster
has used investor funds for his personal private acquire, for functions solely unrelated to the enterprise of Utherverse or the needs for which the funds have been offered.
Particular allegations of securities fraud by Shuster embody
Defendant Brian Shuster is at the moment promoting pre-sale tokens on a United States primarily based non-SEC compliant and unregistered platform, which is owned by a US company and a person.
Defendant Brian Shuster is at the moment taking token investments from nonaccredited US traders.
Defendant Brian Shuster is paying a fee and referral charges to US-based people for gross sales of Utherverse tokens.
Defendant Brian Shuster has taken fairness funding from non-accredited US traders and likewise paid commissions to unlicensed people for investments.
One such non-accredited investor is Jennifer Chen, who has repeatedly requested that her $100,000 funding be returned for effectively over a 12 months.
Defendant Brian Shuster continues to take investments in money and cryptocurrency, however is just not reporting the investments to the SEC, the IRS, or native tax authorities.
Defendant Brian Shuster is utilizing Utherverse as a instrument to launder cash for himself and different prison associates.
[These] fraudulent activit[ies] brings vital legal responsibility on Utherverse and its traders.
As a part of our personal analysis, BehindMLM famous Utherverse was seemingly committing securities fraud submit enterprise actions detailed in each lawsuits;
Defendant Ari Good is cited as a Florida lawyer who allegedly
aided and conspired with Defendant Brian Shuster to defraud, and conceal and withhold funds obtained from, Plaintiffs.
Defendant Peter Gantner (proper) is cited as one other confederate who
created a non-licensed platform to illegally and fraudulently promote tokens and obtain commissions.
On a number of events Defendant Brian Shuster paid Defendant Peter Gantner commissions for promoting Utherverse tokens and shares to non-accredited US traders.
On info and perception, Defendant Peter Gantner knowingly obtained funds fraudulently obtained from Plaintiffs.
Gantner’s firm Nexus Enterprise is cited as a car Shuster allegedly used to “launder cash and misappropriate or conceal funding from traders.”
Gary Shuster, Brian Shuster’s brother, is a 3rd cited confederate.
Defendant Gary Shuster is the brother of Defendant Brian Shuster, was the Chief Mental Property Officer of Defendant Utherverse Digital, Inc., and was Basic Counsel of Defendant Utherverse, Inc. Moreover, always related herein, on info and perception, Defendant Gary Shuster acted as a board member or supervisor of Defendant Utherverse Gaming.
Causes of motion the Denne Plaintiffs are suing the UI defendants for are:
- fraud and deceit (all defendants);
- a civil declare violation of Penal Code Part 496(c) (all defendants);
- breach of fiduciary obligation (all defendants); and
- defamation (all defendants)
The Denne Plaintiffs are in search of an injunction to freeze Shuster’s funds, appointment of a Utherverse Receiver, disgorgement of ill-gotten positive factors, damages and authorized prices.
Wanting on the case docket since November eighth, a Case Administration Convention has been scheduled for April eighth, 2025.
It must be famous Shuster filed his Nevada case in an try and shift proceedings to federal courtroom. In his Nevada Grievance Shuster indicated he didn’t intend to meaningfully take part in Denne’s California proceedings.
BehindMLM is monitoring each dockets on our case calendar. Not that whereas we will monitor case updates, BehindMLM doesn’t have native entry to Californian filings.