UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA WEST ...

[Pages:80]Case 9:19-cv-81316-RAR Document 1 Entered on FLSD Docket 09/25/2019 Page 1 of 80

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA

WEST PALM BEACH DIVISION

CASE NO.: _________________

PARTNERS BIOMEDICAL SOLUTIONS, LLC, a Florida limited liability company, and MAC 15, LLC, a Florida limited liability company,

Plaintiffs, v.

EUGENE SALTSMAN, individually, DARCY SALTSMAN, individually, ALFATWO HOLDINGS, LLC., a Florida limited liability company, EVAN SALTSMAN, individually, STEVEN D. FRIEDMAN, individually, REICHEL REALTY & INVESTMENTS, INC., a Florida corporation, SEZ HOLDING CORP., a Florida corporation, MATRIX INSTRUMENT SERVICES, INC., a New York corporation, and BENJAMIN CHEVERE, individually,

Defendants. _________________________________________/

COMPLAINT

Plaintiffs PARTNERS BIOMEDICAL SOLUTIONS, LLC ("PBS") and MAC 15, LLC

("MAC 15"), as and for their Complaint against Defendants EUGENE SALTSMAN ("Gene"),

DARCY SALTSMAN ("Darcy"), ALFATWO HOLDINGS, LLC. ("Alfatwo"), EVAN

SALTSMAN, individually ("Evan"), STEVEN D. FRIEDMAN ("Friedman"), REICHEL

REALTY & INVESTMENTS, INC. ("Reichel Realty"), SEZ HOLDING CORP. ("SEZ"),

MATRIX INSTRUMENT SERVICES, INC., ("Matrix") and BENJAMIN CHEVERE

("Chevere"), hereby state the following:

Case 9:19-cv-81316-RAR Document 1 Entered on FLSD Docket 09/25/2019 Page 2 of 80

General Allegations Common to All Counts Summary and Nature of the Action 1. This is an Action that arises out of the purchase and investment (the "Transaction") by Mac 15 of and into a series of corporate entities, Gulf Coast Biomedical, Inc. ("CG, Inc."), Gulf Coast Instrument, LLC and Advanced Laser, LLC (collectively, the "Entities") which were planned to be consolidated under a certain Stock Purchase Agreement (the "SPA") by certain Defendants into a single entity, not a party to this action, called North American Biomedical Services, LLC ("NABS"), for the purpose of marketing investment and purchase of the consolidated Entities through the offering of certain unregistered securities. Once Plaintiffs were secured by certain Defendants as the investors and purchasers, on October 19, 2018 (the "Closing Date"), but before actually consolidating the Entities, NABS assigned and transferred its position in the SPA to a new holding company entity created by MAC 15, called Partners Biomedical Solutions, LLC ("PBS"), the co-Plaintiff in this matter. PBS was formed as part of a comprehensive series of contracts (the "Transaction Documents") which also documented the investment, purchase and sale of the Entities and their business (the "Transaction"), to close (the "Closing") on the Closing Date. PBS and MAC 15 were therefore damaged every time Defendants the Defendants committed the acts, omissions, breaches and statutory violations set forth herein. 2. Mac 15 is the largest membership unit owner of PBS and was the Plaintiff which made the investment into the Transaction through a $ 750,000.00 repayable loan (the "Loan") to PBS. PBS is the sole owner of GC, Inc. The Defendants Alfatwo and SEZ are other minority Members of PBS, while PBS Members SEZ and non-party Losowe Capital, Inc., have irrevocably assigned their voting proxies in PBS to Mac 15. The remaining Defendants are either beneficial owners of

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Alfatwo or SEZ, or conducted themselves in a manner to be subject to the within Complaint before, during or after the Closing. 3. Plaintiffs have recently discovered that before, during and after the Closing of the Transaction, the Defendants committed various fraudulent misrepresentations and omissions, illegal acts, and acted in consort and individually to: (a) inflate and misrepresent to PBS and Mac 15 and to their owners and representatives, the value, book of business, financial condition, assets and value of the Entities before their purchase and consolidation; and once the Transaction had closed, (b) divert PBS company opportunities, employees, and contractors; (c) act in competition with PBS despite a non-competition agreement; (d) take and misuse PBS company funds for certain Defendants' own use; and (e) disrupt and interfere with the business and business relationships of PBS so as to destroy PBS and the purpose, intent, expectations and benefit of the Transaction. 4. While not required to do so, Plaintiffs participated on April 15, 2019 in mediation with Defendant Gene Saltsman in West Palm Beach, Florida, concerning some of the matters raised herein. However, the mediation did not resolve the issues with Defendant Saltsman. 5. The within Action therefore follows pursuant to the Transaction Documents, which govern the dispute resolution jurisdiction and venue fora amongst Mac 15, PBS and the Defendant signatories thereto. The Transaction Documents govern any conflicts between those Transaction Documents and the Post-Organization Agreement. The Transaction Documents therein provide for litigation of the matters raised herein within this Court and not through arbitration. 6. All conditions precedent to this action have therefore either been waived, excused or performed.

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Jurisdiction, Venue and The Parties 7. This Court has original jurisdiction pursuant to 28 U.S.C. ? 1331 and 28 U.S.C. ? 1337, by virtue of the allegations of violations of The Defend Trade Secrets Act of 2016, 18 U.S.C. ? 1836, et seq., as well as supplemental jurisdiction pursuant to 28 U.S.C. ? 1367(a). 8. Venue is proper in the United States District Court for the Southern District of Florida pursuant to 28 U.S.C. ? 1391(b) because Defendants reside and/or conducted business in this District, because a substantial part of the events giving rise to Plaintiffs' claims occurred in this District, performance was due in this District, and because Defendants' acts, omissions and statutory violations had an effect upon Plaintiffs in this District. 9. PARTNERS BIOMEDICAL SOLUTIONS, LLC ("PBS") is a Florida limited liability company having its offices and principal place of business in West Palm Beach, Florida. PBS is the successor entity, effective January 1, 2019, to a Florida corporation of the same name. The PBS corporate ancestor had received an assignment of all right, title and interest in the Transaction from NORTH AMERICAN BIOMEDICAL SERVICES, LLC, a Florida limited liability company ("NABS"), which was briefly the original party pursuant to a June 11, 2018 Stock Purchase Agreement (the "SPA") before making that assignment to PBS on October 19, 2018. 10. Plaintiff PBS is a Florida limited liability company, converted from a Florida corporation, having its principal place of business in this State and District. PBS was formed to invest into, purchase and consolidate non-parties GULF COAST BIOMEDICAL, Inc., a Florida corporation, GULF COAST INSTRUMENT COMPANY, LLC, a New York limited liability company, and ADVANCED LASER SERVICE, INC., a New York corporation (collectively, the "Entities"). The Entities were later collapsed into GULF COAST BIOMEDICAL, LLC ("GC, Inc.") after the

Case 9:19-cv-81316-RAR Document 1 Entered on FLSD Docket 09/25/2019 Page 5 of 80

Closing and PBS is the sole owner of GC, Inc. At all times relevant hereto, the Entities were in the business of providing medical laboratory equipment maintenance, repair services and related consumable products and materials for histology and pathology and other types of medical equipment. The Entities also were in the business of purchasing, leasing and selling such refurbished equipment, all as located in and utilized by hospitals, laboratory testing companies and medical practices predominantly in Florida and in the New York City Tri-State area (New York, New Jersey, Connecticut) and in Pennsylvania. 11. PBS was formed on August 16, 2018 with three (3) managers and four (4) members, set forth below. PBS and Manager and Member MAC 15 are the Plaintiffs in this action, while PBS Members SEZ HOLDING CORP. and ALFATWO HOLDINGS, LLC, together with others, are Defendants parties to this Complaint, as set forth herein. 12. Co-Plaintiff MAC 15, LLC ("Mac 15") is a Florida limited liability company owned by Robert Burke, M.D. and a Member and Manager of PBS. MAC 15 was formed by its owner Robert D. Burke, M.D. to invest into and consummate the purchase contemplated by the Transaction. Based on misrepresentations by Saltsman, Friedman and other Defendants, on October 19, 2018, MAC 15, through PBS, closed the Transaction by agreeing to make payment to Defendant Saltsman of $3.25 Million (the "Investment") in the form of $750,000.00 (the "Loan") paid to Defendant Gene, plus execution of a $ 2.5 Million Secured Convertible Promissory Note (the "Note"). $ 250,000.00 of the $ 750,000.00 Loan was designated as operating capital for the Entities and therefore not part of the $ 3.0 Million Purchase Price for the Entities, though the $ 250,000.00 was part of the $ 3.25 Million Investment by MAC 15. 13. MAC 15 is the largest interest Member of PBS, holding 40.01% of the voting membership units of PBS. MAC 15 holds the irrevocable voting proxies of PBS Members LOSOWE

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CAPITAL, INC. of non-party Louis Weltman, which holds a 25.00 % PBS membership interest. MAC 15 also holds the PBS voting proxies of Defendant SEZ HOLDING CORP., which is owned by Defendant STEVEN FRIEDMAN and holds a 15.00% PBS membership interest. MAC 15 therefore holds 80.01% of the voting membership interests of PBS, and MAC 15 is also a Manager of PBS. ALFATWO HOLDINGS, INC., is the remaining entity of Defendants GENE SALTSMAN and EVAN SALTSMAN, which holds 19.99% PBS membership interest. 14. Defendant EUGENE SALTSMAN ("Gene") is a citizen and resident of the Southern District of Florida, Palm Beach County, having an office, conducting business from and residing at 2603 Frederick Blvd., Delray Beach, FL 33483, who also utilized 269 Northeast 2nd Avenue, Delray Beach, Florida 33444 as his business address at time relevant hereto, who is otherwise sui juris. Gene made the misrepresentations in the SPA. Gene was, at all relevant times hereto, the majority owner of Defendant ALFATWO HOLDINGS, LLC ("Alfatwo"), party to the PBS Operating Agreement, which followed the SPA. Gene had complete control over the acts and omissions of Alfatwo. Gene actively participated in all of the actions of Alfatwo set forth herein and made representations and warranties individually and by Alfatwo as to the acts, omissions, breaches, representations, business, and structure of the Transaction complained of herein. Gene acted alone and also conspired with certain Defendants to commit the acts, omissions, and breaches complained of herein, having an effect upon Plaintiffs herein and is subject to the jurisdiction of this Court by virtue of being a Member of the various Transaction Documents selecting Florida law and Federal Court sitting in Palm Beach County, Florida. [Exhibits D, E, F, H]. 15. Defendant DARCY SALTSMAN ("Darcy") is a citizen and resident of the Southern District of Florida, Palm Beach County, having an office, conducting business from and residing at 2603 Frederick Blvd., Delray Beach, FL 33483, who is otherwise sui juris. Darcy, the wife of

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Gene, was at relevant times hereto, the bookkeeper for the Entities and actively conspired with other Defendants to misrepresent to Plaintiffs in Florida the business volume, revenues, profits and valuation of the Entities. 16. Defendant ALFATWO HOLDINGS, LLC is Florida limited liability company ("Alfatwo") having an office, conducting business from and having an address at 2603 Frederick Blvd., Delray Beach, FL 33483. Alfatwo is owned by Defendants Gene and Evan and held 19.99% of PBS membership units. Alfatwo was an original Member and Manager of PBS but resigned its Member status on May 16, 2019 and Manager status on June 4, 2019 in correspondence to Losowe, SEZ and MAC 15. Composite Exhibit J. Alfatwo acted alone and also conspired with certain Defendants to commit the acts, omissions, and breaches complained of herein, having an effect upon Plaintiffs herein and is subject to the jurisdiction of this Court by virtue of being a Member of various entities which are party to Transaction Documents selecting Florida law and Federal Court sitting in Palm Beach County, Florida. Exhibits D, E, F, H. 17. Defendant SEZ HOLDING CORP. ("SEZ") is a Florida corporation solely owned by Defendant Steve D. Friedman. SEZ is presently a Member, but not a Manager, of PBS, holding 15.00% of the PBS voting membership units. SEZ acted alone and also conspired with certain Defendants to commit the acts, omissions, and breaches complained of herein, having an effect upon Plaintiffs herein and is subject to the jurisdiction of this Court by virtue of being a Member of various entities which are party to Transaction Documents selecting Florida law and Federal Court sitting in Palm Beach County, Florida. 18. EVAN SALTSMAN ("Evan") is a natural person residing in the State of New York with a residence at 2F South Steuben Court, Beacon, New York 12508, is otherwise sui juris. Evan, either individually or through his entity "EVAN SALTSMAN, INC." is a member ALFATWO

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HOLDINGS, LLC. Evan acted alone and also conspired with certain Defendants to commit the acts, omissions, and breaches complained of herein, having an effect upon Plaintiffs herein and is subject to the jurisdiction of this Court. Evan is also subject to the jurisdiction of this Court by virtue of being a Member of ALFATWO HOLDINGS, which is a party to various Transaction Documents, attached hereto, selecting Florida law and Federal Court sitting in Palm Beach County, Florida. 19. Co-Defendant STEVEN D. FRIEDMAN ("FRIEDMAN") is a citizen and resident of the Southern District of Florida, Palm Beach County, having an office, conducting business from and residing at 24 Bermuda Lake Drive, Palm Beach Gardens, FL 33418, and is otherwise sui juris. SEZ is the alter-ego of Friedman. Friedman was, at all relevant times hereto, the majority owner of Defendant SEZ, and who had complete control over the acts and omissions of SEZ. Friedman actively participated in all of the actions of SEZ set forth herein, and, individually and as a representative of SEZ, made representations and warranties as to the acts, omissions, breaches, representations, business, and structure of the Transaction complained of herein. Friedman acted alone and also conspired with certain Defendants to commit the acts, omissions, and breaches complained of herein, having an effect upon Plaintiffs herein and is subject to the jurisdiction of this Court by virtue of being a Member of SEZ, which is party to certain Transaction Documents selecting Florida law and Federal Court sitting in Palm Beach County, Florida. 20. Further, Friedman was the broker of the Transaction for the purchase and sale of the Entities, personally provided Plaintiffs misleading financial information and made other material misrepresentations and omissions to Plaintiffs concerning the Entities. After June 2018, Friedman left the employ of Defendant REICHEL REALTY, and both individually and through his entity, SEZ, conspired with certain Defendants, including REICHEL REALTY, to commit and continue

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