Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 1 of 75
Perry J. Narancic, California Bar No. 206820NARANCIC & KATZMAN, PC325 Sharon Park Drive, #736Menlo Park, CA 94025www.nk-pc.comTel: 650-814-7688Fax: 650-814-7688Email: [email protected]
Victor A. Sipos, Utah Bar No. 9211UTAH LITIGATION CENTER10421 South Jordan Gateway, Suite 600South Jordan, UT 84095Tel: 801-860-3444Fax: 801-665-1266Email: [email protected]
Attorneys for Plaintiffs, individually and on behalf ofall other similarly-situated purchasers
IN THE UNITED STATES DISTRICT COURTDISTRICT OF UTAH
VISHAL SHARMA and WENDY KWONG, Case No.: 2:10cv01060Individually and on behalf of all similarly situated Judge: Hon. David Sampurchasers, (Filed electronically)
Plaintiffs,
vs.FIRST AMENDED COMPLAINT
FREEDOM INVESTMENT CLUB, Ltd.,a British (PROPOSED CLASS ACTION)
Columbia corporation, MOHAWKDIVERSIFIED LLC, a Utah limited liabilitycompany, GO INVEST WISELY, LLC, PROFINANCIAL SERVICES, INC., a Utahcorporation, FIC FORECLOSURE FUND, LTD.,an entity of unknown origin, PEAKPOTENTIALS TRAINING, an entity of unknownorigin, DBO MANAGEMENT SERVICES, INC.,a Utah corporation, BP PROPERTYMANAGEMENT, an entity of unknown origin,T. HARV EKER, MIKE LATHIGEE, BRADHESS, JOHN HYLAND, TYRELL GRAY,MICHAEL G. OBORN, ROB OBORN, TODDEATON, EARLE PASQUILL, GERALDABRAMS, MIKE YOSHER, ALAN ANDRUS,JIMMY SLAGEL, and DOES 1-300,
Defendants.
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Plaintiffs VISHAL SHARMA and WENDY KWONG (together, the “Plaintiffs”),
complaining on behalf of themselves individually and all other similarly situated individuals
make the allegations set forth in this first amended complaint against the above-named
defendants (collectively “Defendants”).
NATURE OF THIS ACTION
1. This action concerns violations of federal and state securities laws in the sale, or
offer for sale, of unregistered securities related to foreclosed residential properties in the United
States to investors, including Plaintiffs. These securities were promoted, offered and sold in
high-pressure investor seminars run by self-proclaimed investment gurus, who took commissions
for each sale they executed.
2. The residential properties underlying the securities were purchased by one or
more Defendants at wholesale for between $3,000 - $14,000 each. Defendants then sold, or
offered for sale, securities related to these foreclosed properties by promising huge returns for
those investors.
3. Defendants sold, or offered for sale, specific properties that were promised to be
deeded to Plaintiffs. These properties were offered or sold to Plaintiffs together with a “Bulk
Foreclosure Purchasing Agreement” for purchase of the house and a “Management Agreement”
whereby a separate company would provide additional services including finding a third-party
buyer for the property on a land installment contract. The Defendants promised that each
property would become “cash-flowing” within 6 months – Plaintiffs would hold a note against
the property, and receive monthly revenue from the new occupants’ monthly payments. The
bundle of the properties and the corresponding contracts are referred to herein as the “Property
Contracts”.
4. The Property Contracts were “securities” within the meaning of Federal,
California, Utah, and other states’ securities laws.
5. As set forth below, Defendants offered and sold the Property Contracts without
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registering them, or qualifying for an applicable exemption. Consequently, members of the
proposed class who purchased Property Contracts are entitled to rescission under federal and/or
state law.
6. Defendants also made material misstatements or omissions in connection with the
offering or sale of the Property Contracts, as a direct result of which the Plaintiffs suffered
financial loss.
JURISDICTION AND VENUE
7. The claims asserted in this complaint arise under Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 (the “Exchange Act)[15 U.S.C. § 78j(b) and 79t(a)] Rule 10(b)-
5 promulgated thereunder [17 C.F.R. § 240.10b-5], and Sections 12 and 15 of the Securities Act
of 1933 (the “Securities Act”) [ 15 U.S.C. §§ 77l, 77o]. This action also arises under California
Corporations Code § 25501 and Utah Code Ann. § 61-1-22.
8. This court has jurisdiction over the subject matter of this action pursuant to
Section 27 of the Exchange Act [15 USC § 78aa], Section 22 of the Securities Act [15 U.S.C. §
77v], and 28 USC §§ 1331 and 1337. This court has supplemental jurisdiction over the state law
claims pursuant to 28 U.S.C. § 1367(a) since those claims are related and arise from the same
facts and circumstances as those claims asserted under federal law.
9. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b), as many of the
acts and practices complained of herein occurred in substantial part in this district. By order
dated October 15, 2010, the District Court for the Northern District of California ordered that
this case be transferred to the above-captioned court. Order Granting Utah Defendants’ Motion
To Transfer Venue To The District Of Utah, Case No. C 10-01172 JW (N.D. Cal. October 15,
2010).
PARTIES
10. Plaintiff Vishal Sharma (“Sharma”) is an individual residing in Fremont,
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California, who purchased Property Contracts from or through Mohawk in August 2008.
11. Plaintiff Wendy Kwong (“Kwong”) is an individual residing in San Francisco,
California, who purchased Property Contracts from or through Mohawk in August 2008.
12. Defendant Freedom Investment Club (“FIC”), is a British Columbia corporation
and has a principal place of business in Vancouver, British Columbia, Canada. It operates a
website at www.ficinvetsors.com and claims to be the “North America’s Largest Investment
Club”. FIC accepts membership fees to allow individuals to join its investment club and obtain
access to so-called investment opportunities and information. FIC encouraged participants of its
meetings to invest with Mohawk, and upon information and belief received compensation for
doing so. Mohawk sold at least 995 properties during FIC events.
13. Defendant Mohawk Diversified LLC (“Mohawk”) is a limited liability company
organized under the laws of the State of Nevada.
14. Defendant Go Invest Wisely, LLC (“GIW”) is a limited liability company
organized under the laws of the State of Utah and has a principal place of business in North
Ogden, Utah.
15. Defendant Pro Financial Services, Inc. (“Pro Financial”) is a Utah corporation.
Upon information and belief it was initially incorporated as Pro Management Group, Inc. Pro
Financial was a joint venture between Mike Oborn, Rob Oborn and the principals of GIW. In or
about January 2009, Hess and Gray assumed complete ownership of Pro Financial.
16. Defendant FIC Foreclosure Fund, Ltd. (“FICFF”) is an entity of unknown
residency.
17. Defendant BP Property Management (“BP Management”) is an entity of unknown
residency. BP managed properties related to investments sold by Mohawk.
18. Defendant DBO Management Services, Inc. (“DBO”) is a Utah corporation that
acted as the manager of GIW.
19. Defendant Peak Potentials (“Peak”) is an entity of unknown residency. Upon
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information and belief, it is the entity through which Eker operated.
20. Defendant T. Harv Eker (“Eker”) is a self-described multi-millionaire and
motivational speaker. Among other things, he is the author of a book titled “The Millionaire
Mind”. On information and belief, Eker is a resident of British Columbia, Canada. Eker
encouraged participants of his meetings to invest with Mohawk and received compensation for
doing so. Mohawk sold at least 135 properties during Eker events.
21. Defendant John Hyland (“Hyland”) is a citizen of the State of Virginia, and is
principal of Mohawk Diversified LLC. In early 2008, Hyland admitted to making materially
false statements to investors during seminars and has pleaded guilty to providing false
information to the United States Securities and Exchange Commission (“SEC”).
22. Defendant Mike Lathigee (“Lathigee”) is, and at all material times was, the CEO
of FIC. On information and belief, Lathigee is a resident of British Columbia, Canada. Lathigee
encouraged investors to invest with Mohawk.
23. Defendant Brad Hess (“Hess”) is an individual and citizen of Utah, and is, or was
at all relevant times, an owner, principal or agent of Defendants Mohawk, Pro Financial, and
DBO.
24. Defendant Tyrell Gray (“Gray”) is an individual who, upon information and
belief, is a resident of Utah, and is, or was at relevant times a director and officer of Pro
Financial and an owner of GIW.
25. Defendant Todd Eaton (“Eaton”) is an individual who, upon information and
belief, is a resident of Utah, and is, or was at relevant times an officer of GIW.
26. Defendant Michael G. Oborn (“Mike Oborn”) is an individual who, upon
information and belief, is a resident of Utah, and is, or was at relevant times a director and
officer of Pro Financial.
27. Defendant Rob Oborn (“Rob Oborn”) is an individual who, upon information and
belief, is a resident of Utah, and is, or was at relevant times a director, officer, and/or key
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employee of Pro Financial.
28. Defendant Earle Pasquill (“Pasquill”) is an individual who upon information and
belief has been a director and officer of FIC at all relevant times, and who upon information and
belief is a resident of Canada.
29. Defendant Gerald Abrams (“Abrams”) is an individual who upon information and
belief has been a managing member of Mohawk at all relevant times. Upon information and
belief, Abrams is a resident of Nevada.
30. Defendant Mike Yosher (“Yosher”) is an individual who upon information and
belief has acted as a client services manager for Mohawk at relevant times. It is unknown where
Mr. Yosher resides.
31. Defendant Alan Andrus (“Andrus”) is an individual who upon information and
belief acted in a professional capacity for Mohawk at relevant times. Upon information and
belief, Abrams is a resident of California.
32. Defendant Jimmy Slagel (“Slagel”) is an individual who upon information and
belief acted in a professional capacity for Mohawk at relevant times. It is unknown where Mr.
Slagel resides.
33. Eker, FIC, Hyland, Lathigee, Abrams, and Andrus are referred to collectively as
“Promoter Defendants”. FIC, Mohawk, GIW, Pro Financial, BP Management, DBO, Hess, Gray,
Eaton, Mike Oborn, and Rob Oborn are referred to collectively as “Organizer Defendants”. FIC,
Mohawk, GIW, Pro Financial, DBO, and BP Management are referred to collectively as
“Corporate Defendants”. Abrams, Andrus, Eaton, Eker, Gray, Hess, Hyland, Lathigee, Mike
Oborn, Rob Oborn, Pasquill, and Slagel are referred to collectively as “Individual Defendants.”
34. DOES 1-300, inclusive, are the fictitious names of those defendants whose true
identities are unknown to Plaintiff and whose true capacities, whether as individuals,
corporations, partnerships, joint ventures and/or associations, are also unknown to Plaintiff.
Each fictitious defendant is in some manner responsible for the acts and occurrences hereinafter
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set forth. Plaintiff will amend this complaint to allege their true names and capacities when
ascertained.
GENERAL ALLEGATIONS
Promotion of the Property Contracts at Millionaire’s School
35. Defendant Eker provides investment advice through various seminars held
throughout North America. Among other things, Mr. Eker personally ran an investment advice
program called “Millionaires School”, in which he charged attendees over $1,000 in “tuition”.
36. Plaintiff Kwong attended Millionaires School in Los Angeles in 2007, where Mr.
Eker personally led the seminar. At that seminar, Mr. Eker introduced a large number of so-
called “investment opportunities”. Mr. Eker specifically told the attendees that he had personally
conducted “due diligence” on the investment opportunities that he was introducing.
37. At the 2007 Los Angeles Millionaires School event, Mr. Eker introduced
Defendant Lathigee from FIC as an extremely knowledgeable individual and told the attendees at
Millionaires School that investors could make a lot of money with Lathigee. Mr. Eker also said
that he trusted Lathigee, and that he personally had made a lot of money in investing with him.
As a result of these endorsements, Plaintiff Kwong became a member of FIC.
38. As a member, Plaintiff Kwong received solicitations and information about
investment opportunities from FIC. In the summer of 2008, she received a mailing that FIC
would conduct a seminar in San Francisco on August 5, 2008 at Marriott Courtyard San
Francisco downtown hotel (the “FIC San Francisco Sales Event”), which Plaintiff Kwong
attended.
39. Plaintiff Sharma also attended the FIC San Francisco Sale event, and he, like
Plaintiff Kwong, also became aware of FIC through Eker.
40. Plaintiff Sharma attended a wealth seminar called the “Millionaire Mind –
Intensive”, run by Mr. Eker and his company Peak Potentials Training, in May 2008. Eker gave a
personal presentation in San Francisco May 30 – June 1, 2008 which was attended by Plaintiff
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Sharma. At that event, Mr. Eker announced that FIC would be conducting a meeting in San
Francisco on June 23, 2008, and Mr. Eker strongly encouraged attendees to attend.
41. Mr. Eker gave free tickets to attendees to attend the FIC San Francisco meeting
for June 23, 2008. Mr. Eker also strongly endorsed Mr. Lathigee and said that he was a “whiz”
on global economics and financial investments, and that he (Eker) had made a lot of money with
Mr. Lathigee. Eker specifically stated that he trusted Lathigee’s investment decisions, and that
Eker invested a lot of money with Lathigee and that others should follow suit. Plaintiff Sharma
attended the June 23, 2008 FIC meeting in San Francisco, and signed up as a FIC member.
Thereafter, Sharma received an invitation to attend the FIC San Francisco Sales Event, which
Plaintiff attended on August 5, 2008.
42. Mohawk sold at least 135 investments as a result of Eker’s promotional activities.
Eker promoted the FIC and/or Mohawk investments with the expectation of receiving a
commission for each resulting investment. Eker receives commissions for these investments.
43. Some, perhaps all, investors sent their investment funds related to Property
Contracts to a Utah corporation called Escrow Specialists, Inc. located in Ogden, Utah.
The FIC San Francisco Sales Event.
44. At the FIC San Francisco Sales Event, Mr. Lathigee gave a presentation on the
Property Contracts. Mr. Lathigee also introduced Mr. Andrus from Mohawk, who described the
Property Contracts, with Mr. Lathigee present at all times. Mr. Lathigee and Mohawk distributed
an information sheet that stated investors would “make INCREDIBLE RETURNS within 12-18
months”. The information sheet is attached hereto as Exhibit A, and states the following:
a. “INVEST FOR $18,500 and receive clean, clear, marketable title”
b. “we GUARANTEE property value to be at least $45,000”
c. “our CURRENT AVERAGE property value is $55,000”
d. “make INCREDIBLE RETURNS within a 12-18 month period or take
advantage of the option to keep passive cash flow of approximately $300 per
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month”
e. “PASSIVE INVESTMENTS, managed by experienced property management
company”
f. “This great passive by lends itself to multiple purchases with little
investment”
g. “INVEST NOW, SEE AMAZING RETURNS.”
45. Defendants FIC, Lathigee and Mohawk described in detail the offer as follows:
a. United States financial institutions sold foreclosed properties at reduced prices
in bulk in order to write them off their books and minimize incurring further
costs.
b. Mohawk purchased 400 to 500 foreclosed homes, sight -unseen at a time from
the foreclosing financial institutions.
c. The investor buys a home from Mohawk for $17,500 and receives clear title
on a home within 30 days.
d. The investor pays $1,000 to a management company, Pro Financial;
e. Pro Financial would inspect the home to determine if it is sellable for-profit,
or if it is suitable for a land installment contract.
f. If the house is suitable for a land installment contract, Pro Financial will find a
buyer/occupant for the home. Pro Financial also qualifies the buyers.
g. The investor holds the note on the property and collects income from the new
occupants.
h. Mohawk guarantees that if the investor’s property is not sold within six
months, Mohawk will exchange it for property that is “cash flowing”.
46. Mr. Lathigee stated that he would not offer this investment opportunity unless “at
the end of the day the system will work to a point where the majority of the homes are resold and
there is a market for the notes”.
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47. Defendants Lathigee and Mohawk provide a presentation on projected returns on
the $18,500 investment as follows:
a. the investors note develops a worth of $45,000 based on the calculations of
monthly payments of $300, and 30-year amortization at 10% interest.
b. Once the note is “seasoned”, anywhere from 6 to 18 months, it can be offered
for sale-thereby generating a substantial return for the investor if the investor
chooses to sell it rather than hold the note.
48. Mr. Lathigee and Mohawk created a sense of urgency at the FIC San Francisco
Sales Event, stating that there were not enough properties for all of the attendees. Lathigee and
Mohawk encouraged the attendees to purchase their properties quickly on a first-come first-
served basis.
49. Based on the representations of Mr. Lathigee and Mohawk, Plaintiff Sharma
purchased two properties, and Plaintiff Kwong purchased one property. A total of 103 investors
purchased 146 homes at the FIC San Francisco Sales Event. More than 995 Property Contracts
were sold at this and other FIC events.
50. At the FIC San Francisco Sales Event, Plaintiffs Sharma and Kwong each entered
into two contracts; first, a “Bulk Foreclosure Purchasing Agreement” for purchase of the house,
and second, a “Management Agreement” with Pro Financial. The agreements were marketed as
part of one investment opportunity. Each agreement is a “security.”
51. An example of the Bulk Foreclosure Purchasing Agreement is attached hereto as
Exhibit B and provides as follows:
a. Investor to pay Mohawk $17,500.
b. Mohawk provides a foreclosed property and transfers clear and marketable
title to the investor.
c. Mohawk will exchange the property if an occupant cannot be contracted to
purchase the property within six months from the time of the markings on his
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properties.
52. An example of the Management Agreement is attached hereto as Exhibit C and
provides as follows:
a. Investor to pay $1,000 to Pro Financial.
b. Pro Financial to prepare the property for sale and display signs thereon,
c. Pro Financial to research local market occupant, and manage the collection of
all mortgage payments.
53. On August 6, 2008, the day after the FIC San Francisco Sales Event, Defendants
Lathigee and Mohawk gave substantially the same presentation in Vancouver, British Columbia.
An investigator from the Superintendent of Real Estate of the Province of British Columbia
attended that presentation and prepared the detailed report and order attached hereto as Exhibit
D. That order recites statements made by Defendants Lathigee and Mohawk in Vancouver that
were identical to those made the night before at the FIC San Francisco Sales Event.
54. In or about May 2008, Mr. Hyland, a principal of Mohawk, pleaded guilty to
knowingly and willfully providing false information to the SEC during an investigation. He also
admitted under oath that during seminars for investors, he made materially false representations
to those investors in order to induce them to purchase investment products. Such material
misrepresentations included statements about his trading profits, qualifications, history of
trading, and his return on investments. Such information about Mohawk and Hyland would
have been material information to Plaintiffs, but no information about Mr. Hyland was provided
to Plaintiffs prior to them investing with Defendants.
GIW and Mohawk
55. Contrary to the contractual promises and oral representations made by
Defendants, Plaintiffs Sharma and Kwong never received any income, nor even title to any
property, as promised under the Property Contracts.
56. In September 2008, GIW contacted Plaintiff Sharma and told him that GIW had
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assumed the business of Mohawk. GIW advised Plaintiff Sharma that two foreclosed properties
had been allocated to him and that it would provide the deed of title when the properties were
income-producing.
57. On March 4, 2009, six months after Plaintiff Sharma purchased his properties, he
contacted GIW to inquire about the status of his properties. At that time, GIW told him it had no
information on the properties that had been allocated to him. On March 24, 2009, GIW sent
photographs and inspection reports for one of Sharma’s properties. In April 2009, Sharma
followed up multiple times with GIW to find out details about the second property and to find
out why there was no “cash-flow” from his two Property Contracts as promised in the Bulk
Foreclosure Agreement. When Plaintiff Sharma asked for his properties to be exchanged for
properties which were income flowing (in accordance with the promises in the Bulk Foreclosure
Agreement), GIW said that they could not do so because such properties are all “taken”.
58. Starting in April 2009, Plaintiff Sharma asked GIW for a full refund. GIW
refused, claiming, among other things, that Defendants Eker, FIC and Mohawk had already taken
commissions from the purchase prices paid by Plaintiff Sharma. Moreover, GIW advised
Sharma that FIC had told GIW not to make any refunds.
59. Starting in the summer of 2009, Plaintiff Sharma contacted Lathigee and Hess by
electronic mail to seek a refund of his investment funds. During this correspondence, Hess and
Lathigee made a number of admissions concerning the Property Contacts - including the fact that
GIW was liquidating poor quality homes in order to purchase better homes, at higher prices. But
neither Lathigee nor Hess could explain how such purchases could be financed without reducing
the total number of homes that had been purchased on behalf of, and allocated to, individual
investors. At the same time, and throughout 2009, GIW continued promoting the sale of
Property Contracts through various seminars and through a website called
www.junkhouseriches.com .
60. Alarmed by the statements, Plaintiff Sharma started an online discussion group
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for unhappy investors. In response to this discussion group, Defendants GIW and Hess posted
an official statement on August 7, 2009 concerning the investments (the “GIW Official
Statement”).
61. The GIW Official Statement is attached hereto as Exhibit E. It provides a detailed
history concerning the involvement of FIC, GIW, Hess and Mohawk:
a. GIW is owned by Gray and Hess and Eaton is an officer;
b. The Property Contracts were, in fact, conceived by GIW, and Mohawk was a
sales and marketing entity that presented the “GIW process” to large groups of
people.
c. Beginning in 2008, GIW purchased large numbers of foreclosed properties in
bulk sales in order to supply Mohawk.
d. Pro Financial was started in the summer of 2008 by, among others, the owners
of GIW (Gray and Hess);
e. GIW knew that there could be problems and delays in having a foreclosed
property occupied by a new owner due to the condition of these foreclosed
properties. For this reason, “GIW did not think that it would be fair to buyers
to deed a property and pass all the related liabilities of the property to the
buyer without the assurance that the property had an occupant placed in the
home creating cash flow.”
f. As of February 2009, Defendant Pro Financial was managing 1,267
properties. However, of these, only 112 had an occupant on the property.
g. Mohawk sold 135 properties during investors meetings sponsored by Eker.
h. FIC sold 995 properties during investor events sponsored by FIC.
62. The GIW Official Statement also admitted that the principal reason the
investments were not working was because many of the properties were “bad” properties. As a
result, “GIW is left to liquidate the bad properties to create capital in order to purchase
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replacement properties”. In effect, this has created a pyramid scheme wherein money from later
investors is used to pay early investors.
Developments after August 2008
63. In early September 2008, Mr. Eker sent a note to his investors cautioning them to
exercise careful review over the Property Contracts that Eker had promoted to them (the
“Disclaimer”), which is attached hereto as Exhibit F. Indeed, Eker had good reason to know
well before September 2008 that the Property Contracts he was promoting were risky.
64. In 2008, Eker took Mohawk on “road shows” promoting the Property Contracts.
As of August 2009, Mohawk had sold 135 Properties at these “road show” events – and collected
commissions on each sale. However, discontented investors started contacting Eker seeking
refunds of the money paid for Property Contracts in the summer of 2008. This prompted Eker to
issue the Disclaimer which contains many cautions that Eker knew – but failed to disclose – at
the time that he was promoting Property Contracts.
65. The Disclaimer contained the following cautions about the Property Contracts:
-So, as you evaluate purchasing foreclosure properties from Mohawk,please keep in mind some additional information that we have learned:Not all the properties seem to have come directly from “banks.” Someof these properties were available from other sources, such as the MLS,before Mohawk acquired them. Some seem to have been available at alower “gross” price, however, according to Mohawk, the difference isdue to getting “clean and clear” title and a home that is in “livable”condition. Mohawk also states that its “program” offers a “guarantee”that should your home not be sellable, they will replace it with one thatis. As always, you need to determine whether the purchase price fromMohawk makes sense today given the prior pricing of these properties.Mohawk can advise you of any liens, debts or other expenses that weredue on the property that increased its cost of acquisition.
-Some of these houses will be easily matched with tenant/buyers, othersmay not and there is no absolute time table to guarantee when you canexpect cash flow from a property.
-The market for “notes” from tenant/buyers is relativey untested and thefuture cannot be predicted with any certainty. Mohawk appears to beconfident the notes can be sold.
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-Whether a buyer/tenant will be able or willing to maintain the propertyto your standards is not guaranteed and it is possible you may incurexpenses for maintenance and repairs. You own this home.
-As you might expect, it is impossible to guess how and exactly whenthe local markets where these properties are located will rebound andvalues will increase.
-You might want to ask Mohawk for information about other investorswho have used this program. Speak to these referrals to learn abouttheir experiences.
-Become an expert on “values” in the market place so that you have areal understanding about how the purchase price stacks up againstmarket value and how much “equity” you are gaining. This is importantgiven that Mohawk uses a popular web based appraisal system that mayor may not be perfectly accurate in today’s ever-changing marketplace.
-Finally, always talk to your advisers – lawyer, accountant, financialplanner. Ask for their advice and be certain that this type of investmentfits in your personal financial plan and portfolio.
-If you need further information, go directly to the source and speak tothe people at Mohawk. Be sure that all of your questions are answered.
66. Prior to September 2008, Eker never made any of the above cautions known to
any of the investors to whom he promoted the Property Contracts. Had either Plaintiff received
this email prior to the FIC San Francisco Sales Event on August 5, 2008, neither would have
purchased the Property Contracts.
67. Eker’s Disclosure also contained a misrepresentation by stating that Eker was not
affiliated with Mohawk. The Disclosure falsely states:
It is important, however, to be clear that Peak Potentials has noaffiliation with any of our guest speakers’ private businesses and howthey handle their own programs or the administration of thoseprograms. If a student chooses to participate in a guest trainer’sadditional offerings they should do so in the same way as werecommend they purchase anything else, by doing their own researchand due diligence.
Also, please note that Peak Potentials and T. Harv Eker do not formallyendorse any guest speaker or other company at our events. We simplyprovide a “forum” for learning
68. In fact, Eker took commissions on each Property Contract that was sold at his
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events. And instead of simply providing a “forum”, Eker promoted the Property Contracts for
his own personal gain.
69. In February 2010, FIC (through a subsidiary FIC Foreclosure Fund, Ltd.
(“FICFF”) sued GIW. Mohawk, Pro Financial and their principals alleging that the Defendants
had failed to perform obligations under various contracts. FIC Foreclosure Fund, Ltd. v. Go
Invest Wisely, LLC (Case No. 10-00081, filed Feb. 3, 2010, C.D. Utah). In one contract, dated
May 12, 2008 (3 months before Plaintiffs purchased their Property Contracts at the FIC San
Francisco Sales Event), FIC’s subsidiary paid $1,400,000 for 100 homes (the “FIC – Mohawk
Agreement”, which is attached hereto as Exhibit G). The agreement was signed on behalf of
Mohawk by Brad Hess (who also owns GIW and Pro Financial). Under the terms of the FIC-
Mohawk Agreement, Mohawk was to deliver “clear and marketable title” to these properties
within the same 30-day closing period that Lathigee had represented to Plaintiffs at the FIC San
Francisco Sales Event. But Mohawk had never delivered these properties to FICFF. Despite
knowing that Mohawk had breached its contracts, FIC and Lathigee actively promoted and sold
Property Contracts to Plaintiffs in August 2008.
GIW Refunds
70. As of November 11, 2010, GIW stated it was in the process of refunding
customers in the order the customers purchased their investments. According to GIW: “The
person who purchased their property first is at the top of the list, the person who purchased last is
at the bottom of the list. We feel this is the only fair way to issue the numbers.”
71. It is believed that more than 1,700 Property Contracts were sold. As of November
11, 2010 GIW had refunded 184 customers.
72. GIW’s refund policy is neither fair nor equitable for the thousand plus customers
who have not been refunded anything. There is no reason to believe that GIW received
reasonably equivalent value for the refunds it issued to select customers. Further, it is possible
that the earliest GIW customers were Defendants’ insiders or friends. At least one GIW refund
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was paid to FIC. GIW’s notion of fairness is not an adequate basis on which to distribute limited
assets to numerous injured parties. The payments issued to 184 customers should be avoided and
distributed fairly.
73. It is possible that other Defendants have taken steps to refund select customers on
a preferential, unfair, and/or fraudulent basis. If so, such refunds should also be avoided.
74. Upon information and belief, none of defendants is properly licensed to sell
securities by any state division of securities or by FINRA.
PLAINTIFF CLASS ACTION ALLEGATIONS
75. Plaintiffs bring this action on behalf of the following proposed class: all
purchasers of Property Contacts from or through any of the Defendants.
76. Excluded from the proposed class are Defendants; any entity in which Defendants
have a controlling interest; any of Defendants’ officers, directors, legal representatives or
successors; any Judge assigned to this action and his or her immediate family; and anyone who
timely requests exclusion from the class.
77. This action may be maintained on behalf of the class proposed above under the
criteria of the Federal Rules of Civil Procedure.
78. Numerositv. Based on FIC’s own documents, as of August 2008, FIC had sold
over 1,700 homes, with the average purchaser buying approximately 1.4 homes. On information
and belief, there at least 1,200 purchasers across the United States and Canada who have
purchased the Property Contracts. Such a large number of purchasers, dispersed over a large
geographic area, makes joinder impracticable.
79. Commonalitv and Predominance. Common questions of law and fact exist as to
members of the proposed class and predominate over questions only affecting individual class
members. These common questions include:
a. Whether the Defendants were “sellers” within the meaning of Federal
securities laws;
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b. Whether sellers were properly licensed and registered to sell securities.
c. Whether the securities were properly registered.
d. Whether the offering materials and other representations made to class
members by Defendants made false and misleading representations of
material facts, or omitted to disclose material facts necessary for the
statements that were made to be not misleading.
e. Whether, and when, the Defendants, and each of them, knew or ought to have
known that the foreclosed properties which were the subject of the Property
Contracts were “bad” properties;
80. Typicality. The claims of the Plaintiffs are typical of the claims of all members of
the class since the representations and omissions of material facts were made to all class
members through the use of misleading offering materials and statements.
81. Adequacy. Plaintiffs adequately represent the members of the proposed class
because their interests do not conflict with those of the members of the class. Each Plaintiff has
been an organizing force in the grass-roots movement among members of the proposed class to
retain counsel and protect the interests of the proposed class.
82. Class-Wide Injunctive Relief. Defendants have acted or refused to act on
grounds generally applicable to the class, including, especially, refusing to transfer title to
purchased properties to each purchaser thereof, in accordance with the terms of the Property
Contracts. Therefore, it is appropriate to grant final and injunctive relief with respect to the
members of the class as a whole.
83. Deficiency of Assets. It is likely that there will be insufficient assets to satisfy
any judgment against Defendants arising from this action. Accordingly, a class action is
appropriate because adjudications with respect to individual class actions could impair or impede
the ability of other class members to protect their respective interests.
84. Plaintiffs know of no difficulty which would be encountered with the
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management of this litigation that would preclude its maintenance as a class action.
85. All claims below are asserted against all Defendants unless specified otherwise.
FIRST CLAIM FOR RELIEFRescission for Sale of Unregistered Property Contracts
(Securities Act of 1933, Section 12(a)(1), 15 U.S.C.A. § 77l(a)(1))
86. Plaintiffs hereby incorporate by reference all the allegations set forth above as
though fully set forth herein.
87. This claim is brought pursuant to section 12(a)(1) of the Securities Act (15
U.S.C.A. § 77l), by Plaintiffs and on behalf of the proposed class.
88. Defendants were “sellers” of the Property Contracts for purposes of Federal
securities laws, and the Plaintiffs, and other members of the proposed class, were purchasers
thereof.
89. Defendants communicated offers to sell the Property Contracts to the general
public through a sophisticated marketing system that used the means of United States interstate
commerce, including the mails.
90. Many members of the proposed class, including Plaintiff Sharma, are not
“accredited”. Indeed, there was no attempt by Defendants to determine if any of the attendees
were “accredited” investors.
91. In total, the Defendants collected more than $28 million in Property Contract
sales, from over 500 members of the public.
92. The Property Contracts were not exempt from the registration requirements of
Federal law.
93. As a result of the foregoing, Plaintiffs, and other members of the Proposed Class,
suffered damages. Plaintiffs, and the class they represent, are entitled to rescind the Property
Contracts and to recover from Defendants the consideration they paid for securities with interest
thereon, less the amount of any income received thereon, together with costs and attorney fees.
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SECOND CLAIM FOR RELIEFRescission for Sale of Securities through Use of Untrue or Omitted Materially Facts
(Securities Act of 1933, Section 12(a)(2, , 15 U.S.C.A. § 77l(a)(2))
94. Plaintiffs hereby incorporate by reference all the allegations set forth above as
though fully set forth herein.
95. This claim is brought pursuant to section 12(a)(2) of the Securities Act, 15
U.S.C.A. § 77l(a)(2), by Plaintiffs and on behalf of the proposed class.
96. Defendants made the following material misstatements knowing them to be
untrue at the time they were made (the “Misrepresentations”):
a. INVEST FOR $18,500 and receive clean, clear, marketable title
b. make INCREDIBLE RETURNS within a 12-18 months. Or take advantage of
the option to keep passive cash flow of approximately $300 per month.
c. PASSIVE INVESTMENTS, managed by experienced property management
company.
d. Mohawk will exchange any property that is not cash-flowing after 6 months,
for one that is.
e. That they had made money with certain investments as described.
97. At the time of their purchases, Plaintiffs were unaware of the falsity of the
statements above.
98. Defendants made the following material omissions (the “Omissions”):
a. That many of the properties that were the subject of the Property Contracts
were “bad” and unsellable.
b. That it would take many months after a property was purchased before a
“for sale” sign would go up, and that consequently, Mohawk’s obligation
to replace a property that could not be cash-flowing after six months
would only commence after a much longer period following the original
sale to the investors than investors were lead to believe.
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c. That Defendants had failed to timely deliver deeds to properties related to
earlier-sold Property Contracts.
d. That Hyland had already admitted to providing false information to
investors during investment seminars.
e. That none of Defendant was properly licensed or registered to sell
securities and that none of the securities were registered.
f. That one or more Defendants had previously filed for bankruptcy.
99. Defendants failed to disclose the material information that they were the subject
of an investigation by the British Columbia Superintendent of Real Estate and received a cease
and desist order for engaging in unlawful activities.
100. Defendants made misrepresentations and omissions with knowledge, or acted
with reckless disregard in making them, in connection with the promotion of FIC and Mohawk,
and with the purchase and sale of the Property Contracts for the purpose of inducing Plaintiffs,
and other members of the proposed class, into purchasing the Property Contracts.
101. Plaintiffs, and other members of the proposed class, reasonably relied on the
misrepresentations because, among other things, Defendants assured them that this scheme
would result in “incredible returns” in 12-18 months.
102. As a result of the foregoing, Plaintiffs, and other members of the Proposed Class,
suffered damages. Plaintiffs, and the class they represent, are entitled to rescind the Property
Contracts and to recover from Defendants the consideration they paid for securities with interest
thereon, less the amount of any income received thereon, together with costs and attorney fees.
THIRD CLAIM FOR RELIEF(Securities Act of 1933, Section 15, 15 U.S.C.A. § 77o)
103. Plaintiffs hereby incorporate by reference all the allegations set forth above as
though fully set forth herein.
104. This claim is brought pursuant to section 15 of the Securities Act, 15 U.S.C.A. §
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77o, by Plaintiffs on behalf of themselves, and on behalf of all members of the proposed class.
105. Defendants are liable under section 12(a)(2) of the Securities Act as set forth
herein.
106. Defendants Lathigee as Pasquill are control persons of FIC by virtue of their
position of operational control of FIC.
107. Defendants Hess, Gray, and Eaton are a control persons of GIW.
108. Defendants Hess, Gray, Eaton, Mike Oborn, Rob Oborn are or were control
persons of Pro Financial by virtue of their positions of operational control.
109. Defendants Abrams, Hyland, Hess, Gray, and Eaton are or were control persons
of Mohawk by virtue of their position of operational control.
110. The identities and relations between various defendants is not fully known at this
time. Other defendants, including unidentified Doe defendants, may be liable as control persons
of one or more Corporate Defendants.
111. At the time Plaintiffs and the other members of the proposed class purchased the
Property Contracts, Individual Defendants had the power and authority, and exercised the same,
to cause Corporate Defendants to engage in the wrongful conduct complained of herein.
112. Defendants FIC, GIW, Pro Financial and Mohawk issued, caused to be issued,
and participated in the issuance of materially false and misleading statements in connection with
the sale of Property Contracts.
113. Pursuant to section 15 of Securities Act, by reason of the foregoing, Individual
Defendants are jointly and severally liable to Plaintiffs and the other members of the proposed
class for the violations of section 12 Securities Act as set forth herein.
114. By virtue of the foregoing, Plaintiff's are entitled to damages against Individual
Defendants. Plaintiffs, and the class they represent, are entitled to recover from Defendants the
consideration they paid for securities with interest thereon, less the amount of any income
received thereon, together with costs and attorney fees.
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FOURTH CLAIM FOR RELIEFRescission for Sale of Securities through Use of Untrue or Omitted Materially Facts
(Exchange Act of 1934, Section 10(b), 15 U.S.C. § 78j, and 17 C.F.R. § 240.10b-5)
115. Plaintiffs hereby incorporate by reference all the allegations set forth above as
though fully set forth herein.
116. Defendants carried out a plan, scheme and course of conduct which was intended
to, and did, deceive Plaintiffs and the other proposed class members, as alleged herein and
caused Plaintiffs and other class members to purchase the Property Contracts. In furtherance of
its unlawful scheme, plan and course of conduct, Defendants, and each of them, took the action
set forth in this complaint.
117. Defendants employed devices, schemes and artifice to defraud, made untrue
statements of material facts and/or omitted to state material facts necessary to make these
statements not misleading, and engaged in practices, acts and a course of business which
operated as a fraud upon Plaintiffs and the other members of the proposed class, in an effort to
enrich themselves.
118. Defendants, individually and in concert, directly and indirectly, by the use, means
or instrumentalities of interstate commerce and or of the mails, engaged and participated in a
continuous course of conduct to conceal adverse information about the Property Contracts.
119. Defendants intended, by their misrepresentations and omissions, to induce
Plaintiffs and members of the proposed class to purchase Property Contracts.
120. Defendants intended to make the misrepresentations and omissions, or acted with
reckless disregard in making them, and failed to correct such misrepresentations or omissions.
121. As a result of the dissemination of the materially false and misleading information
and failure to disclose material facts, as set forth above, Plaintiffs purchased and continue to hold
the Property Contracts, relying directly or indirectly on the false and misleading statements made
by Defendants, and on the absence of material adverse information that was known to or
recklessly disregarded by Defendants but not disclosed in public statements by Defendants.
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122. At the time the Defendants made the misrepresentations and omissions, Plaintiffs
and other members of the proposed class were ignorant of the true state of affairs concerning the
misrepresentations and omissions. Had Plaintiffs and the other members of the proposed class
known of the truth concerning the Property Contracts, which were not disclosed by Defendants,
Plaintiffs would not have purchased the Property Contracts.
123. By virtue of the foregoing, Defendants have violated Section 10(b)(5) of the
Exchange Act, 15 U.S.C. § 78j, and Rule(b)(5) promulgated thereunder, 17 C.F.R. § 240.10b-5.
124. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiffs and
members of the proposed class suffered economic loss in connection with the purchase of the
Property Contracts. Plaintiffs, and the class they represent, are entitled to recover from
Defendants the consideration they paid for securities with interest thereon, less the amount of
any income received thereon, together with costs and attorney fees.
FIFTH CLAIM FOR RELIEF Sale of Securities without Required Registration(Exchange Act of 1934, Section 15, 15 U.S.C. § 78o)
125. Plaintiffs hereby incorporate by reference all the allegations set forth above as
though fully set forth herein.
126. Upon information and belief, defendants acted as brokers or dealers within the
meaning of 15 U.S.C., § 78c(a)(4) and (5), and that they made use of the mails for transactions in
the sale of securities without registering as brokers or dealers pursuant to 15 U.S.C., § 78o(a)(1).
127. Plaintiffs, and the class they represent, are entitled to recover from Defendants the
consideration they paid for securities with interest thereon, less the amount of any income
received thereon, together with costs and attorney fees.
SIXTH CLAIM FOR RELIEF(Exchange Act of 1934, Section 20, 15 U.S.C.A. § 78t)
128. Plaintiffs hereby incorporate by reference all the allegations set forth above as
though fully set forth herein.
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129. This claim is brought pursuant to section 20 of the Exchange Act, by Plaintiffs on
behalf of themselves, and on behalf of all members of the proposed class.
130. Some identities and relationships between various defendants are set forth above.
Others identities and relationships including unidentified Doe defendants, may be liable as
control persons of one or more Corporate Defendants.
131. Pursuant to section 20 of Exchange Act, by reason of the foregoing, Defendants
are liable to Plaintiffs and the other members of the proposed class for the violations of Section
10 Exchange Act, and related federal regulations as set forth herein.
132. Plaintiffs, and the class they represent, are entitled to recover from Defendants the
consideration they paid for securities with interest thereon, less the amount of any income
received thereon, together with costs and attorney fees.
SEVENTH CLAIM FOR RELIEFRescission/Damages for Sale of Unregistered Securities
(Cal. Corp. Code, § 25503)
133. Plaintiffs hereby incorporate by reference the allegation set forth above as though
fully set forth herein.
134. This claim is brought pursuant to Section 25503 of the California Corporation
Code, by Plaintiffs and on behalf all members of the proposed class who purchased the Property
Contracts from or within the State of California (the “Subclass”).
135. Promoter Defendants were “sellers” of the Property Contracts for purposes of
California securities laws, and the Plaintiffs, and other members of the Subclass, were purchasers
thereof.
136. Promoter Defendants communicated offers to sell the Property Contracts to the
general public through a sophisticated marketing system within the State of California.
137. Many of the members of the Subclass, including Plaintiff Sharma, are not
“accredited”. Indeed, there was absolutely no attempt at the FIC San Francisco Sales Event to
even determine if any of the attendees were “accredited” investors.
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138. The Property Contracts were not exempt from the registration requirements of
California law.
139. Plaintiffs, and the class they represent, are entitled to recover from Defendants the
consideration they paid for securities with interest thereon, less the amount of any income
received thereon, together with costs and attorney fees. All Defendants are liable either for their
direct actions or vicariously for positions they held with Corporate Defendants.
EIGHTH CLAIM FOR RELIEFSale of Securities through Use of Untrue or Omitted Materially Facts
(Cal. Corp. Code, § 25401)
140. Plaintiffs hereby incorporate by reference the allegation set forth above as though
fully set forth herein.
141. This claim is brought pursuant to Section 25401 of the California Corporation
Code, by Plaintiffs and on behalf all members of the proposed class who purchased the Property
Contracts from or within the State of California (the “Subclass”).
142. Defendants sold securities through the use of false statements or material
omissions of fact as described above.
143. Plaintiffs, and the class they represent, are entitled to recover from Defendants the
consideration they paid for securities with interest thereon, less the amount of any income
received thereon, together with costs and attorney fees. All Defendants are liable either for their
direct actions or vicariously for positions they held with Corporate Defendants.
NINTH CLAIM FOR RELIEFRescission/Damages for Sale of Securities through Unlicensed Persons
(Cal. Corp. Code, §25501.5)
144. Plaintiffs hereby incorporate by reference the allegation set forth above as though
fully set forth herein.
145. This claim is brought pursuant to Section 25501.5 of the California Corporation
Code, by Plaintiffs and on behalf all members of the proposed class who purchased the Property
Contracts from or within the State of California (the “Subclass”).
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146. Defendants unlawfully sold securities without the licenses required to do so.
147. Plaintiffs, and the class they represent, are entitled to recover from Defendants the
consideration they paid for securities with interest thereon, less the amount of any income
received thereon, together with costs and attorney fees. All Defendants are liable either for their
direct actions or vicariously for positions they held with Corporate Defendants.
TENTH CLAIM FOR RELIEFRescission/Damages for Sale of Unregistered Securities
(Utah Code Ann. § 61-1-7, 61-1-15 )
148. Plaintiffs hereby incorporate by reference the allegation set forth above as though
fully set forth herein.
149. This claim is brought pursuant to Utah Code Ann. § 61-1-7, 61-1-15 by
Plaintiffs and on behalf all members of the proposed class who purchased the Property Contracts.
150. Defendants were “sellers” of the Property Contracts for purposes of Utah
securities laws, and the Plaintiffs, and other members of the Subclass, were purchasers thereof.
Defendants received funds from the sale of Property Contracts in the State of Utah.
151. Plaintiffs, and the class they represent, are entitled to recover from Defendants
the consideration they paid for securities with interest thereon, less the amount of any income
received thereon, together with costs and attorney fees. All Defendants are liable either for their
direct actions or vicariously for positions they held with Corporate Defendants.
ELEVENTH CLAIM FOR RELIEFSale of Securities through Use of Untrue or Omitted Materially Facts
(Utah Code Ann. § 61-1-1(2))
152. Plaintiffs hereby incorporate by reference the allegation set forth above as though
fully set forth herein.
153. This claim is brought pursuant to Utah Code Ann. § 61-1-1(2) by Plaintiffs and
on behalf all members of the proposed class who purchased the Property Contracts.
154. Defendants were “sellers” of the Property Contracts for purposes of Utah
securities laws, and the Plaintiffs, and other members of the Subclass, were purchasers thereof.
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Defendants received funds from the sale of Property Contracts in the State of Utah.
155. Defendants sold securities through the use of false statements or material
omissions of fact as described above.
156. Plaintiffs, and the class they represent, are entitled to recover from Defendants
the consideration they paid for securities with interest thereon, less the amount of any income
received thereon, together with costs and attorney fees. All Defendants are liable either for their
direct actions or vicariously for positions they held with Corporate Defendants.
TWELFTH CLAIM FOR RELIEFRescission/Damages for Sale of Securities through Unlicensed Persons
(Utah Code Ann. § 61-1-3)
157. Plaintiffs hereby incorporate by reference the allegation set forth above as though
fully set forth herein.
158. This claim is brought pursuant to Utah Code Ann. § 61-1-1(2) by Plaintiffs and
on behalf all members of the proposed class who purchased the Property Contracts.
159. Defendants were “sellers” of the Property Contracts for purposes of Utah
securities laws, and the Plaintiffs, and other members of the Subclass, were purchasers thereof.
Defendants received funds from the sale of Property Contracts in the State of Utah.
160. Defendants unlawfully sold securities as broker-dealers and or agents without
having the licenses required to do so.
161. Plaintiffs, and the class they represent, are entitled to recover from Defendants
the consideration they paid for securities with interest thereon, less the amount of any income
received thereon, together with costs and attorney fees. All Defendants are liable either for their
direct actions or vicariously for positions they held with Corporate Defendants.
THIRTEENTH CLAIM FOR RELIEFCommon Law Fraud
162. Plaintiffs hereby incorporate by reference the allegation set forth above as though
fully set forth herein.
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163. Promoter Defendants made knowingly false representations of material facts
(and/or concealed material facts) for the purpose of inducing Plaintiffs to act on those
representations. Plaintiffs, in reasonable reliance on Defendant’s statements, and in ignorance of
the falsity of those statements, were induced to purchase securities from Defendants. Plaintiffs
have been injured as a result.
164. Defendants have caused Plaintiffs damages in an amount to be shown hereafter,
plus interest, costs, and punitive damages.
FOURTEENTH CLAIM FOR RELIEFNegligent misrepresentation
165. Plaintiffs hereby incorporate by reference the allegation set forth above as though
fully set forth herein.
166. Defendants negligently made untrue representations of materials facts for the
purpose of inducing Plaintiffs to act on those representations. Plaintiffs, in reasonable reliance
on Defendant’s statements, and in ignorance of the falsity of those statements, were induced to
purchase securities. Plaintiffs have been injured as a result.
167. Defendants have caused Plaintiffs damages in an amount to be shown hereafter,
plus interest, costs, and punitive damages.
FIFTEENTH CLAIM FOR RELIEF Civil Conspiracy
168. Plaintiffs hereby incorporate by reference the allegation set forth above as though
fully set forth herein.
169. In connection with the above-described incident, all Defendants acted as an
association of two or more persons with an unlawful objective and to perform an unlawful act.
The Defendants had an agreement or understanding with regard to the objective and the manner
in which their objectives would be achieved. Each Defendant engaged in an unlawful, overt act
in furtherance of the conspiracy. Each Defendant is jointly and severally liable for the damage
caused to Plaintiffs.
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170. Defendants caused Plaintiffs damages in an amount to be shown hereafter, but in
no event less than the consideration they paid for securities with interest thereon, less the amount
of any income received thereon, together with costs, punitive damages, and attorney fees.
SIXTEENTH CLAIM FOR RELIEFAccounting
(Against All Defendants)
171. Plaintiffs hereby incorporate by reference the allegation set forth above as
though fully set forth herein.
172. Plaintiffs are entitled to accounting of what happened with their investment funds,
as well as Defendants’ efforts to refund some but not all investors. To the extent some investors
received preferential treatment, such transfers may need to be avoided so that refunds can be
equitably distributed among the injured class.
SEVENTEENTH CLAIM FOR RELIEFUniform Fraudulent Transfer Act
(Against All Defendants)
173. Plaintiffs hereby incorporate by reference the allegation set forth above as
though fully set forth herein.
174. When one or more Defendants were insolvent, such Defendants transferred assets
to select creditors with intent to hinder, delay, or defraud other creditors, and/or without
receiving reasonably equivalent value in exchange for the transfer. It is believed that at the time
of the transfers, such Defendants transferred assets to insiders, failed to properly disclose the
transfers, knew of lawsuits or threatened lawsuits, transferred substantially all of Defendants’
assets, and/or were insolvent or became insolvent as a result of the transfers.
175. Plaintiffs seek an avoidance of transfers and obligations and other appropriate
relieve under the Uniform Fraudulent Transfer Act to ensure that assets are fairly distributed
among injured parties.
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EIGHTEENTH CLAIM FOR RELIEF Breach of Contract
(Against Mohawk and GIW)
176. Plaintiffs hereby incorporate by reference the allegation set forth above as
though fully set forth herein.
177. The Bulk Foreclosure Purchasing Agreement was, and is, a valid and binding
contract between each member of the proposed class, and Mohawk.
178. The Plaintiffs, and the members of the Proposed Class, have performed their
obligations under these contracts.
179. Mohawk failed to deliver “clear and marketable title” to the Plaintiffs, and other
members of the proposed class, to the properties that were the subject of the Bulk Foreclosure
Purchasing Agreements. These breaches are not excused under the relevant contract.
180. Mohawk has also failed to exchange those non-cash-flowing properties purchased
by Plaintiffs, and other members of the proposed class, with other income-producing properties,
as required under the Bulk Foreclosure Purchasing Agreement.
181. As a result of the breaches set forth above, Plaintiffs, and other members of the
proposed class, have suffered proximately-caused damages.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs pray that judgment be rendered in their favor as follows:
A. A preliminary injunction against all Defendants enjoining them from further
violations of Sections 10(b) of the Exchange Act and Rule 10(b)-5 promulgated thereunder;
B. A permanent injunction against all the Defendants and their agents, servants,
employees, and all persons acting in concert with them, and each of them, from further violations
of Sections 10(b) of the Exchange Act and Rule 10(b)-5 promulgated thereunder;
C. A preliminary and permanent injunction enjoining all Defendants from selling, or
offering for sale, directly or indirectly, any Property Contracts;
D. An order that each Defendant be restrained and enjoined from destroying,
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Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 32 of 75
removing, mutilating, altering, concealing or disposing of, in any manner, any of books, records
and documents relating to the matters set forth in the complaint;
E. For an order certifying this case a class action and appointing Plaintiffs as class
representatives;
F. For judgment stating that Defendants each violated the 1933 Securities Act; the
1934 Exchange Act, and federal regulations promulgated thereunder; the California Securities
Act; and/or the Utah Uniform Securities Act, Utah Code Ann. § 61-1-1, et seq.
G. For judgment stating that each Defendant engaged in fraud;
H. For judgment stating that each Defendant was a member of a civil conspiracy;
I. At the election of the Plaintiffs, and each member of the proposed class, an order
of specific performance under the Bulk Foreclosure Purchasing Agreement directing Mohawk,
and GIW as its successor in interest, to convey to each member of the proposed class the
property purchased by that member;
J. For money damages, in an amount to be proven at trial;
K. For pre -judgment and post -judgment interest on damages awarded hereunder;
L. For the cost of the proceedings and for Plaintiffs’ reasonable attorneys fees;
M. For punitive damages in an amount to be determined at trial; and,
N. For all such other and further relief as the court deems just.
DATED: March 18, 2011 UTAH LITIGATION CENTER
Im
By Victor SiposAttorney for Plaintiffs
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Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 33 of 75
EXHIBIT A
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 34 of 75
When we getI .issJ.^^^.^We make -!JZJ
In investments, often the exit strategy is as important, if not more so, than the actual buy. Investing in foreclosed homes is justsuch a case, It's easy to buy property for cents on the dollar today-the problem lies in what then to do with it. There's upkeep,management, selling and/or renting, There are many factors that make even the most tempting situation less than desirable.
What If the exit strategy, was built in? What if on the buy, you knew what would happen when, and the variables were taken care of?This investment takes care of those variables.
- INVEST FOR $18,500 & receive a clean, clear, marketable title-we GUARANTEE property value to be at least $45,000- our CURRENT AVERAGE property value is $55,000- make INCREDIBLE RETURNS within a 12-18 month period or take advantage of the option to keep passive cash flow ofapproximately $300 per month
- PASSIVE INVESTMENT, managed by experienced property management company
This great passive buy lends itself to multiple purchases with little investment.
lecent Properties:low are a sampling of recent properties within our system. Invest in this opportunity.
Market Value: $144,544 Tahe advantage of theCincinnati, OH
' - 2 1/2 story•
1. $500 down, $35 month sub-prime lemon, without
^--^, Note Price $59,000 tag advantage of people.Market Value: $50,399 Invest now, see Indianapolis, INr story, 2 bed,1 bath, finished amazing returns.basement,1 ear detached garage$500 Down, $380 monthNotre Price $44,540
mohawk -diversifie d opening doors is what we do
infoPmohawkreoxom1-800-928-2713
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 35 of 75
EXHIBIT B
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 36 of 75
BULK FORECLOSURE PURCHASING,-^"AGREEMENT
THIS AGREEMENT (hereafter "Agreement") is made between MOHAWK DIVERSIFIED, LLC, (hereafter "HAWK") and
Client Name: Email
Address: `City. ° , State: , Zip:
Phone: - , (hereafter "CLIENT"). HAWK and Client are referred collectively herein as the "Parties."
Client referred by:
Event Locatiordif Applicable:
RECITALS
A. WHEREAS, HAWK has established extensive relationships with wholesale foreclosure buyers, these buyers are willing toinclude HAWK in their bulk property purchasing.
B. WHEREAS, Client wishes to be given the opportunity to participate along with HAWK in their opportunity to purchaseforeclosures at a discount.
C. WHEREAS, Client desires to purchase a property from HAWK, which property shall later be identified and approved of byHAWK.
Client shall indicate how many properties are being purchased, as well as the total funds being remitted to HAWK.
X $17,500.00 USD =Property Count Total funds to remit to Escrow Specialists
Terms of the agreement are as outlined on the back of this document and will become effective when executed by both parties and purchase funds havebeen released to HAWK.
Client initials: Client confirms that Client has read the entirety of the contract located on the back side of this document.
Client Initials: Client confirms that Client understands that purchasing real estate comes with inherent risks.
Client initials: Client understands that HAWK offers no guaranteed returns of investments.
" Client Initials: Client understands that said property will be in a distressed condition and may have signs of neglect anddamage to the property.
ESCROW INSTRUCTION: CLIENT will forward total amount of funds to Escrow Specialists of Ogden Utah. Escrow Specialists will function as adisinterested third party to hold funds until HAWK has delivered a property address to Escrow Specialists which will ultimately be the property which willbe deeded to CLIENT. Escrow Specialists will also function as a third party to hold client funds until the end of the 7 day "coaling off" period. After the 7day "cooling off" period has expired and HAWK has delivered an address to Escrow Specialists, Escrow Specialists will release the total amount of fundsto HAWK. HAWK will continue to fulfill its duties outlined within this agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the dayand year written below.
MOHAWK DIVERSIFIED, LLC i
By: It's Manager / Date
CLIENT
Date
AGREEMENT-1
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 37 of 75
SERVICES AND RESPONSIBILITIES
HAWK1. HAWK will supply said property to Client for seventeen thousand five hundred dollars ($17,500.00). This purchase
price will cover the property and the following warrantees.a) HAWK shall provide Client with ownership to a property with a clear and marketable title. The property will
be purchased by HAWK from a wholesale foreclosure supplier and HAWK will have little informationregarding the property.
b) The property provided to Client will be valued no less than forty five thousand ($45,000); said property valuewill be determined by online evaluations of property values and (not) an appraisal. Once the property isidentified by HAWK Client will have the opportunity to obtain an appraisal at its own cost if desired.
c) HAWK will exchange said property from Client with a new property under the following circumstances, andONLY if Client has employed the Management Services of Pro Financial Services. Following are the ONLYreasons why HAWK would exchange said property.
1. If said property is found to be un-saleable by the process developed by the ManagementCompany, the Management Companies research crew, and or local ordinances at the time ofinspection.
2. If six (6) months has expired from the time the marketing sign has been placed, and an Occupantcannot be contracted to purchase said property.
d) HAWK has established a relationship with a reputable Client Services Company whom can assist Client withthe liquidation of said property if Client so desires. Client will be responsible for the costs associated withthese services.
e) HAWK shall only hold title for a short period of time, will not reside in the property itself, and will thereforehave little information upon which a Client may rely.
CLIENT1. Client shall provide funding to HAWK for the purchase of said property in the amount of seventeen thousand five
hundred dollars ($17,500.00) per property.
CONTRACTUAL RELATIONSHIPIndependent Relationship. This is document is a purchase contract. Client is purchasing real property from HAWK. CLIENT is contractingseparately with a client services company to perform the management duties needed to sell said property. This purchase agreement does notcreate any kind of business partnership between the Parties. HAWK will purchase the bulk foreclosure properties based on the demandgenerated from clients who enter into these Agreements.Federal, State and Local Taxes. Neither Federal, nor state, nor local tax nor payroll tax of any kind shall be withheld or paid by HAWK onbehalf of Client.Notice of Tax Duties and Liabilities. Both parties understand that each party is responsible to pay, according to law, each party's taxresponsibilities. Neither party will be responsible for any Federal, state or local taxes owed by the ether party.Indemnity. Client agrees to indemnify and hold HAWK harmless from all claims, demands, losses, costs, expenses, obligations, liabilities,damages, recoveries, and deficiencies, including interest, penalties, casts, and attorneys' fees that HAWK may incur arising from or out ofwillful, or negligent misconduct of Client while providing services or acting under this Agreement.
THE TERMS OF THIS SECTION SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT.WARRANTIES
Confidentiality. In the performance of the service contemplated by this Agreement, Client agrees to hold in strict confidence all confidentialor proprietary information that it receives relating to HAWK's business, and Client will not divulge or otherwise communicate such informationto a third party without HAWK's prior written consent. Confidential or proprietary information shall include all information obtained by Clientfrom HAWK, and which relates to HAWK's past, present, or future business activities, including client lists, technology and operationalprocesses and manuals, except for previously obtained or publicly disclosed information.Confidentiality of Client Information. In the performance of the service contemplated by this Agreement, HAWK agrees to hold in strictconfidence all personally identifiable or financial information that HAWK receives relating to Client, and HAWK will not divulge or otherwisecommunicate such information to a third party, except to needed Client Services Company, without the client's prior written consentTHE TERMS OF THIS SECTION SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT
GENERAL PROVISIONSRisk. Each party shall perform the work or services at its own risk.No Authority to Bind Other Party. Neither party has authority to enter into contracts or agreements on behalf of the other party. Thisagreement does not create a partnership between the parties.Choice of Law. Any dispute under this agreement or related to this agreement shall be decided in accordance with the laws of Utah.Arbitration. The parties to this Agreement agree to submit to binding arbitration under the rules of the American Arbitration Association anyunresolved disputes between the parties and agree that the costs of such proceedings shall be reimbursed to the prevailing party.Entire Agreement. This Agreement (including any Exhibits attached hereto) represents the entire understanding and agreement between theParties with respect to the subject matter hereof, and supersedes any prior understandings and agreements, written or oral, between suchParties with respect to such subject matter. Depending on the state where the Client's allocated property is located, Client and HAWK may berequired to enter into a state approved real estate purchase contract and disclosures as required under that state's laws. The parties agree toenter into those Agreements and shall not unreasonably delay or reject such standard terms so long as they do not contradict terms orunderstandings under this Agreement.Severability. If any part of this Agreement is held unenforceable, the rest of the Agreement will nevertheless remain in full force and effect.Amendments. This Agreement may not be modified, amended or discharged except by an instrument in writing signed by the parties hereto.No waiver or consent may be enforced unless such waiver or consent shall be in writing and signed by the party against whom enforcementthereof is sought. Any handwritten modifications or amendments to this Agreement shall supersede any conflicting printed term or condition.Notices. All notices, demands, and requests required or permitted to be given under this Agreement shall be in writing and shall be deliveredor mailed, If to HAWK, to: 2637 North Washington Blvd., Suite 131, North Ogden UT 84414.
AGREEMENT-2
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 38 of 75
EXHIBIT C
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 39 of 75
CLIENT AND CLIENT SERVICES COMPANY MANAGEMENT AGREEMENT
This .Agreement is made and entered in this day of , 2008, between hereinafter called "Client', and Pro Financial Services, hereinafter called "Manager„.
Client hereby employs the services of the Manager to faci itate the dosing and resale of the properly, and manage the eolWonof mortgage payments and escrow on the property purchased from Mohawk Diversified, LLC and will be determined andissued to Client from Manager.
Event Location:
Term of Agreement
The term of this Agreement shall commence on the day of , 2008, and end upon sale ofthe note. This Agreement may also be terminated by mutual agreement of the parties at any time upon payment to Manager of allfees, commissions and expenses due Manager under terms of this Agreement
Extent of AgreementThis document represents the entire Agreement between the parties hereto.
Terms of the agreement are as outlined on the back of this document and will become effective when executed byboth parties and purchase funds have been paid in full to Manager.
---` Client initials: Client confirms that Client has read the entirety of the contract located onthe back side of this document.
Number of Properties needing management Services: X $1,000 = $
PAYMENT INSTRUCTIONS: Once Client has been assigned the property purchased from Mohawk Diversified,LLC, Manager will issue Client an invoice for the one thousand dollars ($1,000). Once the invoice is paid in fullManager will contact Client by way of phone and email and explain the process in which Manager will communicatethe process explained with in the agreement.
IN WITNESS WHEREOF, the parties hereto hereby execute this Agreement on the date first above written.
PRO FINANCIAL SERVICES, LLC
By: It's Manager Date
CLIENT
Date
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 40 of 75
EXHIBIT D
Case 2:1 0-cv-01 060-DS Document 19 Filed 03/18/11 Page 41 of 75
rr^^r
BRITISHCOLUMBIA
IN THE MATTER OF
THE REAL ESTATE SERVICES ACT, S.B.C. 2004 C. 42
and
THE FREEDOM INVESTMENT CLUB GROUP OF COMPANIES,
FIC INVESTMENT LTD., WBIC CANADA LTD.,
MICHAEL LATHIGEE,
EARLE PASQUILL,
MOHAWK DIVERSIFIED, LLC,
ALAN ANDRUS AND GERALD ABRAMS, and
PRO FINANCIAL SERVICES, INC. (UTAH) dbaPRO FINANCIAL SERVICES, LLC (UTAH)
ORDERS UNDER SECTIONS 51 AND 49 OFTHE REAL ESTATE SERVICES ACT
UPON REVIEWING the submissions and exhibits contained in the Investigation Report
prepared by the staff of the Superintendent of Real Estate and based on that information, I
make the following findings and orders:
1. On or about July 29, 2008 information was received by the Financial Institutions
Commission (TICOM") from a British Columbia financial institution regarding the
account activities of an account holder, WBIC Canada Inc. ("WBIC").
Superintendent of Rea! Estate Mailing Address: Web Address:1200 — 13450 102 nd Avenue www.fcombc.caSurrey, BC V3T 5X3Teiephone: 604 953.5300Facsimile: 604 953-5301
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 42 of 75
Page 2
2. On July 30, 2008 FICOM's Executive Director, Investigative Services attended at the
financial institution and spoke with an officer of the financial institution. As a result of this
conversation the following information was obtained:
(a) On July 10, 2008 and July 16, 2008 two deposits were made into WBIC's
account. The amount of the deposits were $3.6 million and $150,000
respectively.
(b) The financial institution is not aware at this time who made the deposits into the
WBIC account.
(c) A letter, written on the letterhead of Escrow Specialists, Inc. ("Escrow") signed by
a "JME Simpson" on behalf of Escrow accompanied the deposits. The letter
purportedly authorizes the credit union to allow the deposit of the cheques,
payable to Escrow, into the WBIC account.
(d) The deposits consisted of approximately 180 cheques in varying amounts.
However, it appears that all the cheques were in multiples of $17,500. The
cheques were made payable to Escrow, "Mohawk" and "Pro Financial".
(e) Where the cheque was initially made payable to Mohawk or Pro Financial these
names were crossed out and Escrow was inserted.
(f) The cheques showed different payors and were drawn on various British
Columbia and other Canadian financial institutions.
(g) Financial institution staff have determined through conversations with the
principals of the WBIC the following:
(a) Mohawk has a relationship with several United States banks whereby
Mohawk will purchase foreclosed on properties;
(b) Mohawk thorough its affiliation with the Freedom Investment Club runs
presentations in British Columbia and elsewhere in Canada called
"I nvestfests."
(c) The purpose of the Investfests is to solicit British Columbia and Canadian
residents to purchase these foreclosed properties in the USA.
(d) Potential purchasers are asked to pay $17,500. In addition, purchasers
are told that for an extra $1,000 they can enter into a property
management agreement with Pro Financial who will undertake to find
tenants for their property.
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 43 of 75
Page 3
(h) When the financial institution management staff became aware of the deposits, it
was determined that the deposits contravened credit union policy in that the
credit union does not allow the deposit of unendorsed third party cheques.
3. As a result, the financial institution decided to place an institutional hold on the deposits
pending its own review.
4. On August 4, 2008, the office of the Superintendent of Real Estate ("Superintendent")
began an investigation of a real estate "investment" promotion in Vancouver advertised
on the Freedom investment Club website www.ficinvestors.com (the TIC Website").
5. Section 1 of the Real Estate Services Act ("Act') provides the following definitions:
IF
estate services" means
(a) rental property management services,
(b) strata management services, or
(c)trading services.
"real estate" means
(a) real property,
(b) regardless of whether it is or is not an interest in real property, acooperative interest, shared interest in land or time share interest, asthese are defined in the Real Estate Development Marketing Act, and
(c) a right in relation to real property that is defined by regulation to bereal estate,
but does not include a right in relation to real property that is excluded byregulation.
"rental property management services" means any of the following servicesprovided to or on behalf of an owner of rental real estate:
(a) trading services in relation to the rental of the real estate;
(b) collecting rents or security deposits for the use of the real estate;
(c) managing the real estate on behalf of the owner by
(i)making payments to third parties,
(ii)negotiating or entering into contracts,
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 44 of 75
Page 4
(iii)supervising employees or contractors hired or engaged by theowner, or
(iv)managing landlord and tenant matters
but does not include an activity excluded by regulation.
"trading services" means any of the following services provided to or on behalf ofa party to a trade in real estate:
(a) advising on the appropriate price for the real estate,
(b) making representations about the real estate;
(c) finding the real estate for a party to acquire;
(d) finding a party to acquire the real estate;
(e) showing the real estate;
(t) negotiating the price of the real estate or the terms of the trade in realestate;
(g) presenting offers to dispose of or acquire the real estate;
(h) receiving deposit money paid in respect of the real estate
but does not include an activity excluded by regulation;
„party„
(a) in relation to a trade in real estate, does not include a licensee actingsolely as a licensee, and
(b) in relation to a prospective trade in real estate, includes a potentialparty
'providing", in relation to real estate services, includes
(a) offering to provide such services,
(b) holding oneself out as a person who provides such services, or
(c) soliciting for the purposes of the provision of such services;
6. Subsection 3 (1) of the Act provides:
3(1) A person must not provide real estate services to or on behalf of another, foror in expectation of remuneration, unless the person is
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 45 of 75
Page 5
(a) licensed under this Part to provide those real estate services, or
(b) exempted by the regulations from the requirement to be licensedunder this Part in relation to the provision of those real estate services.
7. Subection 48(1)(a) of the Act provides:
48(1) The superintendent may conduct an investigation to determine whether
(a) a person who does not hold a licence has engaged in any activity forwhich a licence under this Act is required.
8. The FIC Website is registered in the name of FIC Investment Ltd., with an address of
Suite 990, Box 12091, 555 West Hastings, Vancouver, British Columbia. The FIC
Website states that the mailing address for the Freedom Investment Club is Suite 990,
Box 12091, 555 West Hastings Street, Vancouver, BC V6B 4N5.
9. The FIC Website advertised a "Vancouver FIC foreclosure event". An Investigator
reviewed the website and registered online to attend the presentation slated for August
6, 2008, at 7:00 PM at the Marriott Hotel, 1128 West Hastings Street, Vancouver,
British Columbia. The FIC Website advertised that a tour by the presenters was
scheduled during the period August 4 to August 12, 2008, and would include Los
Angeles, San Francisco, Edmonton, Calgary, New York, and Toronto.
10. The Investigator attended the meeting room on August 6, 2008 where the presentation
was to take place, checked in, and received a brochure showing some recent properties
listed by Mohawk Diversified, LLC ("Mohawk"). The brochure showed a website address
of www.mohawkreo.com , and a contact telephone number 1-800-928-2713. The
brochure, among other things, stated the following:
- INVEST FOR $18,500 & receive a clean, clear, marketable title
- we GUARANTEE property value to be at least $45,000
- our CURRENT AVERAGE property value is $55,000
- make INCREDIBLE RETURNS within a 12 -18 month period or take
advantage of the option to keep passive cash flow of approximately $300
per month
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 46 of 75
Page 6
PASSIVE INVESTMENT, managed by experienced property
management company
This great passive buy lends itself to multiple purchases with little investment.
Invest in this opportunity. Take advantage of the sub-prime lemon, without taking
advantage of people. Invest now, see amazing returns.
11. The brochure contained pictures of a number of properties including the following
information:
Market value: $104,544Location: Cincinnati, OhioDescription: 2-1/2 storey buildingTerms: $500 down, $325 a monthNote price: $59,000
Market value: $50,399Location: Indianapolis, IndianaDescription: 1 storey, 2 bed, 1 bath, finished basement, car detached
garageTerms: $500 down, $380 a monthNote price: $44,500
12. Approximately 150 persons attended the presentation.
13. The first portion of the presentation was given by a person identifying himself as Mike
Lathigee ("Lathigee"), CEO of the FIC Investment Club in Vancouver. Lathigee stated
that in San Francisco, the night before, 103 investors attended his presentation and 146
homes were purchased. San Francisco is the newest chapter of the Club.
14. Lathigee then made some general comments about the U.S. economy, the rate of
default by homeowners, and that current foreclosure laws in the U.S. could change, thus
creating problems for "the Club". He then provided the following information:
• The homes are handled by a property management company.
• The demand for these homes is overwhelming.
• In the last 45 days the Club has sold over 1,700 homes.
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 47 of 75
Page 7
650 signs have gone up on homes purchased by investors in the last seven
days.
• There will be multiple opportunities to get involved. Other meetings are planned
in the fall.
• An average of one home per person is sold at Club meetings.
• 50 homes were allocated for the Vancouver meeting on a first come first served
basis.
• The home purchase will complete within 30 days.
Other investors will go on a waiting list, but they will still get a home although it
will take longer — from 60 to 90 days.
If no home is found, the investment is returned.
• The Club makes approximately $1,500 per home.
• Based on projections, 10,000 homes will be sold which will mean $15 million for
the FIC Group of Companies.
• All Club shareholders share in the proceeds.
The caveat is that laws in the U.S. are changing, and there are pressures to
prevent foreclosures on lower end homes. Laws are likely to change early in the
new year.
He will not allow money to just sit for months on end if a home cannot be offered.
• The Club cannot be both the property management company and be involved in
the ownership, as this would be considered a securities matter. The property
management firm and the actual ownership must be completely separate, which
is why there are two entities and a number of people involved in this process.
• This requirement is due to securities regulations.
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 48 of 75
Page 8
• Because of the high level of trust in the Club by the members, the process is very
well received.
• At the last meeting in Toronto, 120 persons attended and purchased more than
120 homes.
15. Lathigee then introduced Alan Andrus ("Andrus") as representing Mohawk, stating that
Andrus had extensive experience in real estate development. Lathigee explained that
Andrus was going to explain how the process actually works.
16. Andrus described the steps in the foreclosure process in the U.S. as follows:
• The homeowner gets behind in his mortgage payments.
• A Notice of Default ("NOD") to the homeowner is issued by the lender, which is
published in the newspaper.
• The property is sold at a foreclosure sale, or if no offers are made the lender
(financial institution) will sell them in bulk at reduced prices in order to write them
off their books, and minimize incurring further costs.
• Andrus provided the following information about the bulk purchase system:
o Mohawk buys blocks of 400 to 500 foreclosed/distressed homes at a timefrom the financial institutions.
o The homes are sight unseen, and typically are encumbered with tax liens
and other charges against the property.
o www.mohawkreo.com is the website for Mohawk.
o Mohawk is involved in the process of clearing the titles of the properties.
• For the investor the process is as follows:
o The investor buys a home from Mohawk.
o The investor receives a clear title on that home.
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 49 of 75
Page 9
o Mohawk takes the time to clear the title, and the investor receives that
title with a warranty.
o It is not a quit claim.
o Mohawk uses a management company, Pro Financial, who helps clear
the title. The property is inspected to determine whether it is sellable for a
profit.
o If an investor buys a home that is not sellable, Mohawk will exchange it.
o Pro Financial finds a buyer and occupant for the investor's home.
o Pro Financial will evaluate the neighbourhood and put up a sign on the
property indicating that it is for sale for $500 down and $400 a month.
• Pro Financial creates a mortgage between you and the new buyer with
100% financing. Pro Financial qualifies the buyers.
• The investor ultimately becomes "the bank".
17. Andrus then gave a PowerPoint presentation with time lines, and projected returns on
the $18,500 investment.
18. After finishing his presentation, Andrus re-introduced Lathigee, who provided the
following information regarding the mortgages in the form of Promissory Notes:
• The mortgages (Promissory Notes) are based on a 30-year amortization at 10%
interest.
• The Promissory Note becomes worth $45,000 based on the calculations of
monthly payments of $300.
• Once the Promissory Note is "seasoned", anywhere from 6 to 18 months, it is
offered for sale.
• Seasoned Promissory Notes are purchased typically at a fraction of the
calculated value.
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 50 of 75
Page 10
• There is an inherent risk in any investment.
• Lathigee stated that some investors have found that the homes they purchased
were listed on the MLS prior to foreclosure for less than the $18,500 they paid.
Lathigee explained that this is because the homes often have tax liens and other
charges placed against them which are not reflected on MILS and those charges
have to be removed.
• If the home is not sold within six months, Mohawk will exchange it.
• Lathigee stated that he would not engage in something of this magnitude unless
at the end of the day the system will work to a point where the majority of the
homes are resold and there is a market for the Promissory Notes.
• They are lobbying the U.S. Federal Housing Authority to buy the Promissory
Notes.
• The investor pays $18,500 for an unspecified property, receives $300 per month,
and pays a 10% monthly property management fee which is deducted from the
$300 per month payments.
• As the owner of the home, the investor can either sell it himself, keep it, or have
Pro Financial sell it or maintain it on the investor's behalf.
• Other offerings of foreclosed properties are planned for the fall.
19. Lathigee then inquired of his staff and was told that so far at this meeting, 27 homes had
been purchased. He reiterated that 50 investors would receive domes immediately, and
any other investors wishing to purchase would go on a waiting list.
20. At that time, Lathigee instructed his assistants to hand out the following documents to
interested purchasers:
(a) Process and Wire Transfer Instructions. That document states in part:
Please read carefully, these are your step by step process and wire transfer
instructions for the purchase of your FIC foreclosure homes) in The United
States.
Case 2:1 0-cv-01 060-DS Document 19 Filed 03/18/11 Page 51 of 75
Redact
Page 11
Redacted
STEP 1. Complete BOTH:
- Bulk Foreclosure Purchasing Agreement and
- Client and Client Services Company Management
Agreement
STEP 2. Go to Sales TABLE to have BOTH of your Agreements
Signed.
STEP 3. Arrange for TWO wire transfers using the Banking co-
ordinates below:
• Wire transfer #1 — amount: $17,500 USD (for EACH home
purchased)
FOR THE ACCOUNT OF: Escrow SpecialistsP.O. Box 3287, Ogden, Utah 84409555 East 5300 South, Suite 3 Ogden, Utah 84405(801) 627-6800 5330
South 900 East Suite 180 South Lake City, Utah 84117(801) 538-0869. Other In-state areas 1-800-427-8698
BANK: Bank of Utah2605 Washington Blvd.Ogden, UT, 84401Phone: (801) 409-5165
Account Number: RedactedABA Number: Redacted
Please reference: Mohawk Diversified LLC"Customer Name"Account Redac
• Wire transfer #2 — amount: $1,000 USD (for EACH home
purchased)
TO: Pro Financial Services LLC169 East Holly Brook Cove, Draper UT 84020Phone 866-451-3381Fax 801-203-3070
BANK: Washington Mutual805 East Thunderbird RDPhoenix, AZ 85022
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 52 of 75
Page 12
Account number: Redacted
Routing number: Redacted
(b) Bulk f=oreclosure Purchasing Agreement between Mohawk and the client,
which the client completes to indicate how many properties are to be purchased
at $17,500 USD each to be sent to Escrow Specialists.
(c) Client and Client Services Company Management Agreement between the
client and Pro Financial Services, LLC, listing the number of homes to be
purchased and the amount of $1,000 USD per home.
21. On the back of each of the above agreement documents are listed the services and
responsibilities of each party, limited liability of the manager, and the compensation of
the manager, and other rules related to the contract including terms and conditions.
22. The Bulk Foreclosure Purchasing Agreement provides the following terms:
• The consumer gives Mohawk Diversified, LLC $17,500 (held by an escrow agent
in Utah) in return for Mohawk's agreement to find a suitable property and
purchase it in Mohawk's name and then transfer clear title to that property to the
consumer.
• Mohawk warrants that the value of the property will be at least $45,000 however
this is not based on an appraisal but based on an online valuation. If the
consumer wants to have an appraisal, they must obtain it at their own cost.
• As soon as Mohawk notifies the escrow agent of the address of the property,
Mohawk receives the funds from the escrow agent. At a later date, Mohawk
transfers clear title of the identified property from Mohawk to the consumer.
• There is no definition of "property" in the agreement and there are no provisions
where the property is/will be located. However, the process and wire instructions
indicate that the property will be in the United States.
• Mohawk Diversifed, LLC is listed in the agreement with a contact address of
2637 North Washington Blvd., Suite 131, North Ogden, Utah 84414.
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 53 of 75
Page 13
23. The Client and Client Services Management Agreement provides the following terms:
• The consumer retains Pro Financial Services, LLC for $1,000 plus certain
commissions to act on the consumer's behalf to:
o facilitate the purchase of the closing and resale of the property purchased
from Mohawk Diversified, LLC by working with auction houses, title
companies, real estate agents, attorneys or other agents involved in the sale
of the property;
o facilitate selection of a buyer and the closing process with the buyer andprovide all appropriate documents for the consumer and subsequent buyer
for a commission of the greater of $1,000 or 3% for sale;
o engage local service providers to prepare the property for sale and display
signage;
o determine the local market rent and place marketing material for sale of the
property;
o qualify each potential subsequent buyer;
o manage the collection of mortgage payments due monthly to the consumer
providing receipts for payment to the borrower and monthly accounting to the
consumer for an additional 10% commission and collect late payment
charges which late fees are retained by Pro Financial Services, LLC;
o shop the note to multiple note buyers as well as lenders for potential
refinancing for a commission of the greater of $1,000 or 3% upon successful
sale or refinancing of the note;
o retain and manage local agents or attorneys to institute eviction if required;
o to transfer ownership from one consumer to another Pro Financial Services,
LLC client, the consumer will pay a fee of $125.
o No address or contact information is provided for Pro Financial Services,
LLC.
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 54 of 75
Page 14
24. During and after the presentation, the Investigator observed a number of people with
completed purchase and management contracts lining up at the front of the room to
submit them to persons at the desks in order to complete the agreements and purchase
homes.
25. The Mohawk website www.mohawkreo.com lists Mohawk's address as #131 — 2637
North Washington Boulevard, Ogden, Utah. This is the same address listed on the
website www.profinancialshop.com as the contact address for a company advertising
itself as Pro Financial (Professional Home Financing)_ This Pro Financial offers to find
affordable homes for prospective purchasers at the same prices as what rent payments
are and works with purchasers to make offers to the existing homeowners. The website
www.profinancialshop.com is registered under the name of The Marketing Guy, Owen
Wraxall, Upper 370 Ontario Street, Stratford, Ontario N5A 3H9,
26. There is no record of any real estate licence having been issued to either Mohawk
Diversified, LLC or Pro Financial Services, LLC or similar business names in Utah.
27. There is no company registered in Utah named Pro Financial Services, LLC. There is
one expired entry for Pro-Financial Service, Inc. There are also two entries for the entity
Pro Financial Services, Inc. One entry was registered to a
of Rancho Cucamonga, California, but that registration is now expired. The other Pro
Financial Services Inc. was registered on April 2, 2008. It is registered in good standing,
with an address of 169 East Holly Brook Cove, Draper, Utah, U.S.A. 84020. Its
registered agent is Hardway Enterprises. It is noted this is the same address as listed on
the Process and Wire Transfer Instructions for Pro Financial Services, LLC, although the
company name on the agreement is listed as Pro Financial Services, LLC.
28. Hardway Enterprises is a registered entity in good standing in Utah. Its registered agent
is Michael Gordon Oborn with the same address as Pro Financial Services, Inc. on Holly
Brook Cove in Draper, Utah.
29. There is a Utah registered company called Escrow Specialists, Inc. which is in good
standing with its registered agent being J. Dennis Simpson at Suite 3, 555 East 5300
South, Ogden, Utah. This is the same address as indicated on the Process and Wire
Transfer Instructions for the escrow company.
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 55 of 75
Page 15
30. The website www.mohawkreo.com provides a number of documents, brochures, and a
section called "Frequently Asked Questions". The documents relate to the process
surrounding the purchase of bulk foreclosed properties, and are substantially the same
as those handed out during the Vancouver presentation.
31. There is no business registration in British Columbia for Mohawk Diversified, or Pro
Financial.
32. Some entities listed on the FIC Website as being part of the FIC Investment Club Group
of Companies with Lathigee as Chairman and CEO are: FIC Canada Ltd., FIC USA Ltd.,
FIC SE Asia Ltd, and WBIC Canada Ltd (aka: FIC RRSP). None of these, except WBIC
Canada Ltd., are registered to do business in British Columbia.
33. WBIC Canada Ltd. is registered to do business in British Columbia as an extraprovincial
company with its directors and officers being Lathigee and Earle Pasquill ("Pasquill").
WBIC Canada Ltd. was incorporated on June 27, 2003 under the Canada Business
Corporations Act.
34. A search of registry records did find that Lathigee and Pasquill are also registered as the
only directors and officers for the following companies registered to do business in
British Columbia: FIC Investment Ltd, FIC Foreclosure Fund Ltd. and FIC Real Estate
Fund Ltd., and are all incorporated in the Province of British Columbia with Lathigee and
Pasquill as its only directors and officers. Both Lathigee and Pasquill are listed with
British Columbia residences.
35. As noted above, FIC Investment Ltd. is the entity which owns the registration for the FIC
Website www.ficinvestors.com .
36. There is no licensing by the British Columbia Real Estate Council of Mohawk, Escrow
Specialists, Pro Financial, Lathigee, Andrus , Hardway Enterprises, Michael Oborn, Rob
Oborn or any FIC entity.
37. The address of 4131 — 2637 North Washington Boulevard, Ogden, Utah, U.S.A. 84414,
and fax number 801 217-0285 is not only connected to Mohawk but is also connected to
the following entities:
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 56 of 75
Page 16
• A website entitled www.goinvestwisely.com which has similar contact and real
estate sales information as found on the www.mohawkreo.com website as it uses
almost identical bulk purchase and property management agreements.
• A website entitled www.Profinancialshop.com for a company called
"Pro Financial" with the same address in Ogden, Utah.
• A website entitled www.lunkhomemillions.com related to
www._qoinvestwiseiv.com.
• A website entitled www.bolagsintensiven.se which is a mirror site for
www.mohawkreo.com which is in the Swedish and Norwegian languages.
• A website entitled www.eliteinvestorsclub.com which offers investment
opportunities.
• A website entitled www.hesscapital.com which specializes in high risk, non
traditional corporate financing.
38. Pro Financial Services, LLC is a company registered in Nevada with
as its managing member. He also is the sole officer and director of Pro Financial
Services, Inc. registered in Nevada. He is also the person listed in Utah under the
expired company name Pro Financial Services, Inc. in Utah. On August 13, 2008, the
Investigator called of Rancho Cucamonga, California, to enquire whether there
was any relationship between his companies and Mohawk or the Pro Financial Services
operating in Utah.
39. 41111111a stated to the Investigator that he is a real estate agent and a mortgage broker
in California and he has had Pro Financial Services, LLC registered as a company in the
State of Nevada for many years. He does not know Mohawk, nor does he currently do
business in Utah as Pro Financial Services LLC, or Pro Financial Services, Inc.
was concerned about any connection that may be advertised using his
com pa ny.41FASM stated he is not associated to www.mohawkreo.com ,
www.profinancialshop.com , Lathigee, or Andrus.
40. On August 15, 2008, the Investigator received a telephone call from 1111111111111111111111b, who
advised the following:
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 57 of 75
Page 17
• He had made enquiries on his own and determined the company Pro Financial
Services, LLC operating out of Utah, was doing business under the name Pro
Financial Services, LLC without his permission since he believes the name is
confusing and there is no LLC registered in Utah.
• He says he owns the rights to the company name Pro Financial Services, LLC.
• He had contacted Pro Financial Services operating in Utah and advised a person
by the name of Mike Yosher ("Yosher") that he owns the rights to Pro Financial
Services, LLC. Yosher then asked whether something could be worked
out.
41. Approximately five minutes later on the same date, the Investigator received a telephone
call from a male who identified himself as Rob Oborn, the brother of the owner of Pro
Financial Services, Inc. (doing business as Pro Financial Services, LLC) in Utah. The
owner was identified by Rob Oborn as Mike Oborn. Rob Oborn advised that:
• He works with Mohawk in finding buyers and fielding calls for buyers of
foreclosed homes.
• His office recently moved from the Draper, Utah address to the North
Washington Boulevard address and has since moved to an address in South
Jordan, Utah.
• His company is not a licensed property management company anywhere in the
United States or Canada, and their assistance to Mohawk is typically examining
the foreclosed properties for saleability.
• He is aware of a connection to Mohawk by Lathigee and Andrus.
• His contact at Mohawk is Mike Yosher at telephone number 801-879-3760.
42. Rob Oborn was advised that providing property management services requires a licence
in British Columbia.
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 58 of 75
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43. Approximately five minutes after the tali from Rob Oborn, the Investigator received a call
from a male who identified himself as Mike Yosher, Client Services Manager for
Mohawk. Yosher advised that:
• Mohawk is a registered company in the State of Nevada and the owner of the
company is Gerald Abrams.
• He had not been in Vancouver for the presentation on August 6, 2008.
• He confirmed that Mohawk is not licensed to provide real estate trading services
in British Columbia.
• Yosher declined to provide information related to the volume of purchases of
foreclosed properties when asked.
44. Mohawk Diversified, LLC is registered as a Nevada limited liability company. It is not
registered to do business in Utah. Its managing member is Gerald Abrams whose
address is 9500 West Sahara Avenue, Las Vegas, Nevada 89117.
45. There appears to have been a prior offering by the Freedom Investment Club and
Mohawk and Pro Financial of Mohawk real estate services and Pro Financial services in
Vancouver regarding foreclosed real estate in the U_S.A. in June 2008.
46. During the presentation in Vancouver on August 6, 2008, Lathigee told the audience that
there was no need to rush on the foreclosure opportunity as there would be other club
meetings in September and November, and specifically advertised that another meeting
was planned for October related to real estate.
The Freedom Investment Club Group of Companies, FIC Investment Ltd., WBIC CanadaLtd., and Michael Lathigee and Earle Pasquill
47. 1 find that the Freedom Investment Club Group of Companies through its Investfest
events, FIC Investments Ltd. through its website, and Michael Lathigee as the
representative of the Freedom Investment Club Group of Companies and FIC
Investment Ltd. are engaged in soliciting for the provision of trading services by Mohawk
Diversified, LLC for a fee, or are otherwise engaged in providing trading services since
they find buyers for Mohawk Diversified, LLC real estate for a fee, and do so in the
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 59 of 75
Page 19
Province of British Columbia, contrary to Section 3(1) of the Real Estate Services Act
("Act').
48. 1 find that WBIC Canada Ltd. and Michael Lathigee and Earle Pasquill conduct trading
services in British Columbia by receiving deposit money paid in respect of a trade in real
estate on behalf of British Columbia residents and/or Mohawk Diversified, LLC, for a fee
directly to WBIC Canada Ltd., or indirectly to WBIC Canada Ltd. through a related entity
within the Freedom Investment Club Group of Companies, with Michael Lathigee and
Earle Pasquill as WBIC's controlling minds, contrary to Section 3(1) of the Act.
Mohawk Diversified, LLC and Alan Andrus
49. 1 find that Mohawk Diversified, LLC and Alan Andrus as its representative are engaged
in trading services in British Columbia by offering in British Columbia to find property for
British Columbia residents to purchase, and taking deposits on real estate, for a fee, and
entering into such agreements in British Columbia, contrary to Section 3(1) of the Act.
Pro Financial Services, Inc. (Utah) dba Pro Financial Services, LLC (Utah)
50_ 1 find that Pro Financial Inc. of Utah is doing business as Pro Financial, LLC in British
Columbia and is engaged in real estate services in British Columbia since it solicits for,
advertises, and enters into agreements in British Columbia to provide property
management and trading services to British Columbia residents, contrary to Section 3(1)
of the Act.
Orders
51. Section 49 of the Act provides in part:
49(9) This section applies if, after a hearing under section 48 (2)[superintendent hearings], the superintendent determines that the person subjectto the hearing did not hold a licence under this Act at a time when the personengaged in any activity for which such a licence was required.
(2) The superintendent may, by order, do one or more of the following withrespect to a person referred to in subsection (9).
(a) require the person to cease the activity,
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 60 of 75
Page 20
52. Section 51(1) of the Act provides:
51(1) The superintendent may act under this section if the superintendentconsiders that
(a) there has been conduct in respect of which the superintendent couldmake an order under section 49 [orders respecting unlicensed activity] or50 [orders against licensees in the public interest], and
(b) the length of time that would be required to complete an investigationor hold a hearing, or both, in order to make such an order would bedetrimental to the public interest.
53. Neither the Freedom Investment Club Group of Companies, FIC Investment Ltd., WBIC
Canada Ltd., Michael Lathigee, Earle Pasquill, Mohawk Diversified, LLC, Alan Andrus,
nor Pro Financial Services, Inc. (Utah) dba Pro Financial Services, LLC are licensed to
provide real estate services in British Columbia.
54. 1 find that, by engaging in the above noted activities, the Freedom Investment Club
Group of Companies, FIC Investment Ltd., WBIC Canada Ltd., Michael Lathigee, Earle
Pasquill, Mohawk Diversified, LLC, Alan Andrus, and Pro Financial Services, Inc. (Utah)
dba Pro Financial Services, LLC are actively engaged in providing real estate services to
or on behalf of others for or in expectation of remuneration in British Columbia in
contravention of the Act.
55. Neither the Freedom Investment Club Group of Companies, FIC Investment Ltd., WBIC
Canada Ltd., Michael Lathigee, Earle Pasquill, Mohawk Diversified, LLC, Alan Andrus,
nor Pro Financial Services, Inc. (Utah) dba Pro Financial Services are exempted from
the requirement to be licensed by subsection 3(3) of the Act, nor are they exempted from
the requirement to be licensed by the Regulation.
56. 1 agree with staff that a hearing would require approximately seven witnesses and would
take approximately five days to complete, and could not be held for at least five months
due to scheduling of parties, witnesses, counsel and the hearing officer.
57. 1 find that the length of time that would be required to hold a hearing would be
detrimental to the due administration of the Act given that it would likely result in further
non-compliance with the Act, especially given the fact that future offerings have been
announced to take place this fall. Continued non-compliance would harm the reputation
Case 2:1 0-cv-01 060-DS Document 19 Filed 03/18/11 Page 61 of 75
Page 21
of the British Columbia real estate industry and would be detrimental to the public
Interest since the public would be dealing with unlicensed real estate service providers.
I THEREFORE CONSIDER that the Freedom Investment Club Group of Companies, FIC
Investment Ltd., WBIC Canada Ltd., Michael Lathigee, Earle Pasquill, Mohawk Diversified, LLC,
Alan Andrus, and Pro Financial Services, Inc. (Utah) dba Pro Financial Services, LLC (Utah) are
conducting themselves in a manner that would enable me to make an order under section 49 of
the Act.
I THEREFORE ORDER pursuant to sections 51(2) (a) and 49(2) (a) of the Act that the Freedom
Investment Club Group of Companies, FIC Investment Ltd., WBIC Canada Ltd., Michael
Lathigee, Earle Pasquill, Mohawk Diversified, LLC, Alan Andrus, and Pro Financial Services,
Inc. (Utah) dba Pro Financial Services, LLC (Utah):
Cease and desist conducting, directly or indirectly, unauthorized real estate services,
including trading services and property management services, in British Columbia,
effective immediately.
TAKE NOTICE that the Freedom Investment Club Group of Companies, FIC Investment Ltd.,
WBIC Canada Ltd., Michael Lathigee, Earle Pasquill, Mohawk Diversified, LLC, Alan Andrus,
and Pro Financial Services, Inc. (Utah) dba Pro Financial Services, LLC (Utah) may appeal this
Order to the Financial Services Tribunal under section 54(1)(e) of the Act, or require a hearing
before the Superintendent under sections 51(3) and 45(6) of the Act.
Dated at theCity of Surrey,Province of British ColumbiaThis 271h day of August, 2008.
W. Alan Clark rSuperintendent of Real EstateProvince of British Columbia
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 62 of 75
Page 22
TO: Freedom Investment Club Group of Companies
Suite 990, Box 12091555 West Hastings StreetVancouver, BC V6B 4N5
FIC Investment Ltd.c/o Paul Weir Law Corporation2nd Floor147 West 16th StreetNorth Vancouver, BC V7M 1T3
WBIC Canada Ltd.c/o Paul C. Weir Law Corporation2 nd Floor147 West 16th StreetNorth Vancouver, BC V7M 1T3
Michael Lathigee
12000W and
Earle Pasquiil
VNWWM^Mohawk Diversified, LLC9500 West Sahara Avenue,Las Vegas, Nevada USA 89117
Alan Andrus
CA USA 95762
Pro Financial Services, Inc.169 East Holly Brook Cove,Draper, Utah, USA 84020
Real Estate Council of British Columbia#900 - 750 West Pender StreetVancouver, British ColumbiaV6C 2T8
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 63 of 75
EXHIBIT E
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 64 of 75
Official Statement From Go Invest Wisely, LLC and Pro Financial Services Regarding The 2008Mohawk Diversified Tour
August 7, 2009
Dear Valued Client:
Early in 2008 John Hyland (“Hyland”) contacted Tyrell Gray and Brad Hess the owners of Go InvestWisely, LLC (“GIW”) as he was interested in purchasing several homes for his Clients. At that time,he represented himself as the owner of Mohawk Diversified, LLC (“Mohawk”). Over the next fewweeks Hyland purchased several homes from GIW and chose to have these properties managed by amanagement company out of Gilbert, Arizona called BP Property Management (“BP”).
At that time GIW and its owners had purchased approximately 200 homes and were using BP tomanage their properties as well. GIW’s goal with the homes it owned was to prepare those homes tosale to third-parties under a land installment sales contract and then to sell the cash flowing property todifferent third-party interested in owning such a property. As demand for additional home purchasesincreased and as Hyland demanded more and more properties for his clients, GIW’s role changedsomewhat to a wholesale company whereby it simply provided properties to Hyland and Mohawk.
As time passed, it became apparent that BP was unable to properly manage GIW’s or Hyland’s client’sproperties. As a result, GIW started working with Pro Financial Services, Inc (“Pro”), a joint venturebetween the principals of GIW and Rob and Mike Oborn who were to be the managers and operatorsof the new property management company. Pro was started in the summer of 2008 and themanagement team showed great promise. Additionally, the company was conveniently located withinless than an hour’s drive from GIW’s office which made accountability and follow-up that mucheasier.
Hyland’s Sales Approach
Hyland generated a lot of demand to purchase properties from GIW from his ability to get in front oflarge groups of individuals interested in real estate opportunities. Hyland worked with severalindividuals and/or groups who organized events to which individuals interested in real estateopportunities were invited to attend. These individuals and groups included Harv T Eker, SunilTulsiani of Toronto and Mike Lathigee (FIC) of British Columbia. During these events, Hyland andother speakers he employed, including Tyrell Gray, Allan Andrus, Jimmy Slagel, and several others,provided presentations on real estate trends, methods, and business models, including GIW’s businessmodel which was to prepare homes for sale under a land contract to create a cash flowing property. Atthe end of the presentation, attendees were given the opportunity to purchase homes from Mohawkand Hyland, so they could implement the GIW process on their own. Each home that an attendeewanted to purchase (each purchasing attendee being a “Buyer”), Mohawk would purchase from GIWand other wholesalers and then engage Pro to manage the properties if the purchaser chose not tomanage the property themselves and not to use the services of a different property managementcompany.
Deeds and property status
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 65 of 75
In anticipation of the events scheduled by Hyland/Mohawk in 2008, GIW started purchasingmany homes to prepare for the demand that would be generated by these events. These homesGIW purchased were all done so, sight unseen and by way of a quit claim deed. Each propertythat Mohawk purchased from GIW and then resold to a Buyer was to be deeded intoMohawk’s name and then to the Buyer, however, this was not done initially. Mohawk wouldnot allow GIW to deed the properties into Mohawk’s name for fear of the tax, insurance, andcode/city liabilities it might incur. Since the real estate purchase contract signed by a Buyerwas between Mohawk and the Buyer, and Mohawk received the purchase money from theBuyer. GIW did not have the ability to deed the properties directly into the Buyer’s name, butwas reliant on Mohawk to accept the properties into its name and then convey title to theproperties to the Buyers. It wasn’t until after a meeting in California between GIW andMohawk’s attorney that Mohawk agreed to cooperate with having deeds transferred into itsname. Accordingly, after that meeting GIW began deeding properties into Mohawk’s namewhich were in turn transferred into the Buyer’s name. Despite Mohawk’s agreement to acceptthe deed into its name, to date, it still takes Mohawk and its true owner, Gerry Abrams, anunnecessarily long time to move the deeding process along – sometimes taking a month ormore to complete this simple deed transfer process.
As discussed above, when Buyer purchases a property from Mohawk a specific property isidentified and assigned to a particular Buyer, however the deed to the specific property is notimmediately assigned in the Buyer’s name. There are two reasons for this.1. First, occasionally costly improvements and certain encumbrances prevent a property from
being sold under a land contract. Since the ultimate goal of most Buyer’s is to receive anoccupied property that can produce monthly cash flow, if it becomes apparent that theassigned property cannot be immediately sold, instead having to go through thecumbersome and tedious process of re-deeding the property to Mohawk, the property canmerely be exchanged for another property that is more likely to be saleable (this process isknown as an “Exchange”).
2. Second, given the uncertainty of whether a property will be Exchanged (for any of thereasons mentioned above), GIW did not think it would be fair to Buyers to deed a propertyand pass all of the related liabilities (code violations, taxes, theft, vandalism) of theproperty to the Buyer without the assurance that the property had an occupant placed in thehome creating cash flow.
As a result, the management team of GIW decided to retain the property and maintain theliability, taxes, code violations, etc. related to the property until it has been made cash flowingby Pro. Once the property has an Occupant located in the property, the deed work is started, thetaxes are paid and the property is deeded to Mohawk and then to the Client/Buyer.
If at anytime the Buyer/Client wants the property deeded directly to them GIW will withouthesitation deed the property to the Buyer/Client. GIW is in no way holding these properties asan asset; these properties represent an enormous liability and GIW only retains them in aneffort to help the Buyer/Client get an asset rather then a liability.
This decision has also allowed GIW to liquidate properties that are found to be un-sellable byPro without the extra deeding process and lag time between sell and deeding. Once theproperty has been liquidated GIW then has been able to buy replacement properties that domeet the criteria needed to deed the property to the Client/Buyer by way of Mohawk.
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 66 of 75
GIW and Pro are fighting two fronts:
1. Market each home and try to sell it to a local occupant by way of land contract.
2. Liquidate properties that are determined to be un-sellable by way of land contract andpurchase replacement properties post inspection that are quality sell-able homes.
Property Management
During the fall of 2008 Pro was struggling to keep up with the demand placed on them fromMohawk. Due to Pro managing other GIW properties, GIW clients where also being affected;therefore GIW started to help Pro and the Oborn’s by lending manpower, technology, andfunds. After having Todd Eaton the VP of operations for GIW spend nearly the entire month ofNovember in the offices of Pro, GIW determined they needed a list of improvements. Themanagement team at GIW presented these findings to the management of Pro andunfortunately they were meet with resistance at every turn. The battle continued until January29th 2009 when Brad Hess and Tyrell Gray successfully took over the complete ownership ofPro.
When the take over was completed Pro had 5 full time employees, 4 part time employees andone independent contractor that did their books. All of these employees quit when the decisionwas made to move the Pro office into the GIW building. As of August 3, 2009 Pro has 27 fulltime employees and 4 part time employees, not to mention the 11 GIW employees that crossover on many activities. We feel we have come a long way, we understand we still have a longway to go, and we thank all of our Clients that are helping us get through this difficult time.
Status and updates
When Pro was moved into the GIW building in February 2009 of the 1,267 properties beingmanaged by Pro there were 112 that had an occupant in the property. This meant at that time9% of the properties had been completed. To date August 7, 2009 there are 557 properties withland contracts which represents 44% of the total properties and a 35% increase in six months.This 44% has come down slightly in the last month or so due to the clean up work that hasbeen completed by the quality control in the land contract sales department.
Pro currently has T.V., radio, hundreds of internet ads posted per week, newspaper, andthousands of print ads all over the markets were the homes are located.
Between customer service calls and sales calls Pro fields between 600 to 750 inbound calls perday; outbound calls are also within the same range. Pro understands there is a long way to goto complete the task ahead of them; however they are dedicated to completing this and are herefor the long haul.
Summary of Mohawk Events:
Harv T Eker events:
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 67 of 75
Mohawk sold 53 properties where Escrow Specialists received and distributed funds. Mohawksold 70 properties where the funds where forwarded directly to Mohawk. Mohawk hascollected funds on 12 Clients where GIW has never been given any information; therefore aproperty has never been assigned to the Client.
Mohawk has reported to GIW they sold a total of 135 properties during the Harv T Ekerevents. Mohawk has shorted GIW $243,050 thousand dollars for Harv T Eker Client sales.GIW is currently pursuing legal action to recover these funds. Other promoters such asFreedom Investment Club (FIC) where also shorted their compensation for the Harv T eventsand are also pursuing legal action for these funds.
Sunil events:
Mohawk Sold 149 properties and for the most part all payments where collected by EscrowSpecialists, and for the most part funds where allocated correctly.
FIC events:
Mohawk sold 995 properties during FIC events and for the most part all funds where collectedby Escrow Specialists. For the first 714 or so properties GIW received its compensation for thepurchase of the properties directly from Escrow Specialists. The difference between theacquisition price forwarded to GIW and the retail purchase price was forwarded directly toMohawk from Escrow Specialists. From these funds that where forwarded to Mohawk FIC wasto be paid $3,500 and from this $3,500 there was to be $1,000 set aside for a contingency fundto protect the FIC clients and allow Mohawk by way of GIW to purchase additional propertiesin case the number of bad properties ended up being higher than anticipated.
The remaining 200 plus properties where paid out from Escrow Specialists a little differently.$2,500 was forwarded directly to FIC, $1,250 was forwarded to Mohawk and the balance wasforwarded to GIW for property acquisitions and contingency property purchases.
Mohawk has shorted FIC, and in return the contingency fund, roughly an additional $1,000,000million dollars. FIC and GIW independently are seeking legal action to recover these fundsfrom Mohawk.
Contingency fund summary:
The Management of GIW insisted on keeping profits set aside, or the creation of a contingencyfund, where funds could be earmarked to purchase additional properties in case the number ofbad properties ended up being higher then anticipated. From each property purchased therewas to be $1,000 set aside to purchase additional properties to draw from in the event thenumber of bad properties where too high.
GIW was partially paid on 123 Harv T property sales. Therefore there should have been$123,000 set aside for the contingency fund. For the Sunil events there should have been$149,000 set aside for the contingency fund. For the second tour of FIC events there shouldhave been roughly $248,000 set aside for the contingency fund. These totals add up to a total of$520,000 that should have been set aside for additional property purchases.
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 68 of 75
GIW however purchased an additional 650 properties 341 of which to date they still have notreceived the deeds on, and therefore can not market the home for sell by way of land contractuntil the deed comes in. These property purchases represent over $4,000,000 GIW invested inproperties to make sure there was enough properties to fulfill Mohawk clients. This representsa far greater number of property purchases than what was asked of them for the contingency.
Two things have happened:
1. A much higher number of bad properties where purchased, please remember theproperties where purchased sight unseen and the odds where being played. This hashindered the efforts of Pro in acquiring land contracts.
2. When purchasing these properties in bulk the buyer must wait for the seller to providethe deed. Many deeds did not come in for months longer than ever anticipated. All thewhile these properties sat and deteriorated due to neglect and vandalism.
The contingency funds for the second tour of FIC have not been distributed to GIW. Thecontingency funds for for these events are currently being held by FIC and Mohawk. FICholds $360,000 that has been earmarked for contingency funds and Mohawk holds anotherestimated $350,000+ that should be used for the contingency properties.
To date Mohawk and the other promoter’s have contributed nothing towards the contingencyfund for replacement properties. GIW has been unable to purchase as many homes as theywould have liked to replace properties for Mohawk Clients. Therefore GIW is left to liquidatethe bad properties to create capital in order to purchase replacement properties.
When GIW purchases replacement properties it does so “post” inspection and only in marketsthat have shown a high level of land contract sales in the past.
GIW and Pro continue to work each and every day to provide a quality product to their Clients.We ask each of our Clients to come and visit our facility, see that there are people on the otherside of the phones and emails working diligently each day on your behalf. We haveimplemented many great working systems and marketing efforts to secure quality landcontracts. We welcome your constructive input and look forward to a long and synergisticrelationship.
Sincerely,
Brad Hess
-^Tyrell Gray
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 69 of 75
EXHIBIT F
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 70 of 75
From: Peak Potentials Training [mai lto: [email protected] ]Sent: Tuesday, September 02, 2008 7:30 PMTo: [email protected]: Update Regarding Mohawk Diversified
YUKPOTE a IA ST AWING
Important Message From Customer Care:
UPDATE RE MOHAWK DIVERSIFIED
As you know, the real estate market in the United States is facing many challenges but also offers manyopportunities.
At the recent Never Work Again, Mohawk Diversified shared their strategy for profiting from the foreclosure crisisand we wanted to provide you with some important updates about this offer and some real estate investingguidelines to consider.
For the foreseeable future, real estate opportunities in the United States, especially relating to foreclosures, willbe very fluid and volatile. In addition to the traditional mantra of “location, location, location,” you should keeprepeating “information, information, information.”
• So, as you evaluate purchasing foreclosure properties from Mohawk, please keep in mind someadditional information that we have learned: Not all the properties seem to have come directly from“banks.” Some of these properties were available from other sources, such as the MLS, before Mohawkacquired them. Some seem to have been available at a lower “gross” price, however, according toMohawk, the difference is due to getting “clean and clear” title and a home that is in “livable” condition.Mohawk also states that its “program” offers a “guarantee” that should your home not be sellable, theywill replace it with one that is. As always, you need to determine whether the purchase price fromMohawk makes sense today given the prior pricing of these properties. Mohawk can advise you of anyliens, debts or other expenses that were due on the property that increased its cost of acquisition.
• Some of these houses will be easily matched with tenant/buyers, others may not and there is no absolutetime table to guarantee when you can expect cash flow from a property.
• The market for “notes” from tenant/buyers is relativey untested and the future cannot be predicted withany certainty. Mohawk appears to be confident the notes can be sold.
• Whether a buyer/tenant will be able or willing to maintain the property to your standards is not guaranteedand it is possible you may incur expenses for maintenance and repairs. You own this home.
• As you might expect, it is impossible to guess how and exactly when the local markets where theseproperties are located will rebound and values will increase.
• You might want to ask Mohawk for information about other investors who have used this program. Speakto these referrals to learn about their experiences.
• Become an expert on “values” in the market place so that you have a real understanding about how the
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 71 of 75
purchase price stacks up against market value and how much “equity” you are gaining. This is importantgiven that Mohawk uses a popular web based appraisal system that may or may not be perfectlyaccurate in today’s ever-changing marketplace.
• Finally, always talk to your advisers – lawyer, accountant, financial planner. Ask for their advice and becertain that this type of investment fits in your personal financial plan and portfolio.
• If you need further information, go directly to the source and speak to the people at Mohawk. Be sure thatall of your questions are answered.
At Peak Potentials, we always strive to bring you quality information at our events; be it with our own teachings orby inviting guest speakers and trainers. Students tell us that over the past 18 years we’ve been doing atremendous job in bringing the best of the best (close to 200 different trainers) to our stage. We hope you agree.
It is important, however, to be clear that Peak Potentials has no affiliation with any of our guest speakers’ privatebusinesses and how they handle their own programs or the administration of those programs. If a studentchooses to participate in a guest trainer’s additional offerings they should do so in the same way as werecommend they purchase anything else, by doing their own research and due diligence.
Also, please note that Peak Potentials and T. Harv Eker do not formally endorse any guest speaker or othercompany at our events. We simply provide a “forum” for learning.
We urge you to always do your own research, ask questions, be proactive in your due diligence and then makeappropriate adult decisions about participating in a program like Mohawk or any other. Should we receive anyfurther updates on this investment we will forward them to you.
To reach Mohawk Diversified email [email protected] or call (434) 534-9213.
As always, it is our honor to serve you and we wish the best of success in all your endeavors.
Keith Jackson,
COO, Peak Potentials Training
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 72 of 75
EXHIBIT G
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 73 of 75C.
r
BULK FORECLOSURE PURCHASING
AGREEMENTXIt
/TH15AGREEMENT fhereafter `Agreement') is made between MOHAWK DIVF,RSIFIED, L.LC, thereafter "HAWK") and/^C+ PP4FCL.(iW,'
^ I "uNl? (hereafter "CLIENT") HAWK and Client are referred collectively herein as
the "Parties"
RECITALS
A,
WHEREAS, HAWK has established extensive relationships with wholesale foreclosure buyers. these buyers are willing toinclude HAWK in their bulk properly purchasing
B. WHEREAS, HAWK has helped create a system where the said properties can be liquidated relatively quickly lot a profit
C. WHEREAS, Client wishes to be given the opporluruly to participate along with HAWK in their opportunity to purchaseforeclosures at a discount
D. WHEREAS, Client desires to purchase a property from HAWK, which properly shall later be ldenilfied and approved of byHAWK and Chem
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein. and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged the Parties hereby agree as follows
11 TERM OF CONTRACT. This Agreement will become effective when executed by both party
2. SERVICES AND RESPONSIBILITIES
a. HAWK^)
OA
1. HAWK will complete the contracted services for a fee of S OOH 00 b ' ^ This fee willcover the purchase price of the property from HAWK to Client an the services outlined in this Agreement
fl. HAWK shall provide Client with ownership to a properly with a clear and mariwlablo title. transferred with aWarrantee Deed The property will be purchased by HAWK from a wholesale foreclosure and HAWK will havelittle information regarding the properly HAWK shall only hold title for a short period of time, will not reside in theproperty itself, and will therefore have little information upon which a Client may rely
II), The property provided to Client will be vefued-no less than forty live thousand ($45,000), said property value willbe determined by chime evaluations of property values Once the properly is Identified by HAWK Client will havethe opportunity to obtain an appraisal at Its own cost if desired
Iv, HAWK will exchange said properly front with a new properly if the said properly is found to be un-saleableby the process developed by HAWK research crew of HAWK, cr a contracted company to perform thisinspection service 9
V. HAWK shall provide Client with the company(s), fools and information needed to help Client liquidate saidproperly
L HAWK conlmcls with a Client Services Company to complete the following services and hasdeveloped a system for managing wholesale lorecloswif propeites Client shall enter into standardconlracl with Client Services Company or it may opt to e ilm Into a contract with an alternativeClient Services Company of Clienis choice but if Client chooses a companyol its choica then Clientshall be responsible for those properly manaUomenl costs and will not receive a discouill orreduction in fees under this Agreement The following services ale poll of the -Fee' paid to HAWNwhich will be provided by the said Client Services Company
a. Delefmine the local market rent and place markeling material for sale of propertyb. Keep properly in compliance with local laws and ordinancesc. Listing properly for potential quick saled. Acquire Tale Company and provide all closing documents to facilitate close with potential
buyere, Maintain records for optimal safe of the noteL Qualify each potential buyerg, Shop the note to multiple rote buyers
ltfGt.o 19&0 tnJ 7ff ^^(/a(Y(dA^ O/— G.6/f^C: k)(4 1-/1/T U*1 10 c- A(l (Y Fo t° ^V lRo fG c//^C coA(,,Wf /u/l( ^/UN i /{ls(J,E'i¢l/cc
AGREEMENT., r v0 N ^,^A1T v (6-c s c—o tit RA a►l ^.
/ "^°^ W r
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 74 of 75
vi. HAWK has negohaleci with Client Services Company the following services and assocoated lees These fees onlyneed to be paid out of potential profits and are not part of the Fee` paid to HAWK and are more fully descnbodin the Client Services separate contract will
1. Mortgage Payment Menagelnent. Fee. S12 00 per monthly Payment received These payments willbe collected per month and drsperse l to file oppropnote parties each month
2. Sale of Note 3% of sate price, Min $1,0003. Properly Insurance will be the responaiblltly of the Client once the properly is issued Client
Services Company has made coriecls to assist Client With the needed insurance The cost of themswanee can be deferred to the property Occupant once the Occupant has been contracted
4. Properly Taxes will be the responsibility of the Client once the property Is issued Client ServicesCompany will manage the payments and notices in behalf of the Client The cost of the Propertytaxes can be deferred to the property Occupant once the Occupant has been contracted.
vii.
If buyer should default. HAWKhas negotiated with Client Services Company a $60000 Qelaulveviction feewhich fee shall be paid by Client separately from the terms and fees oontamed fit this Agreement
viii.
HAWK shalt make its staff, employees, and resources available during reasonable hours to the Client forassistance In liquidating said property
Ix. HAWK shall use its best efforts to assist Client m completing and profiting from the liquidating of said property
b. Client
I,
Client shall provide funding to HAWK for the purchasing of properties and services outlined in this Agreement inthe amount of the agreed upon "Fee` par property
3, CONTRACTUAL RELATIONSHIPr •
e. Independent Relationship. This is a inuhidl conlraclual business relationship where Oath party. is an Indopendempatty rind will beworking together to purghaso fomclose q properties at It bulkpricing discount. HAWK wi g pimoinsd the bilk foreclosure propedres basedOn the demand goneraled from cilenls who enter into these Agreements. Clients will have the option of approving of their property txdsheuld Client not notify HAWK
within three business days (3) of its disapproval of the propurty y Allocated to Client than such. silence shalltoast Jule acaeplance of the allocaled property HAWK Shall nrillfy Client of its al located property and C gont shall give its Approval ordisapproval Na the means of communlowton in wlxeh In,) parties have dealt Eleclronw eomirnmlcnbons such as a•mad standard mailmM other mathods of communicalbn crnnulnnly , used belwaon the panes m tho l f (101 10fis shall be cuff Clem notice under this paragraphend the parties sha g not be requited to follow Section S r for 0011=3 under this paragraph. Client rosy request odddional Arne to approveof As property wlthm threr, (1) Uusiness doys far lnuposirs which Client nxrsl cannnnsaealo 101IAWK And which HAWK shall nilunreasonably dotty
b. Fodoral, Stale and Local Taxes, Nellher Fedeinl no( Stale lint local lax nix payr Wl lax of any kind shAll be vnthhNd m pnkl by HAWKon behalf of Cfent
c. Notice of Tax Duties and Llabl lfhes. Both panes undoisfand Iha i each party is'resputsible to pay, accordelg io law adch panys laxrasponsil7adies Neither PAny will bra iespmlsibie for any Federal, state or local lAxes Wfid by iho Who( pony
d, Indemnity, C l ient agrees to indemnify and hold .HAWK harndess Irom All clmirts. deco Ands. losses costs, expenses obrigonomliabilities, damages. recovenas. And s- mdefiwg ncieciuding interest, penalties, costs, Anil attorneys' fees. that HAWK may nlcw arisingIrons or out of willful. of rinliponi ilisotxelucl of Client while providing services or acting Under tills Agreement
THE TERMS OF THIS SECTION 3(d) SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT.
A. TERMINATION OF AGREEMENT
n. Toridinadon. Client. may Icrn inalo this Agrouinmll prior to IheA holds hemg usod to ptechnsa, A peopo ily I IAWK will asses a 10'x,-AdahiiAStral on fee upon written notice to Ianniunle Pund6 Will be refunded to Ghoin within In hlisinem rinys 1 tits lint lira shoal ctinunuu ivtreat wish each other in good faith
5. WARRANTIES
A. canfidontlallty, In The perfu mnrlce of the service callorhp(Alod by this Agratsmonl, Clwnt agrees to hold in slocl cant toonce MIBAnAdailhol of piopiletary information Ihnl d iecawes teloong to I IAWK's lursinuss and Cholll will 1101 dMilga of Annuuunimsn 'snchbdammuonlo a Ilmd pally w+lhwu HAVVK's pn x xsrtlen ggnsanl cooltdonwil IN Inolnitgary NIf WR1i11iafi ahAdltickldd all inl(xi1d11ioi1dblamod by Choral 1(oln I1AVJK And which relates IQ I IAWK's past. prescrll, or hilure businoss aclrvilios, mOlutAng choral lists. lachnologyAnd ppalA1300al INACLSeas And Illainlala. oxeepl fax previously nblA ined or puMirly diseJnsgd Infoinlnliol ClleAt nckhuwwdg0s thatuteach nr this SoOhon 6(A) wo ukd car(su HAWK to sillfo urepm;lhlo hihnl to I whmh manoinry damagds wABdd be ngidualuaternml>CnSahwl - Client Agrees Ihaf HAWK will he onhlloo Io all "'PineAon r gshuxang ruw aohial m lhi palonnd bleach of lhss Hcrlmn Et,Vof sli"Iflr, p0r4xnlnncu d applicable. ei nehlelan Ai Any neneiary rlanulgux
AGREEMENT 2G/^
Case 2:10-cv-01060-DS Document 19 Filed 03/18/11 Page 75 of 75
b. Confident la Illy of Cllonl Information. In lho pP110 manse of the service cornraMinlod by Ihis Agreement HAWK aglow to hold m slantconpdence all personafly Idenhhahle of tunurcinl wforn+rrbon flint HAWK receives totaling to Crienl and HAWK vri11 uW dNulov Iliothend mse connruente such hfanrabon to it thud party oxcupl BP Propelty Monagemmil. tvitholil.Ilra cnslomei's Illicit vrtillen ennsnnlHAWK agrees to comply with all federal and slate laws and regulations 001ing will porsarusyidenllaahie ra Inlottndl allnrnudmn
THE TERMS OF THIS SECTION 5 SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT
5. GENERAL PROVISIONS
a. Rtak. Each pony shall perform the wort or services at its own nsa
b, No Authority to Bind Other Party. Neither party has authority to enter into contracts a agreements art of Iho olhel parry
• -- ,oea not Ueale a partnorshnpbehvdren IhvparUrm
G. Choice of Law. y dispute undo) this ngioentent a (claied to this agieentonl shall be decided In. mcordanFe wall thin laws ofUtah
d, Arbitration. The parhes to this Agroemenl agree to subnrl to binding othihaaoo under the rules of the Anions an AtImtranoodl dASFeclallon any unresoNersollas belwoen the parties and agree that the Gists of such proueodings shall Ito rebnbutsed to the
proytdling party
c. Elhioal Conduct. Both parties Agree to cnrmrol business will Alu highest e1lUcal slandards
L Entire Agreement. This Agloorileit lmdudmg any Eshntfds attached herelo) represents the entire undo Islandmg ann agreennenlbetween the Parties with respuM 10 the suMccl Mellor hereof, onf supersedes any prior undersloiWings and agreements. wntivn ororal. bell such Parties vaih respect to such subject maller UCpanding on the stale where the Cheifs allocated property islocated. Cliorµ and HAWK may be required to color into a state approved real "late Porchose cbnlract and disdowitts as roquuedunder that state's laws. The parties ogrnn to enter mlo those Agreemmds and shall nul Inn ensonabty delay or relool smilslmylnidtenors so long as ttivy do notconlrad1cl lenna or understandings under this Agreeniem
g. Savorabillty. 11 any part of this Agrounronl its held unenforceable the rest M IIre Agreemani will nevertheless remain in hat Wrceand effect I
h. Amendments, This Agreonrnnl may itol W modified 01)OIMlad of dbschargud vzcopl by an inslran vat in wiling sgned by Ibaparties hereto. No waiver or consent may be ontOrced vrttesa suoh waiver m consgnl shall he in %wilhig And Atoned fly the parryngannst wrtom enlacement Ihereol is aerghl Any handwriltenmodllicallons or amendmaols to this Agreement shallsupoislide anyconflicting primed iernl or condition
1.
Notices. All notices domands, and iegvests (oquisd a pomt0ted to be given under airs Agreement shall be in welling and slma bedelivered or malted if to HAWK. to 9005 West Sahara Ave. I as Vases NV 09) 1 y d to i ruinl to
Address J^5' k/• kl6r,d4s 5 V/ Le city. Vxvv,- 601e 7rp 7'V^ Email ^hf!C f'iC /A/f2^C1QS, CpGf
GrtvV.F A^Phone IPO Z4 (/0AA or any other address provided by the Parties
Please indicate how many properties you are pumbasnng along with a total of funds you are remitting to MohawkDiversified. LI.0 !
rL f itNumber of Properties Purchased _ Q X S, _ ( I: fit)̀ 0 . Total funds to remit to MohawkDiversified, LLC
IN WITNESS WHEREOF the parlies hereto have Caused this Agreement to be duly'executod and delivered as of the dayand year written below
MOHAWK DIVERSIFIED, LLC
ay: t'sManage`r11%, Dale
CLIENT
f
rrrd Date
AGREEMENT • 3