Here is a cut/paste of highlights I got from looking over the lawsuit. With Gerry D and Kevin H in their corner there is hardly a doubt that RMHB will win AND get reimbursed given the amount of evidence in the documentation and supporting Exhibits.
** FORTEEN Separate counts, WOW!! go get'em! **
COUNT ONE –BREACH OF FIDUCIARY DUTY - GRISAFFI
53. Examples of Grisaffi’s breach of fiduciary duty include but are not limited to the following “Unauthorized Transactions”:
a. Grisaffi concealed from the Board and the Bankruptcy Court and
surreptitiously executed the Employment Agreement authorizing a salary and the invalid issuance of the One Million purported shares of Series A Preferred Stock and then subsequently conveyed the One Million purported shares of Series A Preferred Stock to LSW for $3.5 Million;
b. Grisaffi authorized the issuance of two convertible promissory notes for $184,300.00 and $200,150.20 without any properly executed board resolutions. Though the note for $184,300.00 was allegedly for back salary, he was not entitled to back salary under the plan of reorganization until the board authorized and approved such back salary and this occurred. As for the note for $200,150.20, though allegedly Grisaffi advanced funds to Rocky Mountain about
$100,000.00 was to pay a promoter for services which benefited Grisaffi and not Rocky Mountain; and
c. Grisaffi concealed and surreptitiously authorized the issuance 11,000,000 shares of stock to Epic and 10,000,000 shares of stock to Li for no consideration and without board approval in advance of these actions.
d. Grisaffi surreptitiously authorized the issuance of 113,688,625 shares of stock to the Radcliffe Group at deeply discounted prices as a part of a conspiracy to help them amass Rocky Mountain stock.
COUNT TWO –KNOWING PARTICIPATION IN, AIDING AND ABETTING BREACHES OF FIDUCIARY DUTY – LSW, LI AND EPIC.
COUNT THREE –FRAUDULENT CONVEYANCE – GRISAFFI
The unauthorized transaction of issuing one million shares of
Series A Preferred Stock to Grisaffi and the subsequent conveyance of the One million shares of Series A Preferred Stock to LSW (the “Grisaffi Fraudulent Conveyances”) constitute a
fraudulent conveyance under Section 24.005(a)(1) of the Texas Business and Commerce Code as these unauthorized transactions took place with the actual intent to hinder, delay or defraud
Rocky Mountain and its shareholders at the time of Grisaffi Fraudulent Conveyances and the unauthorized Employment Agreement.
COUNT FOUR –FRAUDULENT CONVEYANCE – LSW
74. Based on information and belief, Li is a shareholder, officer and director of LSW and is and was an Executive Vice President of Rocky Mountain.
75. Furthermore, LSW, is not a good faith transferee as Li being an insider was or should have known that the One million shares of Series A Preferred Stock was not authorized and that Rocky Mountain received no value in consideration of the issuance of said One million shares of Series A Preferred Stock.
COUNT FIVE – FRAUDULENT CONVEYANCE – LI
Li is the holder of 10,000,000 shares of Stock purportedly granted to Li to compensate Li for promotional activity including assistance
with the purchase of controlling interests by outside investors. The stock was issued on February 22, 2017 but was never authorized by the Board of Directors of Rocky Mountain.
COUNT SIX – BREACH OF CONTRACT – LI
Li materially breached her agreement to raise money for Rocky Mountain and did not satisfy the condition to issuance of shares.
COUNT SEVEN – FRAUDULENT CONVEYANCE – EPIC
117. The unauthorized transaction of issuing 11 million shares of Stock to Epic (the “Epic Fraudulent Conveyance”) constitutes a fraudulent conveyance under Section 24.005(a)(1) of the Texas Business and Commerce Code as the Epic Fraudulent Conveyance took place with the actual intent to hinder, delay or defraud Rocky Mountain and its shareholders at the time of the Epic Fraudulent Conveyance.
COUNT EIGHT – PROFESSIONAL NEGLIGENCE – JOE RADCLIFFE
He advised and conspired with Grisaffi to adjust both the voting rights and the conversion rights of the Series A Preferred Shares to be increased to a ratio of 1:1,200. He was instrumental in
advising and conspiring with Grisaffi to issue the two convertible promissory notes for $184,300.00 and $200,150.20 without any properly executed board resolutions. He was further instrumental in advising and conspiring with Grisaffi to issue 11,000,000 shares of stock to Epic and 10,000,000 shares of stock to Li for no consideration and without board approval. He influenced Grisaffi to cause stock to be issued to the Radcliffe Group in numerous ways to his own self-enrichment and to the detriment of the Company. Finally he actively aided, abetted and worked with Grisaffi concealing and surreptitiously authorizing the issuance of 113,688,625 shares of stock to the Radcliffe Group at deeply discounted prices as a part of a conspiracy to help them amass Rocky Mountain stock.
COUNT NINE – ACTION FOR UNJUST ENRICHMENT.
COUNT TEN – CIVIL CONSPIRACY
COUNT ELEVEN – DECLARATORY JUDGMENT
COUNT TWELVE – ATTORNEYS’ FEES AND INTEREST
Rocky Mountain would show that by virtue of Defendants’ conduct as referenced above, Rocky Mountain has found it necessary to employ the law firm of Cowles & Thompson, P.C. to prosecute this suit. Rocky Mountain hereby sues and seeks recovery against
Defendants in the following amounts: approximately $200,000.00 for preparation and trial, $75,000.00 for an appeal to the Court of Appeals, $75,000.00 for making or responding to an application for writ of error to the Supreme Court of Texas, $75,000.00 if an application for a writ of error is granted by the Supreme Court of Texas.
COUNT THIRTEEN – EXEMPLARY DAMAGES
COUNT FOURTEEN – ALTERNATIVE PLEADINGS
Some other quoted statements that are key from the FACTS section:
* Rocky Mountain did receive another version of the Stock
Purchase Agreement (“SPA 2”) that appears to executed but is substantially different than SPA1. A copy of SPA 2 s attached hereto as Exhibit “D” and is incorporated herein by reference for all purposes. Of note, Grisaffi represented in SPA 2 that he “is not now nor has …ever been an affiliate to the Company”. That statement is blatantly FALSE.
After it had been executed, Mr. Grisaffi remained Chairman of the Board. He immediately instructed Michael Welch, Rocky Mountain’s President and Chief Executive Officer, to draft a press release announcing the sale. In the press release, Rocky Mountain High referred to the funding that LSW Holdings, LLC would provide to Rocky Mountain. The press release was approved by both Grisaffi and Joe Radcliffe, as a representative of LSW Holdings, LLC, before being released. Furthermore, Grisaffi made similar funding representations to Rocky Mountain’s CEO and CFO during the preparation of the third quarter financial statements. As a result, the CFO included a statement that Grisaffi approved which disclosed LSW’s FUNDING OBLIGATION in the Company’s Going Concern Footnote in the Company’s third quarter 10-Q filing.
Grisaffi also signed a Management Representation Letter along the other members of management and the Board who were relying on his statements. Copies of the press release, the footnote disclosure in the third quarter 10-Q and the executed Management Representation letter are attached hereto as Exhibits “E”, “F” and “G” for all purposes.
* So, at this time Li is currently an executive vice president of Rocky Mountain and is the holder of 10,000,000 shares of Stock purportedly granted to Li at Grisaffi’s direction in consideration to assigning and facilitating the sale of Series A Shares of Stock in Rocky Mountain which was supposed to raise money for Rocky Mountain. Li NEVER raised money for Rocky Mountain after LSW Holdings, LLC, acquired the Series A Preferred Shares. Thus the
stock was issued to Li for no consideration.
** FORTEEN Separate counts, WOW!! go get'em! **
COUNT ONE –BREACH OF FIDUCIARY DUTY - GRISAFFI
53. Examples of Grisaffi’s breach of fiduciary duty include but are not limited to the following “Unauthorized Transactions”:
a. Grisaffi concealed from the Board and the Bankruptcy Court and
surreptitiously executed the Employment Agreement authorizing a salary and the invalid issuance of the One Million purported shares of Series A Preferred Stock and then subsequently conveyed the One Million purported shares of Series A Preferred Stock to LSW for $3.5 Million;
b. Grisaffi authorized the issuance of two convertible promissory notes for $184,300.00 and $200,150.20 without any properly executed board resolutions. Though the note for $184,300.00 was allegedly for back salary, he was not entitled to back salary under the plan of reorganization until the board authorized and approved such back salary and this occurred. As for the note for $200,150.20, though allegedly Grisaffi advanced funds to Rocky Mountain about
$100,000.00 was to pay a promoter for services which benefited Grisaffi and not Rocky Mountain; and
c. Grisaffi concealed and surreptitiously authorized the issuance 11,000,000 shares of stock to Epic and 10,000,000 shares of stock to Li for no consideration and without board approval in advance of these actions.
d. Grisaffi surreptitiously authorized the issuance of 113,688,625 shares of stock to the Radcliffe Group at deeply discounted prices as a part of a conspiracy to help them amass Rocky Mountain stock.
COUNT TWO –KNOWING PARTICIPATION IN, AIDING AND ABETTING BREACHES OF FIDUCIARY DUTY – LSW, LI AND EPIC.
COUNT THREE –FRAUDULENT CONVEYANCE – GRISAFFI
The unauthorized transaction of issuing one million shares of
Series A Preferred Stock to Grisaffi and the subsequent conveyance of the One million shares of Series A Preferred Stock to LSW (the “Grisaffi Fraudulent Conveyances”) constitute a
fraudulent conveyance under Section 24.005(a)(1) of the Texas Business and Commerce Code as these unauthorized transactions took place with the actual intent to hinder, delay or defraud
Rocky Mountain and its shareholders at the time of Grisaffi Fraudulent Conveyances and the unauthorized Employment Agreement.
COUNT FOUR –FRAUDULENT CONVEYANCE – LSW
74. Based on information and belief, Li is a shareholder, officer and director of LSW and is and was an Executive Vice President of Rocky Mountain.
75. Furthermore, LSW, is not a good faith transferee as Li being an insider was or should have known that the One million shares of Series A Preferred Stock was not authorized and that Rocky Mountain received no value in consideration of the issuance of said One million shares of Series A Preferred Stock.
COUNT FIVE – FRAUDULENT CONVEYANCE – LI
Li is the holder of 10,000,000 shares of Stock purportedly granted to Li to compensate Li for promotional activity including assistance
with the purchase of controlling interests by outside investors. The stock was issued on February 22, 2017 but was never authorized by the Board of Directors of Rocky Mountain.
COUNT SIX – BREACH OF CONTRACT – LI
Li materially breached her agreement to raise money for Rocky Mountain and did not satisfy the condition to issuance of shares.
COUNT SEVEN – FRAUDULENT CONVEYANCE – EPIC
117. The unauthorized transaction of issuing 11 million shares of Stock to Epic (the “Epic Fraudulent Conveyance”) constitutes a fraudulent conveyance under Section 24.005(a)(1) of the Texas Business and Commerce Code as the Epic Fraudulent Conveyance took place with the actual intent to hinder, delay or defraud Rocky Mountain and its shareholders at the time of the Epic Fraudulent Conveyance.
COUNT EIGHT – PROFESSIONAL NEGLIGENCE – JOE RADCLIFFE
He advised and conspired with Grisaffi to adjust both the voting rights and the conversion rights of the Series A Preferred Shares to be increased to a ratio of 1:1,200. He was instrumental in
advising and conspiring with Grisaffi to issue the two convertible promissory notes for $184,300.00 and $200,150.20 without any properly executed board resolutions. He was further instrumental in advising and conspiring with Grisaffi to issue 11,000,000 shares of stock to Epic and 10,000,000 shares of stock to Li for no consideration and without board approval. He influenced Grisaffi to cause stock to be issued to the Radcliffe Group in numerous ways to his own self-enrichment and to the detriment of the Company. Finally he actively aided, abetted and worked with Grisaffi concealing and surreptitiously authorizing the issuance of 113,688,625 shares of stock to the Radcliffe Group at deeply discounted prices as a part of a conspiracy to help them amass Rocky Mountain stock.
COUNT NINE – ACTION FOR UNJUST ENRICHMENT.
COUNT TEN – CIVIL CONSPIRACY
COUNT ELEVEN – DECLARATORY JUDGMENT
COUNT TWELVE – ATTORNEYS’ FEES AND INTEREST
Rocky Mountain would show that by virtue of Defendants’ conduct as referenced above, Rocky Mountain has found it necessary to employ the law firm of Cowles & Thompson, P.C. to prosecute this suit. Rocky Mountain hereby sues and seeks recovery against
Defendants in the following amounts: approximately $200,000.00 for preparation and trial, $75,000.00 for an appeal to the Court of Appeals, $75,000.00 for making or responding to an application for writ of error to the Supreme Court of Texas, $75,000.00 if an application for a writ of error is granted by the Supreme Court of Texas.
COUNT THIRTEEN – EXEMPLARY DAMAGES
COUNT FOURTEEN – ALTERNATIVE PLEADINGS
Some other quoted statements that are key from the FACTS section:
* Rocky Mountain did receive another version of the Stock
Purchase Agreement (“SPA 2”) that appears to executed but is substantially different than SPA1. A copy of SPA 2 s attached hereto as Exhibit “D” and is incorporated herein by reference for all purposes. Of note, Grisaffi represented in SPA 2 that he “is not now nor has …ever been an affiliate to the Company”. That statement is blatantly FALSE.
After it had been executed, Mr. Grisaffi remained Chairman of the Board. He immediately instructed Michael Welch, Rocky Mountain’s President and Chief Executive Officer, to draft a press release announcing the sale. In the press release, Rocky Mountain High referred to the funding that LSW Holdings, LLC would provide to Rocky Mountain. The press release was approved by both Grisaffi and Joe Radcliffe, as a representative of LSW Holdings, LLC, before being released. Furthermore, Grisaffi made similar funding representations to Rocky Mountain’s CEO and CFO during the preparation of the third quarter financial statements. As a result, the CFO included a statement that Grisaffi approved which disclosed LSW’s FUNDING OBLIGATION in the Company’s Going Concern Footnote in the Company’s third quarter 10-Q filing.
Grisaffi also signed a Management Representation Letter along the other members of management and the Board who were relying on his statements. Copies of the press release, the footnote disclosure in the third quarter 10-Q and the executed Management Representation letter are attached hereto as Exhibits “E”, “F” and “G” for all purposes.
* So, at this time Li is currently an executive vice president of Rocky Mountain and is the holder of 10,000,000 shares of Stock purportedly granted to Li at Grisaffi’s direction in consideration to assigning and facilitating the sale of Series A Shares of Stock in Rocky Mountain which was supposed to raise money for Rocky Mountain. Li NEVER raised money for Rocky Mountain after LSW Holdings, LLC, acquired the Series A Preferred Shares. Thus the
stock was issued to Li for no consideration.
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