Complaint Review: James Poe Paula Poe Jeffery Thomas Hans Brost BHGI Beverly Hills Group Inc - California

These crooks go around the USA lying to current investors and raising money from unsuspecting investors. They ask for help building ficticious publically trading companies and promise they will take them public only to continuoulsy come up with excuse after excuse when nothing happens. James and Paula lie about his past and has zero experience in running a successful company. In fact a closer look into their past reveals a myriad of failed companies, stolen investor money and frivilous lawsuits. Their minions Jeff Thomas (ironically goes by the screen name JT the DD King) and Hans Brost are so desperate to make a buck that they believe everything James and Paula say. Stay clear of these people. They are terrible people with zero experience in building legitamate businesses. Further They are being sued. The following is the cross complaint filed by a few investors they tried and failed to cheat out their money. They are now claiming to be filing a registration for IPO....more lies as they do not even have assets to substantiate a meaningful evaluation to raise money in the public markets. 

RICHARD WEINTRAUB. (SBN 82882)

AMBER CONDRON (SBN 249416)

JENNIFER TROWBRIDGE (SBN 282876)

WEINTRAUB LAW GROUP, PC.

10085 CARROLL CANYON RD STE 230

SAN DIEGO, CA 92131

(858) 566-7010

Attorneys for the Cross- Defendant and Cross Complainants

AHMAD ARFAANIA and N.A. FAM LLC

1SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN DIEGO

Defendants and Cross-Complainants, Ahmad Arfaania and N.A. FAM, LLC, (hereinafter referred to as “Defendants” or “Defendant” allege as follows:

VENUE AND JURISDICTION

1. Section 22 of the Securities Act of 1933, 15 U.S. Code §77v, provide the State Courts with jurisdiction of offenses and violations under the rules and regulations promulgated by the Commission, of all suits in equity and actions of law brought to enforce liability or duty created thereunder.

2. Jurisdiction and Venue are proper pursuant to Section 428.10 of the California Code of Civil Procedure.

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GENERAL ALLEGATIONS

3. On or about December 1, 2015 the Plaintiffs Beverly Hills Group, Inc. and Peter Martinez filed a Complaint, in this matter in the above caption court, and while the Complaint is lacking the Causes of Action attachments, the Complaint alleges Fraud, Intentional Misrepresentation. No specific facts have been plead in the Complaint, but the Plaintiff prays for $15,000,000 in damages, interest on such, Punitive and Exemplary Damages in the amount of $30,0000,000 and attorney’s fees.

4. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that Plaintiff and Cross-Defendant Beverly Hills Group, Inc. (“BHG”) is a Nevada corporation whose common stock is listed on the Over-The-Counter Pink Sheets under the symbol “BHGI.”

5. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that Plaintiff and Cross Defendant Peter Martinez (“Martinez”) is an individual and is an agent of BHG, Global and/or AEG.

6. Defendant and Cross-Complainant Ahmad Arfaania (“Arfaania”) is an individual residing in California and is an investor in BHG,.

7. Defendant and Cross Complainant N.A. Fam, LLC (“NA Fam”) is a California limited liability company, of which Arfaania is the Managing-Member/Manager. The members of NA Fam are unaccredited investors who aggregated their investment into NA Fam for the express purpose of investing into BHG. NA Fam is an investor in BHG, and at all times relevant hereto conducted business in California.

8. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that Cross-Defendant, AE Group Investments Limited (“AEG”) is a Nevada corporation and is a noteholder and/or shareholder of BHG, and at all times relevant hereto conducted business in California.

9. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that Cross-Defendant Global Force Trading Limited (“Global”) is a Hong Kong Private company, and is a noteholder of BHG, and at all times relevant hereto conducted business in California.

10. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that Cross-Defendant Gene O’Brien, (“O’Brien”), a California licensed attorney, is the counsel, secretary and a director of BHG, as well as the President, Treasurer, Secretary and the sole director of AEG.

11. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that Cross-Defendant Donna Mikkin (“Donna”) is the President, Chief Executive Officer, Treasurer and one of the Directors of BHG.

12. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that Cross-Defendant Edward Mikkin (“Edward”) is an agent of BHG, Global and/or AEG and at all times relevant hereto conducted business in California.

13. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that Cross-Defendant Jacob Thomas (“Jacob”) is a director of BHG and an agent of AEG /or Global, and at all times relevant hereto conducted business in California.

14. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that Cross-Defendant Jeffrey Thomas (“Jeffrey”) is an individual located in California, and is an agent of BHG, AEG and/or Global, and at all times relevant hereto conducted business in California.

15. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that Cross-Defendant James Poe (“James”) is an agent of BHG, AEG and/or Global, and at all times relevant hereto conducted business in California

16. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that Cross-Defendant Paula Poe (“Paula”) is an agent of BHG, AEG and/or Global, and at all times relevant hereto conducted business in California

17. Defendant and Cross-Complainants are unaware of the true names, identities and capacities of Cross-Defendant DOES 1 through 30, or any of them, and for this reason said Cross-Defendants are sued herein by such fictitious names. When Cross-Complainants ascertain the true names, identities and capacities, whether corporate, individual, associate, affiliate or otherwise, of Cross-Defendants Does 1 through 30, or any of them, Cross-Complainants will amend this complaint to allege the same. Cross-Complainants are informed and believe and thereon allege that at all times relevant to the facts alleged herein, each such fictitiously named defendant was responsible in some manner for the acts, occurrences, happenings and/or omissions hereinafter alleged.

18. Cross- Complainant is informed and believes and thereon alleges that at all times relevant to the facts alleged herein, each Cross-Defendant was the agent, servant or employee, alter ego, conspirators, co-conspirators, joint venturers of each of the other Cross-Defendants, and as such was acting within the course and scope of such agency and/or employment, and with the express permission of, consent to and ratification by each of the other Cross-Defendants.

19. Cross-Complainants are informed and believe and thereon allege that at all times relevant to the facts alleged herein, the Cross-Defendants, and each of them, were directly or indirectly in control, or together acting in common control of BHG and its related subsidiaries and other entities including AEG and Global.

20. Cross-Complainants are informed and believe, and allege thereon, that Cross-Defendants, and each of them, including those designated as Does 1-30, inclusive, are responsible in some manner for the occurrences and happenings, as well as such acts and omissions as more fully alleged herein, and that damages and losses, as alleged below were and are the direct and proximate result of the acts or omissions of said Cross-Defendants.

21. Cross-Complainants are informed and believe and thereon allege that during the period from 2002 to 2014, AEG and Global were assigned or otherwise acquired one or more Convertible Promissory Notes (“Notes”) issued by BHG; that AEG and Global subsequently converted a portion of the Notes into a large number of common shares of BHG. The Notes still have a large unpaid balance convertible into over 120,000,000 common shares of BHG.

22. Cross-Complainants are informed and believe and thereon allege that throughout the summer of 2014, Jeffrey was actively soliciting Arfaania through emails, texts and phone conversations, to make an investment in BHG by purchasing common shares of BHG from AEG or other private entities.

23. Cross-Complainant Arfaania is informed and believes that Jeffrey is not a licensed broker dealer in the State of California nor with the Financial Industry Regulatory Authority (“FINRA”) and the Securities Exchange Commission.

24. On or about July 8, 2014, Arfaania purchased 800,000 shares of common stock of BHG from AEG for $100,000 through the execution of a Stock Purchase Agreement (“AEG SPA.”)

25. In the summer of 2015, after being notified of BHG’s dire need of funds in order to pay for BHG company expenses, NA Fam believed it had purchased 1,100,000 shares of common stock of BHG from Global for $125,000 through the executory execution of a Stock Purchase Agreement (“Global SPA”); a fully signed or countersigned document was not provided by BHG or its affiliates.

26. Cross-Complainants are informed and believe and thereon allege that the common shares they purchased from AEG and Global were the same common shares that were issued as a result of the conversion of the Notes (by AEG and Global) held by each. The funds were contributed by AEG and Global to BHG to pay for day-to-day operating expenses of BHG in this manner in an attempt to disguise an offering by BHG itself and thus circumvent the registration requirements under the Section 5 of the Securities Act of 1933.

27. Cross-Complainants are informed and believe and thereon allege that in a press release published on December 15, 2015 by BHG, the shares purchased by Arfaania are characterized as a “PIPE” (Private Investment in Public Equity) transaction, by BHG themselves. BHG never filed a Form D with the Securities Exchange Commission nor a notification of the sale of securities in California or any other state.

28. Cross-Complainants are informed and believe and allege thereon that both the Global SPA and AEG SPA contained representations that “…that has been no act in connection with the transactions contemplated in this Agreement that would give rise to a valid claim against either party for a broker’s fee, finder’s fee or other similar payment.”

29. Cross-Complainants are informed and believe and thereon allege that Jeffrey received a 10% commission based on the dollar amount that Arfaania paid for the BHG common shares.

30. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that the each named Cross-Defendant, as control persons, had knowledge of, and knowingly provided assistance to Jeffrey in furtherance of his fundraising and investment solicitation of Arfaania.

31. In January 2015, Arfaania received stock certificate numbered 1474 representing the 800,000 common shares purchased on or about July 8, 2014 pursuant to the AEG SPA.

32. NA Fam purchased a total of 1,100,000 common shares of BHG from Global, but has only received 600,000 common shares of BHG.

33. On November 30, 2015, as a result of receiving neither the common share certificate, nor a response from BHG and its agents regarding the remaining 500,000 common shares Arfaania, communicated rescinded his offer via email to purchase the shares prior to delivery of an acceptance of his offer. He demanded his $50,000 to be returned.

34. As of the date of this filing, NA Fam has received neither their common shares certificate nor their $50,000.

35. Cross-Complainants are informed and believe that the Cross-Defendants’ actions, collectively and individually of converting the substantial debt owned by AEG and Global into common shares of BHG, then selling those same common shares to investors like Arfaania and NA Fam, to fund the business expenses of BHG is a scheme intended to circumvent federal and state securities registration requirements and well as the federal and California licensed broker dealer registration requirements (“Scheme”).

FIRST CAUSE OF ACTION

UNREGISTERED OFFER AND SALE OF SECURITIES

Violations of Sections 5(a) of the Securities Act

and Section 25110 of the California Corporations Code

(Against BHG)

36. Cross-Complainants re-allege and reincorporate each and every allegation contained in all previous paragraphs of all previous sections of this Cross-Complaint, inclusive, as though fully set forth herein.

37. Sections 5(a) and (c) of the Securities Act of 1933 prohibit the “sale” and “offer for sale” of any securities unless a registration statement is in effect or there is an applicable exemption from registration

38. Section 25110 of the California Corporations Code states that it is unlawful to sell in this state any security in an issuer transaction, unless such sale is qualified or an exemption for such qualification exists. The offer or sale of security that fails to conform with either a material or term or material condition of qualification of the offering as set forth in the permit or qualification order, shall be an unqualified offer or sale.

39. The Cross Defendants perpetrated a scheme whereby BHG was able to issue unregistered shares to the noteholders, AEG and Global, through a conversion of debt. Then, with the assistance of Jeffrey, sell the unregistered shares to third parties without complying with the registration requirements found in Section 5 of the Securities Act of 1933, and contributing the funds from the private third party transaction back to BHG. BHG perpetrated a scheme by where it could raise money to run its operations without having to comply with the registration requirements of the federal and California securities laws.

40. The Cross-Defendants, and each of them, by engaging in the conduct described above, directly or indirectly, made use of means or instruments of transportation or communication in interstate commerce or of the mails, to offer to sell or to sell securities, or to carry or cause such securities to be carried through the mails or in interstate commerce for the purpose of sale or for delivery, in the Scheme and sale of stock to Cross-Complainants. Such acts constituted an offer and sale of securities and is an “offering” as that term is used in regard to the Securities Act of 1933, the Exchange Act of 1934, and Section 25008 of the California Corporations Code.

41. Cross-Complainants are informed and believe, and on that basis allege, that no registration statement has been filed with the United States Securities and Exchange Commission (“SEC”) or has been in effect with respect to the offering alleged herein.

42. Cross-Complainants are informed and believe, and on that basis allege, that no qualification statement has been filed with the California Commissioner of Corporations or has been in effect with respect to the offering alleged herein.

43. By engaging in the conduct described above, each of the Cross-Defendants violated Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c), and thereby violated Section 12(a) of the Securities Act, 15 U.S.C. §§ 77(a), and defendants violated section 25110 of the California Corporations Code.

44. As a proximate result of the conduct of Cross-Defendants as herein alleged, Cross-Complainants have incurred damages in that Cross-Complainants were induced to invest in BHG, by reason of which Cross-Complainants have been damaged in at least the sum in excess of the jurisdictional amount of this Court, and thus prays for rescission of their investment of $225,000, and additional amounts according to proof at time of trial, including interest, attorneys’ fees and costs.

SECOND CAUSE OF ACTION

VIOLATION OF Section 4(a)(1) OF THE sECURITIES ACT

Violations of Sections 4(a)(1) of the Securities Act

(Against AEG and Global)

45. Cross-Complainants re-allege and reincorporate each and every allegation contained in all previous paragraphs of all previous sections and Causes of Action this Complaint, inclusive, as though fully set forth herein.

46. Sections 5(a) and (c) of the Securities Act prohibit the “sale” and “offer for sale” of any securities unless a registration statement is in effect or there is an applicable exemption from registration. Among the various exemptions from registration is Section 4(a)(1), which exempts from the registration requirement “transactions by any person other than an issuer, underwriter, or dealer.”

47. The term “underwriter” is defined to mean “any person who has purchased from an issuer with a view to, or offers or sells for an issuer in connection with, the distribution of any security….” (Securities Act, Section 2(11), 15 U.S.C. § 77b(a)(11)). Individual investors who are not securities professionals may be deemed “underwriters” within the statutory meaning of that term if they act as links in a chain of securities transactions from issuers or control persons to the public.

48. Section 4(a)(1) provides private resales of restricted and control securities and to qualify, the transaction must meet several requirements, including, among others, that unless each purchaser is an “Accredited Investor” as defined by Rule 501(a) of Regulation D and that provide the extensive disclosures regarding the nature, character and risk factors relating to an offering; usually contain in a Private Placement Memorandum “PPM” or similar.

49. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that that basis alleges, that neither Arfaania, nor any of the individual members of NA Fam are Accredited Investors, nor were they provided the extensive disclosures regarding the nature, character and risk factors relating to an offering found in a PPM.

50. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that that basis alleges that since Cross-Defendants purchased (through conversion of debt) the BHG common shares from the Issuer with the intent and view to, or offer or sell for an issuer in connection with, the distribution of such, that the Cross-Complainants are thus Underwriters. As Underwriters they should have registered the BHG common shares.

51. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that AEG and Global failed to qualify for the exemption from registration requirements set forth in the Securities Act of 1933; and by engaging in the conduct described above, each of the Cross-Defendants violated Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c), and thereby violated Section 12(a) of the Securities Act, 15 U.S.C. §§ 77l(a) and are considered underwriters.

52. As a proximate result of the conduct of Cross-Defendants as herein alleged, Cross-Complainants have incurred damages in that Cross-Complainants were induced to invest in BHG, by reason of which Cross-Complainants have been damaged and seek rescission of their investment of $225,000, plus attorney’s fees and costs, and additional amounts according to proof at time of trial.

THIRD CAUSE OF ACTION

BREACH OF WRITTEN CONTRACT

(Against Cross-Defendants AEG and Global)

53. Cross-Complainant re-alleges and reincorporates each and every allegation contained in all previous paragraphs of all previous sections and Causes of Action this Complaint, inclusive, as though fully set forth herein.

54. Pursuant to AEG and Global SPA, AEG and Global both represented and warranted in Section of each SPA, that “the Seller is neither an affiliate nor a party to any agreement that creates rights or obligations in the stock…”

55. Pursuant to AEG and Global SPA, AEG and Global both represented in Section 6 of each SPA that “…there has been no act in connection with the transactions contemplated in this Agreement that would give rise to a valid claim against either party for a broker’s fee, finder’s fee or other similar payment.”

56. Pursuant to the Global SPA, Cross-Complainant was to receive 1,100,000 common shares of BHG, of which he only received 600,000.

57. Cross-Complainant fully performed all conditions, covenants, and promises to be performed on the part of Cross-complainant under the written Global SPA and AEG SPA.

58. As a proximate result of the fraudulent conduct of defendant as herein alleged, Cross-Complainant has incurred damages in that Cross-Complainant was induced to invest BHG, and the non-receipt of the bargained-for shares, all by reason of which Cross-complainant has been damaged in at least the sum in excess of the jurisdictional amount of this Court, plus attorney’s fees and costs, and additional amounts according to proof at time of trial, including interest, attorneys’ fees and costs.

FOURTH CAUSE OF ACTION

RESCISSION AGAINST UNLICENSED BROKER DEALER

Under Section 25501.5 of the California Corporations Code

(Against Cross-Defendant Jeffrey Thomas)

59. Cross-Complainants re-allege and reincorporate each and every allegation contained in the General Allegations and all previous paragraphs of all previous sections and Causes of Action this Complaint, inclusive, as though fully set forth herein.

60. Section 25501.5 of the California Corporations Code provides that “a person who purchases a security from or sells a security to a broker-dealer that is required to be licensed and is not, at the time of the sale of purchase, applied for and secured from the commissioner a certificate under Part 3 (commencing with section 25200), that is in effect at the time of the sale or purchase authorizing that broker-dealer to act in that capacity, may bring an action for rescission of the sale or purchase, or if the plaintiff no longer owns the security, for damages.” (§ 25501.5, subd. (a)(1).)

61. Newly enacted Section 25206.1(g)(2) provides “any person introduced or referred by that natural person, who purchases securities of that issuer in an issuer transaction following that introduction or referral, shall have the right to pursue any applicable remedy afforded under state law, including, without limitation, any applicable remedies pursuant to Section 25501.5.”

62. Jeffrey acted as broker by facilitating the offer and sale of the common shares of BHG to the Cross-Complainants Arfaania and NA Fam and receiving a 10% commission based on the purchase price.

63. At all times mentioned herein, Cross-Complainants are informed and believe and thereon allege that Jeffery is and was not a licensed broker dealer in the State of California nor with the Financial Industry Regulatory Authority (“FINRA”) and the Securities Exchange Commission.

64. As a proximate result of the conduct of Cross-Defendant as herein alleged, Cross-Complainants have incurred damages and therefore pray for rescission and return of the $225,000 invested, plus interest and attorney’s fees; and pursuant to Section 1029.8 of the Code of Civil Procedure, treble damages of $10,000 for each investment made; and any additional amounts according to proof at time of trial.

FIFTH CAUSE OF ACTION

CONTROL PERSONS LIABILITY

Under Section 25403 of the California Corporations Code

(Against BHG, AEG, Global, O’Brien, Donna, Edward, Jacob, James, Paula)

65. Cross-Complainants re-allege and reincorporate each and every allegation contained in the General Allegations and all previous paragraphs of all previous sections and Causes of Action this Complaint, inclusive, as though fully set forth herein.

66. Section 25501 of the California Corporations Code provides that any person who violates Section 25401 shall be liable to the person who purchases a security from him or sells a security to him, and the purchaser may sue either for rescission or for damages.

67. Section 25403 of the California Corporations Code provides that any person who (a) knowingly, directly or indirectly controls or induces any person to violate any provision of this division, or any other rule thereunder shall be deemed to be in violation of that provision, rule or order to the same extent as the controlled or induced person, b) any person that knowingly provides substantial assistance to another person in violation of any provision of this division or any rule or order thereunder shall be deemed to be in violation of that provision, rule, or order to the same extent as the person to whom the assistance was provided and, c) it shall be unlawful for any person to directly or indirectly to do any act or thing which would be unlawful for that person to do under any provision of this division or any rule or order thereunder, through or by any other person.

68. Anyone that violates Section 25403 shall be liable to the person who purchases a security from him or sells a security in contravention of Section 25501 of the Code, and the purchaser may sue either for rescission or for damages. Section 25501 further provides that upon rescission, a purchaser may recover the consideration paid for the security plus interest at the legal rate.

69. Cross-Defendants, and each of them, are in violation of and have breached these provisions by knowing of, allowing, substantially assisting and ultimately paying an unlawful finder’s or similar fee or commission to Jeffrey in connection with his activities as an unlicensed broker-dealer.

70. As a proximate result of the fraudulent conduct of Cross-Defendants, and each of them, as herein alleged, Cross-Complainants have incurred damages in that Cross-Complainants were induced to invest BHG, all by reason of which plaintiff is entitled to Rescission of the AEG SPA and Global SPA and return of the $225,000 total investment, plus interest at the legal rate, attorney’s fees and costs, and additional amounts according to proof at time of trial.

WHEREFORE, Cross-Complainants pray for relief as follows:

1. that Plaintiffs take nothing by their Complaint;

2. that the Complaint be dismissed, in its entirety, with prejudice;

3. that judgment be entered in Defendants’ and Cross-Complainants’ favor and against Plaintiffs;

4. rescission of the investments of $225,000;

5. interest at the legal rate;

6. that Defendants and Cross-Complainants be awarded their costs of suit;

7. that the Defendants and Cross-Complainants be awarded their attorneys’ fees;

8. the Defendants and Cross-Complainants be awarded treble damages of $10,000 per investor (Section 1029.8 of Code of Civil Procedure); and

9. that Defendants and Cross Complainants be awarded such other and further relief as the Court deems proper.

Dated: December 29, 2015