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`CHARLES BUFFIN, an individual;
`MAXWELL LEVINE, an individual;
`STEVEN LEVINE, an individual
`
`
`Plaintiffs,
`
`
`
`v.
`
`
`COMMUNITY.COM, INC., a
`Delaware corporation; MATTHEW
`PELTIER, an individual; and DOES 1
`through 10,
`
`
`
`
` CASE NO.
`
`COMPLAINT FOR
`
`(1) BREACH OF FIDUCIARY
`DUTY
`(2) FRAUDULENT
`MISREPRESENTATION
`(3) INTENTIONAL
`CONCEALMENT
`(4) FEDERAL SECURITIES
`VIOLATIONS
`(5) CALIFORNIA SECURITIES
`VIOLATIONS
`(6) NEGLIGENT
`MISREPRESENTATION
`(7) BREACH OF CONTRACT
`(8) CONVERSION
`(9) VIOLATION OF CALIFORNIA
`PENAL CODE § 496(C)
`(10) DECLARATORY RELIEF
`(11) FINANCIAL ELDER ABUSE
`
`
`[DEMAND FOR JURY TRIAL]
`
`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 1 of 69 Page ID #:1
`
`
`
`CHRISTOPHER D. BEATTY (State Bar No. 266466)
`cbeatty@millerbarondess.com
`MINH-VAN T. DO (State Bar No. 314201)
`mdo@millerbarondess.com
`ADAM P. STILLMAN (State Bar No. 317071)
`astillman@millerbarondess.com
`MILLER BARONDESS, LLP
`1999 Avenue of the Stars, Suite 1000
`Los Angeles, California 90067
`Telephone: (310) 552-4400
`Facsimile:
`(310) 552-8400
`
`Attorneys for Plaintiffs
`
`
`UNITED STATES DISTRICT COURT
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`CENTRAL DISTRICT OF CALIFORNIA
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`Defendants.
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`471279.1 .1
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`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 2 of 69 Page ID #:2
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`Plaintiffs Charles Buffin (“Buffin”), Maxwell Levine (“Max Levine”), and
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`Steven Levine (“Steven Levine”) (collectively, “Plaintiffs”) allege in their
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`Complaint against Defendants Community.com, Inc. (“Community” or the
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`“Company”), Matthew Peltier (“Peltier”), and Does 1-10, inclusive (collectively,
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`“Defendants”), as follows:
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`NATURE OF THE ACTION
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`1.
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`Community is a technology start-up that utilizes an app that permits its
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`clients—including actors, musicians, athletes, and social media influencers—to
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`communicate directly with their fans or followers through SMS text messaging. Its
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`stated purpose is to allow more meaningful dialogue between the celebrities and
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`their “community” in a world dominated by a flurry of social media apps that can
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`make fans feel invisible or disengaged. Community’s clients include, but are not
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`limited to, Ashton Kutcher, Jennifer Lopez, John Legend, Paul McCartney, Amy
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`Schumer, Marshmello, Kerry Washington, Sean “Diddy” Combs, Mark Cuban,
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`Sophie Bush, and Ellen DeGeneres.
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`2.
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`The Company has raised tens of millions of dollars in financing from
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`the likes of Ashton Kutcher and Guy Oseary. The Company is believed to be
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`currently raising money at a valuation of approximately $450 million.
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`3.
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`Buffin and Max Levine founded the Company in or about 2013.
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`Originally, the Company was aimed at providing a platform for social media
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`influencers to directly communicate and build personalized “tribes” or groups with
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`their followers.
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`4.
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`Buffin and Max Levine both had business backgrounds and wanted to
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`find someone with product expertise to help them build the Company. Max Levine
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`met Peltier in late 2013 and introduced him to Buffin. Peltier appeared smart and
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`had the technical expertise they were looking for. Peltier soon thereafter joined the
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`Company. In mid-2014, Buffin and Max Levine decided that it was in the best
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`interest of the Company for Peltier to take over as CEO.
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`471279.1 .1
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`2
`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 3 of 69 Page ID #:3
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`5.
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`The Company’s first investor was Max Levine’s father, Plaintiff Steven
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`Levine. Steven Levine invested $50,000 in Community when it was little more than
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`an idea. Peltier agreed to provide Steven Levine a 2.5% equity stake in the
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`Company in return for this investment.
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`6.
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`The Company struggled to onboard users and produce significant
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`revenue. In or about the summer of 2017, Max Levine and Buffin left the Company
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`to pursue other opportunities. Peltier continued as CEO of the Company, directing
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`its day-to-day operations. Max Levine and Buffin each retained 750,000 shares of
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`the Company upon their departure.
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`7.
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`Thereafter, Max Levine and Buffin relied on Peltier to keep them
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`apprised of how the Company was doing. In mid-2018, Peltier began to consistently
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`communicate to Buffin and Max Levine that the Company was on the brink of
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`failure and that the value of their shares was “whatever.” Peltier told Buffin and
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`Max Levine that the Company was burning $40,000 a month and only had $70,000
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`8.
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`In mid-2018, Peltier reached out to Buffin and Max Levine and began
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`to float the idea of repurchasing their shares. Peltier continued to put pressure on
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`Buffin and Max Levine to sell and reinforced the idea that the Company was
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`drowning and that their shares had no value.
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`9.
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`On October 29, 2018, Peltier gave Buffin and Max Levine an
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`ultimatum: either the Company would go bankrupt and Buffin and Max Levine
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`would lose their entire investment in the Company; or Buffin and Max Levine could
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`sell their shares back to the Company for approximately $20,000, which would save
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`the Company from insolvency and at least guarantee them some cash for their
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`investment.
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`10. Peltier expressed that this deal would be great for them because the
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`shares of the Company were worthless. Indeed, Peltier told Buffin the stock was
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`worth a penny a share. Peltier led Buffin and Max Levine to believe he was only
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`471279.1 .1
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`3
`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 4 of 69 Page ID #:4
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`offering to buy their shares to do right by them. Peltier coyly alluded to having two
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`new founders coming on board during these conversations who would try to turn
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`around this supposedly failing company but refused to disclose any further
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`information. Even after Buffin explicitly asked him who the new founders were and
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`reminded him that he was a shareholder entitled to know this information, Peltier
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`refused to divulge this information.
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`11. Buffin and Max Levine signed Stock Repurchase Agreements on
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`November 28, 2018, agreeing to sell back 600,000 of their shares for $22,002 each.
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`This transaction constituted approximately 10% of the shares of the Company.
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`Plaintiffs trusted and relied on Peltier not to swindle them.
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`12. Peltier’s statements to Buffin and Max Levine were fraudulent and
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`clear breaches of his fiduciary duties. Peltier materially misrepresented the
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`Company’s financial position. He concealed the fact that Community was in the
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`midst of negotiating (if it had not already sealed the deal) an investment round that
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`was led by a venture capital firm owned by celebrity Ashton Kutcher and influential
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`Hollywood talent agent Guy Oseary, whose clients include big-name artists like U2
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`and Madonna. The Company was raising money at a valuation of approximately
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`$180 million, and it went on to raise $35 million as part of this round. All of this
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`information was inconsistent with the dire picture that Peltier painted for Buffin and
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`Max Levine. Had Peltier told Buffin and Max Levine this information, they would
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`not have agreed to sell back any of their shares.
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`13. Worse, Community, through Peltier, has now taken the position that
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`Steven Levine is not a shareholder of the Company, even though Steven Levine
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`financed the growth of the Company with its first investment. In fact, Peltier has
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`repeatedly over the course of several years confirmed Steven Levine’s status as an
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`investor before just recently reversing course.
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`14. Through this lawsuit, Plaintiffs seek what they are owed. Their
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`damages for Peltier’s fraudulent misconduct, securities violations and breaches of
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`471279.1 .1
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`4
`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 5 of 69 Page ID #:5
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`fiduciary duty are estimated to be in excess of $30 million. In addition, due to the
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`egregious nature of what happened here, punitive damages are appropriate.
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`PARTIES
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`15. Plaintiff Buffin is an individual residing in Los Angeles County.
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`16. Plaintiff Max Levine is an individual residing in Los Angeles County.
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`17. Plaintiff Steven Levine is an individual residing in the State of New
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`Jersey.
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`18. Defendant Peltier is an individual residing in Los Angeles County.
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`19. Upon information and belief, Defendant Community is a Delaware
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`corporation that is headquartered in Los Angeles County.
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`20. Plaintiffs are ignorant of the true names, capacities, relationships and
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`extent of participation in the conduct herein alleged of the Defendants sued herein as
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`DOES 1 through 10, inclusive, but on information and belief alleges that said
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`Defendants are legally responsible to them. Plaintiffs will amend this Complaint to
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`allege the true names and capacities of the Doe Defendants when ascertained.
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`JURISDICTION AND VENUE
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`21. This Court has jurisdiction over the subject matter of this action
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`pursuant to 28 U.S.C. § 1331 and Section 27 of the Securities Exchange Act of 1934
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`(“Exchange Act”), 15 U.S.C. § 78aa. The claims asserted herein arise under and are
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`pursuant to Sections 10(b) and 20(a) of the Exchange Act, 15 U.S.C. §§ 78j(b) and
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`78t(a), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5.
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`22. This Court has diversity jurisdiction over the claims between Plaintiff
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`Steven Levine and Defendants which have an amount in controversy over $75,000,
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`pursuant to 28 U.S.C. § 1332.
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`23. This Court has supplemental jurisdiction over state law claims in this
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`action pursuant to 28 U.S.C. § 1367 because they are related to the claims in this
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`action within the original jurisdiction of this Court that they form part of the same
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`case or controversy under Article III of the United States Constitution.
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`471279.1 .1
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`5
`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 6 of 69 Page ID #:6
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`24. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b).
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`Defendants reside in this district; and many of the acts, omissions, and transactions
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`giving rise to the claims herein, including the false and misleading statements made
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`to Plaintiffs with respect to Defendants’ repurchase of Plaintiffs’ Company shares,
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`occurred in this district.
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`25.
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`In connection with the acts and omissions alleged in this Complaint,
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`Defendants, direct or indirectly, used the means and instrumentalities of interstate
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`commerce, including but not limited to the use of phones for calls and texting, e-
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`mails, and the internet.
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`FACTUAL BACKGROUND
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`A. Overview Of Community
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`26. Community assigns a phone number to its clients (e.g., actors, athletes,
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`influencers, artists), which permits them to use the app to text directly with their
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`fans, and the fans can text the celebrity directly back. For example, if a musician is
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`on tour, he or she can use the Community app to text fans in a specific city
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`announcing an upcoming concert there and when they arrive in that city, he or she
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`can send a text to fans in that area asking for recommendations about local
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`27. The direct line of communication allows celebrities to create a more
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`intimate “community” with their fan base, and lets them bypass the media, the so-
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`called internet trolls and bullies, and the toxic culture that persists in many other
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`social media platforms such as Facebook, Instagram, Twitter, and Snapchat. It has
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`been reported that at least as of January 2020, Community has about 500 artists and
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`celebrities, or “Community leaders,” on board, and tens of thousands more on the
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`waiting list to join. Current users of Community include, but are not limited to,
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`Ashton Kutcher, Jennifer Lopez, John Legend, Paul McCartney, Amy Schumer,
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`Marshmello, Kerry Washington, Sean “Diddy” Combs, Mark Cuban, Sophie Bush,
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`and Ellen DeGeneres.
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`471279.1 .1
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`6
`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 7 of 69 Page ID #:7
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`28. Community has received favorable press from major publications like
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`The New York Times, USA Today, Variety, Billboard, TechCrunch, Wired, Fast
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`Company, and Oprah Magazine.
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`29. While Community launched as a vehicle for celebrities, it intends to
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`scale and broaden its reach to other people and entities that have an audience they
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`want to reach, such as traditional salespeople, churches, politicians and community
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`organizers.
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`30. Community is currently raising tens of millions of dollars in
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`investments at a valuation of approximately $450 million.
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`B. Max Levine And Buffin Co-Found The Company
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`31.
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`In 2013, Max Levine and Buffin had the idea to create an internet
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`platform that would make it easier for social media influencers to interact with their
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`fans and followers. The idea was to flip the top-down and linear fashion in which
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`most social media platforms work, and instead create a space that would make fans
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`feel more visible and influencers feel more engaged with their base.
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`32. At the time of the Company’s founding, Max Levine was the
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`Company’s Chief Executive Officer (“CEO”), and Max Levine and Buffin were the
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`sole shareholders.
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`33. Max Levine and Buffin both had business backgrounds, and they
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`decided to bring someone on board to help build the Company’s technology.
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`34.
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`In or around the end of 2013, Max Levine met Peltier at a networking
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`event in New York City. Peltier had the product development experience that Max
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`Levine and Buffin were looking for. Peltier was brought on as the product manager.
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`35. Community launched under the name Shimmur as a web-based
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`application. It has been described as a Reddit-style product.
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`36. Buffin had a good relationship with Peltier from the start. Buffin
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`trusted Peltier, and thought he was extremely smart and talented. They built a
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`strong friendship based upon mutual trust and respect.
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`471279.1 .1
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`7
`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 8 of 69 Page ID #:8
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`37.
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`In fact, all three co-founders, Buffin, Max Levine, and Peltier, lived
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`together from early 2015 to April 2016 and thereafter lived in the same apartment
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`complex. Buffin and Peltier also attended the wedding of Max Levine’s sister.
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`38.
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`In 2014, Buffin, Max Levine, and Peltier collectively decided Peltier
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`should take over as CEO. In or around April 2014, Peltier became CEO, and the
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`parties also altered the capital structure of the Company: 40% to Peltier, and 15%
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`each to Max Levine and Buffin (the remaining stock was either reserved for the
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`stock pool or vested in others not a party to this lawsuit).
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`39. Throughout 2014, the parties continued to work on developing the
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`C. The Company’s Early Fundraising Efforts
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`40. The Company’s first investment came from Max Levine’s father,
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`Steven Levine. In or about 2014, Steven Levine made three separate investments in
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`the Company totaling $50,000: $8,500 made in January 2014 for the company’s pre-
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`development stage; $24,000 in February/March 2014 for the Company’s
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`development stage; and $17,500 in April 2014 for the Company’s post-development
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`stage.
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`41. Peltier promised Steven Levine a 2.5% equity stake in the Company in
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`return for this investment. Steven Levine’s equity investment was documented in an
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`April 16-17, 2014 email chain between Steven Levine and Peltier. On April 16,
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`2014, Peltier sent an email to Steven Levine telling him that the Company was
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`“proposing an offer of 2.5% equity for your investment” but that “the proposed
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`convertible note is still on the table as well.” Peltier calculated Steven Levine’s
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`equity as follows, adding in a “risk premium (RP)”:
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`$50,000/$3,000,000 – 1.666666% * 1.5 (RP) = ~2.5%
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`42. That same day, Steven Levine and Peltier had a phone call during
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`which Steven Levine told Peltier that he was accepting the equity offer rather than
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`the convertible note proposal. Peltier followed up with an email confirming their
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`471279.1 .1
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`8
`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 9 of 69 Page ID #:9
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`conversation, stating: “The benefits for you are equally great and this ensures a
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`return on you [sic] investment. Max Levine, Buffin, and I unanimously agree this is
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`the route we would like to take.”
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`43. Steven Levine’s investment was the Company’s sole investment for
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`quite some time. In the latter part of 2014, Peltier started meeting with potential
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`investors in Los Angeles. In early 2015, Pelter was able to raise small amounts
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`from various investors in the range of $5,000-$20,000.
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`44.
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`In 2015, the Company started to grow as the team added more
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`engineers to develop the product. Its app was launched for the first time in or
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`around the beginning of 2016. However, the Company was still in its early stages
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`and still had little working capital.
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`45. Therefore, Max Levine loaned the Company money so that it could
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`cover its expenses. Between January 2015 and August 2016, Max Levine lent the
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`Company approximately $28,857. These loans were to cover expenses including
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`the Company’s payroll, rent, and bills.
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`46.
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`In 2016, Peltier continued to raise money from other investors, and the
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`team worked to onboard more influencers onto the app. Community raised about
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`half a million dollars that year.
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`47.
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`In 2017, Community applied to and got accepted into Tech Stars, a
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`competitive start-up incubator. At this point, Community had a team of 12
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`employees and was raising a seed fundraising round. Buffin played a pivotal role in
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`getting the Company accepted into Tech Stars by sending a tweet to one of the
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`people running the program, which got the Company a meeting.
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`48. Community nevertheless struggled to take off. While it had a decent
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`following of about 15,000 to 20,000 followers on Instagram, it struggled to gain
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`49.
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`In or around 2017, the Company began to incorporate into its
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`technology SMS texting, which is where the entertainer could use the app to send
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`471279.1 .1
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`9
`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 10 of 69 Page ID #:10
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`SMS texts to his or her followers. In or around 2018, the product started operating
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`under the d/b/a of Community. Subsequently, Community officially changed its
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`name with the Delaware Secretary of State.
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`D. Buffin And Max Levine Leave The Company; And, According To
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`Peltier, The Company Continues To Struggle
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`50.
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`In or about the Summer of 2017, Max Levine, Buffin, and Peltier
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`determined that it would be in the best interests of the Company for Max Levine and
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`Buffin to leave the Company. Buffin and Max Levine wanted to pursue other
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`opportunities and felt that Peltier was capable of running the Company without
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`them. Both Buffin and Max Levine left the Company on good terms.
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`51. After their departures, Buffin and Max Levine each retained 750,000
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`common stock shares in the Company.
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`52.
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`In or around mid-Summer of 2017, after Max Levine and Buffin left
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`the Company, Steven Levine called Peltier to discuss his investment. Steven Levine
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`wanted to know what was going to happen with the Company now that his son, Max
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`Levine, was no longer going to be directly involved. Steven Levine spoke with
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`Peltier and offered Community a discount in exchange for the return of his $50,000
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`investment.
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`53. During this call, Peltier acknowledged Steven Levine’s 2.5%
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`investment in the Company and reassured Steven Levine that the money was best
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`left in the Company because he was working on a new strategy that could turn the
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`Company around. Steven Levine trusted Peltier and believed that Peltier would
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`protect Steven Levine’s interests and rights because Peltier had worked closely with
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`his son and Buffin. Steven Levine thus agreed to leave his investment in the
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`Company.
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`54. On or around January 28, 2018, Peltier, on behalf of Community,
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`entered into a contractual agreement to reimburse Max Levine for the money he had
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`loaned the Company. Peltier signed a contract stating that the “Company will
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`471279.1 .1
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`10
`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 11 of 69 Page ID #:11
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`reimburse you for these expenses….” Max Levine timely submitted the expenses
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`for reimbursement, per the terms of the agreement.
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`55. However, Peltier kept pushing off paying Max Levine back and
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`eventually took the inexplicable position that no money was owed. Max Levine
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`literally subsidized Peltier so he could live in LA and work at Community, and then
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`Max Levine got stiffed.
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`56. On March 26, 2018, Peltier provided an investor update on the
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`Company in which he said the Company was burning approximately $40,000 a
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`month and raising a small investment round for runway into early 2019.
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`57. Thereafter, Peltier began to communicate to Max Levine and Buffin
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`that the Company was failing and their shares were worthless. For example, on or
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`about May 11, 2018, in discussions about the value of the shares, Buffin expressed
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`concern about his incomplete knowledge about how the Company was doing: “Lol
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`you guys know what the shares can be worth much better than I do hence why
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`you’re shooting for more, I get it. I just personally feel like I’m getting dicked
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`around and don’t appreciate it.”
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`58. Peltier responded by assuring his friend that this was not the case: “but
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`for real, because the share[s] are w.e. [whatever] at this point, and we have $70k in
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`our bank lol I’m just going off what feels meaningful.”
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`59. Peltier told Buffin he would make him “a good cash offer on some
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`shares over the summer when we get some money goin too. think about, lml.”
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`60. On May 25, 2018, Peltier called Buffin. During this call, Peltier
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`reiterated that the Company only had $70,000 in the bank.
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`61. These and similar statements reinforced to Buffin that the value of their
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`shares was extremely low. Peltier began making these statements in March 2018 to
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`start laying the foundation for his fraud.
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`62. On or about June 18, 2018, Peltier called Buffin and floated that the
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`idea of the Company repurchasing all of Buffin’s and Max Levine’s outstanding
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`471279.1 .1
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`11
`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 12 of 69 Page ID #:12
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`shares. During this call, which lasted about 20 minutes, Peltier offered $10,000-
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`$15,000 to each of Buffin and Max Levine. Peltier told Buffin that he was trying to
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`buy back shares from other key contributors as well. Peltier conveyed to Buffin and
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`Max Levine that he was just trying to do the “right thing” for all of the Company’s
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`shareholders.
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`63. Over the next several months, Peltier continued to push Buffin and
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`Max Levine to sell back their shares. The parties spoke on several occasions,
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`including via phone on August 14, 2018. Peltier floated some numbers to Max
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`Levine and Buffin to put some pressure on them but never made a formal offer for
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`the shares repurchase.
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`64. Peltier continued to paint a bleak picture of the Company and its
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`finances in these discussions. Peltier made vague references to trying to “clean up”
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`the Company’s capitalization table because they had a “small” investment closing
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`soon, but never offered any further detail or information. These statements were
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`intended to prime Max Levine and Buffin for a low-ball repurchase offer that Peltier
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`would soon thereafter make.
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`65. On October 29, 2018, Peltier called Buffin to give him and Max Levine
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`an ultimatum on the repurchase of their shares and to walk Buffin through the
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`Company’s position. Peltier told Buffin on this phone call that there were only two
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`options left for the Company given its poor financial condition: (1) the Company
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`would either go bankrupt and Buffin and Max Levine would be left with nothing; or
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`(2) Buffin and Max Levine could sell back their shares to the Company for
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`approximately $20,000, which would save them all the time and legal costs
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`associated with filing for bankruptcy, allow Community to make payroll for a few
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`more months, and allow Max Levine and Buffin to walk away with guaranteed cash
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`66. Peltier told Buffin during this October 29, 2018 call that the
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`Company’s shares were only worth a penny per share, or somewhere in that
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`471279.1 .1
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`12
`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 13 of 69 Page ID #:13
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`“range,” and thus a purchase price in the $20,000 range would be a great deal for
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`Max Levine and Buffin. Peltier told Buffin that such a purchase price would
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`essentially give Plaintiffs a windfall—three times the value of the Company’s
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`shares.
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`67. Peltier’s ultimatum was confirmed in a phone call and multiple texts
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`the next day, November 1, 2018. Buffin called Peltier, with whom he continued to
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`have a close relationship, to get some clarity on the situation. Buffin expressed that
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`he wanted more insight into the finances of the Company so he could make an
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`informed decision. On this phone call, Peltier repeated the same ultimatum and told
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`Buffin that the $20,000 he was offering to each of Max Levine and Buffin was a
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`generous offer, would provide the Company some runway for a couple more months
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`and would give the Company the only way to avoid bankruptcy.
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`68.
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` The conversation then continued via text message during which Peltier
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`again confirmed his ultimatum:
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`Buffin: Is there an option to sell half and keep half?
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`Peltier: unfortunately, i don’t think they’d go for that. kinda all or
`nothing if we’re gonna try n roll forward vs clean reset. cash either
`goes to legal or shareholders if that makes sense. latter is better for all
`. . .
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`Buffin: Can you lay out options in a list form please?
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`. . .
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`Peltier: same as we talked about the other night as options. there arnt
`really any. we either try n make something work or we just have to go
`back to the drawing board
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`69.
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`In the same text message chain, Buffin again told Peltier that he
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`preferred a cash and equity option and asked Peltier about the Company’s potential
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`upsides. Peltier played coy, responding in a manner that conveyed he saw no upside
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`to the Company and wished there was:
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`Buffin: Would be great to still see some longer term upside which is
`why I asked about cash + equity.
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`471279.1 .1
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`13
`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 14 of 69 Page ID #:14
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`Peltier: you’re telling me lol.
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`70. Peltier then emphasized that this would be a good deal for them while
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`at the same time helping out the Company financially. In particular, Peltier said,
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`“end of the day it’s your call. it would help us out tremendously to be honest and
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`you can at least control your outcome. it’s still a pretty massive return considering
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`the shares started at $.00001 lol but think about it. otherwise we’ll need to recap
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`further or take other riskier/shitty routes.”
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`71. Buffin responded, summarizing that this other route, as Peltier had
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`explained previously, would be to “get stroked and move on with nothing lol.”
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`72. Peltier confirmed this was the only other option: “right, we just need to
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`clean cap to get all parties to help us move forward” and suggested this transaction
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`was essential for the Company to stay in business.
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`73.
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`In the same text chain, Buffin also directly asked Peltier about the two
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`new founders that Peltier alluded to during their phone call the day prior. Peltier
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`refused to give Buffin that information. Even when Buffin reminded Peltier that he
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`was a shareholder of the Company and thus entitled to this information, Peltier blew
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`him off and completely ignored the request:
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`Buffin: I understand and wanna make this smooth for you guys. Who
`are the two partner/co founder types you guys are bringing on?
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`Peltier: aight lmk [let me know] when you can please cause we gotta
`make moves here soon and can’t get into that unfortunately, it’s
`complicated but this is all part of how thatle turn out. think about it,
`hit me tm or wkend.
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`Buffin: Word just curious considering I’m a shareholder.
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`74. Over the next several weeks in November 2018, Peltier ramped up his
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`communications with Buffin in efforts to get Buffin and Max Levine on board with
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`the repurchase of their stock. Peltier made repeated affirmations that this was the
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`only route available that would permit the Company to survive, that the shares were
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`worthless, the Company had limited prospects and was on death’s door.
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`471279.1 .1
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`14
`COMPLAINT
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`Case 2:20-cv-07552 Document 1 Filed 08/20/20 Page 15 of 69 Page ID #:15
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`75. On November 8, 2018, Buffin called Peltier to get some additional
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`clarity on the situation and continued to express his hesitation. Peltier, again,
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`reaffirmed that the only two options were those he previously discussed with Buffin.
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`Based on Peltier’s statements and representations, Buffin told Peltier on this call that
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`he and Max Levine wanted to move forward with selling back their shares for a
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`purchase price in the range of $20,000.
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`76.
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`In or about mid-November 2018, Peltier sent Buffin and Max Levine a
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`draft Stock Repurchase Agreement. Peltier repeatedly assured them that this was
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`the best way forward for the Company and the only way to ensure Buffin and Max
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`Levine got any return on their investment.
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`77. On November 29, 2018, Peltier called Max Levine to try and seal the
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`deal. During that call, Peltier repeated the same story he had been telling Plaintiffs
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`for months—that the Company was on the verge of bankruptcy and that the only
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`way it could survive is if Buffin and Max Levine would sell back their shares.
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`During the call, Max Levine raised the fact that the Company still owed him for the
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`loans he provided to cover the Company’s expenses.
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`78. Peltier became frustrated with Max Levine, accusing him of holding up
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`the repurchase process and accusing him of not being a “team player.” Ultimately,
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`Peltier and Max Levine were able to reach a mutual understanding on that call, and
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`Peltier acknowledged Max Levine’s loans to the Company and Steven Levine’s
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`equity investment in this phone call.
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`79. Buffin and Max Levine entered into a Stock Repurchase Agreement
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`agreeing to sell back 600,000 shares in the Company for $22,002. Peltier signed the
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`Stock Purchase Agreement on behalf of the Company. At this purchase price, the
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`approximate