Case 2:21-cv-01226-KSH-CLW Document 1 Filed 01/27/21 Page 1 of 36 PageID: 1
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`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
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`U.S. SECURITIES AND EXCHANGE
`COMMISSION,
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`
`Plaintiff,
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`
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`vs.
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`VUUZLE MEDIA CORP.,
`RONALD SHANE FLYNN, and
`RICHARD MARCHITTO,
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`Defendants.
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` 
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`Civil Action No. _______________
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`JURY TRIAL
`DEMANDED
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`
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`Plaintiff United States Securities and Exchange Commission (“SEC” or the
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`COMPLAINT
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`“Commission”) alleges as follows against the following Defendants, whose names and last
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`known addresses are set forth below:
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`
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`
`
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`a.
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`b.
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`
`c.
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`1.
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`Vuuzle Media Corp. – 42 Broadway, Suite 12-117, New York NY, 10004;
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`Ronald Shane Flynn – Angeles City, Philippines and/or Dubai, United Arab
`Emirates;
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`Richard Marchitto – Rockaway, New Jersey.
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`SUMMARY
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`This action concerns an offering fraud perpetrated by Vuuzle Media Corp.
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`(together with its predecessor entities, hereinafter referred to as “Vuuzle”) and its founder,
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`Ronald Shane Flynn (“Flynn”), and aided and abetted by Richard Marchitto (“Marchitto”).
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`2.
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`From approximately September 2016 through at least May 2020, Vuuzle and
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`Flynn offered and sold more than $14 million of Vuuzle common stock and warrants to investors
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`throughout the United States. In violation of the securities laws, Flynn secretly diverted
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`approximately $5 million to support his aggressive fund-raising operations and pay commissions
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`to stock promoters. Flynn misappropriated another nearly $5 million in direct transfers to his
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`personal bank accounts overseas and by using corporate credit and debit cards for personal items,
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`such as dating and gambling applications, gold bars, and luxury travel. An additional
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`approximately $2 million appears to have been used for other expenses in furtherance of the
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`fraud, including, but not limited to, Ponzi-like payments to a limited number of investors, Fed Ex
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`charges, rent for a New York office, and attorney fees.
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`3.
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`To raise funds, Vuuzle and Flynn falsely represented to investors that Vuuzle was
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`a legitimate, successful, and growing company in the business of providing online live streaming
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`and entertainment services. In fact, Vuuzle was little more than a front for a boiler room Flynn
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`controlled.
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`4.
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`Operating primarily out of the Philippines under a series of different corporate
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`entities, Flynn, directly and through marketing teams acting at his direction, engaged in
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`aggressive and high-pressure sales campaigns. Among other tactics, Flynn and his boiler room
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`employees cold-called potential investors and, through relentless and deceptive phone and email
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`communication, convinced them to buy Vuuzle securities. In return for bringing investor funds
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`to Vuuzle, Flynn paid substantial commissions to himself and others.
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`5.
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`The securities offered were common stock. The price per share ranged from $1 to
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`$5, with most investors paying $5 per share. Many investors were also granted warrants that
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`provided the investor the purported right to purchase additional shares for a limited time at a
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`discounted price. None of these securities were registered with the Commission.
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`6.
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`Vuuzle and Flynn made numerous materially false and misleading statements in
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`their communications with investors, filings with the Commission, and in offering documents,
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`including Vuuzle’s Private Placement Memoranda (“PPMs”). For instance, Vuuzle and Flynn
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`told investors that their funds would be used to operate and build Vuuzle’s online streaming
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`business, which would earn millions of dollars in revenue from service fees and advertising. In
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`fact, of the $14 million raised in investor funds, Vuuzle and Flynn used only approximately $2
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`million to build the streaming applications, which served as props to raise more investor funds.
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`7.
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`Vuuzle and Flynn also falsely represented Vuuzle as a “pre-IPO” investment
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`opportunity that would provide returns to investors in the form of dividends and skyrocketing
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`post-IPO stock values. Yet, Vuuzle has never made a profit, never paid dividends to any
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`investor, and never made a public offering on any stock exchange. From its inception in October
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`2016 through May 2020, Vuuzle’s U.S. bank account reflects total business revenue of less than
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`$1,670.
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`8.
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`Vuuzle’s public filings and offering documents falsely suggest Flynn had only a
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`peripheral relationship with the company, if any. For example, in the PPMs, Vuuzle described
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`Flynn as merely a “non-voting beneficial owner” of a Vuuzle corporate shareholder. And
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`Vuuzle’s Forms D, filed with the Commission in 2017 and 2019, do not name Flynn as a related
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`party at all. In fact, however, Flynn exercised ultimate control over every part of Vuuzle’s
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`business for the primary purpose of enriching himself.
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`9.
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`Vuuzle and Flynn concealed Flynn’s control over Vuuzle by falsely representing
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`to investors and the public that Vuuzle was operated by a legitimate team of independent
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`executive officers. In early 2018, Flynn hired two former executives of a publicly-traded
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`company to ostensibly serve as Vuuzle’s Chief Executive Officer (“CEO”) and Chief Operating
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`Officer (“COO”). Their hiring was all for show. During their time at Vuuzle, both individuals
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`raised serious questions about Flynn’s operation of Vuuzle, and both were gone by November of
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`that year.
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`10.
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`Vuuzle and Flynn were aided and abetted in their fraud by Marchitto, a former
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`dentist who had lost money investing in one of Flynn’s previous business ventures. He provided
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`substantial assistance to Vuuzle and Flynn by acting as their U.S. corporate and financial
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`presence, thereby enhancing Vuuzle’s aura of legitimacy as a U.S.-based company. Because
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`Flynn avoided U.S. jurisdiction, Marchitto was instrumental to the fraud.
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`11.
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`Specifically, Marchitto (a) organized Vuuzle’s predecessor legal entity and served
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`as its initial member; (b) opened and maintained a U.S. bank account for Vuuzle, which was
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`used to receive and disburse the overwhelming majority of investor funds; (c) maintained a New
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`York office space, which was represented to investors as Vuuzle’s primary place of business;
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`and (d) facilitated Flynn’s misappropriation of investor funds by transferring funds to Flynn’s
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`accounts overseas and opening and maintaining corporate credit cards, which Flynn used for
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`personal expenses.
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`12. Marchitto was the sole signatory to Vuuzle’s U.S. bank account and had direct
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`access to that account. Marchitto also collected mail from the New York office space and
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`deposited investor checks to Vuuzle’s U.S. bank account. Because he had all the account
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`information, Marchitto knew or was reckless in not knowing that investor funds were deposited
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`to that U.S. bank account, and that his actions directly aided Flynn in misappropriating these
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`funds. By his conduct, he substantially assisted Flynn’s and Vuuzle’s violations of the securities
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`laws.
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`13.
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`By perpetrating this offering fraud, Vuuzle and Flynn have violated Section 17(a)
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`of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)] and Section 10(b) of the
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`Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17
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`C.F.R. § 240.10b-5] thereunder, and Marchitto aided and abetted those violations. By failing to
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`register the offering of Vuuzle securities, Vuuzle and Flynn also have violated Section 5 of the
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`Securities Act [15 U.S.C. § 77e]. And, by acting as a broker in selling Vuuzle securities without
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`being registered as, or associated with, a registered broker-dealer, Flynn has violated Section
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`15(a) of the Exchange Act [15 U.S.C. § 78o(a)].
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`14.
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`Because of the Defendants’ unlawful conduct, the Commission respectfully
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`requests that the Court: (i) permanently enjoin each Defendant from further violations of the
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`foregoing securities laws, (ii) order each Defendant to disgorge the unlawful profits from their
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`violations with prejudgment interest, (iii) impose civil money penalties on each Defendant, and
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`(iv) impose such other and further relief as the Court may deem just and appropriate.
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`JURISDICTION AND VENUE
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`15.
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`The Court has jurisdiction over this action pursuant to Section 20 of the Securities
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`Act [15 U.S.C. §§ 77t(b)] and Sections 21A and 27 of the Exchange Act [15 U.S.C. §§ 78u-1,
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`78aa]. Defendants, directly or indirectly, singly or in concert with others, made use of the means
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`or instruments of transportation and communication in interstate commerce, or of the mails, in
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`connection with the acts, transactions, and practices alleged in this Complaint.
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`16.
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`Venue is proper in this district under Section 22(a) of the Securities Act [15
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`U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa] because, among
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`other things, Defendant Marchitto resides in this district, and Defendants Vuuzle and Flynn have
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`targeted, communicated with, and raised money from investors that reside in this district.
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`DEFENDANTS
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`17.
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`Vuuzle Media Corp. is a Delaware corporation formed on August 22, 2017 as a
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`successor entity to Boink Live Streaming LLC, which was incorporated in Delaware on
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`September 16, 2016. (A separate corporation called Boink Live Streaming Corp. was also
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`incorporated in Delaware on August 22, 2017 and, until October 26, 2018, when the name was
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`officially changed to Vuuzle Media Corp., company documents referred to the entity
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`interchangeably as Boink Live Streaming, Boink Live Streaming Corp., and Boink Live
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`Streaming LLC.)  Vuuzle markets itself as a provider of online live streaming and entertainment
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`services. Vuuzle has claimed at various times to have offices around the world, including in
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`New York City, Las Vegas, and Scottsdale, as well as the Philippines, United Arab Emirates, and
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`United Kingdom. Vuuzle was founded by Flynn, who controlled Vuuzle’s operations at all times
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`during the relevant period.
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`18.
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`Vuuzle has never registered any of its securities with the Commission. Vuuzle
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`filed a Form D Notice of Exempt Offering of Securities on September 26, 2017 (in the name of
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`Boink Live Streaming Corp.), and an amendment on February 15, 2019 (in the name of Vuuzle
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`Media Corp.), claiming an exemption from registration under Securities Act Rule 506(b).
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`19.
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`Ronald Shane Flynn (a/k/a Ronnie Shane), age 56, is a United States citizen,
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`resident of the Philippines and/or the United Arab Emirates, and the founder of Vuuzle. While
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`Flynn currently holds no official title at Vuuzle, he is Vuuzle’s majority shareholder and
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`exercises ultimate control over all aspects of Vuuzle’s business, including its operations, online
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`presence, communications with investors, and company finances.
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`20.
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`Flynn has been subject to at least two state cease-and-desist orders in connection
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`with his prior solicitations of investors: one dated October 4, 2000 by the Ohio Division of
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`Securities; and a second dated September 22, 2016 by the State of California Department of
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`Business Oversight. Flynn was a registered representative of a registered broker-dealer from
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`November 1988 to March 1989, but he is not currently registered with the Commission in any
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`capacity.
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`21.
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`Richard Marchitto, age 72, is a retired dentist residing in Rockaway, New
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`Jersey. Marchitto has held various titles at Vuuzle, including “VP Marketing” and “board
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`director.” He acts on behalf of Vuuzle at Flynn’s direction. For example, at Flynn’s direction,
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`Marchitto established the original Vuuzle entity (Boink Live Streaming LLC) on September 28,
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`2016 and was its initial member. Also at Flynn’s direction, Marchitto opened Vuuzle’s primary
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`U.S. bank account (initially using his home address) – which Defendants used to receive and
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`transfer investor assets – and provided Flynn with electronic access to that account while
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`Marchitto remained the sole signatory. In addition, Marchitto opened credit card accounts in the
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`names of his former dental practice and various Vuuzle entities and granted Flynn the use of
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`those cards. Marchitto has never been registered with the Commission in any capacity.
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`I.
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`Vuuzle’s Purported Business
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`FACTS
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`
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`Vuuzle and Flynn convinced investors to buy Vuuzle securities by presenting
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`22.
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`Vuuzle as a legitimate, successful, and growing provider of online live streaming and
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`entertainment services. Investors were inundated with communications drafted and sent by
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`Flynn, directly or through his marketing teams, that used hyperbole to describe Vuuzle, its
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`products, and the online entertainment industry as whole.
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`23.
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`Vuuzle, Flynn, and his subordinates told investors that Vuuzle would use their
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`funds to grow and operate Vuuzle’s business. But instead, Flynn misappropriated the vast
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`majority of what Vuuzle received. Of the $14 million investors gave Defendants, only
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`approximately $2 million was used to operate Vuuzle – just enough to build and maintain
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`superficial versions of the online streaming applications from which Vuuzle was purportedly
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`going to earn revenue. These purported products were mere props Flynn used to raise additional
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`investor funds.
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`24.
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`Beginning in September 2016, Vuuzle and Flynn told investors that Vuuzle was
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`in the process of building a mobile phone application called “Bonk.live” (later called
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`“Bonk.be.live”) through which the company would provide a platform for performers who
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`wanted to livestream their talent to an audience. Flynn, Vuuzle, and Flynn’s marketing teams
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`provided investors with revenue projections showing millions and, in some instances, even
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`billions of dollars in expected company earnings. For example, in a September 11, 2016 email to
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`investors, Flynn claimed that “BONK LIVE HAS 6 UNIQUE INCOME STREAMS” and
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`depicted math equations purportedly reflecting revenues from each income stream ranging from
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`$50,457,600 per year to more than $21 billion per year.
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`25.
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`On October 30, 2016, Flynn sent an another email to investors attaching a “press
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`announcement” in which he described Bonk.live as “the newest streaming super app in the
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`world” which was “nothing less than genius as it allows digital publishers, advertisers, and the
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`live social streamers to make enormous money.” In this press announcement, Flynn claimed that
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`the “advertising carousel” on Bonk.live “will earn the company more th[a]n 50 million United
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`States Dollars per year” and that advertising during an influencer’s live stream could result in
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`another “$350,000,000 Million” to “1 billion USD to 3 billion USD Dollars per year.”
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`26.
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`Vuuzle and Flynn told investors that Bonk.live users would be able to purchase
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`virtual gift packages that they could send to live streamers they liked. In that same October 30,
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`2016 announcement, Flynn told investors that “Bonk potential earnings with only 100 million
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`users buying one package of $128.95 per year is more than 12 billion [dollars] per year.”
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`Performers that received enough virtual gifts were supposed to be able to cash out the value of
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`those gifts through debit cards. Indeed, Flynn sent investors photos of what appeared to be
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`Bonk-branded debit cards. Yet, Vuuzle never actually created or distributed any such cards.
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`27.
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`Despite these promises to investors, Bonk.live never made millions of dollars, or
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`really any money at all. Using outside vendors to build the platform, Flynn directed just enough
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`money to create an application with the minimum functionality necessary for downloading on a
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`mobile device. Flynn then used the existence of the app as proof of Vuuzle’s legitimacy, by, for
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`example, sending investors images of the Bonk.live application downloaded to his own phone.
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`28.
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`Vuuzle’s revenue projections assumed that there would be millions of Bonk.live
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`users. In fact, however, there were not. From May 25 through November 15, 2018, the average
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`daily number of devices using the Bonk.live app was 371. Flynn knew the actual number of
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`users because he received weekly emails containing updated charts of Bonk.live user data.
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`29. Moreover, Flynn knew that there never could be millions of users. In an email
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`dated September 27, 2018, a Vuuzle adviser told Flynn that his first discussion about the
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`Bonk.live application was “terrifying” because he “just found out how weak and undeveloped
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`this whole initiative is right now.” In particular, the adviser emphasized that he had just learned
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`that the software could only handle 40,000 users with “a full system crash imminent at 50,000+.”
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`Flynn responded that he already knew the app’s limitations, stating: “[t]he question about users
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`is not a new question as it was addressed months ago.”
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`30.
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`In approximately November 2018, Vuuzle began to shift its focus away from the
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`Bonk.live app. Flynn, directly and through his marketing teams, told investors that Vuuzle was
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`moving its business toward online streaming of television shows, through a mobile application it
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`later called “Vuuzle TV.” Flynn drafted and sent to investors, directly and through his marketing
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`teams, multiple emails raving about Vuuzle TV, its capabilities, and its potential. According to
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`this marketing material, Vuuzle TV was going to offer free as well as paid versions of its app and
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`would earn money through subscription fees and advertising. Investors were told that online
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`streaming was going to be the next revolution in entertainment and that Vuuzle investors would
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`earn “gargantuan return[s].”
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`31.
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`For example, on April 13, 2019, Flynn sent an email to investors with an attached
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`document titled, “Vuuzle TV’s Ten Million Dollar Investment Is Set To Win OTT subscribers
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`while eliminating the competition.” Flynn encouraged investors to “cash out of those mediocre
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`investments and finally make a sizeable investment in Vuuzle Media and get paid for being in
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`the right place at the right time with an investment that will win you BIG money!!!!!!!”
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`32.
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`Flynn’s statement that “ten million dollar[s]” was invested into building Vuuzle
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`TV was false. As described above, Flynn directed just enough money toward the business to
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`build a mobile application that users could download and view some television shows. Once the
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`app was available, Flynn sent investors, directly and through his marketing teams, links to the
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`Vuuzle.TV site along with images of Vuuzle.TV on his phone.
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`33.
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`And, contrary to the promises of “BIG money,” Vuuzle TV has not resulted in the
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`promised revenues. From its inception in October 2016 through May 2020, Vuuzle’s U.S. bank
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`account reflects total business revenue of less than $1,670. In its entire four years of operation,
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`through all the various mobile products Vuuzle and Flynn have hyped, Vuuzle has never made a
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`profit.
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`II.
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`Vuuzle was a Front for Flynn’s Boiler Room
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`34.
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`Rather than the legitimate, successful business touted to investors, Vuuzle was
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`simply a front for a boiler room, the sole purpose of which was to bring investor funds to Vuuzle
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`to be spent by Flynn and at Flynn’s direction.
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`35.
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`Operating primarily out of the Philippines, Flynn directed marketing teams
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`headed by four to six “Investment Representatives” (“IRs”) who were mostly close associates of
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`Flynn or members of his family. The marketing teams operated, at varying times, through four
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`companies under Flynn’s control: WorldCom Online Marketing, Inc.; Bonk Marketing Trade
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`and Promotion, Inc.; iMagically LLC; and Vuuzle Media Corp Fze LLC.
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`36.
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`Together, Flynn and the marketing teams engaged in coordinated and aggressive
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`sales campaigns to convince investors to buy Vuuzle securities. These sales campaigns involved
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`repeated, high-pressure sales calls. Flynn and his marketing teams also inundated current and
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`potential investors with emailed marketing materials – sometimes several in a single day –
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`relating to the business of Vuuzle, its products, and the industry as a whole.
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`37.
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`Vuuzle and Flynn identified potential investors by purchasing “lead lists” of
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`purportedly accredited investors from several independent sellers, for anywhere from $1,000 to
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`$5,000 per list. In addition to names and contact information, certain lists also included
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`information such as the types of investments the investor was interested in and, sometimes,
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`descriptions of the investors themselves. For instance, one lead list received by Flynn on June 5,
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`2019, included additional, often profane, descriptors next to certain names such as “dumbass,”
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`“old,” or “stroke.”
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`38.
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`After receiving the lists, Flynn had his marketing teams “wash” them for
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`duplicate names from prior lead lists and then directed them to cold-call the remaining entries.
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`Flynn provided his marketing teams with initial “sales pitch” scripts for them to use in their calls
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`with potential investors.
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`39.
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`In most cases, Flynn’s scripts directed comparisons of Vuuzle to Facebook,
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`Twitter, and Google, highlighting the billions of dollars made by Facebook shareholders from
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`the Facebook IPO. In at least one instance, aware of the misrepresentations typically made to
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`investors, Flynn instead recommended that a particular investor be pitched “super clean.” In a
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`July 19, 2018 email, Flynn directed an IR to call an acquaintance of the then-CEO of Vuuzle.
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`Specifically, Flynn instructed the IR to “just pitch clean because he will tell [the CEO]
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`everything and I don’t want him to scare [the CEO] into thinking we are selling dirty.”
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`Notwithstanding Flynn’s efforts, Vuuzle’s CEO resigned a few months after Flynn’s July 2018
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`email.
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`40.
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`Flynn controlled nearly every aspect of the sales campaigns. He directed the sales
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`pitches, created marketing material sent to investors via email, oversaw Vuuzle’s online
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`presence, controlled the content posted to Vuuzle’s websites, followed up directly with each
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`investor by phone to address any concerns, if necessary, and often “closed” the investment deal.
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`41.
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`In addition to the IRs and marketing representatives, Flynn retained a staff of
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`secretaries, IT support specialists, content writers, and finance employees who reported solely to
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`him and who helped him solicit investor funds. Flynn required each group of employees to
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`provide him with periodic reports of their “accomplishments.” These reports make clear that
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`selling Vuuzle securities – not building a legitimate business – consumed the overwhelming
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`majority of Flynn’s and his employees’ time and energy.
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`42.
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`For example, at any given time, Flynn retained anywhere from four to thirteen
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`secretaries to contact existing and potential investors (who they referred to as “clients”) and to
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`maintain meticulous records of their efforts to procure additional investor funds. To control the
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`messaging to investors, Flynn required his secretaries to send him written investor
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`communications for his approval before they were sent to investors. In addition, Flynn arranged
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`for his secretaries to receive trainings in dealing with investors. As part of these trainings, Flynn
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`was provided reports on each secretary’s skills in “pitch[ing] a customer,” including evaluations
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`of their English pronunciation and their ability to recite “rebuttals” to standard investor concerns.
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`43.
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`On a daily basis, each secretary provided Flynn with a report of her
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`“accomplishments.” These reports included detailed information about which investors the
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`secretary had contacted, when the communications occurred, what was said, how much the
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`investor planned to invest, and what next steps were necessary to close the investment deal.
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`Periodically, secretaries also sent group reports to Flynn, titled “Incoming Done Deals,” which
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`were consolidated lists of investors who had committed funds that Flynn could expect to receive
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`shortly.
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`44.
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`Similarly, Flynn received daily reports from his “IT Department.” These reports
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`reflected virtually no activity relating to the production or maintenance of the Bonk.live or
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`Vuuzle TV applications, the ostensible focus of Vuuzle’s business. Instead, his IT employees
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`primarily reported providing computer and tech support to Flynn and his marketing teams,
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`“washing” lead lists, creating Skype and email accounts for new marketing representatives, and
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`double-checking investor calls reported by Flynn’s secretaries.
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`45.
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`In addition, Flynn received “Treasury Department” reports, which had nothing to
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`do with business revenue or Vuuzle’s books and records. Instead, these reports detail finance
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`employees’ efforts to track investments made into Vuuzle, issuing share certificates and warrant
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`agreements, and maintaining the Vuuzle shareholder records.
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`46. Marketing team meeting notes similarly reflected the pressure to make investor
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`sales within the boiler room. For instance, in a meeting that took place on May 25, 2019, one IR
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`told his marketing representatives that he needed potential investors to be “fully pitched and not
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`half-pitched,” and that marketing representatives should “do whatever it takes every day to
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`produce” investor sales. As the IR reminded his marketing team, their focus should always be on
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`the money: “[y]ou have good opportunities to make good cash right here and right now if you
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`stay focus[ed] and do what needs to be done every day.”
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`47.
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`As compensation for recruiting investors, Vuuzle and Flynn paid commissions to
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`Flynn, his IRs, and other boiler room staff based upon their respective roles. To receive
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`payment, the IR was required to submit a request or invoice to Flynn for his approval. No one
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`got paid unless Flynn approved it.
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`48.
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`Accordingly, detailed spreadsheets were emailed to Flynn by his IRs, which
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`calculated each investor’s “done deal” investment amount, the initials of the boiler room staff
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`person credited with “opening” and/or “closing” the deal, and the percentage commission earned.
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`According to these charts, Flynn and his IRs received commissions from 8% to 15% of investor
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`funds, while lower level marketing reps were paid commissions of up to 2.5% of investor funds.
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`III. Vuuzle and Flynn Misused $10 Million in Investor Funds
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`49.
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`Vuuzle and Flynn falsely represented to investors, directly and through the
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`marketing teams, that Vuuzle was a legitimate business and that it would use investor funds to
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`grow and operate the company.
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`50.
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`For example, a 2017 PPM that was provided to investors describes the use of
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`investor proceeds as follows:
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`51.
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`In this chart and other similar statements, Flynn, Vuuzle, and their marketing
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`team represented that Vuuzle would use more than 99% of investor funds for building,
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`marketing, and selling Vuuzle’s online products. They also claimed that only 0.5% of investor
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`funds would be used in connection with offering securities. Similarly, in an email dated April
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`20, 2020, Flynn told an investor that “the corporation is using its funds to grow the platform.”
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`52.
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`Vuuzle made similarly false statements in two Forms D filed with the
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`Commission in 2017 and 2019.
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`15
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`53.
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`Both Forms D contained identical responses that specifically represented that
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`Vuuzle had paid $0 in sales commissions and $0 in finders’ fees in connection with the offering
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`of Vuuzle securities.
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`54.
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`As Flynn knew, these statements were false. Of the $14 million invested in
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`Vuuzle, only approximately $2 million was ultimately used for the costs of building and
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`maintaining Vuuzle’s online products. Flynn diverted more than $10 million for his personal
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`use and benefit and to support his boiler room operations, including paying commissions to
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`himself and others.
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`A.
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`55.
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`Flynn Personally Misappropriated $5 million of Investor Funds
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`Flynn diverted a total of nearly $5 million of investor proceeds from Vuuzle’s
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`primary U.S. bank account for his own benefit. Specifically, from November 21, 2016 to August
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`22, 2019, Flynn transferred (or directed Marchitto to transfer) more than $2.6 million in investor
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`funds from Vuuzle’s U.S. bank account to Flynn’s personal bank accounts in Singapore and the
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`United Arab Emirates. In addition, Flynn used investor funds to pay more than $2.3 million in
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`expenses that he incurred using corporate credit and debit cards.
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`56.
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`The overwhelming majority of the $2.3 million in expenses were personal. They
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`included, for instance, nearly $1 million in purchases at jewelry stores in Singapore, Dubai, and
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`the Philippines. Receipts from the Dubai jewelry store reflect that some of Flynn’s purchases
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`16
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`Case 2:21-cv-01226-KSH-CLW Document 1 Filed 01/27/21 Page 17 of 36 PageID: 17
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`were for 24 Karat gold bars. Flynn also racked up more than $500,000 in credit card charges for
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`his travel and entertainment, including international business class flights, luxury hotels, strip
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`clubs, and restaurants. Flynn also used the Vuuzle debit card connected to the primary U.S. bank
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`account that received investor funds to spend another more than $25,000 on clearly personal
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`items, such as online dating and gambling applications. Investors unwittingly paid for it all.
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`B.
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`57.
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`Vuuzle Paid Undisclosed Commissions to Flynn and Others
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`In addition to $5 million misappropriated for Flynn’s personal use, Vuuzle and
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`Flynn diverted another approximately $5.5 million in investor funds to sustain Flynn’s boiler
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`room operations, including paying undisclosed commissions to himself and his marketing staff.
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`58.
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`Flynn engaged in efforts to conceal the nature of these payments. From
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`November 22, 2016 through May 28, 2020, Flynn transferred (or directed Marchitto to transfer)
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`a total of $5.1 million from Vuuzle’s primary U.S. bank account to overseas accounts in the
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`names of entities under Flynn’s control, including more than $2.2 million to his company,
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`iMagically.
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`59.
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`Flynn attempted to legitimize some of these payments by directing iMagically to
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`send Vuuzle invoices for “consulting fees.” However, these invoices clearly reflect
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`commissions, as they contain investor names, along with the amounts invested, and a description
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`of the charges that said “40% Fees, Consulting, meetings, phone, time, FedEx, Credit charges &
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`secretarial.” The bottom of each invoice had a note stating “[i]f you have any questions about
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`this invoice please contact Ronnie Shane Flynn” and providing Flynn’s phone and email address.
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`60.
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`Once the funds arrived in the overseas accounts, Flynn directed them to be
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`disbursed to himself and his marketing staff, mostly in the form of commissions. For example,
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`on April 9, 2019, Flynn sent his treasury staff an email with the subject line, “10k sent to
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`17
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`Case 2:21-cv-01226-KSH-CLW Document 1 Filed 01/27/21 Page 18 of 36 PageID: 18
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`magically” and a message saying, “SENT YOU TEN THOUSAND, GET JOSHUA PAID…”
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`Similarly, on August 24, 2019, Flynn sent his staff an email that stated “I have sent off an
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`additional 5 k that can be used for the commis