Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 1 of 24
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`NANCY MILLER-RICH,
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`Plaintiff,
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` - against -
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`ALTUM PHARMACEUTICALS INC.,
`BETTERLIFE PHARMA INC.,
`AHMAD DOROUDIAN,
`STEPHEN DATTELS,
`JOHN AND JANE DOES 1-50 and
`ABC CORPORATIONS 1-20,
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`Defendants.
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`COMPLAINT
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` PLAINIFF DEMANDS
` TRIAL BY JURY.
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`Plaintiff Nancy Miller-Rich by her undersigned counsel, McCarney Law
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`P.C., for her complaint alleges:
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`1. Plaintiff brings this action for damages arising from defendants’ violations
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`of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934
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`(“Exchange Act”), 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10.b-5,
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`aiding and abetting deceptive acts and false statements pursuant to Section 20(e) of the
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`Exchange Act, 15 U.S.C. § 78t(e), common law fraud and breaches of contract. Plaintiff
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`seeks $2 million in compensatory and $10 million in punitive damages.
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`1
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`NANCY MILLER-RICH,
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`Plaintiff,
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` - against -
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`ALTUM PHARMACEUTICALS INC.,
`BETTERLIFE PHARMA INC.,
`AHMAD DOROUDIAN,
`STEPHEN DATTELS,
`JOHN AND JANE DOES 1-50 and
`ABC CORPORATIONS 1-20,
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`Defendants.
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`COMPLAINT
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` PLAINIFF DEMANDS
` TRIAL BY JURY.
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`
`
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`Plaintiff Nancy Miller-Rich by her undersigned counsel, McCarney Law
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`P.C., for her complaint alleges:
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`1. Plaintiff brings this action for damages arising from defendants’ violations
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`of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934
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`(“Exchange Act”), 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10.b-5,
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`aiding and abetting deceptive acts and false statements pursuant to Section 20(e) of the
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`Exchange Act, 15 U.S.C. § 78t(e), common law fraud and breaches of contract. Plaintiff
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`seeks $2 million in compensatory and $10 million in punitive damages.
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`1
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 2 of 24
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`PARTIES
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`2. Plaintiff Nancy Miller-Rich resides at 565 Broome Street, Apt. 22A, New
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`York, NY 10013.
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`3. Upon information and belief, defendant Altum Pharmaceuticals Inc.
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`(“Altum”) is a corporation formed under the laws of Canada with an office at 1275 West
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`6th Avenue, Suite 300, Vancouver, BC V6H 1A6, Canada.
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`4. Upon
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`information and belief, defendant BetterLife Pharma
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`Inc.
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`(“BetterLife”) is a corporation formed under the laws of Canada with an office at 1275
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`West 6th Avenue, Suite 300, Vancouver, BC V6H 1A6, Canada.
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`5. Upon information and belief, defendant Ahmad Doroudian is an individual
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`with an address at 4172 Doncaster Way, Vancouver, BC V6S 1V9, Canada.
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`6. Upon information and belief, defendant Stephen Dattels is an individual with
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`an address at Lot 5, Lagomar Road, Palm Beach, FL 33480.
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`7. Upon information and belief, defendants John and Jane Does 1 through 50
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`are individuals, the present identities of whom are unknown to plaintiff, who are
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`party to defendants’ fraudulent conspiracy as alleged below.
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`8. Upon information and belief, defendants ABC Corporations 1 through 20
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`are corporations, the present identities of which are unknown to plaintiff, which are
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`party to defendants’ fraudulent conspiracy as alleged below.
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 3 of 24
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`JURISDICTION AND VENUE
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`9. This Court has federal question subject matter jurisdiction under 28 U.S.C.
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`§ 1331 and Section 27 of the Exchange Act, 15 U.S.C. § 78jaa, over the claims arising
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`under the antifraud provisions of Sections 10(b) of the Exchange Act, 15 U.S.C. § 78j(b),
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`Rule 10b-5 thereunder, 17 C.F.R. § 240.10.b-5, and Section 20(e) of the Exchange Act, 15
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`U.S.C. § 78t(e), and pendent jurisdiction over the common law fraud and breach of contract
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`claims.
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`10. This Court has diversity jurisdiction under 28 U.S.C. § 1331 over the claims
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`asserted in this action because the matter in controversy exceeds the sum or value of
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`$75,000, exclusive of interest and costs, and plaintiff is a citizen of New Jersey and
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`defendants are citizens of either Canada or Florida.
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`11. Venue lies in respect of the federal securities law claims under Section 27
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`of the Exchange Act, 15 U.S.C. § 78jaa, because an act or transaction constituting the
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`violation occurred in this District and defendants may be found or transact business here.
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`12. Venue lies under 28 U.S.C. § 1391(b)(2) because a substantial part of the
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`events or omissions giving rise to the state law claims occurred in this District.
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`13. This Court has in personam jurisdiction over defendants pursuant to Fed. R.
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`Civ. P. 4(k)(1)(A) because they would be subject to the jurisdiction of the courts of general
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`jurisdiction of New York State where this Court is located. Such jurisdiction lies under the
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`long-arm provisions of CPLR § 302(a)(1)-(3). Section (a)(1) jurisdiction obtains because
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`plaintiff’s claims arise from the defendants, either directly or through their co-conspirator
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`defendants, having transacted business within the State of New York, contracted to supply
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 4 of 24
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`goods and services here in the form of financing, securities and pharmaceuticals, and
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`entered into the Employment Agreement described below to be performed in New York,
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`all as set forth below. Section (a)(2) jurisdiction lies because defendants, either directly or
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`through their co-conspirators, committed tortious acts within this State from which
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`plaintiff’s claims arise, including without limitation their fraudulent misrepresentations
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`concerning Altum’s stock price and proposed amalgamation, fraudulent diversion of the
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`Covid-19 Opportunity, and fraudulent concealment of their scheme in this State, all as
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`alleged herein. Section (a)(3) jurisdiction exists because defendants, either directly or
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`through their co-conspirator defendants (1) have committed tortious acts without the
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`State as alleged below causing injury to plaintiff within the State, and (2)(i) regularly do or
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`solicit business, or engage in a persistent course of conduct or derive substantial revenue
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`from goods used or consumed or services rendered, in the State of New York, or (ii) expect
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`or reasonably should expect their fraudulent acts to have consequences within New York
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`State and derive substantial revenue from interstate or international commerce.
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`14. Defendants, each of them, individually, or through the acts of their co-
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`conspirator defendants described below, have committed overt acts in further of their
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`fraudulent scheme within the State of New York, and are otherwise subject to jurisdiction
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`in this Court based upon the acts and omissions of their co-conspirators.
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`15. In the event any defendant were not subject to in personam jurisdiction in
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`the courts of general jurisdiction of New York State in respect of any federal claim, then
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`exercising such jurisdiction would be proper under Fed. R. Civ. P. 4(k)(2) consistent with
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`the United States Constitution and laws.
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 5 of 24
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`FACTS
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`16. Prior to the events at issue, plaintiff Nancy Miller-Rich held upper-level
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`management positions for thirty-five years in the pharmaceutical, biotech, and healthcare
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`industries. She held senior management positions at Sandoz (now Novartis), Schering-
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`Plough and Merck where she was a member of the Operating Committee responsible for
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`launching several innovative products worldwide, including the breakthrough Gardasil
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`vaccine for human papillomavirus (“HPV”) and Keytruda immunotherapy for cancer.
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`These medications reached millions of patients across the globe and created billions in
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`shareholder value, with Keytruda alone generating some $18 billion annually. Ms. Miller-
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`Rich received numerous corporate awards and accolades for her achievements industry
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`wide and presently serves on Boards of Directors of four publicly traded pharmaceutical
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`companies and two private biotech companies.
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`17. Defendant Ahmad Doroudian had
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`likewise been active
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`in
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`the
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`pharmaceutical industry prior to meeting Ms. Miller-Rich having held senior positions at
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`nearly a dozen firms during his career, mostly short-term stints at start-up concerns. He
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`left one of these positions, CEO of pharmaceutical manufacturer Pangeo (USA) Corp.
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`(“Pangeo’), after his auditors resigned during a joint investigation by the Royal Canadian
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`Mounted Police and US Drug Enforcement Administration into unlawful distribution of
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`Pangeo’s 60mg pseudoephedrine tablets used
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`in
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`illegal methamphetamine
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`labs.
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`Doroudian is a citizen of both Canada and Iran and is active in the Ismaili community near
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`his home in Vancouver, Canada which serves as a source for investors, including investors
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`in defendant BetterLife.
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 6 of 24
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`18. Defendant Doroudian was Chairman and CEO of Altum in June 2018 when
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`he sought Ms. Miller-Rich out at the Jeffries Healthcare Conference in New York
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`City. Altum was a start-up private biopharmaceutical company based in Vancouver
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`engaged in clinical development of new products for treatment of HPV and cancer in which
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`Ms. Miller-Rich had particular expertise. Doroudian was looking to New York Venture
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`Capital firms, bankers and pharmaceutical investors to underwrite its efforts to obtain FDA
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`approval for use of interferon alpha 2b (“IFN a2b”) for treatment of HPV and to market a
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`gallium-based anti-cancer agent (“AP-002”). Ms. Miller-Rich’s experience and profile in
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`the industry would greatly enhance his ability to attract investors.
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`19. At a meeting following the conference arranged at Doroudian’s request, he
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`aggressively recruited Ms. Miller-Rich to assist with Altum’s efforts to gain funding for
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`the development of its two pipeline products for the U.S. market. He was especially keen
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`to move forward with the development of IFN a2b as an HPV treatment. Merck was the
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`innovator of IFNa2b and had obtained U.S. approval to market the drug under the brand
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`name Intron-A to treat Hepatitis B & C. In order to obtain U.S. Food and Drug
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`Administration (“FDA”) approval for a new indication for IFNa2b, Altum would need to
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`demonstrate biosimilarity to the reference compound, Intron-A. Ms. Miller-Rich’s close
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`relationships with key personnel at Merk would be invaluable.
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`20. After some discussions, Ms. Miller-Rich agreed to assist on a part-time
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`consultancy basis for a three-month period. Doroudian was so pleased with her efforts
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`during this period that he asked her to join the Board of Directors as Executive Chairman.
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 7 of 24
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`The arrangement was formalized in a written employment agreement effective as of
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`September 17, 2018 (the “Employment Agreement”)(Ex. A).
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`21. Under the Employment Agreement, Ms. Miller-Rich would provide
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`strategic guidance to the Company for the development of its HPV and cancer drugs and
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`assist CEO Doroudian in securing another $20 million round of investor funding. (Empl.
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`Agmt., Sched. A). She would continue to be based in lower Manhattan where she resided
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`and work on Altum matters approximately 20-hours per week. (§ 2.2). Although she
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`would make herself available in Canada as needed, her services would be performed
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`“generally . . . in the United States” and she would be paid in US currency. (Sched. A &
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`§ 13.1). Her initial compensation was set at $410,000, including a $50,000 signing bonus
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`payable in immediately exercisable stock options, as well as $180,000 in salary, $80,000
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`in stock and $100,000 in options, each payable in equal quarterly installments. (Sched. B).
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`22. Ms. Miller-Rich thereafter fully performed her obligations under the
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`Employment Agreement. Over seventy meetings were held, more than twenty of which
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`occurred in New York, to progress US market interest and funding for both IFN a2b as an
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`HPV treatment and AP-002 as an anti-cancer drug. Her former colleagues at Merk
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`provided Altum with access to $2.4 million in Intron-A at no cost which would enable
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`Altum to demonstrate to the FDA that Altum’s product was the biosimilar equivalent.
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`23. Ms. Miller-Rich also formulated an investor presentation and worked with
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`the development team, many of them U.S. employees, consultants and companies. She
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`targeted nearly one hundred Venture Capital investors as potential sources of funding.
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`After meeting Ms. Miller-Rich at a luncheon in Manhattan, partner Oscar Bekk of Ortac
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 8 of 24
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`AG, a Zurich-based investment firm representing wealthy European investors, gave the
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`green light for an additional $ 2.6 million in funding for Altum.
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`24. At Doroudian’s direction, Ms. Miller-Rich primarily focused her efforts on
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`the U.S. market. Her strategic analysis, valuation and forecasting work were all tailored
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`toward the needs of American venture capital firms and pharmaceutical companies. She
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`targeted the New York City and New Jersey market with which she was most familiar. The
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`approval process involved on-going discussions with the FDA. Clinical work was to be
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`performed in the United States as the leading medical experts in the field were located at
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`American universities.
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`25. In recognition of her achievements and as required under the Employment
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`Contract, Altum made the quarterly $45,000 salary payments to Ms. Miller-Rich for the
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`last quarter of 2018 and all four quarters of 2019 as required, but thereafter failed and
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`refused to make further salary payments without justification or explanation.
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`26. Altum further purported to comply with its obligations under the
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`Employment Agreement to make quarterly distributions of $20,000 in Altum common
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`stock and $25,000 in options for the last quarter of 2018 and all four quarters of 2019 as
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`required, but thereafter failed and refused to make quarterly share distributions without
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`justification or explanation. The distributions were all calculated at a stock price of
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`$1.20/share which Altum and Doroudian represented to be the fair market value of such
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`shares.
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`27. Ms. Miller-Rich reasonably relied on the misrepresentations of Altum and
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`Doroudian regarding the fair market value of the quarterly common stock and option
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 9 of 24
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`distributions (the “Altum Stock Misrepresentations”) and continued to perform her
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`obligations under the Employment Agreement fully and faithfully in reliance thereon.
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`28. In fact, as revealed by internal Altum corporate records to which Ms. Miller-
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`Rich would later gain access as described below, and as Altum and Doroudian both then
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`and there well knew, the fair market value of Altum shares was only a fraction of the $1.20
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`price used to calculate the quarterly distributions to Ms. Miller-Rich. The diminution in
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`value resulted from Doroudian’s systematic (1) payment of finder’s fees to his friends for
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`sourcing new investors with Altum shares at no cost, (2) issuance of Altum shares to
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`himself for no consideration which he in turn would sell to Altum investors at a higher
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`price to facilitate his diversion of these new investments to himself, and (3) issuance of
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`shares to other investors at much lower prices, many for no consideration whatsoever. Had
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`a true and correct valuation been utilized, Ms. Miller-Rich would have received a far
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`greater number of shares.
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`29. On March 25, 2020, Altum Chief Medical Officer Angela Ogden reported
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`to the Altum Board that Wuhan China was utilizing IFN a2b in an inhaler form for
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`treatment of Covid-19. At the time the three-person board consisted of Doroudian, Ms.
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`Miller-Rich and Ali Ardakani. Ardakani had been responsible for bringing the gallium-
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`based anti-cancer opportunity and the pharmaceutical development team to Altum. The
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`board immediately recognized the opportunity to seek FDA approval of Altum’s IFN a2b
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`as a Covid-19 treatment on an emergency use authorization basis. The potential for Altum
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`to help patients, responsibly gain approval and realize significant profits in the short-term
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 10 of 24
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`from IFN a2b (the “Covid-19 Opportunity”) was manifest. The Altum shareholders stood
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`to reap a windfall from the news and eventual sales.
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`30. Doroudian, however, had other plans. He was also a major investor in a
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`publicly traded cannabis company which he had co-founded, defendant BetterLife. The
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`shares of BetterLife (formerly Pivot Pharmaceuticals Inc.) were publicly traded on both
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`the Canadian Stock Exchange (“CSE”) and U.S. Over The Counter (“OTC”) markets with
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`a substantial number of U.S. investors. More than 56 million shares—nearly one-third of
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`those outstanding—were owned by U.S. investors as of July 2019.
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`31. After a series of acquisitions, BetterLife was focusing on cannabis laced
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`tablets, capsules, soft gels and beverages as well as edible mints and candies and intimate
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`lubricants. Doroudian had brought in many of his cronies from the Ismaili community in
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`Canada as early investors who stood to reap substantial benefits together with Doroudian
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`should its share price escalate dramatically.
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`32. Doroudian had also secured a substantial participation in BetterLife from
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`investment partnership High Park Ventures led by Canadian lawyer Stephen Dattels.
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`Doroudian was hopeful that Dattels, who had garnered his personal wealth from
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`investments in the mining industry and had residences in London, Palm Beach and
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`Bermuda, would bring in capital to fund BetterLife’s cannabis expansion plans. Dattels
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`and the group of investors he led had recently assumed control of BetterLife pursuant to an
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`undisclosed governance agreement in order to direct Doroudian. As Dattels and his
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`investors had cemented 40% control over BetterLife and held warrants to secure even
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`greater control, they stood to reap the most benefit from a dramatic increase in BetterLife’s
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 11 of 24
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`stock price, all but a certainty should BetterLife secure control of the Covid-19
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`Opportunity.
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`33. The defendants, each of them individually and together, thereafter
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`combined, conspired confederated and agreed to divert the Covid-19 Opportunity from
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`Altum to themselves. It was an object of the conspiracy, and means of its commission, that
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`the Covid-19 Opportunity would be diverted from Altum’s shareholders at less than fair
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`value by whatever means possible. It was a further object of the conspiracy, and means of
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`its commission, that the transfer of the Covid-19 Opportunity to BetterLife would increase
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`its stock price for the benefit of defendants at the expense of Altum’s other shareholders.
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`34. In furtherance of the conspiracy, defendant Dattels via email dated April 16,
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`2020 directed BetterLife’s Chairman and fellow investor, Krisztian Toth of the Fasken law
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`firm, to secure a license of the IFN a2b rights from Altum on below market terms. Toth
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`thereafter had a letter of intent (“LOI”) prepared binding Altum to an exclusive license to
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`BetterLife with an essentially one-sided commitment. Contrary to the industry standard
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`for such transactions which would require a substantial upfront cash component, the
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`transaction involved payment in BetterLife stock and warrants which would be of little use
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`in Altum’s development efforts and detrimental to Altum’s scientific credibility.
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`BetterLife reserved to itself unilateral rights to cancel the transaction should it not be able
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`to secure its own financing for IFN a2b development efforts as it did not itself have the
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`necessary capital. This was an unprecedented condition for investments involving break-
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`through pharmaceuticals.
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 12 of 24
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`35. Recognizing that Doroudian himself was hopelessly conflicted in respect of
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`the transaction given his dual shareholdings in both Altum and BetterLife, Toth’s draft of
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`the LOI provided for signature by Ms. Miller-Rich on behalf of Altum. Knowing full well
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`that Ms. Miller-Rich would never agree to such a deal, defendants, in furtherance of the
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`conspiracy, asked the Altum general counsel to change the signatory to Doroudian himself.
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`Doroudian executed the LOI on Altum’s behalf on the afternoon of May 6, 2020. Although
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`his fellow board members had no inkling of the transaction, the LOI by its terms was fully
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`binding even in the absence of the more formal license agreement that was contemplated
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`therein.
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`36. Later that evening at 7:30 pm board resolutions were circulated to Altum
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`directors Miller-Rich and Ardakani for their review and approval. This was the first they
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`learned of defendants’ scheme to divert the Covid-19 Opportunity. As it was immediately
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`apparent that Doroudian was breaching his fiduciary duties to the company by secretly
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`arranging to license Altum’s most valuable asset at a fraction of its value, the resolution
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`was summarily rejected.
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`37. Notwithstanding the Altum board’s rejection, BetterLife issued a press
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`release the following day announcing that it had secured a license to Altum’s IFN a2b
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`rights which it planned to market as a potential Covid-19 treatment under the trade name
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`“AntiCovir.”
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`38. After further investigation of Doroudian’s self-dealing, Ms. Miller-Rich and
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`Mr. Ardakani by majority vote of the board on May 21, 2020 suspended both Doroudian
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`and Chief Financial Officer (“CFO”) Moira Ong and terminated the General Counsel Stuart
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 13 of 24
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`Muglich. The board subsequently retained Blakes firm as outside counsel to assist with
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`their investigation.
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`39. Review of Doroudian’s email account and the financial records maintained
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`by CFO Ong revealed widespread self-dealing and stock dilution by Doroudian. Nearly
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`450,000 shares of Altum common stock had been distributed to various finders at no cost
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`which served both to offset the amount of the investment and to dilute the stock price.
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`Doroudian issued more than 1.1 million shares in Altum common stock and made cash
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`payments of nearly $1.6 million to finders sourcing Altum investments. During the same
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`period Doroudian was making quarterly stock and option distributions to Ms. Miller-Rich
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`at a $1.20 valuation, he issued 12,527,056 shares at a lower price, 5,255,558 of them for
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`no consideration at all. Since June 2016 Doroudian had issued 6,299,000 shares to himself
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`or his wife for no consideration. These manipulations, which were not disclosed to Ms.
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`Miller-Rich, substantially reduced the value of her stock.
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`40. Given the scope of the fraudulent dealings, directors Miller-Rich and
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`Ardakani both decided to part ways with Altum and Doroudian. By agreement dated June
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`9, 2020 (the “Settlement Agreement”)(Ex. B), Ms. Miller-Rich agreed to resign and
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`surrender her compensation and severance rights under the Employment Agreement
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`subject to Altum’s agreement to make certain payments to her. She was to receive a cash
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`payment of $400,000 payable in eight equal quarterly installments of $50,000 commencing
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`June 30, 2020, together with a $45,000 payment for outstanding salary on or before July
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`31, 2020. (§ 2). This represented a substantial discount from what was due and owing
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`under the Employment Agreement which included the short fall on the stock and option
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 14 of 24
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`distributions she had received based upon the inflated $1.20 pricing, the stock and option
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`distributions owing for the first two quarters of 2020, $45,000 in salary due for the second
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`quarter of 2020 and a $400,000 severance payment. (Empl. Agmt., Sched B & § 7.1).
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`Altum subsequently refused to make any payments.
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`41. With the dissenting directors out of the way, defendants were free to proceed
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`with their scheme to divert the Covid-19 Opportunity to BetterLife. On July 31, 2020,
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`defendants, in furtherance of the conspiracy, caused Altum and BetterLife to enter into an
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`Amalgamation Agreement (the “Amalgamation Agreement”) pursuant to which Altum
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`would become a wholly owned subsidiary of BetterLife. In exchange for their shares,
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`Altum shareholders would receive BetterLife shares equal to one-half of BetterLife’s
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`value. By Offering Circular issued that same day (the “Offering Circular”), Altum’s
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`shareholders, including Ms. Miller-Rich, were solicited, in furtherance of the conspiracy,
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`to approve the transaction at a July 29, 2020 special shareholder meeting.
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`42. The Offering Circular was materially false and misleading as defendants
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`then and there well knew. These misrepresentations included, inter alia, that BetterLife
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`was valued at or near $28.9 million (CND$36.1MM), that the transaction would be a
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`“merger of equals,” and that it would provide “better access to capital” (the “Offering
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`Misrepresentations”).
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`43. At the shareholder meeting on July 29, 2020, defendants, in furtherance of
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`the conspiracy, caused the Amalgamation Agreement to be approved by a 91.3% vote with
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`Ms. Miller-Rich among the dissenters.
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`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 15 of 24
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`44. Also in furtherance of the conspiracy, defendants caused a Form 2A Listing
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`Statement dated August 26, 2020 (“Form 2A”) to be publicly filed with the Canadian
`
`Securities Commission describing the transaction contemplated by the Amalgamation
`
`Agreement and its impending implementation. The Form 2A represented, falsely and in
`
`furtherance of the conspiracy, that the valuation of Altum in connection with the
`
`transaction was determined by arm’s length negotiation between BetterLife and Altum,
`
`that Altum’s value at the time of the transaction was equivalent to BetterLife, that such
`
`transaction would be a “merger of equals,” and that the transaction was valued at
`
`$19,485,932.80 (CAN$24,357.416)(the “Form 2A Misrepresentations”).
`
`45. Contrary to the representations in the Offering Circular and Form 2A, and
`
`as defendants then and there well knew, Better Life was in dire financial straits, hardly
`
`Altum’s “equal,” and certainly in no position to make the substantial capital investment
`
`required to bring IFN a2b to market under an emergency use authorization. As defendant
`
`Dattels wrote to BetterLife director Wolfgang Renz earlier in the year:
`
`[W]e have all sort of claims by [former CEO] Patrick Frankham,
`someone called Ali who has garnished $600k of our cash, [CEO]
`Russell Star’s termination and others who have resigned or who may
`be let go. Europe has been an unmitigated disaster.
`
` .
`
` .
`
`
`
`
`
`The iamhealth business has generated <$20k in gross income and we
`have nothing but a big hole in Europe with legal fees mounting and
`an unknown own future.
`
` . . .
`
` . . .
`
`
`
`15
`
`
`
`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 16 of 24
`
`Let’s batten down the hatches. Our stock is 9 cents bid. [CEO] Toni
`[Rinow] has resigned. We have litigation everywhere. We have
`former employees like Patrick trying to destroy us and now Toni is
`gone. We have chaos in Montreal and a huge lease obligation. We
`need to unwind California. We have zero revenue so to speak. We
`have devastated investors and if we don’t turn this around fast the
`company will go under . . . . .
`
`46. Indeed, in a sworn affidavit submitted to the Supreme Court of British
`
`Columbia on or about June 17, 2020, BetterLife CFO Ong averred that the company’s
`
`financial circumstances were “extremely dire.” The company had been unable to pay rent
`
`for its sole manufacturing facility in Quebec for more than a year, its CEO had not taken
`
`salary in 2020, other officers had been forced to take 35% pay cuts, and capital would be
`
`fully depleted within a month.
`
`47. The amalgamation was effectuated based upon the false and fraudulent
`
`misrepresentations of the Offering Circular and Form 2A without disclosure of these facts,
`
`in furtherance of the conspiracy, on August 31, 2020, whereupon the Altum shareholders
`
`surrendered their shares in exchange for publicly traded BetterLife shares.
`
`48. Although Ms. Miller-Rich initially elected not to participate in the
`
`transaction and instead exercise her dissenting shareholders rights under Section 190 of the
`
`Canada Business Corporations Act, she withdrew the notice after being advised that Altum
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`was unable to pay for the shares. In reliance on the representations made in the Offering
`
`Circular and Form 2A, she elected instead to receive BetterLife shares in their place
`
`pursuant to the terms of the Amalgamation Agreement. She tendered her 58,244 shares
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`of Altum common stock by letter dated September 16, 2020, and received in return 25, 628
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`BetterLife shares.
`
`
`
`16
`
`
`
`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 17 of 24
`
`49. Upon information and belief, defendants had the assistance of other co-
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`conspirators who participated in or aided and abetted the frauds set forth above, including
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`other investors, shareholders, directors and officers of defendant BetterLife and defendant
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`Doroudian’s Ismaili investor cohorts, who may have acted individually or through
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`corporate or other investment vehicles, the present identities of whom or which are
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`presently unknown to plaintiff. These defendants are named herein as John and Jane Does
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`1-50 and ABC Corporations 1-20 until their identities may be determined through
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`discovery or investigation.
`
`50. BetterLife’s stock was trading at .14 at market close today. Rather than the
`
`expected growth from a well-financed Covid-19 treatment roll-out, the former Altum
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`shareholders are now just as “devastated” as the BetterLife shareholders.
`
`FIRST CLAIM—SECURITIES FRAUD—ALL DEFENDANTS
`
`51. Plaintiff incorporates the foregoing allegations by reference herein.
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`52. By engaging
`
`in
`
`the conduct alleged
`
`in
`
`the complaint,
`
`including
`
`disseminating the Offering and Form 2A Misrepresentations containing materially false
`
`and misleading statements and omissions, defendants, directly or indirectly, singly or in
`
`concert, in connection with the purchase or sale of securities and by the use of means or
`
`instrumentalities of interstate commerce, or the mails, or the facilities of a national
`
`securities exchange, knowingly or recklessly have made one or more untrue statements of
`
`a material fact or omitted to state one or more material facts necessary in order to make the
`
`statements made, in light of the circumstances in which they were made, not misleading.
`
`
`
`17
`
`
`
`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 18 of 24
`
`53. Plaintiff relied on defendants’ representations to the market in electing to
`
`tender her shares.
`
`54. By reason of the foregoing, defendants each violated Exchange Act Section
`
`10(b), 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10.b-5, and plaintiff
`
`has been damaged in an amount to be determined at trial believed to be in excess of $2
`
`million.
`
`SECOND CLAIM
`AIDING AND ABETTING SECURITIES FRAUD
`ALL DEFENDANTS SAVE BETTERLIFE
`
`55. Plaintiff incorporates the foregoing allegations of paragraphs 1-50, supra,
`
`by reference herein.
`
`56. By engaging in the conduct alleged in the complaint, including
`
`disseminating the Offering and Form 2A Misrepresentations containing materially false
`
`and misleading statements and omissions, defendant BetterLife, directly or indirectly,
`
`singly or in concert, in connection with the purchase or sale of securities and by the use of
`
`means or instrumentalities of interstate commerce, or the mails, or the facilities of a
`
`national securities exchange, knowingly or recklessly have made one or more untrue
`
`statements of a material fact or omitted to state one or more material facts necessary in
`
`order to make the statements made, in light of the circumstances in which they were made,
`
`not misleading.
`
`57. The defendants other than BetterLife knew, or were reckless in not knowing,
`
`that BetterLife was engaged in the unlawful conduct allege in the complaint, and they
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`knowingly or recklessly substantially assisted and participated in the wrongdoing.
`
`
`
`18
`
`
`
`Case 1:22-cv-03473 Document 1 Filed 04/28/22 Page 19 of 24
`
`58. Plaintiff relied on defendants’ representations to the market in electing to
`
`tender her shares.
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`59. By reason of the foregoing, pursuant to Section 20(e) of the Exchange Act,
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`15 U.S.C. § 78t(e), defendants aided and abetted BetterLife’s violations of Exchange Act
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`Section 10(b), 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10.b-5, and
`
`plaintiff has been damaged in an amount to be determined at trial believed to be in excess
`
`of $2 million.
`
`THIRD CLAIM—SECURITIES FRAUD—ALTUM/DOROUDIAN
`
`60. Plaintiff incorporates the allegations of
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