STEALTH SOFTWARE Case Study

SUMMARY OF FACTS

40. Plaintiff, STEVEN HOOPER, repeats, realleges and reiterates each and every allegation contained in Paragraphs “1” though “39” of the Complaint.
41. Defendant, GERARD WARRENS, individually and as an Officer , Sole Director and Sole Manager of STEALTH SOFTWARE, LLC, actively recruited plaintiff, HOOPER , who became an Employee of STEALTH SOFTWARE, L.L.C., on or about July 1, 2013 after retirement from the F.B.I. GERARD WARRENS is a non immigrant citizen of The Netherlands but resides in Cave Creek, Arizona.
42 WARRENS never disclosed to HOOPER at the time of his employment or subsequently when WARRENS solicited money from HOOPER, that the sole manager of STEALTH SOFTWARE, L.L.C was STEALTH SOFTWARE, B.V., a Netherlands business entity

nor did he disclose to HOOPER, that WARRENS was the sole owner, officer, director and shareholder in STEALTH SOFTWARE, B.V.
43. WARRENS never disclosed to HOOPER , HOOPER at the time of his employment or subsequently when WARRENS solicited money from HOOPER, that the sole owner, officer, shareholder and director STEALTH SOFTWARE HOLDING, B.V. was GERARD WARRENS.
44. WARRENS never disclosed to HOOPER , HOOPER at the time of his employment or subsequently when WARRENS solicited money from HOOPER, that the sole owner, officer, shareholder and director of WARRENS HOLDING, B.V. was GERARD WARRENS.
45. WARRENS never disclosed to HOOPER , HOOPER at the time of his employment or subsequently when WARRENS solicited money from HOOPER the predecessor in interest to STEALTH SOFTWARE, B.V., was STEALTH SOFTWARE HOLDINGS, S.A.R.L. This entity is also owned by WARRENS.
46. In point of fact, upon further investigation by HOOPER, documents held in the Netherlands Office of Registry revealed GERARD WARRENS individually, and STEALTH SOFTWARE, LLC, and STEALTH SOFTWARE B.V., and STEALTH SOFTWARE HOLDINGS, S.A.R.L. are used interchangeably by WARRENS. (See Exhibit "D").
47. HOOPER was present at a number of presentations and conferences wherein WARRENS failed to reveal the true legal and equity ownership in any of the entities which WARRENS was the sole member, officer and director. WARRENS falsely stated to HOOPER that STEALTH SOFTWARE, L.L.C., had many investors and numerous customers. These statements by WARRENS were made on at least fifteen occasions commencing on or about June 23, 2013 and thereafter each and every subsequent month through and including July 1, 2015. 48. The Arizona limited liability company and the Netherlands and Luxemburg business entities (the other co-defendants) have the exact same owner, officer, and director, to wit, GERRARD WARRENS. WARRENS knew that he created each of the aforementioned business entities in The Netherlands or Luxemburg, but failed to disclose the true nature of WARRENS businesses, his personal interest therein, and the relationship between each and every one of the other business entities (the co-defendants). These disclosures are mandated disclosures under Arizona and Federal SEC regulations.
49. HOOPER relied upon statements by WARRENS, in which WARRENS said to Hooper that "...his investment was for STEALTH SOFTWARE, L.L.C., and would be used to purchase an equity interest in the limited liability company. This statement by WARRENS to HOOPER was made on or about June 19, 2014 and again on October 7, 2014,
and thereafter each and every month, through the present. These statements were false. HOOPER relied on WARRENS false statements and was never issued ANY interest in the Arizona Limited Liability company nor in any of the co-defendants businesses. HOOPER was not and still remains an "unsophisticated investor." All that HOOPER has received to date is an email which states he has ownership in 75 shares (See Exhibit "G "). Curiously, the email fails to disclose what his share are in (which entity) nor the number of treasury or outstanding shares in any of the defendants' businesses.
50. HOOPER was hired as an employee, because of the wealth of experience and expertise he had with the Intelligence and Security communities and various law enforcement agencies for over twenty nine years and because his contacts with proprietary companies engaged in security and intelligence was extensive and well respected. He was not hired as a salesman. Although he was given a title as Director of Homeland Security, he was not appointed an officer or director of the L.L.C., and has never been privy to any books, records, shareholder or board meetings nor has any financial information relative to any of the named Defendants' been disclosed to him by any of the Defendants', although requested at least weekly from the date of his employment in July 2013, through and including the present.
51. An Offer of Employment and Contract were signed by WARRENS and HOOPER on or about on July 1, 2013. (See Exhibit "H") attached and made a part hereof.
52. The first matter underlying the First Count and Cause of Action in the Complaint concerns the sophisticated security fraud orchestrated by GERARD WARRENS, individually, ("WARRENS") and through his business shells ("STEALTH SOFTWARE, L.L.C.", "STEALTH SOFTWARE, B.V.", "STEALTH SOFTWARE HOLDING B.V., STEALTH SOFTWARE HOLDINGS, S.A.R.L., and "WARRENS HOLDING, B.V." (the other co- defendants named in this Complaint).

53. Plaintiff HOOPER alleges that GERARD WARRENS, individually ("WARRENS") is utlizing his business shells ("STEALTH SOFTWARE, L.L.C.", "STEALTH SOFTWARE, B.V.", "STEALTH SOFTWARE HOLDING B.V.,STEALTH SOFTWARE HOLDING, S.A.R.L., and "WARRENS HOLDING, B.V.,") in order to protect himself from any personal liability, and to perpetrate and facilitate a complex scheme of security fraud by making false representations, making inaccurate and untruthful statements all of which were relied upon HOOPER to his detriment. This has resulted in HOOPER's investment loss of $75,000.00.
54. WARRENS also knew that Stealth Software, L.L.C., was insolvent and that he could not afford to pay HOOPER salary, or required unemployment insurance and other mandated benefits at the time HOOPER made his "investment."
55. HOOPER alleges that all actions complained of herein are the result of continuous and substantial contacts by WARRENS individually and on behalf of the other co-defendants. WARRENS solicited, met with and misrepresented to Arizona investors, (including but not limited to Plaintiff, HOOPER) false, and material misleading information or omitting material facts about the "investments" to HOOPER. These false statements and material omissions of fact are specified with particularity in the First Count of this Complaint.
56. Plaintiff alleges that should the activities of a subsidiary provide evidence that the subsidiary is an “alter ego” of the foreign defendant, these activities may be sufficient to establish personal jurisdiction. Although, co-defendants, have made disclosures and informed the Plaintiff that none of the foreign entities named as co-defendants are corporations, they are in fact operating, conducting business, and soliciting investments to United States citizens, and thus, has violated federal and stte security regulations and law. Defendants' denials that the foreign entities are all separate and unique are simply false.
57.

Plaintiff alleges that "STEALTH SOFTWARE, L.L.C.", "STEALTH SOFTWARE, B.V.", "STEALTH SOFTWARE HOLDING B.V., "WARRENS HOLDING, B.V., and STEALTH SOFTWARE HOLDINGS S.A.R.L. are alter egos of GERARD WARRENS.
58. Plaintiff alleges that under an alter ego theory, there is no requirement of a showing of fraud, even though in the instant matter, all elements of fraud are present.
59. Plaintiff has clearly illustrated that each of the foreign business entities named herein as co-defendants are the alter ego of WARRENS because each share unity of ownership, officer, directors, management and actually operated as a single economic entity such that it would be inequitable to uphold a legal distinction between them.

60. Each of the above noted foreign entities share common ownership of all of the legal and equitable interests in each other; share the same common officer, and director; the same or similar common marketing image on the website of STEALTH SOFTWARE; the same managerial and supervisory personnel, and business structures for handling investments from outside of The Netherlands, or Luxemburg, and all investor funds were solicited totally within the state of Arizona and from Arizona

domiciliaries.

61. Plaintiff HOOPER alleges that all co-defendants share unity of control and observance of corporate form would sanction a fraud or promote injustice.

62. Plaintiff HOOPER alleges that in the instant matter there is unity of control over management and activities amongst all foreign business entities. These factors include common ownership by GERARD WARRENS, common office space shared by STEALTH SOFTWARE, LLC, and the nonresident foreign co-defendants named in the Complaint; the intermingling of investment funds from Plaintiff HOOPER into the foreign nonresident co-defendants bank accounts; and the payment of salaries and other expenses of the entity. See, e.g., Dietel v. Day, 492 P.2d 455. (insert below footnote)

In addition to establishing ‘unity of control,’ a plaintiff must also demonstrate that fraud or injustice will result if the veil is not pierced. While one consideration is whether the entity was formed to perpetrate a fraud or is being used for fraudulent purposes, this is not the only way to establish injustice or inequity. For example, in Gatecliff, the court held “observance of the corporate form could permit the two corporations to confuse plaintiffs and frustrate their efforts to protect their rights” while allowing the responsible party to “evade liability.” 170 Ariz. at 38, 821 P.2d at 729. Accordingly, the totality of the circumstances must demonstrate an “overall element of injustice or unfairness.” NetsJets Aviation, Inc., 537 F.3d at 176.

63. Plaintiff HOOPER alleges that fraud and injustice has resulted from each of the foreign co-defendants were formed to perpetuate a fraud on security investors from the state of Arizona, and each of the foreign co-defendants are being utilized in the United States for fraudulent purposes, including but not limited to, circumventing the restrictions in place on nonimmigrant investments in the United States by a nonresident defendant to wit, GERARD WARRENS.