CHEERS CHUMPS!!->WORLDCALL CORP filed this 8-K on 01/15/1999. tenkwizard.com
FOR THE DISTRICT OF NEVADA
POWERTEL USA, INC., ) CV-N-98-00739-HDM (PHA)
a Delaware corporation, formerly )
Nevada Energy Company, Inc., )
)
Plaintiff, )
)
v. ) COMPLAINT
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PATTINSON HAYTON; RODERICK )
R. MCCLOY, individually and trading as )
RODERICK R. MCCLOY, P.C. and )
JONES, MCCLOY, PETERSON, )
affiliated law practices; JONES, MCCLOY )
PETERSON, affiliated law practices; )
KEVIN QUINN; GOLDEN CHANCE )
LIMITED, an Isle of Man Private Company )
Limited by Shares; WATERFORD TRUST )
COMPANY, an Irish corporation; and )
MORTLAKE VENTURE CAPITAL )
FUND, a California corporation, )
)
Defendants. )
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A. JURISDICTION AND VENUE
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1. Plaintiff PowerTel USA, Inc., formerly known as Nevada
Energy Company, Inc. ("Nevada Energy"), brings this action pursuant to the
Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C.
Sec. Sec. 1961-1968, and common law conversion and fraud.
2. Jurisdiction over the RICO claims exists pursuant to 18
U.S.C. Sec. 1964 and 28 U.S.C. Sec. 1331, in that this is a civil action arising
under the laws of the United States. This Court has supplemental jurisdiction
over the related state-law claims.
3. Venue exists in this district pursuant to 28 U.S.C.
Sec. 1391(b), in that a substantial part of the events giving rise to the claim
occurred in this district.
B. NATURE OF THE ACTION
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4. This lawsuit arises out of a pattern of racketeering
activity and scheme to defraud pursued by the Hayton Enterprise Group (the
"Hayton Group" or the "Group"), an association-in-fact that was formed to
conduct illegal activity. The affairs of the Hayton Group were and are directed
by defendant Pattinson Hayton. The Hayton Group consists of at least all of the
defendants in this action, plus other individuals and entities not being sued
here, and may include other individuals and entities unknown to plaintiff. Each
of the members of the Hayton Group were knowing participants in the Group's
pattern of racketeering activity and scheme to defraud Nevada Energy, as
explained below. The Hayton Enterprise Group's activities affected interstate
and foreign commerce.
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5. The Hayton Group's scheme involves taking over small
publicly-traded companies, illegally looting them for the Group's substantial
profit, and then leaving that company on the verge of, or in, bankruptcy. The
Hayton Group accomplishes its scheme by initially appearing to be a legitimate
investor interested in providing financial assistance to the target company
through one or more companies that are members of the Group. Although Mr. Hayton
through one or more companies that are members of the Group. Although Mr. Hayton
controls the Group, he typically stays in the background once the takeover is
complete. Instead, the Hayton Group conducts its day-to-day operations through
other members of the Group, particularly attorneys. In addition to keeping Mr.
Hayton out of the public view, the Hayton Group's use of attorneys gives the
target company a false sense of security, as it provides comfort that the Hayton
target company a false sense of security, as it provides comfort that the Hayton
Group's investment must be legitimate. Unbeknownst to the company, however, the
attorneys (who sometimes, as in the case here of defendant Kevin Quinn, have
prior disciplinary problems) are a knowing part of the illegal scheme. Indeed,
instead of guarding against the defrauding of the company, the attorneys (as
here with Roderick McCloy and his law firms) are one of the chief means by which
the Hayton Group manages to defraud the target company.
6. The Hayton Group's first victims apparently were Apogee
Robotics Inc. and Quadrax Corp. (of which more below). Thereafter, the Hayton
Robotics Inc. and Quadrax Corp. (of which more below). Thereafter, the Hayton
Group descended on Nevada Energy, as described in detail below. The Hayton Group
(including additional individuals and entities) is currently using this same
scheme to loot Zulu-Tek, formerly known as Netmaster Group (of which more
below).
C. THE PARTIES
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7. Plaintiff PowerTel USA, Inc, is a Delaware corporation. It
is a diversified holding company engaged in the energy and telecommunications
industries; its current principal place of business is East Lansing, Michigan.
At most times relevant to this complaint, PowerTel was known as Nevada Energy
Company, Inc., and had its principal place of business in Reno, Nevada. At all
times relevant to this complaint, Nevada Energy and PowerTel were engaged in
interstate commerce. Plaintiff will be referred to as "Nevada Energy" or "the
Company" throughout this complaint.
8. THE MEMBERS OF THE HAYTON ENTERPRISE GROUP
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The members of the Hayton Enterprise Group include at least
the following defendants, all of whom agreed to participate, and did
participate, in the Group's racketeering activity by means of a scheme to
defraud Nevada Energy:
a. PATTINSON HAYTON, an Australian national
who currently lives in or around Palm Springs, California; he sometimes adds a
"III" after his name and at other times has used the name "Patrick Hayton". Mr.
Hayton is and has been the leader of the Hayton Group throughout the unlawful
scheme set forth in this complaint. Mr. Hayton purportedly was elected as Vice
President of Financial Planning of Nevada Energy on November 25, 1996 and as
"Interim President" of Nevada Energy on approximately February 10, 1997,
although he purported to act as President starting sometime in January 1997. Mr.
Hayton's unsavory career is set forth in more detail in Paragraph 9.
b. RODERICK R. MCCLOY, a barrister and
solicitor in Vancouver, British Columbia, Canada who trades variously as
Roderick R. McCloy, P.C. and Jones,
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McCloy, Peterson, affiliated law practices. On information and belief, Mr.
McCloy has been a participant in the Hayton Group's activities since its
successful scheme to defraud Apogee Robotics, Inc. and Quadrax Corp. Mr. McCloy
was prominently involved in the Hayton Group's scheme to defraud Nevada Energy,
as he passed the Hayton Group's orders to Nevada Energy's board of directors,
gave the Nevada Energy board securities and corporate legal advice (even though
he is not licensed to practice law in any state of the United States), and used
Jones, McCloy, Peterson's accounts as a conduit to improperly take money from
Nevada Energy for the benefit of the Hayton Group. In addition, Mr. McCloy was
and is a director of defendant Waterford Trust Company, another member of the
Hayton Group.
c. JONES, MCCLOY, PETERSON, affiliated law practices, a law firm
based in Vancouver, British Columbia, Canada. Acting through Mr. McCloy, Jones,
McCloy, Peterson knowingly was one of the principal conduits through which the
Hayton Group defrauded Nevada Energy, as it knowingly permitted its bank
accounts to be used to transfer money into and improperly take money out of the
Company. In participating in this illegal activity, plaintiff believes that
Jones, McCloy, Peterson made a substantial profit. In all of his activities set
forth below, Mr. McCloy acted both on his own behalf and as an agent of Jones,
McCloy, Peterson.
d. KEVIN QUINN, a disbarred attorney and convicted felon who
formerly was admitted to practice law in the state of California. Although
knowing that Mr. Quinn had been disbarred and convicted of grand theft
embezzlement for stealing money from clients, the Hayton Group caused him to be
hired as counsel by Nevada Energy, believing
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(correctly) that Mr. Quinn would knowingly participate in the Group's scheme to
defraud the Company. In addition, at the direction of Mr. Hayton, Mr. Quinn
purportedly was elected as Secretary and General Counsel of Nevada Energy on
approximately January 21, 1997. While purporting to act as Nevada Energy's
counsel (even though he knew that he had been suspended from the practice of
law), Mr. Quinn fraudulently caused Nevada Energy to file documents with the
Securities and Exchange Commission that he knew to be false and misleading.
e. GOLDEN CHANCE LIMITED, an Isle of Man private
company limited by shares, which was the Hayton Group's chosen instrument to
obtain effective control of Nevada Energy. Although Mr. Hayton was neither a
director, officer nor record stockholder of Golden Chance, Nevada Energy
believes that he was (and is) its controlling stockholder, hiding his ownership
through a web of nominee companies and individuals.
f. WATERFORD TRUST COMPANY, an Irish corporation.
Waterford participated in the effective control of Nevada Energy through its
affiliate, Golden Chance. Although Mr. Hayton was neither a director, officer
nor record stockholder of Waterford, Nevada Energy believes that he also was
(and is) its controlling stockholder, hiding his ownership through a web of
nominee companies and individuals. At all relevant times, Golden Chance acted as
an agent for Waterford.
g. MORTLAKE VENTURE CAPITAL FUND, a California
company that Nevada Energy believes is solely owned by Mr. Hayton. Through Mr.
Hayton, Mortlake
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participated in the effective control of Nevada Energy, and was
used by the Hayton Group as one of the principle conduits by which the Group
defrauded Nevada Energy.
D. MR. HAYTON'S HISTORY BEFORE FORMING THE HAYTON GROUP
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9. Mr. Hayton has a long history of problems with agencies and
courts. Among other matters:
a. In approximately 1987, a company controlled by Mr.
Hayton, Palmer Financial Corp., bought a controlling interest in a United
Kingdom investment firm, London & Norwich, that was later ordered into
receivership by British authorities for failing to protect the public money it
was entrusted with investing;
b. In approximately 1988, Mr. Hayton was fined
$60,000 by the United States District Court for the District of Columbia for
failing to comply with a court order requiring two companies he controlled,
Palmer Financial Corp. and Galloway Capital Corp., to file certain financial
reports with the Securities and Exchange Commission;
c. In 1991, the Immigration and Naturalization
Service issued a deportation order for Mr. Hayton, who avoided deportation by
marrying a United States citizen;
d. In 1992, the California Superintendent of Banks,
in blocking Mr. Hayton's purchase of a unit of the Bank of Beverly Hills,
stated that Mr. Hayton's "integrity. . . is subject to question."
E. THE HAYTON GROUP INITIATES ITS PATTERN OF RACKETEERING
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ACTIVITY
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10. Prior to becoming involved with Nevada Energy, the Hayton
10. Prior to becoming involved with Nevada Energy, the Hayton
Group obtained control of two other small, publicly-traded companies, Apogee and
Quadrax, both in mid-1994. In both of those cases, the Hayton Group obtained
substantial sums of money (perhaps as much as millions of dollars) from either
the company or its investors, while leaving both companies in or on the verge of
bankruptcy, and the investors with worthless (or near-worthless) stock.
11. For example, the Hayton Group acquired control of Apogee
on approximately May 12, 1994 by purchasing 6 million shares of its common stock
for 6 million shares of preferred stock in Conagher & Co., Inc., which was then
(and may still be) a member of the Hayton Group. Conagher was required to redeem
its preferred stock for $2 million, but never did so; as the Hayton Group
controlled Apogee's board of directors, it was able to prevent Apogee from
pursuing its legal rights against Conagher. Although it never properly paid for
its Apogee stock, Conagher nonetheless sold it, earning large profits for the
Hayton Group. As a result of the Hayton Group's actions, Apogee's stockholders
suffered large losses, as the price of Apogee's stock dropped from 75 cents to 2
cents per share. Apogee had its stock delisted by NASDAQ on approximately
November 1, 1994, suspended operations on November 28, 1994 and filed for
bankruptcy protection on December 9, 1994.
12. As a result of this looting, Apogee filed an adversary
proceeding against Mr. Hayton in the United States Bankruptcy Court for the
District of Colorado. On April 8, 1997, after Mr. Hayton failed to defend the
action against him, that court entered a judgment against Mr. Hayton for nearly
$3.7 million, including $1 million in punitive
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damages. In this order, the Bankruptcy Court determined that Conagher was the
"alter ego of and instrumentality of [Mr.] Hayton," that Mr. Hayton "received
from [Apogee] transfers of stock of Apogee Robotics for less than fair
consideration," that Mr. Hayton received payments from Apogee "without corporate
authorization [which] represented conversion of funds of Apogee," and that Mr.
Hayton made false representations and assurances to Apogee. In awarding punitive
damages, the Bankruptcy Court determined that "the actions of [Mr.] Hayton were
calculated and intentional and intended to defraud Apogee and the shareholders
of Apogee and represented a gross fraud upon Apogee and its shareholders."
13. Also as a result of his actions with Apogee, Mr. Hayton
and Conagher were sued by James R. Currier, Sr., a former officer of Apogee, in
the United States District Court for the Western District of North Carolina. Mr.
Hayton also defaulted in that action, and on September 26, 1996 Mr. Currier
obtained a judgment against both defendants for over $775,000. This court also
determined that Conagher was the alter ego of Mr. Hayton.
14. With Quadrax, the Hayton Group acquired control by having
Conagher buy substantial amounts of Quadrax's stock for promissory notes, which
were never fully paid. During the Hayton Group's control of Quadrax, Mr. Hayton
used more than $1 million in company funds to write checks to his wife,
attorneys who did not work for Quadrax, other companies controlled by the Hayton
attorneys who did not work for Quadrax, other companies controlled by the Hayton
Group (including Apogee) and for undocumented "travel expenses." Mr. Hayton's
tenure resulted in losses of nearly $8 million for Quadrax's stockholders. After
Mr. Hayton quit as chairman in early 1995, the new management claimed that Mr.
Hayton was the main reason for these losses, stating that he "directed
substantial
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resources away from the company's core business and into activities
that the current management was either unaware of or did not endorse." Quadrax
also later filed for bankruptcy protection. |
