UNITED STATES DISTRICT COURT for the
MIDDLE DISTRICT OF FLORIDA
[Tampa Division]
HITSGALORE.COM, INC., a Florida Corporation
Plaintiff,
JANICE SHELL,
JOHN DOE No. 1 a/k/a "PAUL KERSEY",
JOHN DOE No. 2 a/k/a "MAYOR",
JOHN DOE No. 3 a/k/a "MR. PINK",
JOHN DOE No. 4 a/k/a "MSHATER", and
JOHN DOE Nos. 5-100,
Defendants.
Case No.
COMPLAINT FOR MONETARY
DAMAGES, INJUNCTIVE RELIEF.,
AND DEMAND FOR JURY TRIAL
Plaintiff HITSGALORE.COM, INC. ("HITSGALORE", the"Company" or the
"Plaintiff"), a Florida Corporation, by and through the undersigned
counsel, sues Defendants Janice Shell ("SHELL"), John Doe No. I a/k/a
"Paul Kersey" ("KERSEY"), John Doe No. 2 a/k/a "Mayor" ("MAYOR"), John
Doe No. 3 a/k/a "Mr. Pink" ("MR. PINK"), John Doe No. 4 a/k/a "mshat-
er" ("MSHATER"), and John Does Nos. 5-100 ("John Does 5-100") (collec-
tively the "Defendants"), and alleges:
INTRODUCTION
1. Between in or about May 1, 1999 and continuing through to the
present, Defendants SHELL, KERSEY, MAYOR, MR. PINK, MSHATER, and John
Doe Nos. 5-100, intentionally and maliciously published and repub-
lished a variety of unprivileged and unprotected false and defamatory
statements concerning HITSGALORE in a nationwide CYBERSMEAR campaign
on electronic bulletin boards maintained by Raging Bull, Inc. ("Raging
Bull") and Silicon Investor, Inc. , ("Silicon Investor'') on the
Internet which explicitly state and/or have the general import, ef-
fect, and meaning that HITSGALORE was engaging in illegitimate, ille-
gal, dishonest, fraudulent, and criminal business operations, when, in
truth and fact, the Defendants knew, should have known, and/or were
reckless in not knowing, that such statements were false and libelous
per se. Such defamatory publications include statements that are
libelous per se, such as HITSGALORE is being run by "criminals," the
Company is operating a "scum," and "Ask the institutional investors if
they i are buying HITT- You will get a resounding NO! You know why?
FRAUD FRAUD FRAUD." Such statements were not merely expressions of the
authors' opinions but, rather, were expressed as statements of fact.
Indeed, MR. PINK dared HITSGALORE to sue him when he published the
following statement: "These crooks belong in Jail! *** No disclaimer,
this is not opinion but a fact and if company doesn't like it, please
sue Him [MR. PINK]; discovery will be a treat!" Collectively, the
Defendants published and republished hundreds of postings, many of
which are false and defamatory, on the Internet to injure HITSGALORE,
discredit the business methods of HITSGALORE, destroy/he business
reputation and goodwill of HITSGALORE, negatively affect public confi-
dence in HITSGALORE, deter third persons, including customers, share-
holders, and others, from dealing with HITSGALORE, and/or to unlawful-
ly drive the price of HITSGALORE common stock into a downward spiral
to enable the Defendants and those acting in concert with or under the
direction of one or more of them, to illegally profit by selling
HITSGALORE common stock short. Upon information and belief, some or
all of the Defendants are being paid, in cash or securities, to post
false and defamatory messages on the Interact about HITSGALORE, and
receive ~onuses for driving the price of the Company's common stock by
short sellers. Upon information and belief, the Defendants operate
their "cybersmear" campaign systematically until a desired target
~rice is reached, and then they move on like a "wolf pack" to the next
victim. Indeed, some or all of the Defendants have participated in
defaming others on the Interact in the same manner as HITSGALORE, such
as American Benefits Group, Inc. [OTC BB: "ABFG"], millionaire.com
[OTC BB: "MLRE"], ZiaSun Technologies, Inc. [OTC BB: "ZSUN"], Amazon
Natural [OTC BB: "AZNT"], and Liviakis Financial Communications, Inc.
The problem with defamation on the Interact by anonymous tortfeasors
has become so severe that it has prompted the Washington State Senate
to propose legislation to address the abusive practice. Indeed, to
conceal, camouflage, and otherwise disguise their true identities, the
Defendants posted their false and defamatory messages about HITSGALORE
on the Raging Bull and Silicon Investor Message Boards under ficti-
tious names, aliases, and pseudonyms. As a direct, intended, and
proximate result of the libelous and tortious actions of the Defend-
ants, HITSGALORE has, inter alia, suffered irreparable damage in the
form of lost good will and professional standing, status and reputa-
tion with customers, and third)attics, and has incurred monetary
damages in excess of TWENTY MILLION DOLLARS ($20,000~000.00). Specifi-
cally, the Defendants tortious conduct has, directly and/or indirect-
ly, caused the market value for HITSGALORE common stock to drop by
nearly 75% (i.e., approximately $750 million), which, in turn, has,
inter alia, resulted in lost economic expectancies from various advan-
tageous business and contractual relationships with third-parties,
including, but not limited to, a loss of $20 million from Company's
contract with The Life Foundation Trust ("The Life Foundation"), and
exposed the Company to potential liability in two shareholder class
action lawsuits. In this action, HITSGALORE seeks to hold each Defend-
ant fully responsible for all damages and irreparable injuries they
have caused through monetary relief in excess of Twenty Million Dol-
lars ($20,000,000.00), and injunctive relief in the form of temporary,
preliminary, and permanent injunctions restraining and enjoining each
of the Defendants from publishing any further false and defamatory
messages about HITSGALORE on the interact.
JURISDICTION AND VENUE
2. This Court has subject matter jurisdiction over this action pursu-
ant to 28 U.S.C. {}1332 in that the Plaintiff, a Florida corporation,
and one identified Defendant, SHELL, are citizens of different States,
and the mount in controversy for each of the Plaintiff's claims
against each of the Defendants exceeds the sum of Seventy Five Thou-
sand Dollars ($75,000.00), exclusive of interest and costs. As de-
scribed below, the identity and citizenship of the John Doe Defend-
ants, KERSEY, MAYOR, MR. PINK, MSHATER, and John Does 5-100, are not
known at this time. Thus, the Plaintiffs will amend the Complaint
after it ascertains the true identities of such Defendants provided
that an appropriate basis for federal subject-matter jurisdiction
exists with respect to each such John Doe Defendant.
3. This Court has personal jurisdiction over Defendant SHELL through
Florida's long-arm jurisdiction statute, Fla. Stat. Ann. ' 48.193,
which provides, in relevant part, that any person, whether or not a
resident of Florida, who personally or through an agent, commits a
tortious act within Florida submits to the personal jurisdiction of
the courts of Florida for any cause of action arising out of the
tortious act committed in Florida. In this action, each Defendant,
including, but not limited to, SHELL, caused false and defamatory
statements about HITSGALORE to be published, distributed, and circu-
lated within Florida and elsewhere, and, therefore, committed the
torts of libel and tortious interference in Florida, and thus subject-
ed themselves to the long-arm jurisdiction of Florida courts. Fla_
Stat. ' 48.193(1)(b). Moreover, given the fact that the Defendants,
upon information and belief, conspired to defame and damage HITSGA-
LORE, and that at least one Defendant/member of the conspiracy, SHELL,
caused tortious acts to be committed in Florida in furtherance of the
conspiracy, then all of the co-conspirators are subject to the juris-
diction of the state of Florida through its long-arm statute, even if
a co-conspirator was not physically present in Florida at the time the
tort was committed. Upon information and belief, SHELL has sufficient
minimum contacts with Florida, the forum State, to satisfy the Due
Process Clause of the Fourteenth Amendment so that "maintenance of the
suit does not offend 'traditional notions of fair play and substantial
justice.'" This Court, upon information and belief, has specific
personal jurisdiction over Defendant SHELL insofar as her contacts
with the forum state are related to the cause of action. Specifically,
the action of Defendant SHELL in posting false and defamatory postings
on the Interact was purposefully directed at a citizen of Florida and
she must have anticipated being haled into court in Florida to answer
for her actions, because Defendant SHELL knew and could reasonably
foresee that the brunt and most devastating economic effects of her
statements would primarily be felt in Florida where HITSGALORE was
based.
4. Venue is proper in this Court pursuant to 28 U.S.C. ' 1391 in that
a substantial part of the events or omissions giving rise to the claim
occurred in this District and the acts complained of were perpetrated
in this District.
5. All conditions precedent to commencing this action have occurred,
been satisfied, or have been waived.
PARTIES
6. HITSGALORE, a Florida corporation, formerly Systems Communications,
Inc. ("Systems Communications"), was incorporated as Florida One
Capital Corporation in 1987 and made an initial public offering of its
common stock in 1988 as a blank check company for the purpose of
acquiring other companies. Systems Communications underwent several
corporate name changes from its inception until 1991 when it changed
its name to "Systems Communications, Inc." Effective March 19, 1999,
Systems Communications and Hitsgalore.com ("Old Hitsgalore';), a
Nevada corporation, completed a reorganization and merger (the "Reor-
ganization and Merger Agreement"). Pursuant to the Reorganization and
Merger Agreement: (a) Systems Communications transferred its existing
business, properties and assets to International Healthcare Solutions,
Inc. ("IHSI'), a Florida corporation, and caused IHSI to assume the
obligations, debts and liabilities of Systems Communications; and,
then (b) Old Hitsgalore was merged into the Systems Communications and
Systems Communications changed its name to "Hitsgalore.com, Inc."
HITSGALORE maintains a mailing and registered address in Florida, and
its principal executive office in Rancho Cucamonga, California. HITS-
GALORE is currently engaged in the business of an lnternet, business-
to-business search engine, and provides a searchable database for
businesses bringing people ("hits") to their Interact websites. Sig-
nificantly, HITSGALORE strives to provide "porn-free" searching capa-
bilities, and does not accept or encourage any porn or adult content
listings on its website. The Company derives revenues from, interalia,
the sale of sponsorships, keyword bid and rank rights, audio banners,
advertising and local city editions. The Company's common stock is
quoted under the ticker symbol "HITT" on the OTC Bulletin Board. (OTC
BB: HITT). On May 10, 1999, the price for the Company's common stock
reached a 52 week high of approximately $20.6875 per share. Following
the publication of the false and defamatory statements by the Defend-
ants on the Internet, the price for the Company's common stock has
plummeted by nearly 75% to approximately $5.5000 per share as of the
last trade on June 4, 1999. As of March 31, 1999, the Company had
approximately 550 shareholders of record.
7. SHELL, upon information and belief, resides in Angleton or Clute,
Texas, and is sui juris. At all material times hereto, SHELL was a
subscriber to both the Silicon Investor and Raging Bull electronic
bulletin boards on the Internet, and posts messages on the message
boards for HITSGALORE on Silicon Investor and Raging Bull under the
screen name: "Janice Shell."
8. KERSEY is sued under a fictitious name, because the true identity
and capacity of this Defendant is unknown to the Plaintiff, except by
the fictitious name, alias, and pseudonym "Paul Kersey" used as a
screen name to post messages on the message boards for HITSGALORE on
Raging Bull_ Upon information and belief, KERSEY is responsible in
some manner for the occurrences alleged herein, and the Plaintiffs
damages as alleged herein were proximately caused by the conduct of
KERSEY. At all material times hereto, upon information and belief,
KERSEY was the agent, servant, employee, representative, and/or co-
conspirator of the co-Defendants, and acted within the course and
scope of his/her/its authority as an agent, servant, employee, repre-
sentative, and/or co-conspirator with the permission, consent and/or
approval of the codefendant during the existence of the relationship
and/or during the course and in furtherance of the conspiracy. The
Plaintiff will amend the Complaint after it ascertains the true iden-
tity of KERSEY provided that an appropriate basis for federal subject-
matter jurisdiction exists with respect to such John Doe Defendant.
9. MAYOR is sued under a fictitious name, because the true identity
and capacity of this Defendant is unknown to the Plaintiff, except by
the fictitious name, alias, and pseudonym "mayor" used as a screen
name to post messages on the message boards for HITSGALORE on Raging
Bull. Upon information and belief, MAYOR is responsible in some manner
for the occurrences alleged herein, and the Plaintiff's damages as
alleged herein were proximately caused by the conduct of MAYOR. At all
material times hereto, upon information and belief, MAYOR was the
agent, servant, employee representative, and/or co-conspirator of the
co-Defendants, and acted within the course and scope of his/her/its
authority as an agent, servant, employee, representative, and/o~
coconspirator with the permission, consent and/or approval of the co-
Defendants during the existence of the relationship and/or during the
course and in furtherance of the conspiracy. The Plaintiff will amend
the Complaint after it ascertains the true identity of MAYOR provided
that an appropriate basis for federal subject-matter jurisdiction
exists with respect to such John Doe Defendant.
10. MR. PINK is sued under a fictitious name, because the true identi-
ty and capacity of this Defendant is unknown to the Plaintiff, except
by the fictitious name, alias, and pseudonym "Mr. Pink" used as a
screen name to post messages on the message board for HITSGALORE on
Silicon Investor. Upon information and belief, MR. PINK is responsible
in some manner for the occurrences alleged herein, and the Plaintiff's
damages as alleged herein were proximately caused by the conduct of
MR. PINK. At all material times hereto, upon information and belief,
MR. PINK was the agent, servant, employee, representative, and/or co-
conspirator of the co-Defendant~, and acted within the course and
scope of hi,her/its authority as an agent, servant, employee, repre-
sentative, and/or co-conspirator with the permission, consent and/or
approval of the co Defendants during the existence of the relationship
and/or during the course and in furtherance of the conspiracy. The
Plaintiff will amend the Complaint after it ascertains the tree iden-
tityt of MR. PINK provided that an appropriate basis for federal
subject-matter jurisdiction exists with respect to such John Doe
Defendant.
11. MSHATER is sued under a fictitious name, because the true identity
and capacity of this Defendant is unknown to the Plaintiff, except by
the fictitious name, alias, and pseudonym "mshater" used as a screen
name to post messages on the message boards for HITSGALORE on Silicon
Investor. Upon information and belie[ MSHATER is responsible in some
manner for the occurrences alleged herein, and the Plaintiff's damages
as alleged herein were proximately caused by the conduct of MSHATER.
At all material times hereto, upon information and belief, MSHATER was
the agent, servant, employee, representative, and/or co-conspirator of
the codefendants~, and acted within the course and scope of Ms/her/its
authority as an agent, servant, employee, representative, and/or co-
conspirator with the permission, consent and/or approval of the co-
Defendants during the existence of the relationship and/or during the
course and in furtherance of the conspiracy. The Plaintiff will amend
the Complaint after it ascertains the mm identity of MSHATER. provided
that an appropriate basis for federal subject-matter jurisdiction
exists with respect to such John Doe Defendant.
12. John Does 5-100 are sued under a fictitious name, because the true
identities and capacities of these Defendants are unknown to the
Plaintiff. Upon information and belief, John Does 5400 are responsible
in some manner for the occurrences alleged herein, and the Plaintiff's
damages as alleged herein were proximately caused by the conduct of
John Does 5-100. At all material times hereto, upon information and
belief, John Does 5-100 were the agents, servants, employees, repre-
sentatives, and/or co-conspirators of the co-Defendants, and acted
within the course and scope of his/her/its authority as agents, serv-
ants, employees, representatives, and/or coconspirators with the
permission, consent and/or approval of the co-Defendants during the
existence Bloomberg Report states, suggests, and/or implies, and
confirmed the existence of the FTC Civil Action and apparent default
judgment in connection therewith against Reed. See Exhibit C.
The Cybersmear Campaign
38. Between in or about May I, 1999 and continuing through to the
present, Defendants SHELL, KERSEY, MAYOR, MR. PINK, MSHATER, and John
Does 5-100, intentionally and maliciously published and republished a
variety of unprivileged and unprotected false and defamatory state-
ments concerning HITSGALORE in a nationwide CYBERSMEAR campaign on
electronic bulletin boards maintained by Raging Bull and Silicon
Investor on the Internet which explicitly state and/or have the gener-
al import, effect, and meaning that HITSGALORE was engaging in ille-
gitimate, illegal, dishonest, fraudulent, and criminal business opera-
tions, when, in truth and fact, the Defendants knew, should have
known, and/or were reckless in not knowing, that such statements were
false and libelous per se. Such defamatory publications include state-
ments that are libelous per se, such as HITSGALORE is being run by
"criminals," the Company is operating a "seam," and "Ask the institu-
tional investors if they are buying HITT. You will get a resounding
NO! You know why? FRAUD FRAUD FRAUD." Such statements were not merely
expressions of the authors' opinions but, rather, were expressed as
statements of fact. Indeed, MR. PINK dared HITSGALORE to sue him when
he published the following statement: "These crooks belong in Jail!
*** No disclaimer, this is not opinion but a fact and if company
doesn't like it, please sue Him [MR. PINK]; discovery will be a
treat!" Collectively, the Defendants published and republished hun-
dreds of postings, many of which are false and defamatory, on the
Internet to injure HITSGALORE, discredit the business methods of
HITSGALORE, destroy the business reputation and goodwill of HITSGA-
LORE, negatively affect public confidence in HITSGALORE, deter third
persons, including customers, shareholders, and others, from dealing
with HITSGALORE, and/or to unlawfully drive the price of HITSGALORE
common stock into a downward spiral to enable the Defendants and those
acting in concert with or under the direction of one or move of them,
to illegally profit by selling HITSGALORE common stock short. Upon
information and belief, some or all of the Defendants are being paid,
in cash or securities, to post false and defamatory messages on the
Internet about HITSGALORE, and receive bonuses for driving the price
of the Company's common stock by short sellers. Upon information and
belief, the Defendants operate their "cybersmear" campaign systemati-
cally until a desired target price is reached, and then they move on
like a "wolf pack" to the next victim. To conceal, camouflage, and
otherwise disguise their tree identities under the shroud of anonymi-
ty, the Defendants posted their false and defamatory messages about
HITSGALORE on the Raging Bull and Silicon Investor Message Boards
under fictitious names, aliases, and pseudonyms.
Shell's False and Defamatory Statements
39. The false and defamatory statements published and republished by
SHELL ("SHELL's False and Defamatory Statements") concerning HITSGA-
LORE on electronic bulletin boards maintained by Raging Bull and
Silicon Investor on the Interact explicitly state and/or have the
general import, effect, and meaning that HITSGALORE was engaging in
illegitimate, illegal, dishonest, fraudulent, and criminal business
operations, and were made by SHELL when, in truth and fact, SHELL
knew, should have known, and/or was reckless in not knowing, that such
statements were false and libelous per se. For example, a compendium
of SHELL's False and Defamatory Statements is attached hereto and
incorporated herein by reference as Composite Exhibit D as if fully
set forth herein. SHELL's False and defamatory statements are of a
continuing nature and may have been and continue to be published on
bulletin boards and other media of which HITSGALORE is not yet aware.
Representative samples of some of SHELL's False. and Defamatory State-
ments include, among others, the following:
Post 6731 on Raging Bull
Post 6783 on Raging Bull
Post 7067 on Raging Bull
Post 1631 on Silicon Investor
Kersey's False and Defamatory Statements
40. The false and defamatory statements published and republished by
KERSEY ("KERSEY's False and Defamatory Statements") concerning HITSGA-
LORE on electronic bulletin boards maintained by Raging Bull and
Silicon Investor on the Interact explicitly state and/or have the
general import, effect, and meaning that HITSGALORE was engaging in
illegitimate, illegal, dishonest, fraudulent and criminal business
operations, and were made by KERSEY when, in truth and fact, KERSEY
knew, should have known, and/or was reckless in not knowing, that such
statements were false and libelous per se. For example, a compendium
of KERSEY's False and Defamatory Statements is attached hereto and
incorporated herein by reference as Composite Exhibit E as if fully
set forth herein. KERSEY's False and defamatory statements are of a
continuing nature and may have been and continue to be published on
bulletin boards and other media of which HITSGALORE is not yet aware.
Representative samples of some of KERSEY's False and Defamatory State-
ments include, among others, the following:
JURY TRIAL DEMAND
68. Pursuant to Fed. R. Civ. P. 38(b) and M.D. Fla. L.R. 1.06(a),
HITSGALORE hereby demands a trial by jury on all issues triable by a
jury as a matter of right.
Dated: June l4, 1999
Boca Raton, Florida
Respectfully Submitted,
SCHOEPPL & BURKE, P.A.
Counsel for the Plaintiff HITSGALORE_COM, Inc.
4800 North Federal Highway, Suite 210-A
Boca Raton, Florida 33431-5176
Telephone: (561) 394-8301
Facsimile: (561) 393-6541
Carl F. Schoeppl, Esq., Trial Counsel
Florida Bar No. 818518
Daniel J. Becka, Esq.
Florida Bar No. 137601
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