Dear Thread FYI,
*#*#*#*IN THE UNITED STATES DISTRICT COURT*#*#*#*
FOR THE WESTERN DISTRICT OF WASHINGTON AT SEATTLE
ZIASUN TECHNOLOGIES, INC., a Nevada corporation, and
ANTHONY L. TOBIN,
Plaintiffs,
vs.
Defendant FLOYD D. SCHNEIDER aka “FLODYIE;”
STEPHEN N. WORTHINGTON aka “AURIC GOLDFINGER;”
TOM LIVIA aka “REALMONEY;”
PAUL HARARY aka “TRADER14U;”
MIKE MORELOCK aka “CM BURNS;
DEFENDANT JOHN or JANE DOE 1 aka “JJS64;”
DEFENDANT JOHN or JANE DOE 2 aka “GUS SIDERIS;”
DEFENDANT JOHN or JANE DOE 3 aka “ALPINE SLEUTH.”
Defendants.
No.:
COMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF AND
JURY DEMAND
I. PRELIMINARY STATEMENT
1.1. This is a complaint for securities fraud, defamation, violation of
Washington's Consumer Protection Act, violation of Washington's
Criminal Profiteering Act, violation of the Federal RICO statute, and
intentional interference with a business expectancy. The claims arise
out of the defendants' use of the Internet to disseminate false and
defamatory information regarding plaintiffs.
II. PARTIES:
2.1 Plaintiff ZiaSun Technologies, Inc. is a Nevada corporation with
United States headquarters in San Diego, California.
2.2 Plaintiff Anthony L. Tobin is the President of ZiaSun and an
individual resident of Hong Kong.
2.3 Defendant Floyd D. Schneider is an individual residing in Saddle
River, New Jersey. Defendant Schneider uses the alias “flodyie” when
communicating over the Internet.
2.4. Upon information and/or belief, the actual identity of the
Defendant using the alias “Auric Goldfinger” in his communications
over the Internet is Stephen N. Worthington residing in San Francisco,
California.
2.5 Upon information and/or belief, the actual identity of the
Defendant using the alias “realmoney” in his communications over the
Internet is Tom Livia residing in Boca Raton, Florida.
2.6 Upon information and/or belief, the actual identity of the
Defendant using the alias “trader14u” in his communications over the
Internet is Paul Harary residing in Boca Raton, California.
2.7 Upon information and/or belief, the actual identity of the
Defendant using the alias “C M Burns” in his communications over the
Internet is Mike Morelock residing in Greenwood, Arkansas.
2.8 Defendant Doe 1 is an individual of unknown residency using the
alias “jjs64” in his communications over the Internet.
2.9 Defendant Doe 2 is an individual of unknown residency using the
alias “GUS SIDERIS” in his communications over the Internet.
2.10 Defendant Doe 3 is an individual of unknown residency using the
alias “Alpine Sleuth” in his communications over the Internet.
III. BACKGROUND
3.1 Plaintiff ZiaSun Technologies, Inc. is an Internet related company
providing services to consumers located primarily in Asia. Its
business focuses on e-mail services, Internet advertising, investment
research, online stock trading, and e-commerce operations
management. Plaintiff Anthony L. Tobin is the President of ZiaSun.
3.2 ZiaSun is a publicly traded company traded on the OTC. The
ZiaSun trading symbol is "ZSUN."
3.3 Silicon Investor is an online investor website. It is owned by
Go2Net, Inc., a Washington corporation, with its principal place of
business in Seattle, Washington.
3.4 The Silicon Investor website includes trading information, stock
information and provides message boards for its members.
3.5 Members of Silicon Investor can post statements on the Silicon
Investor message boards relating to specific stocks. ZiaSun is the
subject of at least three Silicon Investor message boards.
3.6 Each member's posting is subject to the Silicon Investor Terms of
Use Agreement, which each member must agree to before initiating
membership. Under the Silicon Investor Terms of Use Agreement,
each member agrees to submit to the personal jurisdiction of the
State of Washington for any cause of action arising out of or relating
to the service.
3.7 Beginning in the fall of 1998, Silicon Investor members began
posting statements about ZiaSun on Silicon Investor message
boards.
3.8 In November 1998, a cadre of individuals (“posters”) consisting of
the defendants began using Silicon Investor's ZiaSun message
boards for a defamatory campaign (“cybersmear”) against ZiaSun
and ZiaSun officers and directors, including ZiaSun President,
Anthony Tobin. The cybersmear campaign involved the defendants
posting false and defamatory information about ZiaSun, ZiaSun
officers and directors, and plaintiff Tobin.
3.9 The false information being disseminated by the defendants
includes but is not limited to allegations of criminal behavior,
involvement in pornography, improper financial interests, improper
promotion techniques and dissemination of false corporate and
misleading information to the public. The cybersmear campaign
continues through the present day.
3.10 As a result of defendants' false statements, ZiaSun share prices
have dropped substantially. Damage has directly resulted to the
company, its investors and its officers and directors.
3.11 Upon information and/or belief, defendants' cybersmear
campaign is intended to negatively impact ZiaSun stock prices to
defendants' financial benefit.
3.12 Upon information and/or belief, defendants' are working in
concert to drive ZiaSun stock prices down for the defendants'
collective benefit.
3.13 Upon information and/or belief, defendants maintain “short”
positions in ZiaSun stock, and have a direct financial interest in
driving ZiaSun share prices down.
IV. JURISDICTION AND VENUE
4.1. This Court has jurisdiction over this matter pursuant to 28 U.S.C.
§1331 because the district courts have original jurisdiction of all civil
actions arising under the laws of the United States.
4.2. This Court has jurisdiction over the state law claims set forth
herein pursuant to 28 U.S.C. § 1367, which provides that when the
District Court has original jurisdiction, the District Court shall have
supplemental jurisdiction over all other claims that are so related to
claims in the action within such original jurisdiction that they form part
of the same case or controversy.
4.3. This Court has specific personal jurisdiction over non-resident
defendants pursuant to the Washington long arm statute, RCW §
4.28.185 (1)(b), and the Due Process clause of the Fourteenth
Amendment to the United States Constitution. By initiating activities
within the State of Washington and consenting to judgment there,
defendants have purposefully availed themselves of this Court's
jurisdiction, the claims arise out of defendants' contacts within the
state, and the exercise of jurisdiction is reasonable.
4.4. This jurisdictional district is a proper venue pursuant to 28 U.S.C.
§ 1391(b)(2) because a substantial part of the events giving rise to
the claims occurred in Seattle, Washington.
V. FIRST CAUSE OF ACTION: SECURITIES FRAUD (17 C.F.R.
§240.106.5)
5.1 Paragraphs 1.1 through 4.4 are incorporated as if fully set forth
herein.
5.2 The defendants posted misleading statements about plaintiffs
ZiaSun and Anthony L. Tobin.
5.3 The statements disseminated by defendants include but are not
limited to false allegations of criminal behavior, involvement in
pornography, improper financial interests, improper promotion
techniques, and dissemination of false and misleading company and
other information to the public.
5.4 The statements disseminated by defendants were material
because a reasonable investor would attach importance to them in
determining his/her investment strategy with regards to ZiaSun stock.
5.5 Defendants' statements were made in connection with the
purchase and/or sale of securities in the United States.
5.6 Defendants' statements were made with scienter because they
were disseminated with the purpose of negatively impacting ZiaSun
stock for defendants' own benefit.
VI. SECOND CAUSE OF ACTION: SECURITIES FRAUD
(RCW.21.20 ET SEQ.)
6.1 Paragraphs 1.1 through 5.6 are incorporated as if fully set forth
herein.
6.2 Defendants were involved directly or indirectly in connection with
the offer, sale or purchase of ZiaSun securities.
6.3 Defendants made untrue statements of material fact with regards
to ZiaSun Technologies, Inc. and ZiaSun executives.
6.4 Defendants' statements were made in connection with the
purchase and/or sale of securities.
6.5 Defendants are civilly liable under RCW §21.20.430(2).
VII. THIRD CAUSE OF ACTION: SECURITIES FRAUD (RCW
21.20.ET SEQ.)
7.1 Paragraphs 1.1 through 6.5 are incorporated as if fully set forth
herein.
7.2 The statements disseminated by defendants on the Silicon
Investor message boards were false and/or made with malicious
intent.
7.3 The statements disseminated by defendants on the Silicon
Investor message boards were unprivileged communications.
7.4 Defendants' dissemination of the statements on the Silicon
Investor message boards was negligent and/or made with reckless
disregard for the truth.
7.5 The statements disseminated by defendants on the Silicon
Investor message boards caused substantial damages to plaintiffs.
VIII. FOURTH CAUSE OF ACTION: WASHINGTON CONSUMER
PROTECTION ACT VIOLATION (RCW 19.86.ET SEQ)
8.1 Paragraphs 1.1 through 7.5 are incorporated as if fully set forth
herein.
8.2 Defendants' acts or practice of disseminating false and
misleading statements on the Silicon Investor message boards are
unfair or deceptive.
8.3 Defendants' dissemination of the false and misleading
statements on the Silicon Investor message boards occurred in trade
or commerce.
8.4 Defendants' dissemination of the false and misleading
statements on the Silicon Investor message boards has a public
interest impact.
8.5 Plaintiffs suffered injury to their business or property as a direct
result of Defendants' dissemination of the false and misleading
statements on the Silicon Investor message boards.
8.6 Plaintiffs' damages were caused by, and a direct result of,
defendants' dissemination of the false and misleading statements on
the Silicon Investor message boards.
IX. FIFTH CAUSE OF ACTION: INTENTIONAL INTERFERENCE
WITH BUSINESS EXPECTANCY
9.1 Paragraphs 1.1 through 8.6 are incorporated as if fully set forth
herein.
9.2 Plaintiffs have, and have had, valid contractual business
expectancies of which Defendants have, and have had, knowledge.
9.3 By disseminating the false and misleading statements on the
Silicon Investor message boards, defendants intentionally interfered
with plaintiffs contractual relationships and/or business expectancies,
and induced or caused the breach or termination of those
relationships and/or expectancies.
9.4 By disseminating the false and misleading statements on the
Silicon Investor message boards, defendants interfered for an
improper purpose and or used improper means.
9.5 Plaintiffs' damages are a direct result of defendants' conduct.
X. SIXTH CAUSE OF ACTION: FEDERAL RICO (28 USC §1962)
10.1 Paragraphs 1.1 through 9.5 are incorporated as if fully set forth
herein.
10.2 Upon information and/or belief, defendants are part of an
enterprise, working in concert for the same purpose.
10.3 Defendants' enterprise conducts its activities via the Internet,
and affects interstate commerce.
10.4 Defendants are associated with the above-described
enterprise.
10.5 Defendants participated either directly or indirectly in the
conduct of the affairs of the enterprise.
10.5 Defendants participated in the commission of at least two
racketeering acts.
10.6 By reason of defendants' acts set forth in Paragraphs 10.2
through 10.5, defendants have caused injury to plaintiffs' business or
property.
XI. SEVENTH CAUSE OF ACTION: WASHINGTON'S CRIMINAL
PROFITEERING ACT (RCW 9A.82 ET SEQ)
11.1 Paragraphs 1.1 through 10.6 are incorporated as if fully set forth
herein.
11.2 Plaintiffs sustained injury to their business and property by act of
defendants' criminal profiteering that is a pattern of criminal
profiteering.
11.3 Defendants' act of securities fraud is criminal profiteering under
RCW §9A.82.060(4).
XII. EIGHTH CAUSE OF ACTION: INJUNCTIVE RELIEF (RCW
§7.4.ET SEQ.)
12.1 Paragraphs 1.1 through 11.3 are incorporated as if fully set forth
herein.
12.2 Plaintiffs have clear legal and equitable rights which are being
irreparably harmed by virtue of defendants' acts, as stated above.
12.3 By virtue of defendants' acts, as stated above, plaintiffs have a
well grounded fear of immediate invasion of their legal and equitable
rights.
12.4 Defendants' acts complained of are resulting in and will result in
actual and substantial injury to plaintiffs for which there is no adequate
remedy at law.
12.5 Plaintiffs' are entitled to a temporary and permanent injunction
against each defendant, enjoining him from engaging in the acts set
forth above.
XIII. DAMAGES
13.1 Defendants' conduct directed at plaintiffs was malicious, willful,
wanton, reckless, vexatious, oppressive, intentional, and/or in blatant
disregard of the truth and/or safety and rights of others. Although
subject to jurisdiction in Washington, each defendants' most
significant relationship to the controversy exists in their respective
home states. Plaintiffs are therefore entitled to an award of enhanced
compensatory damages and punitive damages pursuant to the laws
of each defendants' home state.
13.2 The effect of defendants' false and misleading statements on the
Internet has resulted in direct harm to ZiaSun Technologies'
reputation, share values, business relationships, contracts and
dealings with others, in an amount to be proven at trial.
13.3 The effect of defendants' false and misleading statements has
resulted in direct harm to Anthony L. Tobin's reputation, business
relationships, contracts and dealings with others in an amount to be
proven at trial.
13.4 The defendants, through their dissemination of false and
misleading statements about plaintiffs, have improperly made
significant profits, all of which should be disgorged.
13.5 Defendants, through their false and misleading statements about
ZiaSun
and Mr. Tobin, have caused plaintiffs to incur significant direct
consequential damages, including attorney's fees, costs, employment
time and other such damages in an amount to be proven at trial.
WHEREFORE, Plaintiffs ZiaSun Technologies, Inc. and Anthony L.
Tobin request that this Court grant the following relief:
(a) Judgment for compensatory damages, together with interest
thereon, at legal rate, plus additional and consequential damages, in
an amount to be determined at trial;
(b) Judgment for enhanced compensatory damages and punitive
damages according to the law where each defendant's acts were
undertaken;
(c) Judgment for enhanced damages as authorized by R.C.W. 19.86
et seq;
(d) Judgment for costs incurred herein, including attorneys' fees, to
the fullest extent allowed by law;
(d) Judgment to permanently enjoin the defendants from issuing
malicious, false and misleading statements concerning plaintiffs;
(e) Such other and legal and equitable relief as this court may deem
just and equitable.
RESPECTFULLY SUBMITTED this ____ day of June, 1999.
WEISS, JENSEN, ELLIS & HOWARD
__________________________________
Christopher H. Howard, WSBA# 11074
Brian L. Myers, WSBA# 14467
Patrick S. Pearce, WSBA# 20857
of Attorneys for Plaintiffs
DEMAND FOR JURY
Pursuant to Federal Rule of Civil Procedure 38, these plaintiffs
demand trial on all issues pertaining to it in this matter be by a jury of
six (6).
DATED this ______ day of June, 1999.
WEISS, JENSEN, ELLIS & HOWARD
__________________________________
Christopher H. Howard, WSBA# 11074
Brian L. Myers, WSBA# 14467
Patrick S. Pearce, WSBA# 20857
of Attorneys for Plaintiffs
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