Cross Posted from RB: 10. Stephens promised Roberts that she could have her money back at any time.
Stephens personally guaranteed that Roberts’ investment would be returned to her upon demand.
On September 11, 1997, Roberts’ issued a check in the amount of $200,000 payable to “Ness Energy.”
11. For reasons unknown, Stephens and Hesed (then known as Ness Energy International, Inc.) failed to issue stock certificates to Roberts until June of 1998. Importantly, the securities were not registered. After the stock certificates were finally issued, Stephens related to Roberts that his intentions had changed. According to Stephens, “[s]ince September 30k” [of 1997], we changed horses and decided to purchase a~ oil company, instead of taking our company public.”
12. In December of 1997, three months after receipt of Roberts’ investment, Stephens formed NTI, also for the express purpose of “acquiring and developing oil and gas properties in both the United States and Israel.” NTI “made a d.eposit of $200,000 (US) to Israel for the purpose of acquiring a lease in the Dead Sea.”
13. Also in December of 1997, Stephens acquired controlling interest in the Kit Karson Corporation, a publicly traded Washington corporation. Stephens subsequently changed the name of Kit Karson Corporation to Ness Energy International, Inc. Simultaneously, Stephens changed the name of Ness Energy International, Inc., the Texas corporation, to Hesed Energy International, Inc.
14. It appears that Roberts holds stock in Hesed. Hesed, NTI, and HSO have all been described as “affiliates” of Ness, however Roberts does not hold stock in Ness. In June of 1998, Stephens promised Roberts that Ness (formerly Kit Karson Corporation) would effect a merger with Hesed (formerly known as Ness Energy International, Inc.). The merger was never accomplished.
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The Israel drilling project is now being developed by Ness (formerly Kit Karson Corporation). Stephens used this corporate shell game to convince Roberts to invest in a worthless corporation.
15. In June of 1998, upon learning that she did not hold stock in the publicly traded corporation, Roberts demanded the return of her investment. Stephens acknowledged his earlier promise to return Roberts investment. In July of 1998, he promised for a second time to return her investment. Stephens wrote as follows:
Dear Curry,
Just a note to say “excuse me” for not getting back to you before the 4th of July. As you know, my life has been very hectic. I called you yesterday and left word on your answering service to tell you that my attorney, Bill Bullock, Ivan Webb (who you know), and I are working as quickly as possible to return your investment. As you know, as your money came in a year ago, all of it went out the next day. So we are having to figure out how to gather up this amount. Naturally, we were not anticipating this, but we want to do everything possible to be a blessing to you. Just please know that we havemet and we will make the exchange (money for stock) as timely as is humanly possible.
16. Despite repeated demands, Stephens has failed to return Roberts’ investment. Roberts’ stock certificates are worthless.
Causes of Action
17. Breach of Contract. Stephens and Hesed have breached their promise to return Roberts’ investment on demand. Stephens has breached his promise to personally guarantee Roberts’ investment. Roberts’ has been damaged in the amount of $200,000.
18. Violation of the Texas Securities Act. In connection with the solicitation of Roberts’ investment and the subsequent issuance of sttock in Hesed, Stephens made misrepresentations of material facts. Stephens made omissions of material facts necessary to make the statements made not misleading. Thx. REV. CIV. STAT. Art. 581-33(A)(2) (Vernon 2000). Stephens is jointly and severally liable as a control person. TEx. REV. CIV. STAT. Art. 58 1-33 (F)(1).
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19. Violation of the Federal Securities Exchan2e Act of 1934. In connection with the solicitation of Roberts’ investment and the subsequent issuance of stock in Hesed, Stephens employed manipulative and deceptive devices. 15 U.S.C. § 78j. Stephens, Ness, Ilesed, NTI, and HSO all participated in the use of such manipulative and deceptive devices to defraud Roberts.
20. Violation of the Federal Securities Act of 1933. In connection with the solicitation of Roberts’ investment and the subsequent issuance of stock in Hesed, Stephens made untrue statements of material facts. Stephens omitted material facts necessary in order to make the statements, in light of the circumstances under which they were made, not misleading. 15 U.S.C.
§ 771.
20. Fraud in a stock transaction. In connection with the solicitation of Roberts’ investment and the subsequent issuance of stock in Hbsed, Stephens made false representations of material facts to Roberts for the purpose of inducing Roberts to enter into a contract. Roberts relied on Stephens’ false representations. Stephens made false promises to Roberts to do certain acts. The false promises were material, made with the intention of not fulfilling them, and made for the purpose of inducing Roberts to enter into a contract. Roberts relied on Stephens’ false promises. Thx. Bus. & COMM. CODE § 27.01 (Vernon 2000).
21. Common law fraud. In connection with the solicitation of Roberts’ investment and the subsequent issuance of stock in Hesed, Stephens made false representations of material facts to Roberts. Stephens omitted material facts necessary in order to make the statements, in light of the circumstances under which they were made, not misleading. Stephens intended that Roberts rely on those false representation and omissions, and Roberts did, in fact rely on those false representations and omissions to her detriment.
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