SOUTHFIELD, Mich.--(BUSINESS WIRE)--Sommers Schwartz, P.C. has filed a lawsuit seeking class action status in the United States District Court for the Eastern District of Michigan (docket no. Case No. 2:17-cv-12626) on behalf of all persons or entities (the "Class") that acquired ViSalus securities through a company offering between January 1, 2015 and February 17, 2017.
A copy of the Complaint may be obtained from the Court, or by calling Sommers Schwartz, P.C. at (877) 957-6272 to speak with an attorney who will provide a copy of the Complaint.
Among other claims, the Complaint alleges that in violation of Section 10b-5 of the U.S. Securities Exchange Act and Section 509(2) of the Michigan Uniform Securities Act, ViSalus, Inc., Nick Sarnicola, Ashley Sarnicola, Blake Mallen, Ryan Blair, Todd Goergen, Gary J. Reynolds, and Vincent Owens (the “Defendants”) defrauded and deceived the Plaintiffs and other Class members into believing they had collectively purchased 6% of ViSalus common stock from Defendants Nick Sarnicola, Mallen, and Blair, shares that the three individual Defendants falsely represented they had re-purchased after a failed stock purchase by Blyth, Inc.
According to the lawsuit, the shares were made available during a public offering via an instrument called the “Founders Equity Incentive Plan” (the “Plan”) that called for the equity to be sold in two lots – 3% in 2015 and another 3% in 2016. Neither the company nor the selling shareholders registered the offering, prepared a formal prospectus, or disclosed information about the company’s precarious financial condition.
The Complaint alleges that advertising and promotional information about the Plan stated that purchasers could obtain their equity by “qualifying” through participation in the company’s distribution system, a purported pyramid scheme at the center of a separate pending class action (Kerrigan, et al., v. ViSalus, Inc., et al., Case No. 2:14-cv-12693). The company provided no means for a direct purchase; instead, the Plaintiffs and other Class members were required to become ViSalus distributors (if they were not existing distributors), earn “points” by buying ViSalus products (or recruiting other people to buy ViSalus products), then converting those points into “units” that qualified them to receive the equity shares.
The Complaint further alleges that, to entice buyers to “March to Equity” – a promotional campaign for the Plan – the Defendants promised a “generational” dividend and a specific payout slated for April 17, 2017. The payout did not occur the Plaintiffs and other Class members were then told that to receive their equity shares, they must sign a “Participation Agreement” with unknown terms and conditions.
The Plaintiffs claim that, to date, no shares have never been tendered by the Defendants, nor have they revealed the quantity of stock each purchaser acquired. Further, the Plaintiffs and other Class members have been advised they must continue to work for ViSalus and a new entity called LIV in order to receive their equity.
The Complaint also alleges federal and state laws required the Defendants to file a registration and prospectus before offering the securities, the failure of which prevented the Plaintiffs and other Class members from learning facts necessary to correct the Defendants’ misrepresentations about the Plan. Similarly, the Plaintiffs allege that the Defendants materially misrepresented the circumstances of the Plan and fraudulently induced them to purchase unregistered securities, resulting in financial loss. But for the Defendants’ fraudulent and deceptive actions and the expectation created by the Defendants that purchasers would receive a portion of the 6% equity offering, the Plaintiffs and other Class members would not have continued to purchase products and otherwise remain in good standing under the Plan following their initial qualification.
If you participated in the ViSalus, Inc. “Founders Equity Incentive Plan” between January 1, 2015 and February 17, 2017, you may qualify to serve as lead plaintiff on behalf of the Class. All motions for appointment as lead plaintiff must be filed with the Court no later than sixty days from today. Any member of the proposed Class may move the Court to serve as lead plaintiff in this action through counsel of his or her choice, or may remain an absent class member. There are certain legal requirements to serve as lead plaintiff, which the attorneys at Sommers Schwartz would be pleased to review with you. Please contact Andrew Kochanowski by email at firstname.lastname@example.org or by telephone at (877) 957-6272 if you would like to discuss this action or have any questions regarding this notice or your rights.
Sommers Schwartz, P.C., a law firm located in Southfield, Michigan, represents individuals in Michigan and across the country who have been harmed as a result of fraud, medical errors, defective products, employment disputes, and other forms of negligence or intentional injury, as well as businesses involved in complex litigation matters that jeopardize their existence. Additional information about Sommers Schwartz can be found on its website: www.sommerspc.com.