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APSE SHAREHOLDER DERIVATIVE ACTION COMPLAINT

APSE SHAREHOLDER DERIVATIVE ACTION COMPLAINT

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Published by Darren Adam Heitner

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Published by: Darren Adam Heitner on May 19, 2012
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07/07/2013

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District Court, City and County of Denver, Colorado1437 Bannock StreetDenver, Colorado 80202Plaintiff: Peter J. Schaffer andMembers/SHAREHOLDERS OF APSE, LLC a ColoradoLimited Liability CorporationVs.Defendants: APSE, LLC and C. Lamont Smith,IndividuallyAttorney for Plaintiff Peter Schaffer400 South Steele Street47Denver, Colorado 80209Peterschaffer8@gmail.ComFAX Number: (303) 288-0988Atty. Reg. #: 17042
COURT USE ONLY
 Case Number:Division:
SHAREHOLDER DERIVATIVE ACTION COMPLAINT
COMES NOW, Peter Schaffer, Individually, and the Members of APSE, LLC, by andthrough their counsel of record, Peter J. Schaffer, Attorney at Law, hereby files and submits thebelow complaint against the LLC, its majority shareholder, Board of Directors, and C. LamontSmith, Individually and state and allege as follows;
I.
 
GENERAL ALLEGATIONS
1. The Court has jurisdiction over the parties and the subject matter of this action because allparties are either residents of Colorado, have transacted business in Colorado, and/or thedefendant has committed business acts in Colorado.2. Venue is proper in this Court pursuant to C.R.C.P. 98 because the parties agreed that alllitigation would be in this county and because it is designated by Plaintiff.
 
3. The shareholders Pursuant to § 7-80-714, sent notice to APSE LLC on September 28, 2011asking that the company take suitable action to remedy corporate irregularities and breaches of fiduciary duty of the majority member of the company and in particular against the LLC and itsminority members. At this time and more than thirty days since the sending of the notice noresponse from this notice was ever received from APSE, LLC to the shareholders of any kind.4. As directors of a Colorado LLC, the Individual Defendants have consented to the jurisdictionof this Court pursuant to the Operating Agreement.5. APSE, LLC (“APSE”) is a Limited Liability Corporation organized on October 20, 1997under the laws of the State of Colorado with a principal place of business in Denver, Coloradoand is located at all times at 36 Steele Street, Suite 100, Denver, Colorado 80206.7. Defendant, Charles Lamont Smith (“Smith”), at all times relevant hereto, was an officer,majority Member, president, CEO, and managing director of APSE, LLC and is a resident of theState of Colorado and regularly conducted business in the state of Colorado8. Member, Peter J. Schaffer (“Schaffer”), at times relevant hereto, was and is a minorityShareholder, Member of APSE, LLC. Schaffer is a resident of the State of Colorado.9. Smith incorporated APSE, LLC a Colorado Limited Liability Corporation in 1997. On orabout October 20, 1997, Smith signed the Operating Agreement as the Sole Member. Theagreement provides in part that 7.1 D – “In all matters pertaining to the actions of the managers,the unanimous consent of both managers is required” and in 7.1 F- “any documents orinstruments evidencing the following actions by the company shall be executed by all of themanagers – purchaser sale of property for any amount greater than $5,000.”10. In 1997, Schaffer received for valuable consideration a minority interest in APSE, LLC andbecame a member of the LLC. At that time Schaffer became a 12% shareholder/member of APSE, LLC and became and a minority member of APSE’s Board of Managers. Smith remainedthe majority shareholder, Member, Manager and CEO.11. APSE, LLC was formed for the sole purpose of owning the real property known as 36 SteeleStreet, Denver, Colorado, 80206.12. From 1998 until 2003, Smith, as the majority member spent APSE funds and assets onpersonal and non-corporate expenses and investments without receiving either shareholder orboard approval or acknowledgment and took illegal and unauthorized distributions from thecompany above the percentage of ownership he maintained in the company. In fact, he treatedthe corporate coiffures as his own personal coiffures for personal business, transactions, andaffairs as he deemed proper; without receiving Board or member approval.13. From the years 1998 to 2003, Smith on his own, without corporate authority, approval, boardof directors meetings, shareholder approval, or minority shareholder acknowledgment, took money from the LLC in illegal distributions. At no time were any other member given anydistributions by APSE, LLC or Smith as their corresponding shares of monies taken from APSE,
 
LLC, by Smith during this time period. This money was taken to fund personal obligations,purchases, ultra vires activities, investments in non-APSE LLC entities and corporations and topay for his family’s credit card bills and debts. At no time did Smith or the LLC ever have aMembers meeting, a board meeting, or seek the approval of any of the other members of theLLC for these transactions as recruited by the LLC’s Operating Agreement. All of theseexpenditures and investments did not further the business, shareholder value, or property of APSE, LLC. All were done without corporate resolution or authority and all lost APSE, LLCsignificant amounts of monies.14. In late 2003, in conjunction with a sister company (APSE, INC, A Colorado Corporation) re-organization, APSE, LLC, with the stated goal of retiring approximately and at least $1,600,000in debt Smith owed to the sister company from illegal inequitable draws, loans and distributionshe unilaterally took from the sister company beyond his stated shares and ownership of thecompany, increased Schaffer’s interest in APSE, LLC to 30%. This was done not for the benefitof the LLC but for the benefit of the majority shareholder individually. At no time during any of these truncations did either Smith or APSE offer to the minority shareholders their correspondingownership distribution percentage of monies taken by the Smith from APSE or APSE, LLC. As aminority shareholder, Schaffer was not in the position and did not have leverage to contest or tonegotiate the re-organization of the company. The was well below fair market value of the LLCfor such an interest.15. From the years 2004 to the present, Smith on his own, without corporate authority approval,board of directors meetings, shareholder approval or minority shareholder acknowledgment took an additional $750,000 from the LLC in illegal distributions and benefits. At no time were anyother shareholders given any distributions by APSE, LLC or Smith as their corresponding sharesof monies taken from APSE, LLC by Smith during this time period. This money was taken tofund personal obligations, purchases, ultra vires activities, investments in non-APSE, LLCcorporations and to pay for his family’s credit card bills and debts. In addition, Smith madeexpenditures which spent APSE, LLC money inefficiently and frivolously and that also did notfurther the interests of APSE, LLC. Further, Smith has entered into arrangements, agreements,contracts and other situations as it pertains to the building known as 36 Steele Street, Denver,Colorado and or APSE, LLC on his own, without unanimous approval and or without anycorporate authority whatsoever.16. At some time during the years 2004 to 2006, Smith allegedly on his own accord andaccording to his own statements, transferred the ownership of another separate and distinctlimited liability company he was a fifty percent owner in, a LLC known as JBLS (Standing for“Jerome Bettis/Lamont Smith”) LLC (“JBLS”) into APSE, LLC. JBLS, LLC allegedly ownedtwo condominiums in South Beach, Miami Beach, Florida. These condominiums were asignificant cash flow drain to Mr. Smith personally since the date of acquisition on or around1998 and at some point during this period, Smith transferred his ownership in JBLS into theAPSE, LLC. At some time thereafter, APSE, LLC assumed paying the debts of the South BeachCondominiums through JBLS. These expenditures and debts total approximately $750,000 paidby APSE, LLC from the dates 2004 to the present and may after a full accounting be evengreater than this amount. At no time did Smith ever have a LLC Members meeting, a board ormanager meeting or seek the approval of any of the other members of the LLC for these

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