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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK


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SHAFFER SMITH, 2424, LLC,
SUPER SA YIN' PUBLISHING, LLC,
COMPOUND TOURING, INC., and
COMPOUND ENTERTAINMENT, LLC,
Plaintiffs,
v.
KEVIN FOSTER, VERNON BROWN,
FOSTER & FIRM, INC., and
V. BROWN & COMPANY, INC.
Defendants.
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No.
COMPLAINT AND
JURY DEMAND
Plaintiffs Shaffer Smith, 2424, LLC, Super Sa yin' Publishing, LLC., Compound Touring,
Inc., and Compotmd Entertainment, LLC (collectively, "Plaintiffs"), by and through their
undersigned attorneys, The Roth Law Firm, PLLC, hereby allege the following against
Defendants Kevin Foster, Vernon Brown, Foster and Firm, Inc., and V. Brown & Company, Inc.
(collectively, "Defendants"):
NATURE OF ACTION
1. Plaintiffs commence this action to recover money damages resulting from
Defendants' wholly inappropriate conduct, which includes gross malfeasance and the intentional
misappropriation of funds. Plaintiff Shaffer Smith ("Smith") is an artist and for several years,
Kevin Foster ("Foster") was Smith's manager, confidant, trusted advisor, and friend. Through
his employers, V. Brown & Company, Inc. ("V. Brown & Co.") and Foster & Firm, Co. ("Foster
& Finn"), and after gaining the trust and confidence from Smith, Foster took control of Smith's
ban1c accounts and transferred monies to himself and others, all in violation of his fiduciary duty
to Smith. If that were not enough, Foster forged Smith's signature on loan documents and
converted monies for his personal use. For his gross misconduct, Foster, and the firms in which
he worked, must be held liable.
PARTIES
2. Smith is an individual who resides in Georgia.
3. 2424, LLC is a limited liability company organized and existing under the laws of
the State of Georgia with its principal place of business located at 11255 Huston Street, Apt. I 06,
N. Hollywood, California 91061.
4. Super Sayin' Publishing, LLC ("Super Sa yin"') is a limited liability company
organized and existing under the laws of the State of California with its principal place of
business located at 795 Champions Club Dr., Alpharetta, GA, 30004.
5. Compound Touring, Inc. ("Compound Touring") is a corporation organized and
existing tmder the laws of the State of California with its principal place of business located at
795 Champions Club Dr., Alpharetta, GA, 30004.
6. Compound Entertainment, LLC ("Compound Entertainment") is a limited liability
company organized and existing under the laws of the State of California with its principal place
of business located at I 0960 Wilshire Boulevard, Floor 5, Los Angeles, California 90024.
7. Upon information and belief, Defendant Kevin Foster is an individual who resides
at 10 Christopher Court, Montclair, New Jersey 07042. Upon information and belief, Foster has
transacted business in connection with this dispute and conducts business in the State ofNew
York.
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8. Upon information and belief, commencing in 2004, Foster worked at V. Brown &
Co. Thereafter, Foster left V. Brown and Co. and formed his own management/accounting firm
which he named Foster & Firm, Inc.
9. Upon information and belief, Defendant Vernon Brown ("Brown") is an
individual who resides in New York. Upon information and belief, Brown has transacted
business in connection with this dispute and conducts business in the State of New York.
10. Upon information and belief, V. Brown & Company, Inc. ("V. Brown and Co.")
is a corporation organized and existing under the laws of the State of New York with its principal
place of business located at 888 Seventh Ave, Suite 500, New York, New York 10019. Upon
infonnation and belief, V. Brown & Co. is an accolmting and business advisory firm that
provides services to professionals in the sports, entertainment, and fashion industries.
11. Upon information and belief, Foster & Firm, Inc. ("Foster & Firm") is a
corporation organized and existing under the laws of the State of New York with its principal
place of business located at 1350 Avenue of the Americas, Suite 310, New York, New York
10019. Upon infonnation and belief, Foster & Firm is an accounting and business advisory firm
that provides services to professionals in the sports, entertainment, and fashion industries.
JURISDICTION AND VENUE
12. This Court has subject matter jurisdiction based on the fact that certain claims
herein are premised on a federal statute, and pursuant to 28 U.S.C. 1332 because the parties are
of diverse citizenship and the amount in controversy, exclusive of interest and costs, exceeds
$75,000. Specifically, Plaintiffs seeks damages of at least $4.5 million.
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13. Venue is proper in this judicial district pursuant to 28 U.S.C. 1391(a)(2) because
a substantial part of the events giving rise to this action occurred within this judicial district and
because Defendants maintain their principal places ofbusiness in New York, New York.
FACTUAL BACKGROUND
14. During 2005, Smith was introduced to Foster, who at the time worked for V.
Brown&Co.
15. After initial conversations and meetings, Foster convinced Smith to engage V.
Brown & Co. to handle all of Smith's business management and accmmting needs.
16. Accordingly, during 2005, Smith retained V. Brown and Co. to represent him in
connection with all of his business needs and to perform all accounting and business services for
Smith and his companies. Upon information and belief, as compensation for its services, V.
Brown & Co. received 5% of Smith's gross revenues.
17. As Smith's business manager, Foster and V. Brown & Co., as his employer, were
responsible for handling all of Smith's finances and business transactions. V. Brown & Co.'s
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responsibilities included, but were not limited to: (i) working with Smith and his representatives,
including agents and lawyers, to determine Smith's earning projections; (ii) overseeing Smith's
advisers and financial consultants who handled Smith's investments, including investments in
bonds, stocks, real estate; (iii) devising strategies for managing funds responsibly; and (iv)
advising Smith on non-conventional investments. In his capacity as business manager, Foster
maintained control of all of Smith's banlc accounts at Citibank.
18. Additionally, V. Brown & Co. and Foster's position as Smith's business manager
imparted on them responsibilities to maintain Smith's budget, ensure Smith was financially
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situated as to maintain his accustomed lifestyle for the remainder of his life, protect Smith from
financial min, and mitigate risk of frivolous spending.
19. Through their role as Smith's business manager, with control over his finances,
Foster and V. Brown & Co. had the fiduciary duty to manage Smith and all aspects of Smith's
finances and businesses responsibly.
20. Additionally, notwithstanding the fact that V. Brown & Co. and Foster & Firm
were responsible for the filing of Smith's individual and corporate tax returns each year, during
certain years, Foster failed to file timely tax rehrrns for Smith and his companies, thereby forcing
Smith to incur substantial penalties and unnecessary interest.
21. Foster, while at V. Brown & Co. and Foster & Firm also failed to timely pay
invoices incurred on behalf of Smith and/or his companies, causing Smith to incur substantial
additional penalties and interest as a result.
22. Thereafter, Foster represented to Smith that he was leaving V. Brown & Co. and
fanning a new c?m_pariY cal!ed_F()ster & FirJ1l, and that, in so doing, Foster &Finn would take
over all management responsibilities previously held by V. Brown & Co.
23. From 2005 through 2013, V. Brown and Foster & Firm, through Foster,
maintained complete responsibility and control over Smith's and his companies' finances.
Throughout this time period, Foster obtained the unfettered trust and respect of Smith. In fact,
over time, the two individuals developed a personal relationship, with Smith eventually placing
complete tmst in Foster's handling of Smith and his companies' finances and affairs.
24. From the inception of Foster and Smith's business manager-client relationship,
Foster had a power of attorney for Smith's personal and company accounts. Foster, both at V.
Brown & Co. and Foster & Firm, maintained unrestricted control over all of Smith's bank
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accotmts and engaged in transactions on behalf of Smith and his companies. Certain of those
transactions were without Smith's knowledge.
25. Thereafter, Smith changed business managers from Foster & Firm to Nigro Karlin
Segal Feldstein & Bolno, LLC ("Nigro Karlin").
26. At some point during the inception of the relationship between Smith and Nigro
Karlin, Smith began to uncover potential improprieties committed by V. Brown, Foster & Firm,
and Foster. The more Smith began to question the transactions, the more he uncovered instances
ofF oster engaging in self-dealing and inappropriate conduct.
27. In or about August/September 2013, Smith visited a branch ofCitibank located in
New York, New York for the purpose of closing the accounts which Foster had previously
controlled through his power of attorney. From September 2013 through April2014, Citibank
provided Smith with information and documents revealing that Foster, while at V. Brown and
Foster & Firm, engaged in serious improprieties.
28. While the true depth of Defendants' deceit has yet to be fully uncovered, in 2014,
Smith began to learn of many instances of self-dealing and negligence, some of which are set
forth below.
29. Commencing in or about July 2011, Foster conducted a series oftmauthorized
transactions which resulted in the movement of monies from different Smith accounts.
30. The inappropriate transfers continued. For example, in October 2012, Foster,
through deception, caused Smith to transfer $1 million from Smith's accounts to an investment
in a water product.
31. Foster continued to make inappropriate transfers through 2012 and into 2013.
Certain transfers, for no apparent reason, exchanged money between various accounts held by
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Smith, and other transfers were payments to individuals with whom Smith had no relationship.
For example, payments were made to "Edward R. Grauer, Esq. Attorney Trust Account" in the
amount of$300,000.
32. Foster's action progressed from improprieties to illegalities. That is, upon
information and belief, on or about February 21, 2013, Foster executed several documents,
including two promissory notes (the "Notes") in Smith's name without Smith's knowledge or
authorization, thereby forging Smith's signature.
33. The first Note, between Compound Touring and Citibank in the amount of
$400,000 (the "First Note") was purportedly signed by Smith and was accompanied by a
personal guarantee by Smith and 2424, LLC and Super Sayin'. Foster forged Smith's name on
the First Note and all related documents, including a loan agreement and guarantees. Thus, the
First Note and related documents bear Smith's signature, but Smith never signed them.
34. Also on February 21,2013, Smith purportedly entered into a second note (the
"Second Note") with Citibank on behalf of Super Sayin' and secured by 2424, LLC. Smith did
not sign any of the documents associated with this Note. This Second Note also bears Smith's
signature, but Smith never signed the Second Note, nor any of the documents associated with the
Note. Indeed, they were all forged by Foster.
35. Additionally, the books and records of certain of Smith's companies reflect
transfers made to Smith and others, yet those transfers were never received by Smith. For
example, according to the books and records, $70,000 was pnrportedly transferred from an
account for Compotmd Ventures LLC, a limited liability company jointly owned by Smith,
Tishawn Gayle ("Gayle") and Reynell "Tango" Hay ("Hay"). The books further state that the
$70,000 was delivered as follows: $20,000 to each of the three members and $10,000 to
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Compound Touring. Yet, the amounts were never transferred as reflected in the books and
records. Upon information and belief, those monies were transferred, directly or indirectly to
Defendants. Thus, those individuals never received the purportedly transferred funds.
The OXYwater Transactions
36. As part of Foster's scheme, in 2011 and 2012 Foster both induced Smith to invest
in and, tmbeknownst to Smith, directed additional funds from Smith's accounts to, Imperial
Integrated Health Research & Development, LLC ("Imperial"). In total, Imperial received $3.5
million from Smith.
37. Upon information and belief, Imperial was founded by Preston Harrison
("Harrison"), a fonner Ohio State University football player, with his partner Thomas E. Jackson
("Jackson").
3 8. Upon information and belief, imperial was an Ohio corporation that produced
OXYwater, a vitamin-infused sports beverage. According to Foster, OXYwater was an oxygen-
enhanced mineral water with no calories, sugar, carbohydrates, caffeine, or other artificial colors
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or sweeteners. Foster also explained to Smith the nmnerous health benefits of the beverage,
including its patented extra oxygen infusion process and its wealth of vitamins, minerals, and
electrolytes.
39. Foster further presented to Smith that OXYwater was set to replace Vitamin
Water, the market leader of the product, and that OXYwater had several deals in place, including
transactions with school boards and other organizations.
40. Upon information and belief, Imperial had partnered with three professional
sports organizations, including NASCAR's FAS Lane Racing Team, the National Basketball
Association's Cleveland Cavaliers, and the American Hockey League's Lake Erie Monsters.
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41. Upon information and belief, Foster was Imperial's President and Chief Financial
Officer and owned 66% of the shares oflmperial.
42. When making each of the above representations to Smith regarding Imperial,
Foster never disclosed to Smith that Foster served as President and CPO of the company or that
he had any relationship with Imperial.
43. Upon information and belief, Foster misrepresented to Smith the product, the
company, and the return to investors. Foster also misrepresented that Smith's investment was
being used for proper purposes.
44. On or about July 8, 2011, through reliance upon the aforementioned omissions
and material misrepresentations by Foster, Smith invested $2.5 million in OXYwater. In order to
further induce Smith to invest in OXYwater, Foster represented to Smith that there were many
additional deals with OXYwater in place and the time to invest was "now," before the company
went public.
45. Following the $2.5 million investment, Foster did not end his self-serving pursuit
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to obtain fi.mding for OXYwater by exploiting his position with Smith. Upon information and
belief, on or about October 12, 2012, unbeknownst to Smith, Foster had an addition $1 million
wire-transferred from Smith's accounts to those of OXYwater.
46. Yet, upon information and belief, Foster knew at the time he invested an
additional $1 million of Smith's money, but did not inform Smith, the true financial status of
Imperial- that it was losing money at an alarming rate and was on the verge of bankruptcy.
47. Upon information and belief, in or about March 2013, the Internal Revenue
Service ("IRS") launched an investigation of Foster, Harrison, Jackson and OXYwater following
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allegations that they improperly diverted at least $1.2 million of investors' money into their
personal banlc accounts and into another company.
48. Upon information and belief, the investigation included reviewing the financial
records of Foster and Imperial.
49. In April2013, Imperial filed for bankruptcy with little to no assets, which, upon
information and belief, cost its investors approximately $9 million. Upon information and belief,
Foster, as President and CPO of Imperial, had defrauded investors, including Smith, by creating
false sales, revenues, expenses, and profit information. The other two principals of Imperial,
Harrison and Jackson, have been indicted on charges relating to the raise of monies at Imperial
and the misappropriation of those funds. The indictment seeks more than $1.1 million in
forfeiture from Harrison and Jackson. Upon information and belief, Foster, Harrison, and
Jackson misappropriated several million dollars of investor funds between August 201 0 and into
2013.
herein.
FIRST CAUSE OF ACTION
- FORVIOLATION OF-THE-SECURITIES-ACT OF1934
AND RULE lOB-5 PROMULGATED THEREUNDER
50. Plaintiffs repeat and reallege the above paragraphs as though fully set forth
51. The material misrepresentations, on which Plaintiffs relied to their detriment,
constitute fraudulent and deceptive acts and practices by the Defendants, committed lmowingly,
intentionally and/or grossly negligently and with a deliberate and/or reckless indifference to
making an accurate, fair, balanced and non-misleading presentation to Plaintiffs, in violation of
lO(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), and Rule !Ob-5 promulgated
thereunder.
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52. As a direct result of Defendants' securities fraud, Plaintiffs have been injured in
an amount to be determined at trial, but believed to be no less than $4.5 million, exclusive of
interest and all attorneys' fees and costs associated in prosecuting this action.
53. As Defendants' actions were intentional and designed to deceive Plaintiffs and the
public in general, Plaintiffs respectfully requests an additional award of punitive damages.
herein.
SECOND CAUSE OF ACTION
FOR SUITABILITY
54. Plaintiffs repeat and reallege the above paragraphs as though fully set forth
55. Defendants invested Plaintiffs' money in a company which Defendants knew was
on the brink ofbankruptcy.
56. As a direct result of Defendants' unsuitable investment, Plaintiffs have been
injured in an amount to be determined at trial, but believed to be no less than $4.5 million,
exclusive of interest and all attorneys' fees and costs associated in prosecuting this action.
57. - - As Defendants' actions were intentional and designed to deceive Plaintiffs and i:he -
public in general, Plaintiffs respectfully requests an additional award of punitive damages.
herein.
THIRD CAUSE OF ACTION
FOR BREACH OF FIDUCIARY DUTY
58. Plaintiffs repeat and reallege the above paragraphs as though fully set forth
59. As Plaintiffs' business manager, Defendants owed Plaintiffs a fiduciary duty.
60. Defendants breached their duty by, among other things, making multiple
tmauthorized transactions to and from Plaintiffs' bank accounts.
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61. As a result of Defendants' breaches of their fiduciary duties, Plaintiffs have
incurred damages in an amount to be determined at trial, but no less than $8 million exclusive of
interest, costs, and attorneys' fees.
62. As a further result of Defendants' breaches, Plaintiffs are entitled to a return of
the 5% compensation Defendants received for each of the years that the respective Defendant
was paid for allegedly perfonning services.
herein.
FOURTH CAUSE OF ACTION
FOR BREACH OF CONTRACT
63. Plaintiffs repeat and reallege the above paragraphs as though fhlly set forth
64. Plaintiffs had an Agreement with Foster's employers, under which Defendants
agreed to act in the best interests of Plaintiffs and their companies.
65. Smith performed all obligations undt::r the Agreement.
66. Defendants failed to perform under the contract, by making numerous
tmauthorized transactions in-Plaintiffs' accounts from2011-t<Y 2013;-
67. As a result of Defendants' improper conduct, Plaintiffs have been damaged in an
amOtmt to be detennined at trial, but no less than $8 million, exclusive of interest, costs and
attorney's fees.
68. As a further result of Defendants' breaches, Plaintiffs are entitled to a return of
the 5% compensation Defendants received for each of the years that the respective Defendant
was paid for allegedly performing services.
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herein.
FIFTH CAUSE OF ACTION
FOR NEGLIGENCE
69. Plaintiffs repeat and reallege the above paragraphs as though fully set forth
70. As Plaintiffs' business managers, Defendants owed Plaintiffs a duty ofcare.
71. Defendants breached the duty by making numerous unauthorized transactions in
Plaintiffs' accounts commencing shortly after the beginning of their representation and
continuing through 2013.
72. These transactions caused $4.5 million to be diverted from Plaintiffs' bank
accounts to other entities, including entities in which Defendants had a direct financial interest.
73. Additionally, Defendants failed to file timely tax returns for Plaintiffs for various
years, including 2012 and 2013.
74. As a result of Defendants' improper conduct, Plaintiffs have been damaged in an
amount to be determined at trial, but no less than $8 million, exclusive of interest, costs and
.. attorney' sfeeS. - -
75. As a further result of Defendants' breaches, Plaintiffs are entitled to a reh1m of
the 5% compensation Defendants received for each of the years that the respective Defendant
was paid for allegedly performing services.
herein.
SIXTH CAUSE OF ACTION
FOR CONVERSION
76. Plaintiffs repeat and reallege the above paragraphs as though fully set forth
77. Plaintiffs have several bank accounts and, directly or indirectly, own the fi.mds in
the accounts.
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78. Defendants intentionally interfered with Plaintiffs' possessory interest in their
funds by executing numerous unauthorized transactions of the funds. Namely, Defendants made
several withdrawals from Plaintiffs' accotmts and issued the withdrawn funds to OXYwater and
Imperial without Plaintiffs' knowledge or authorization.
79. As a result of Defendants' improper conduct, Plaintiff has beeu damaged in an
amount to be determined at trial, but no less than $4.5 million, exclusive of interest, costs, and
attorney's fees.
herein.
SEVENTH CAUSE OF ACTION
FOR UNJUST ENRICHMENT
80. Plaintiffs repeat and reallege the above paragraphs as though fully set forth
81. During their relationship, Defendants diverted at least $2.5 million from
Plaintiffs' accounts to Imperial.
82. As a result of Defendants' improper conduct, Plaintiffs have been damaged in an
attorney's fees.
EIGHTH CAUSE OF ACTION
FOR FRAUD AND FRAUD IN THE INDUCEMENT
83. Plaintiffs repeat and reallege the above paragraphs as though fully set forth
herein.
84. In soliciting an investment from Plaintiffs, Defendants misrepresented to
Plaintiffs numerous facts about Imperial and OXY water and failed to inform Plaintiffs that
Imperial was on the verge of bankruptcy.
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85. The material misrepresentations and omissions by the Defendants described
above, on which Plaintiffs relied to their detriment, were fraudulent and made with the intent to
mislead Plaintiffs and induce it into investing millions of dollars in hnperial.
86. At the time they solicited the investment from Plaintiffs, Defendants knew that
the representations were false.
87. Smith relied upon Defendants' misrepresentations.
88. As a result of Defendants' improper conduct, Plaintiffs have been damaged in an
amount to be determined at trial, but no less than $4.5 million.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs respectfully requests that this Court grant the following relief:
1. An award of Plaintiffs' actual dan1ages in an amount to be determined at trial but
no less than $8 million, exclusive of interest, costs and attorney's fees.
2. Such other and fi1rther relief as this Court may deem just and proper.
Dated: New York, New York
JuJyJo, zor4 - -
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T FIRM,PLLC
By:

295 Madison A venue, 22nd Floor
New York, New York 10017
Tel: 212-542-8882
Fax: 212-542-8883
Attorneys for Plaintiffs