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Michael J. Aguirre, Esq., SBN 060402 Christopher S. Morris, Esq., SBN 163188 Maria C. Severson, Esq., SBN 173967 AGUIRRE, MORRIS & SEVERSON LLP 444 West C Street, Suite 210 San Diego, CA 92101 Telephone: (619) 876-5364 Facsimile: (619) 876-5368 Attorneys for Plaintiffs

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TAMER SALAMEH, an individual; REAL ESTATE 4 HOSPITALITY, LLC, a California limited liability company; ALEKSEY KATS; DIANA KATS; MITCHELL J. PEREIRA; GARY A. TORRETTA; ROBERT ALVARENGA; ALEXIS COSIO; CESAR MOTA; DENIS B. ROTHE JR; CHARLENE SCHRUFER; DAVID R. BUSHY; DALE CURTIS; ZONDRA SCHM IDT; DOLORES GREEN; CHRISTY JESKE; TAZIA REYNA; MARY L. WEE SONG; KERRY L. STEIGERWALT; BETH STEIGERWALT; STUART M. WOLMAN; JEFFREY E. LUBIN AND BARBARA L. LUBIN, INDIVIDUALLY AND AS COTRUSTEES OF THE LUBIN FAMILY TRUST DATED MARCH 26, 2002; MIKAEL HAVLUCIYAN AND THERESE HAVLUCIYAN INDIVIDUALLY AND AS COTRUSTEES OF THE HAVLUCIYAN FAMILY TRUST; SADOUX KIM; VITO MICALE, PHILLIP GUTIRREZ, DANON SLINKARD, JOEY CLEMENT, ANDREW PAUL, STEVEN PAUL, MATTHEW HOERR, SYLVIA HOERR, KEVIN HENRY, KIM HENRY, THOMAS BEHRLE, BARABARA BEHRLE, JOSE GALLANOSA, VIRGINIA GALLANOSA, Case No. 09-cv-02739-DMS-CAB CLASS ACTION SECOND AMENDED COMPLAINT FOR VIOLATIONS OF FEDERAL AND STATE SECURITIES LAWS 1. 2. 3. 4. 5. 6. 7. 8. 12(a)(2) Securities Act of 1933 (Misrepresentation and Omission) 10(b)(5) Securities Act of 1934 (Misrepresentation and Omission) Corp Code 25110, 25503, 25504.1 (Failure to Qualify) Corp Code 25401, 25501, 25504.1 (Misrepresentations and Omissions) Corp Code 25501.5 (Rescission Against Unlicensed Broker-Dealer) Corp Code 25504 (Control Person Liability) Fraud-Misrepresentation Fraud-Concealment UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

JURY TRIAL DEMANDED

CLASS ACTION SECOND AMENDED COMPLAINT

CASE NO. 09-CV-02739-DMS-CAB

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individually and on behalf of a Class of all others similarly situated , Plaintiffs, v. TARSADIA HOTEL, a California Corporation; GASLAMP HOLDINGS LLC, a California Limited Liability Company; TUSHAR PATEL, an individual; B.U. PATEL, an individual; GREGORY CASSERLY, an individual; 5th ROCK LLC, a Delaware limited liability company; MPK ONE, LLC, a California limited liability company; PLAYGROUND DESTINATION PROPERTIES, a corporation; EAST WEST BANK, a California corporation; BANK OF AMERICA, a Delaware Corporation; JP MORGAN CHASE; PROFESSIONAL MORTGAGE PARTNERS, INC.; XBR FINANCIAL SERVICES, LLC, a California limited liability company; ERSKINE CORP., a California Corporation; INDEPENDENT BANK CORPORATION, a Michigan corporation; WINTRUST FINANCIAL CORPORATION, an Illinois corporation; and DOES 1 to 100, inclusive, Defendants.

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TABLE OF CONTENTS NATURE OF ACTION .................................................................................................................. 1 THE PARTIES ................................................................................................................................ 2 CLASS ALLEGATIONS ............................................................................................................. 10 JURISDICTION AND VENUE ................................................................................................... 11 HARD ROCK HOTEL SAN DIEGO COMMON ENTERPRISE .............................................. 11 EXPECTATION OF PROFIT AS THE PRODUCT OF EFFORTS OTHER THAN HRHSD INVESTORS...................................................................... 14 MISREPRESENTATIONS OF MATERIAL FACTS AND OMISSIONS OF MATERIAL FACTS .............................................................................. 21 SALE OF HRHSD INVESTMENT CONTRACTS ..................................................................... 24 KEY PLAYERS ............................................................................................................................ 26 DISCOVERY OF PLAINTIFFS CLAIMS ................................................................................. 28 ATTEMPTED WAIVER OF SECURITIES LAW VOID ........................................................... 28 EAST WEST BANK .................................................................................................................... 29 JP MORGAN CHASE .................................................................................................................. 34 PROFESSIONAL MORTGAGE PARTNERS, INC. .................................................................. 36 INDEPENDENT BANK............................................................................................................... 38 BANK OF AMERICA .................................................................................................................. 38 REGISTRATION WOULD HAVE DISCLOSED FLAWS IN THE INVESTMENT ............................................................................................................... 43 OFFERING WAS NOT FAIR, JUST AND EQUITABLE .......................................................... 43

21 CONTROL PERSON AND JOINT AND SEVERAL LIABILITY ............................................ 44 22 UNLICENSED BROKER DEALER LIABILITY ....................................................................... 44 23 24 25 26 27 28 /// i
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FIRST CLAIM FOR RELIEF....................................................................................................... 46 12(a)(2) Securities Act of 1933 Misrepresentation and Omission SECOND CLAIM FOR RELIEF ................................................................................................. 46 10(b)(5) Securities Exchange Act of 1934 Misrepresentation and Omission

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THIRD CLAIM FOR RELIEF ................................................................................................... 47 Corp Code 25110, 25503, 25504.1 Failure to Qualify, Material Assistance FOURTH CLAIM FOR RELIEF ............................................................................................... 47 Corp Code 25401, 25501, 25504.1 Misrepresentations and Omissions, Material Assistance FIFTH CLAIM FOR RELIEF .................................................................................................... 48 Corp Code 25501.5 Rescission Against Unlicensed Broker-Dealer against Playground Destination Properties only SIXTH CLAIM FOR RELIEF .................................................................................................... 48 Corp Code 25504 Control Person Liability against Patel and Casserly Defendants SEVENTH CLAIM FOR RELIEF ............................................................................................. 48 Fraud Misrepresentation EIGHTH CLAIM FOR RELIEF................................................................................................. 49 Fraud-Concealment

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NATURE OF ACTION This action arises from defendants knowing and intentional violation of

registration, qualification, and broker licensing requirements of the federal and California State securities laws. 2. Public investors in the Hard Rock Hotel San Diego (HRHSD) are losing tens of

millions of dollars from their failed HRHSD investment properties. The HRHSD promoters sold investment contracts (HRHSD Investment Contracts) to investors without registering the investment agreements with the US Securities & Exchange Commission (SEC) or qualifying them with the California Department of Corporations (DOC), in violation of federal and state investor protection laws. 3. The HRHSD promoters and issuers did not want the HRHSD Investment Contract

to be reviewed by federal and state investment regulators. The promoters knew the SEC Corporate Finance Division would review, from the point of view of investors, the investment features of the HRHSD Investment Contracts to determine if the investor agreements contained material misrepresentations or omitted facts needed to make those stated not misleading. The HRHSD also believed the DOC would not issue a permit for the HRHSD if the DOC determined the HRHSD Investment Contracts were not fair, just and equitable. In order to avoid this scrutiny of the HRHSD Investment Contracts, HRHSD promoters elected to disregard their legal duties to submit the HRHSD Investment Contracts to the federal and state investment regulators. 4. The HRHSD promoters shifted the risk of their HRHSD investment through the

HRHSD Investment Contracts to investors. HRHSD promoters sold individual studio and suite investment properties to investors but under the terms of the HRHSD Investment Contract the promoters retained control of the HRHSD studio and suite keys. Under the terms of the HRHSD Investment Contract investors were only permitted to stay in their HRHSD studio and suites a maximum of 28 days of the year. 5. Whether investors made money on their HRHSD investment under the terms of

the HRHSD Investment Contract was substantially dependent on the managerial efforts of the HRHSD promoters. 1
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6.

As a direct and proximate result of defendants violation of investor protection

laws, plaintiffs have suffered tens of millions of dollars in damages. The HRHSD is paying plaintiffs only a fraction of what plaintiffs would need to break even on their HRHSD Investment Contracts. For those who financed their investment in HRHSD with bank loans, the HRHSD revenues are materially and substantially less than the loan debt service. 7. HRHSD promoters prepared documents and provided them to potential purchasers

to give the false impression that HRHSD investors had a choice about whether to use the HRHSD promoters to manage rentals of investors HRHSD investment properties, when in fact the promoters structured the HRHSD so that investors were required to rely on the HRHSD promoters to manage the rental of the HRHSD investment properties. 8. The HRHSD promoters used classic bait-and-switch techniques to sell investors

HRHSD Investment Contracts. Promoters told investors they would be treated like rock stars -the HRHSD Investment Contracts would give investors a proverbial back stage pass to the investment opportunity that was HRHSD. 9. In fact the HRHSD Investment Contract was an artifice of deception devised to be

used by HRHSD promoters to shift substantial risks of the HRHSD to dazzled investors. 10. This operative complaint has been filed to force the HRHSD promoters to honor

their legal duties and make whole the investors who were tricked into buying HRHSD Investment Contracts. THE PARTIES PLAINTIFFS 11. Plaintiffs individually and on behalf of a Class of all other similarly situated

persons described below (collectively, "Plaintiffs"), file this Class Action Second Amended Complaint. 12. Plaintiff Tamer Salameh is a resident of the Southern District of California.

Plaintiff is an investor who purchased ten (10) HRHSD Investment Contracts underwritten by defendant East West Bank. 13. Plaintiff Real Estate 4 Hospitality, LLC is a California limited liability company 2
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whose principal place of business is in the Southern District of California. Plaintiff Real Estate 4 Hospitality, LLC , was an investor who purchased HRHSD Investment Contracts underwritten by defendant East West Bank. 14. Plaintiffs Jeffrey E. Lubin and Barbara L. Lubin individually and as co-trustees of

the Lubin Family Trust dated March 26, 2002 ("Lubin") are residents of or organized under laws of the State of California and reside within the Southern District of California. Lubin purchased an HRHSD Investment Contract underwritten by Water Stone Bank. 15. Plaintiffs Aleksey Kats and Diana Kats are residents of the State of California

residing within the Southern District of California. Aleksey Kats and Diana Kats purchased an HRHSD Investment Contract underwritten by defendant East West bank. After this legal action was filed, defendant East West Bank notified plaintiffs it has sold the plaintiffs note to XBR Financial Services; LLC, a California limited liability company. 16. Mitchell J. Pereira is a resident of the State of California residing within the

Southern District of California. Mr. Pereira purchased an HRHSD Investment Contract underwritten by Professional Mortgage Partners, Inc. (Professional Mortgage Partners). 17. Gary A. Toretta is a resident of the State of California residing within the Southern

District of California. Mr. Toretta purchased an HRHSD Investment Contract underwritten by Professional Mortgage Partners. 18. Stuart M. Wolman is a resident of the State of California residing within the

Southern District of California. Mr. Wolman purchased an HRHSD Investment Contract underwritten Professional Mortgage Partners. 19. Robert Alvarenga is a resident of the State of California residing within the

Southern District of California. Mr. Alvarenga purchased an HRHSD Investment Contract that was underwritten by defendant Bank of America. 20. Alexis Cosio is a resident of the State of California residing within the Southern

District of California. Ms. Cosio purchased an HRHSD Investment Contract that was underwritten by Professional Mortgage Partners, later sold to JP Morgan Chase. 21. Cesar Mota is a resident of the State of California residing within the Southern 3
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District of California. Mr. Mota purchased an HRHSD Investment Contract underwritten by Professional Mortgage Partners, later sold to JP Morgan Chase. 22. Denis B. Rothe Jr., is a resident of the State of Florida. Mr. Rothe purchased an

HRHSD Investment Contract underwritten by Professional Mortgage Partners, then immediately sold to JP Morgan Chase. 23. Charlene Schrufer is a resident of the State of Florida. Ms. Schrufer purchased an

HRHSD Investment Contract underwritten by Professional Mortgage Partners, then immediately sold to JP Morgan Chase. 24. Mikael and Therese Havluciyan individually and as trustees of the Havluciyan

Trust are residents of the State of California residing within the Southern District of California. Mr. Havluciyan and Ms. Havluciyan individually and as trustees of the Havluciyan family trust purchased an HRHSD Investment Contract underwritten by Bank of America. 25. David J. Bushey is a resident of the State of California residing within the

Southern District of California. Mr. Bushy purchased an HRHSD Investment Contract underwritten by East West Bank. 26. Dale Curtis is a resident of the State of California residing within the Southern

District of California. Mr. Curtis purchased an HRHSD Investment Contract underwritten by East West Bank. 27. Dale Curtis and David J. Bushey together purchased an HRHSD Investment

Contract underwritten by Professional Mortgage Partners. 28. Kerry Steigerwalt is a resident of the State of California residing within the

Southern District of California. Mr. Steigerwalt purchased an HRHSD Investment Contract with East West Bank. 29. Beth Steigerwalt is a resident of the State of California residing within the

Southern District of California. Ms. Steigerwalt purchased an HRHSD Investment Contract with East West Bank. 30. Dolores Green is a resident of the State of California residing within the Southern

District of California. Ms. Green purchased an HRHSD Investment Contract underwritten by 4


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Bank of America. 31. Zondra Schmidt is a resident of the State of California residing within the Southern

District of California. Ms. Schmidt purchased an HRHSD Investment Contract underwritten by Bank of America. 32. Christy Jeske is a resident of the State of California residing within the Southern

District of California. Ms. Jeske purchased an HRHSD Investment Contract underwritten by Professional Mortgage Partners. 33. Mary L. Wee Song is a resident of Arizona. She purchased three (3) HRHSD

Investment Contracts underwritten by East West Bank. 34. Tazia Reyna is a resident of the State of California and resides in Orange County.

Ms. Reyna purchased an HRHSD Investment Contract underwritten by JP Morgan Chase. 35. Sadoux Kim is a resident of the State of California. Mr. Kim purchased an

HRHSD Investment Contract underwritten by Professional Mortgage Partners. 36. Vito Micale is a resident of the State of California. Mr. Micale purchased an

HRHSD Investment Contract underwritten by East West Bank. 37. Phillip Gutirrez is a resident of the State of California. Mr. Gutirrez purchased an

HRHSD Investment Contract underwritten by East West Bank. 38. Danon Slinkard is a resident of the State of California. Mr. Slinkard purchased an

HRHSD Investment Contract underwritten by East West Bank. 39. Joey Clement is a resident of the State of California. Mr. Clement purchased an

HRHSD Investment Contract underwritten by East West Bank. 40. Andrew M. Paul is a resident of the State of California. Mr. Paul purchased an

HRHSD Investment Contract underwritten by East West Bank. 41. Steven D. Paul is a resident of the State of California. Mr. Paul purchased an

HRHSD Investment Contract underwritten by East West Bank. 42. Matthew Hoerr is a resident of the State of California. Mr. Hoerr purchased an

HRHSD Investment Contract underwritten by Independent Bank. 43. Sylvia Hoerr is a resident of the State of California. Ms. Hoerr purchased an 5
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HRHSD Investment Contract underwritten by Independent Bank. 44. Kevin Henry is a resident of the State of California. Mr. Henry purchased an

HRHSD Investment Contract underwritten by Independent Bank. 45. Kim Henry is a resident of the State of California. Ms. Henry purchased an

HRHSD Investment Contract underwritten by Independent Bank. 46. Thomas Behrle is a resident of the State of California. Mr. Behrle purchased an

HRHSD Investment Contract underwritten by Independent Bank. 47. Barbara Behrle is a resident of the State of California. Ms. Behrle purchased an

HRHSD Investment Contract underwritten by Independent Bank. 48. Jose Gallanosa is a resident of the State of California. Mr. Gallanosa purchased an

HRHSD Investment Contract underwritten by Bank of America. 49. Virginia Gallanosa is a resident of the State of California. Ms. Gallanosa

purchased an HRHSD Investment Contract underwritten by Bank of America. 50. Each of the Plaintiffs, including those listed by name in the caption and above,

(collectively, Plaintiffs) acquired or purchased a Hard Rock Hotel San Diego Investment Contract, as described more fully herein. DEFENDANTS 51. The promoters who engaged in the unlawful activities alleged are defendants

Tarsadia Hotels, a California Corporation (Tarsadia); Tushar Patel, Chairman of Tarsadia; B.U. Patel, founder and Vice Chairman of Tarsadia; Greg Casserly, agent and President of Tarsadia; 5th Rock LLC, a Delaware limited liability company and seller of the HRHSD studios and suites, and also the HRHSD operator; MPK ONE, LLC, a California limited liability company doing business in the Southern District of California and the manager of 5th Rock LLC; Gaslamp Holdings LLC, a California limited liability company; Playground Destination Properties, a corporation, sales broker for the HRHSD Investment Contracts; East West Bank, a California corporation; JP Morgan Chase; Bank of America; Erskine Corporation, a California corporation that provided mortgage/financing services and arranged financing with defendant Professional Mortgage Partners, Inc.; and other banking company defendants that assisted, participated in, and 6
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funded the investment contracts in whole or part (collectively, the "Defendants"). 52. Those defendants not previously named are substituted in as formerly named

"Doe" defendants. 53. Defendant 5th Rock LLC is a Delaware limited liability company doing business

in the Southern District of California. Defendant 5th Rock LLC was the developer and one of the sellers of the HRHSD Investment Contracts. 54. Defendant Gaslamp Holdings LLC (Doe Defendant 1) is a California limited

liability company doing business in the Southern District of California. Gaslamp Holdings LLC is the owner of the ground upon which HRHSD is built. Gaslamp Holdings LLC entered into a ground lease with 5th Rock LLC. 55. Defendants MPK ONE, LLC, is a California limited liability company doing

business in the Southern District of California. MPK ONE LLC is the controlling entity that manages 5th Rock LLC. MPK ONE LLC executed the sales documents by which the investment contracts and properties -- studio and suites -- were sold to investors. 56. Defendant Tarsadia Hotels (Tarsadia) is a California Corporation doing business in

the Southern District of California. Tarsadia is HRHSD's operator. 57. Defendant Tushar Patel is the Chairman of defendant Tarsadia. In the Southern

District of California, he engaged in material and substantial wrongdoing underlying and forming the basis of the claims alleged in this operative complaint. 58. B.U. Patel is the Vice Chairman and founder of defendant Tarsadia. In the

Southern District of California, defendant B.U. Patel engaged in material and substantial wrongdoing underlying and forming the basis of the claims alleged in this operative complaint. 59. Defendant Gregory Casserly was at all relevant times the President of defendant

Tarsadia. He joined defendant Tarsadia in 1998. In the Southern District of California, defendant Casserly engaged in material and substantial wrongdoing underlying and forming the basis of the claims alleged in this operative complaint. 60. Defendant Playground Destination Properties, Inc. (Playground) is a Washington

corporation doing business in the Southern District of California. At all relevant times, 7
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Playground materially and substantially assisted in the unlawful sale of unregistered and unqualified HRHSD investment contracts. 61. Defendant East West Bank, a California Corporation, materially assisted in the

unlawful sale of approximately $42,726,435 of unqualified and unregistered HRHSD Investment Contracts. 62. XBR Financial Services (Doe Defendant 2) is a California limited liability

company. After this legal action was filed, defendant East West Bank notified several plaintiffs that it has sold the plaintiffs note to XBR Financial Services, LLC. 63. Defendant JPMorgan Chase & Co. (JPMorgan Chase, Doe Defendant 3), a

financial holding company incorporated under Delaware law in 1968. Defendant JP Morgan Chase is added to the operative complaint as Doe Defendant 3. Defendant JP Morgan Chase materially assisted in the unlawful sale of approximately $7,349,895 of unqualified and unregistered HRHSD Investment contracts. 64. Defendant Professional Mortgage Partners, Inc. [PMP] (Doe Defendant 4) is a

Chicago-based mortgage banking firm. Defendant Professional Mortgage Partners materially assisted in the unlawful sale of approximately $38,536,730 of unqualified and unregistered HRHSD. 65. Defendant Wintrust Financial Corporation is an Illinois corporation who purchased

the assets and became responsible for the liabilities of Professional Mortgage Partners. Wintrust had knowledge of PMP in connection with the impaired loans made to finance the HRHSD Investment Contracts. Wintrust continued the business of PMP after its acquisition of PMP. They are named as a defendant herein based on successor liability. 66. Defendant Bank of America is a Delaware corporation, a bank holding company

and a financial holding company under the Gramm-Leach-Bliley Act. Bank of America's principal executive offices are located in the Bank of America Corporate Center, Charlotte, North Carolina. Bank of America is added to the operative complaint in place of Doe Defendant 5. Defendant Bank of America (Doe Defendant 5) materially assisted in the unlawful sale of approximately $14,450,870 of the unregistered and unqualified HRHSD Investment Contracts. 8
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67.

Defendant Erskine Corp. (Doe Defendant 6) operates under the name the Erskine

Group is a division of Cal Con Mutual Mortgage Corporation; both companies have their principal places of business in San Diego County. The Erskine Group is added to the operative complaint as Doe Defendant 6. Defendant Erskine Group materially assisted in the unlawful sale of the unregistered and unqualified BRHSD Investment Contracts as a co-underwriter of HRHSD Investment Contracts. 68. Defendant Erskine Corporation is a California corporation run by two brothers,

Joshua Erskine and Shane Erskine. Erskine Corp. provided mortgage and financing services steering most if not all Investment Contract financing to defendant Professional Mortgage Corporation. Together with Professional Mortgage Partners, and as its agent, materially assisted in the unlawful sale of unqualified and unregistered HRHSD Investment Contracts. 69. Defendant Independent Bank (Doe Defendant 7) is a bank headquartered in Ionia,

Michigan. Independent Bank is chartered by the State of Michigan. Independent Bank provides a full range of financial services, including commercial banking, mortgage lending, investments and title services. Independent Bank does business in California and purchased approximately 100 HRHSD Investment Contract loans from PMP. 70. Defendants offered and sold, or materially assisted the offer and sale of

approximately $195,757, 613 of HRHSD Investment Contracts. Fifth Rock appears to have purchased about $22,940,514 of HRHSD Investment Contracts. 71. Table 1 illustrates the amounts underwritten by defendants East West Bank, JP

Morgan Chase, Professional Management Partners, Bank of America and Independent Bank: Table 1 Bank East West Bank JP Morgan Chase Professional Mortgage Partners/Independent Bank Bank of America Total Amount of HRHSD Investment Contracts Underwritten $42,726,435 $7,349,895 $38,536,730 $14,450,870 $103,063,930 9
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72.

The true names and capacities of those defendants sued herein as DOES 9 through

50, inclusive, whether individual, corporate, associate or otherwise, are unknown to plaintiffs, who sue those defendants by such fictitious names. When the DOE parties' true names and capacities and their actual involvement in the matters alleged herein are ascertained, plaintiffs will amend this complaint to accurately reflect the same. 73. Plaintiffs are informed and believe, and thereon allege, that each of the fictitiously

named defendants designated hereunder as a DOE defendant is responsible in some manner for the occurrences alleged herein, and that plaintiffs' damages as herein alleged were proximately caused or contributed to by their conduct. 74. Plaintiffs are informed and believe and thereon allege. that at all relevant times

herein, each of the defendants was the agent, employee, partner, joint venture, alter ego, and/or co-conspirator of one or more of the remaining defendants and in doing the acts alleged herein, was acting within the purpose, course and scope of such agency, employment joint venture or conspiracy, and with the consent, permission or ratification of one or more remaining defendants. CLASS ALLEGATIONS 75. Plaintiffs bring this action pursuant to Fed. R. Civ. P. 23(a), (b)(1), and (b)(3) on

behalf of all persons (the "Investors") who were sold and who purchased HRHSD Investment Contracts (referred to as HRHSD Investment Contracts or HRHSD Securities). 76. Plaintiffs sue as representative parties on behalf of all members of the class of

purchasers of HRHSD Investment Securities. The class is so numerous that joinder of all of the several hundred purchasers of the HRHSD Investment Securities would be impracticable. There are fundamental questions of law and fact common to the class including whether the elements of the federal and state investor protection law claims can be satisfied. 77. The claims of the representative parties are typical of the claims of the class. The

representative parties and counsel will fairly and adequately protect the interests of the class. The common questions of law and fact common to the class members predominate over any questions affecting only individual members, and a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. 10
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78.

The contracts identified in this operative complaint that collectively form the

HRDSD Investment Contracts are contracts of adhesion. To the extent those contracts purport to restrain a partys ability to proceed in this action, those provisions are unconscionable and unenforceable. JURISDICTION AND VENUE 79. The claims herein arise under Section 12(a)(2) of the Securities Act, 15 U.S.C.

77l (a)(2), and Section 15 of the Securities Act, 15 U.S.C. 77o. This Court has subject matter and supplemental jurisdiction of this action pursuant to Section 22 of the Securities Act, 15 U.S.C. 77v, and 28 U.S.C. 1331 and 1337, 1367(a). 80. Venue is proper in this District pursuant to Section 22 of the Securities Act and 28

U.S.C. 1391(b). The violations of law alleged herein occurred in substantial part in this District, within which the sale of the Hard Rock Investment Securities to Class members occurred, and within which the investment properties are located. 81. In connection with the acts and practices alleged herein, Defendants used the U.S.

Mail and facilities of interstate commerce.

HARD ROCK HOTEL SAN DIEGO COMMMON ENTERPRISE 82. Plaintiffs invested money, in a common enterprise (HRHSD Common Enterprise),

with an expectation that profits would be produced by the managers of HRHSD for plaintiffs. The nature of the HRHSD Common Enterprise, and the basis of plaintiffs expectation that profits would be produced by the operators of HRHSD, were detailed in the documents that framed the legal relationships amongst and between the parties. 83. The HRHSD Common Enterprise in which plaintiffs were invested was described

in a California Department of Real Estate Final Subdivision Public Report (DRE Report) for the HRHSD project (also known as 5th & K Parcel 2 Condominiums and 5th & K Parcel 3 Condominiums) prepared by defendant 5th Rock LLC. The DRE Report was provided to plaintiffs and informed plaintiffs that they were joining in a common interest development. 11
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84.

The DRE report described the integrated and common nature of the HRHSD

Common Enterprise. The HRHSD Common Enterprise, according to the DRE Report, required plaintiffs to pay for the operation and maintenance of the common facilities associated with plaintiffs HRHSD units through two owner associations. The DRE Report represented that the HRHSD included 420 room units divided into one parcel of 257 rooms and another parcel of 163 room units. 85. The DRE Report informed plaintiffs that each of their hotel units has an undivided

interest in the common area located within the parcel in which the room unit is situated. The DRE Report informed plaintiffs their units and associations were part of a master planned development commonly known and advertised as the The Hard Rock Hotel & Condominiums (the Project). 86. The DRE Report further represented that the HRHSD Common Enterprise

included within the Master Planned Development a parcel of 17 commercial condominiums. The commercial condominiums included retail shops, restaurants, bars, and the majority of a hotel, but not the hotel rooms. Plaintiffs were told in the DRE Report their owners associations were members of the HRHSD master association (5th & K Master Association). 87. The DRE Report further described the HRHSD Common Enterprise explaining

that the HRHSD project would be operated by, and subject to, the jurisdiction of the Master Association. The Master Association, according to what plaintiffs were told by the DRE Report, was to manage and maintain the common area of the HRHSD project, including all common areas. 88. As part of the HRHSD Common Enterprise plaintiffs were required to pay their

share of the (1) Master Assessments, (2) Special Master Assessments, (3) Sub-Association Assessments, (4) Enforcement Assessments, and (5) Unit Expenses under Section 5.1 of the terms of the Declaration of Covenants, Conditions, Easements, and Restrictions for 5th & K Master Association. 89. The HRHSD Common Enterprise was further defined by restrictions imposed on

the HRHSD project by the City of San Diego as a condition for approving the HRHSD project. 12
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Those restrictions required plaintiffs units to be managed as part of the hotel and restricted plaintiffs occupancy to 28 days per calendar year. Gaslamp Holdings LLC as the owner of the land below the HRHSD was required by the City of San Diego to file with the San Diego County Recorder a declaration of restrictions 1 as follows: The approximately 420 hotel condominium units (Units) may be sold individually only as non-residential condominium units. Owner occupancy in the Units shall be limited to a maximum of 28 days per calendar year, and at all times the Units shall be managed as part of the Hotel. 90. The HRHSD Common Enterprise came into existence as a result of the promoters

decisions to convert what had begun as a hotel project. On 24 July 2004 the San Diego Centre City Development Corporation granted 5th Rock LLC (as the developer) Special Permit No. 200413 to permit the development of a 12-story hotel with 338 hotel rooms and 23,000 square feet of retail/commercial and parking uses on a 52,500 square foot site. While the project was under construction in 2005 Gaslamp Holdings LLC was granted Map Waiver No. 245739 allowing Gaslamp Holdings LLC to create 420 commercial hotel commercial hotel condominium units and 17 commercial condominium units in the building then under construction. The waiver was granted on the grounds that: As this project is merely a conversion of commercial units to condominiums and no new development is proposed as a result of this action, and because the project is strictly commercial, staff has determined the proposed waiver conforms to the applicable requirements of the States Subdivision map Act Section 66428. Therefore, a Tentative Map may be waived for this project with Certificates of Compliance required as a condition of the Map Waiver. 91. The HRHSD Common Enterprise in which plaintiffs invested was framed by a

series of agreements and documents by which plaintiffs were bound included the following: Document Title Purchase Contract and Escrow Instructions Unit Maintenance Agreement Tarsadia Hotels Hard Rock Rental Management Agreement Declaration of Restrictions (CC&Rs) Association Articles of Incorporation and By Laws Deed Restrictions
1

28

On 30 January 2006 Gaslamp Holdings, LLC, filed a Declaration of Restrictions reciting these restrictions with the San Diego County Recorders Office as Document No. 2006-0067051.

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City of San Diego Restrictions DRE Report EXPECTATION OF PROFIT AS THE PRODUCT OF EFFORTS OTHER THAN HRHSD INVESTORS 92. The economic reality of the HRHSD project led plaintiffs to expect a profit from

the efforts of the management of HRHSD rather than from plaintiffs own efforts. Plaintiffs access to their units was limited. Plaintiffs were not allowed to possess a key to their units under the Unit Management Agreement. Plaintiffs were not permitted to stay in their units for longer than 28 days a year. The units had to be operated as commercial units as part of the HRHSD by the hotel managers. The marketing of the units was controlled by management. The costs of operations were determined by management, which named a majority to all boards controlling the three associations. The rental income was collected by management. Management determined and controlled the HRHSD internal control system. Management hired all employees. Management controlled the HRHSD design and construction. Management engaged in extensive preconstruction promotional activity and post construction management. 93. Plaintiffs received less than 38% of the rental income from their units.

Management charged an operators fee of 50% of net rental revenues derived from plaintiffs hotel units. From plaintiffs 50% a 10% market fee was deducted by management. Plaintiffs paid an additional 3% of rental revenue generated from group booked nights. Plaintiffs pay their association dues and unit costs for repairs and bedding. Plaintiffs were forced to join the

Tarsadia rental program and Tarsadia was plaintiffs exclusive rental agent and plaintiffs were not able to rent their studios or suites on their own. Plaintiffs were not allowed to collect money for the use of their studios or suites for the 28 days of allowed residence. Plaintiffs were provided with the following revenue projections: /// /// /// ///

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Item 244 Studio Rooms paid by plaintiffs (room owners and hotel owners shared income, except for those owned by hotel owners; hotel owners receive an operators fee of 50% of Net Room Rental Revenue) 159 Suites paid by plaintiffs (room owners and hotel owners shared income, except for those owned by hotel owners) 17 Rock Star Suites paid by plaintiffs (room owners and hotel owner shared income, except for those owned by hotel owners) 40,000 Meeting Space (hotel owner receives income) Nobu Restaurant (hotel owners receives income Maryjanes Coffee Shop (hotel owners receives income) Pinkberry (hotel owners receives income) Rock Spa (hotel owner receives income) Rock Shop (hotel owners receives income Bars (hotel owners receive income) Parking (hotel owners receive income) Room Service (hotel owners receive income) Mini Bars in hotel rooms (hotel owners receive income) Marketing Fee room owners pay 10% of their Net Room Revenue Group Sales Fee room owners pay 3% of their Group income Reserve Fee of room owner pays 5% of Net Room Revenue Construction Cost Paid by Hotel Owner 15
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Percent Gross Rental Revenue Less: Marketing Fee Less: Group Sales Fee Net Room Revenue Less Operators Fee Owners Revenue Less: Reserve 94. 10% 3% 50% 50% 5%

Transient Revenue $100.00 ($10.00) ($0.00) $90.00 $45.00 $45.00 ($2.25)

Group Revenue $100.00 ($3.00) $87.00 $43.50 $43.50 ($2.18)

The HRHSD Common Enterprise was organized so that the investors and

promoters shared in the costs and profits from ownership as illustrated in the following Table:

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 95.

Association Maintenance Fees paid by room owner Repair and Replacement Costs paid by room owners Guests who fail to pay, room owners incur loss Costs of Common Areas (hotel room owners and hotel owners share the costs of the common area, hotel owner imposes association owner fees through the home owners association which hotel owners control because they appoint a majority of each board) Plaintiffs were induced to believe they were investing in a common enterprise in

which their profits would come from the efforts of others by written representations contained in the Tarsadia Hotels Inc., (Tarsadia) Hard Rock Hotel San Diego Rental Management Agreement (HRHSD Common Enterprise Rental Agreement) which provided and acknowledged that Tarsadia Hotel was the manager of the HRHSD, and that HRHSD was operated as part of the HRHSD and Condominium project located at 207 5th Avenue, in San Diego, California. 96. The HRHSD Common Enterprise Rental Agreement led plaintiffs to believe they

were investing in a common enterprise in which profits would come from the efforts of others because it provided that Tarsadia was the operator of the HRHSD and was also the operator of the rental management and reservation program for HRHSD. In the HRHSD Common Enterprise Rental Agreement plaintiffs appointed Tarsadia to be their exclusive rental management agent. Plaintiffs were led to believe that rental income from their hotel units would come from the efforts of Tarsadia as the HRHSD operator and as the operator of the reservation and rental program. 97. Plaintiffs looked to Tarsadia, and its affiliated companies and persons, to produce

plaintiffs return on investment. Tarsadia and its affiliated companies decided on HRHSDs location, its operation as a Hard Rock Hotel, the number of rooms, the organization of its associations, its marketing structure, its management, employees, unit prices, and design and architecture. Plaintiffs looked to Tarsadia and its affiliated persons and entities to market their rental units, to set the rental price, to decide when to grant complimentary use of plaintiffs rooms, to select the dcor, the bedding, the color schemes, the entertainment, the restaurants, the

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shops, and the other elements that make for a successful hotel. 98. The defendants written assertion that the rental program was voluntary was not

correct, based upon the way in which defendants structured HRHSD. Section 10.2.3 Rooms Units of the Declaration of Covenants, Conditions, Easements, and Restrictions for 5th & K Master Association provided that plaintiffs could only rent their unit under a program operated by the Hotel Owner (5th Rock LLC or Gaslamp Holdings LLC) or any third party approved by the Hotel Owner. The plaintiff unit owner is required to provide written notice to the Master Association of the owners intention to permit occupancy of the owners unit room. Section 4.1 of the Unit Maintenance and Operation Agreement provided that the unit owner was required to pay the Hotel owner a service fee at initial rates of $90 per day for a studio, $125 per day for a one-bed-room suite, and $150 per day for a Rock Star Suite. The service fee automatically increased every year by an amount equal to the percentage increase in the Consumer Price Index, San Diego Average, All Urban Consumers, All Items (1982-1984=100) as published by the U.S. Department of Labor, over the Consumer Price Index amount on the first day of the prior period but in no event shall the percentage increase be less than 4% per annum. The imposition of service charges by defendants, together with the other provisions in the applicable governing agreements, rendered the option of owners renting out their own units financially infeasible. 99. The opportunity to invest in the HRHSD Common Enterprise in which plaintiffs

expected profit was to come from the efforts of others was made to plaintiffs by way of a public offering. The opportunity to invest was advertized on television, in magazines and other publications in California and in other states. The public offerings of HRHSD units involved operation cost pool arrangements as described above. The costs of operating the common areas were combined and the individual owners were charged a ratable share of the costs without regard to whether plaintiffs units were actually rented. The offer of the unit together with the offer of an opportunity to participate in such a cost sharing pool involved the offer of investment contracts which should have been, but were not, registered with the Securities & Exchange Commission (SEC) or qualified by the California Department of Corporations. /// 17
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100.

Although there was some boilerplate disclaimers that plaintiffs were not investing

in HRHSD, those disclaimers were not contained in the other documents. Such disclaimers are contradicted by the economic reality of the investment terms. Plaintiffs, under the restrictions imposed by the City of San Diego, could not reside in their units and had to operate them as commercial units under hotel management as part of the hotel. The HRHSD Common Enterprise Rental Agreement frequently asked questions distributed to plaintiffs made it clear plaintiffs were looking to Tarsadia and their affiliated persons and entitles To maximize revenue by renting the participating suites for the most number of nights at the highest possible rate. Tarsadia and its affiliated persons, entities and agents represented that Weve got the team. Weve got the ideas. Weve got the experience. Now we want you. And Again, please know that the sooner we receive your signed RMA, the sooner well be able to get your suite into the rental rotation. 101. Through writings, Tarsadia and its affiliated entities and persons used to describe

the Rental Agreement, Tarsadia represented it was voluntary in fact as a practical matter it was mandatory. Plaintiffs could not, as a practical matter, rent out their own unit because under the restrictions imposed by the City of San Diego and agreed to by Tarsadia and its affiliated entities, the units had to be operated as part of the management of the hotel. 102. The rental management agreement was for three years. The primary objective, as

represented by Tarsadia to plaintiffs, was revenue maximization. Tarsadia agreed to provide a monthly statement in the form decided on by Tarsadia and its affiliated entities and persons. Tarsadia falsely promised plaintiffs that it was Tarsadias goal to have each suite occupied the most number of nights each year at the highest possible rate. Tarsadia imposed a term in the rental agreement that allowed Tarsadia to comp plaintiffs units in order to adequately promote the Hotel demand. Tarsadia was allowed to comp Plaintiffs units 5 days per year. 103. Tarsadia represented to plaintiffs that reservations would be allocated by Tarsadia Plaintiffs were told in the

through its Our Property Management System known as OPERA.

Frequently Asked Questions [FAQ] hand out for the rental agreement that Opera would distribute reservations within each suite category (e.g. studios, one bedroom suites, rock star suites) on a rotational basis, taking into consideration owner use, complimentary occupancy, maintenance 18
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down-time, other variables. 104. HRHSD units were offered with a contract or agreement that placed restrictions on

the use of the units. These restrictions required the use of Tarsadia as plaintiffs exclusive rental agent and placed a 28-day per year limit on the period of time plaintiffs could occupy their units. These restrictions required that the units had to be operated as commercial units and as part of the hotel by hotel management. Plaintiffs were not even issued keys to their units and the units did not have kitchens. These restrictions show the economic reality of the transaction in which plaintiffs intended to invest in a business enterprise, the return from which was to be substantially dependent on the success of the managerial efforts of other persons. 105. Defendants own actions support plaintiffs claims that they invested in a common

enterprise with the expectation that a return on their investments would come from the efforts of the defendants. Defendants were well aware of the fact that plaintiffs had invested in a risky investment based on defendants own experience with the HRHSD Project. 106. Defendants had organized the HRHSD project as a hotel with 288 rooms, as

described in the 24 June 2004 San Diego Centre City Development Corporation News Digest: Regular Meeting of the Centre City Development Corporation Board of Directors June 23, 2004 The following summaries Wednesdays meeting: 1. HARD ROCK HOTEL design review approved by Board (Gaslamp Quarter) The Board granted design review approval of developer 5th Rock, LLCs Hard Rock Hotel project and recommended a height exception of 125 feet. Located at the southern end of the Gaslamp Quarter on the block bounded by Fifth and Sixth avenues and K and L streets (adjacent to the Old Spaghetti Factory restaurant) the two towers, 11, and 12 story (124ft), 388 room hotel includes 23,000sf of retail/restaurant space and parking for up to 280 cars. The project will incorporate a restored historic William Sterling Hebbard 1896 Otay Railroad Depot Building at Sixth and L as lobby bar. In addition, the project will feature an artist-designed water sculpture at the L Street entrance. (Vote 4-0, Vice Chair Johnson and Directors Vilaplana and McNeely) 107. The promoter defendants knew that HRHSD had started as a 388 room hotel

26 project because they were involved in the work needed to permit the project and to secure 27 financing. Defendant East West Bank was aware the HRHSD project started as a hotel because 28 19
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East West Bank provided the original financing. On 17 August 2005 a Leasehold Construction Deed of Trust was recorded in favor of East West Bank by 5th Rock, LLC for the sum of $88 million. The deed of trust secured an $88 million construction loan East West Bank made to 5th Rock to construct the hotel. 108. On 12 September 2005 the Orange County Business Journal reported, based on its

interview with B.U. Patel, that Tarsadia was developing a hotel with condominiums: In downtowns Gaslamp Quarter, Tarsadia is building a Hard Rock hotel. The $125 million project calls for an eight-story hotel, condominiums and shops. Its set to open next winter. 109. On 14 December 2005 San Diego City Development Project Manager Peter Lynch

recommended to a San Diego Development Services Hearing Officer that the City approve Map Waiver No. 245739 and allow 5th Rock LLC to convert the HRHSD project from a hotel with 388 rooms to a commercial non-residential condominium project. The project manager wrote: As this project is merely a conversion of commercial units to condominiums and no new development is proposed as a result of this action, and because the project is strictly commercial, staff has determined the proposed waiver conforms to the applicable requirements of the States Subdivision Map Act Section 66428. Therefore, a Tentative Map may be waived for this project with Certificates of Compliance required as a condition of the Map Waiver. 110. part that: 5. Prior to the recordation of the Certificates of Compliance, subdivider shall record a deed restriction as follows: The approximately 420 hotel condominium units (Units) may be sold individually only as non-residential condominium units. Owner occupancy in the Units shall be limited to a maximum of 28 days per calendar year, and at all times the Units shall be managed as part of the Hotel. 111. On 30 January 2006 Gaslamp Holdings LLC, the owner of the land on which the The Hearing Officers Resolution granting the map waiver provided in pertinent

23 HRHSD was under construction, filed a declaration of restrictions for the HRHSD project in 24 connection with the restriction that the approximately 420 hotel condominium units (Units) 25 may be sold individually only as non-residential condominium units. Owner occupancy in the 26 Units was to be limited to a maximum of 28 days per calendar year, and at all times the Units 27 were to be managed as part of the Hotel. 28 20
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112.

Another document that showed plaintiffs expectation of profit from the HRHSD

Common Enterprise was based substantially on the efforts of others was the HRHSD Operation Agreement. Under the HRHSD Operation Agreement, defendant 5th Rock LLC had the responsibility and authority to: accept reservations, enforce check-in and check-out procedures, perform housekeeping services; issue room keys (including to plaintiffs and investors); collect service and other charges; collect and remit transient occupancy taxes; provide such personnel as are necessary to accomplish the defined services. purchase and replace linens, towels, blankets and the like within the Studio and suites (costs to be paid by plaintiffs); connect plaintiffs unit telephones to the Hard Rock Hotel switchboard; arrange for basic cable or satellite television service to the Hotel Unit; operate the mini-bars and otherwise sell alcoholic beverages and foot in the studio and suites. MISREPRESENTATIONS OF MATERIAL FACTS AND OMISSIONS OF MATERIAL FACTS 113. In a series of writings issued to plaintiffs by defendants in connection with the

offer made to plaintiffs to invest in the HRHSD Common Enterprise HRHSD, Tarsadia and its affiliated persons and entities made the following misrepresentations and omitted to state facts needed to make those stated not misleading: Hard Rock Guide Representation Enclosed youll find the Hard Rock Guide and within its pages all the details of San Diegos first and most rockin branded condo-hotel. Everythings here, from the floor plates to the plans to the preferred lenders We will help you through this process and our goal is equally simple To ensure you consider every opportunity thatll exceed your expectations and desires. So just have fun with this. Circle anything that catches your eye. Were here to make this a fantastic experience. Call us anytime. Rock on, [7 signatures] The Hard Rock Condo-Hotel Sales Team (This was a false statement on several levels. The Hard Rock Guide did not contain all the details. It omitted the fact that defendants had changed the business model of HRHSD in July 2005 21
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after defendants determined that the risks of developing the hotel were too great and could be shifted to investors. All the details that should have been provided to investors were not provided including details required under the applicable SEC and California Department of Corporations laws and regulations such as (1) business strategy; (2) recent developments; (3) use of proceeds: (4) risk factors; (5)certified financial statement; (6)liquidity and capital resources; (7)qualitative and quantitative disclosures about market risk; (8)detailed statement of the business; (9)market analysis; (10)suitability standards; and (11) conflicts of interests; . Hard Rock Guide San Diegos First Branded Condo-Hotel Californias Hottest Performing Hotel Market (This was misleading because defendants had determined that the hotel market was not sufficiently strong to support the HRHSD as a hotel and defendants had decided to transform their hotel project into a condominium/hotel project. Q. Whats been your greatest success to date? A. Breaking five world records in a row for franchise development (over 400 deals each year) and building the worlds largest hotel company when I was with Cendant. Q. Tell us about your greatest real estate project? A. Building high-end all-inclusive resorts in the Pacific Rim, Bali, Phuket, Guam, and Saipan; and creating once in a lifetime experience for our guests. Q. Where do you see San Diego in 10 years? A. As a world-class 24-hour city keeping the same company as San Francisco, New York and Miami. Q. You could have chosen to work with just about any hotel brand on this project. Why Hard Rock? A. There are a ton of reasons but the key is the authentic hard Rock experience. Few hotels in the world deliver truly authentic experiences or even spend any time thinking about it. Hard Rock focuses on it 24 hours a day and understands that delivering luxury service is one thing, but making it so kick-ass that it becomes an experience is something else. The best way to say it is every experience at hard Rock Hotels is worldclass, yet unpredictable. Its what going to separate us from everything else in Southern California. Q. Whats the one greatest differentiator of this project? A. A project like this is one in a million. All the stars are aligned: great location, great brand, great dining and entertainment, great design and great partners. It has the hottest location in all of San Diego and this is one of the most desirable markets in the world. Thats it-short and sweet. Theres nothing more important in real estate than the location and this one, no doubt, is the most coveted in San Diego. (This statement was misleading because Tarsadia had determined that the HRHSD project did not pencil out as a hotel and the investment opportunity being presented to plaintiffs was part of a plan to shift the investment risks to plaintiffs while Tarsadia still retained a substantial part of the income and financial benefit of the project) 22
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Q. Normally in the world of condo-hotels, youd sell first, then build. But youre already building and have about $40m in the ground. Whats the story there? A. Weve been working on this project for three years and at the end of the day we have a fantastic project that works all day long. When you get a site like this one and the right team with the right ideas, theres nothing holding you back. (This statement was false and it was known to be false when it was made. Tarsadia and its affiliated persons and entities had worked on the project for three years but they had determined that the project did not work all day long. In fact, they had determined that the project did not pencil out and had shifted from a hotel project to a commercial condominium project after construction began in December 2005 in order to shift the investment risk to plaintiffs.). Q. Youve talked about San Diego as being one of the hottest spots for a condo-hotel Why do you feel this way? A. With the millions of people visiting San Diego every year, this is the perfect spot for a condo-hotel. They work really well at the upper end of the market-at the 4-Diamond luxury level-and thats exactly what were delivering. Then theres the idea of a loyal base of Owners that become the hotels greatest fans and connectors. That priceless for us as the operator for the Owners. (This statement was false because it was misleading. Mr. Cass and the other defendants had determined that the HRHSD would not pencil out because of the income would be insufficient to produce a positive return on the funds invested. Cass and his fellow defendants had decided to use the sale of units to plaintiffs as a device to shift the investment risks to plaintiffs away from Cass and his fellow defendants.) 114. Defendants legal duty was to register and qualify the HRHSD Investment

Contracts -- a process that would have caused defendants to disclose the material information required by those investor protection agencies, explaining how defendants organized the HRHSD investment to achieve its investment objectives. 115. Instead, the promoters distracted investors with claims that HRHSD was a hot new

scene and a place to be seen. HRHSD promoters successfully marketed the sizzle of the HRHSD investment opportunity without going through the legally required process of registration and qualification. 116. The key misrepresentation and omission revolved around the defendants rental

management agreement and program. Defendants falsely represented that defendant Tarsadias rental program was not mandatory and not a condition of ownership. However, as a matter of economic and practical reality, the Tarsadia rental program was mandatory and a condition of ownership. It was not feasible, as plaintiffs were to later discover, for investors to operate their own rental management system separate from the HRHSD given the control 5th Rock LLC 23
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exercised over investors studios and suites under the terms of the Operations Agreement. Defendant Tarsadia, an affiliate of 5th Rock LLC and under the common control of the Patel defendants and defendant Casserly, was the manager of the HRHSD and investors exclusive rental agent. 117. Defendants represented that investors were not required to participate in Tarsadias

rental management program and that the decision was entirely up to investors. This representation was false and untrue in that plaintiffs were required to participate in Tarsadias rental management program and the decision was not entirely up to investors. Under the terms of the operations agreement, 5th Rock LLC, under the common control of Tarsadia, Patel defendants and Casserly, retained control of investors studios and suites as alleged in this operative complaint such that separate rental management by investors was not feasible. Defendants made these misrepresentations in Tarsadias Optional Rental Management Program FAQ. 118. Defendants omitted to disclose that the reason they misrepresented the rental

management agreement as not mandatory is that they were attempting to conceal the fact that the HRHSD Investment Contract transaction was an unregistered, public offering of a security. Defendants prepared and approved the Tarsadias Optional Rental Management Program FAQ with the intent of creating a false written record that the rental management was not a condition of ownership to make it less likely that the investment would be recognized for what it was -- the public offering of a security. Defendants aided and materially assisted each other in the misrepresentations so as to close the deals with the plaintiff investors. 119. Plaintiffs had no control over the rental management of their studios and suites and

were prohibited under the mandatory Operations Agreement from having control over their studios and suites. This lack of control prevented and continues to prevent Plaintiffs from ever being able to separately manage the rental of their studios and suites. SALE OF HRHSD INVESTMENT CONTRACTS 120. The sale and purchase of the HRHSD investment contracts were not final until the

close of escrow. Section 4.2 of the Purchase Contract and Escrow Instructions allowed buyer to make material changes in the transaction up to the time of Escrow: 24
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (i) BUYERSS CANCELLATION RIGHT. If through no fault of Buyer, Escrow is not closed by the Outside Date or within one (1) year after the Sellers receipt of the Certificate of Occupancy for the Units which is the subject of this Contract, Buyer may terminate this Contract, cancel Escrow and, within fifteen (15) calendar days after Escrow Holder receives written notice of such termination and cancellation, receive a refund of the Escrow Deposit. Before the Close of Escrow, Seller May in its sole discretion, make material changes in the Project and/or management documents for the Associations, changes in the overall development of the Project or change in the manner of content of any offering of units in the Sub-Association or any phase of development thereof; 121. The Hard Rock Guide informed investors that the transaction was not final when TERMINATION OF CONTRACT AND ESCROW. Subject to the provisions of Section 9 hereof, if this Contract is terminated in accordance with this Contract, (i)Escrow shall be automatically cancelled and the parties shall execute cancellation instructions requested by Escrow Holder, (ii) within five (5) days after such termination, Buyer shall deliver to Seller all documents delivered by Seller to Buyer hereunder, (iii) Buyer shall have no further right or interest in the Units, and (iv) Buyers indemnities of Seller in this Contract shall survive the termination. In addition to any other rights provided under this Contract, the following termination right exist:

plaintiffs made their deposits: The prices, plans, amenities, availability and improvements shown are subject to change without notice. Illustrations are artists depictions only and may differ from completed improvements, and scenes may include locations or activities not on the property. Improvements, facilities and programs are in formative stages, and there is no guarantee that they will be completed or developed. 122. Section 4.2 of the Purchase Contract also contained a waiver of plaintiffs rights

under the federal and state securities laws which is a void and unenforceable term as alleged below: provided that, Seller shall advise Buyer if Seller becomes aware that any of Sellers representation and warranties in this Contract has become materially inaccurate. In such case, Seller shall provide Buyer with written notice of such material change or material inaccuracy, and Buyers sole remedy at that time shall be to terminate this Contract, request the cancellation of Escrow and receive a refund of the Escrow Deposit. Buyers failure to deliver written notice of termination to Seller within five (5) days after receipt of Sellers material change notice constitutes a waiver of Buyers right to terminate this Contract and cancel Escrow in response to such change/inaccurancy. 123. The provision limiting the penalty for providing material false statements above

quoted are void under Section 14 (15 U.S.C. 77n) of the Securities Act of 1933 which provides: "Contrary stipulations void. Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision of this title or of the rules and 25
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regulations of the Commission shall be void." 15 U.S.C. 77n. 124. The provision limiting the penalty for providing material false statements above

quoted is void under Corporations Code 25701 which provides: Any condition, stipulation or provision purporting to bind any person acquiring any security to waive compliance with any provision of this law or any rule or order hereunder is void. KEY PLAYERS 125. The Key Players in carrying out the fraud consist of confidential source No. 1 who

acted as a HRHSD unit appraiser and who did not use the income method under instructions from the bank defendant for whom he was retained to provide appraisals. 126. The main players through whom Tarsadia engaged in the alleged unlawful conduct

include but are not limited to Greg Casserly the Tarsadia principle manager. Mr. Casserly was an architect of the plan to shift HRHSD from a hotel to a non-commercial condominium investment program and to move investment risk of the HRHSD project from the promoters to plaintiffs. Mr. Casserly was one of the authors of the Hard Rock Guide, Frequently Asked Questions and the other documents cited in the operative complaint that were used to mislead and defraud plaintiffs. 127. Other Tarsadia players who helped to develop the strategy behind the fraudulent

scheme to which plaintiffs were subjected included Trevor Horwell, Vice President of Tarsadia. Mr. Horwell participated in the development of the strategy to shift the investment risk from the HRHSD promoters to plaintiffs. Mr. Horwell also participated in communications with investors representing the terms of the investment opportunity without disclosing the risks identified in this operative complaint. Another key Tarsadia player was Robert Todak, Tarsadia General Manager, who also participated in drafting communications to investors that were misleading and failed to inform investors of the risks of the investment identified in this operative complaint. 128. Another key Tarsadia player was Lori Prock. Ms. Prock provided comparables in

connection with plaintiffs participation in the HRHSD Rental Management Agreement under which Tarsadia managed the HRHSD hotel rooms. One such projection she provided to plaintiffs was dated 3 May 2006:

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Hotel W Hotel Hotel Solamar Omni Hotel Hilton Gaslamp Marriott Marina Marriott Gaslamp

Standard Room Rate $329 $319 $329 $359 $349 $315

Room Size Sq Ft 250 336 360 330 355 392

Suite Rate $650 $500 $500 Sold Out Sold Out Sold Out

Suite Size Sq Ft 500 480 520 500 534 448

129.

John Resnick, a Tarsadia agent, was instrumental in making misrepresentations to

investors regarding the rental agreement being voluntary when it was as a practical matter mandatory. Mr. Resnick also reviewed the rental agreement frequently asked questions document that was communicated to investors and contained the misrepresentations identified in the operative complaint. Brent McLean, another VP at Tarsadia, was also instrumental in preparing and approving the frequently asked questions documents provided to plaintiffs containing the misrepresentations identified herein. 130. Playground related defendants were led by BJ Turner, and Jason Dolker

Playgrounds Director of Sales. Playground defendants Turner and Dolker and their fellow Playground brokers participated directly in the sale of HRHSD Investment Contracts. They negotiated the contracts, provided the terms, helped to prepare the paper work, coordinated with the bank sales representatives, provided comparables sales and rent information, and issued a constant stream of upbeat emails touting the attributes of the HRHSD investment contracts. 131. These Playground representatives knew the HRHSD project had been shifted from

a hotel project to a commercial non-residential condominium and that plaintiffs were not receiving the information they needed about the projected performance underlying the HRHSD Investment Contracts. These agents of Playground knew the HRHSD Investment Contracts were required to be registered with the SEC and qualified by the Department of Corporations from their training as real estate brokers and agents. These Playground agents knew they were required 27
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to be registered as broker dealers before they could lawfully sell the HRHSD Investment Contracts. These Playground agents were highly compensated and were motivated by the lure of financial gain to violate their legal duties. DISCOVERY OF PLAINTIFFS CLAIMS 132. Plaintiffs are bringing this action within: one (1) year after discovery of the untrue

statements or the omissions of material facts alleged herein; within one (1) year after discovery of the untrue statements and omissions should have been made by the exercise of reasonable diligence; and within three (3) years of the sale of the HRHSD Investment Contracts. Plaintiffs did not discover the facts on which this action is based until after consulting with counsel, which was less than a year before the filing of this operative complaint. 133. Plaintiffs were subjected to a barrage of false and misleading statements by the

Tarsadia and Playground Defendants designed to keep plaintiffs from discovering facts supporting the need to bring these claims. One device was to slowly reduce plaintiffs hotel room revenue while gradually increasing costs. ATTEMPTED WAIVER OF SECURITIES LAW VOID 134. The HRHSD Purchase Contract and Escrow Instructions contain provisions

suggesting that plaintiffs were not investing HRHSD and waiving their rights under the federal securities laws. Those provisions are unenforceable under both the federal and state securities laws. 135. Section 14 (15 U.S.C. 77n) of the Securities Act of 1933 which provides:

"Contrary stipulations void. Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision of this title or of the rules and regulations of the Commission shall be void." 15 U.S.C. 77n. 136. Corporations Code 25701 provides: Any condition, stipulation or provision

purporting to bind any person acquiring any security to waive compliance with any provision of this law or any rule or order hereunder is void. 137. Section 29(a) of the Securities Exchange Act of 1934 provides: "Waiver

provisions. Any condition, stipulation, or provision binding any person to waive compliance with 28
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any provision of this title or of any rule or regulation thereunder, or of any rule of a selfregulatory organization, shall be void." 15 U.S.C. 78cc(a). 138. Defendants B.U. Patel and Tushar Patel were the ultimate decision makers in

carrying out the fraud. They were the ultimate owners of Defendants 5th Rock LLC, Gaslamp Holding LLC, MPK One LLC, and Tarsadia. Defendant Gregory Casserly was in control of Tarsadia and participated in the fraud by making the misrepresentations and omissions attributed in this operative complaint. Casserly held the top management position in Defendant Tarsadia. Playground acted as the broker-dealer for the sale of HRHSD Investment Contracts.

EAST WEST BANK

139.

East West Bank is the wholly owned subsidiary of East West Bancorp Inc., a bank

holding company incorporated in Delaware on August 26, 1998. East West Bank's principal office is located at 135 N. Los Robles Avenue, 7th Floor, Pasadena, California 91101, and the telephone number is (626) 768-6000. 140. East West Bank offers a broad spectrum of personal and commercial banking

services to small and medium-sized businesses, business executives, professionals, and other individuals. East West Bank's principal officers include Dominic Ng. Mr. Ng serves as the Chairman, the President and the Chief Executive Officer of East West Bank. Douglas P. Krause is an Executive Vice President, the Chief Risk Officer, a General Counsel and a Corporate Secretary of East West Bank. William J. Lewis is an Executive Vice President and the Chief Credit Officer. Mr. Lewis joined the Bank in 2002. Julia Gouw is President and Chief Operating Officer of East West Bank. Thomas J. Tolda was the Chief Financial Officer and Executive Vice President of East West Bank. Irene H. Oh is the current Executive Vice President and Chief Financial Officer of East West Bank. 141. The East West Bank Commercial Lending segment is comprised of commercial

real estate which principally generates commercial loans and deposits through the lending offices located in East West Bank's northern and southern California production offices. The Commercial 29
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Lending segment generated 50% of the total revenue of East West Bank, Inc. 142. The East West loan and sales team were identified as preferred HRHSD lenders by

the Playground sales team. East West bank loan and sales team members spoke with investors and helped seal the deal by proclaiming the financial viability of the HRHSD Investment contracts. East West Bank understood from its underwriting and due diligence review that the HRHSD units were commercial non-residential units and not second homes. East West Bank knew from the underwriting and due diligence it did in providing a construction loan to HRHSD in and before August 2005 that HRHSD was transformed from a 388 hotel project to a 420 commercial non-residential room project because the HRHSD promoters had determined that the project was too risky to continue as a hotel project. 143. East West Bank knew there was a substantial risk its construction loan to HRHSD

would be impaired if the project continued as a hotel project. East West bank knew that getting HRHSD investors to sign the East West Bank loan documents was a necessary part of the sales of the HRHSD Investment Contract. East West Bank knew the transaction had been structured so that investors had to get their loan commitment from East West Bank before the completion of the HRHSD construction was completed. In this regard defendant Cass told investors as follows: Q. Normally in the world of condo-hotels, youd sell first, then build. But youre already building and have about $40m in the ground. Whats the story there? A. Weve been working on this project for three years and at the end of the day we have a fantastic project that works all day long. When you get a site like this one and the right team with the right ideas, theres nothing holding you back. 144. Further the Hard Rock Guide provided that financing was required before the

HRHSD contracts could be entered: FINANCING Whether you plan to purchase your Hard Rock Hotel San Diego suite either through financing or with cash, prior to going to contract youll need to verify your financial qualification in writing in the form of a letter from your chosen financial institution. Your financial institution will need to provide, on official letterhead, either: COMFORT LETTER (for financed purchases) showing your loan pre-qualification in the full amount of the desired purchased. 30
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145.

The East West bank officers, agents and employees who participated in the lending

to consummate the transaction vouched for the HRHSD project and assisted in the completion of the required financing documents as part of the completion of the sales of HRHSD Investment Contracts. East West bank knew it would be receiving from plaintiffs the funds from the sales of the HRHSD Investment Contracts to pay off the loans East West Bank had advanced to the HRHSD promoters to construct the HRHSD project. 146. Defendant East West Bank agents, officers and employees learned that HRHSD

was proposed to be a 388 room hotel in two towers with 23,000 square feet of retail and restaurant space and parking for 280 cars because East West Bank provided the original construction financing. 147. East West Bank advanced an $88 million construction loan and $30 million in

letters of credit to HRHSD for a total of approximately $111 million. East West Bank materially assisted the unlawful sale of unqualified and unregistered securities by acting as an underwriter for over $42,726,435 of HRHSD Investment Contracts. 148. In so acting, East West Bank materially assisted in the unlawful sale of the

HRHSD Investment Contracts with the intent of generating proceeds from these sales of HRHSD Investment Contracts in an amount sufficient to pay the $111 million East West Bank had advanced for the construction and development of the HRHSD. East West Bank materially assisted the sale of the HRHSD Investment Contracts by acting as an underwriter and providing financing. 149. East West Bank was the beneficiary of a deed of trust dated 12 August 2005 and

executed by defendant 5th Rock LLC securing the $88 million HRHSD construction promissory note from 5th Rock LLC in favor of East West bank. East West Bank memorialized 5th Rock LLC's payment of the $88 million HRHSD construction promissory note by way of a full reconveyance dated 15 February 2008 (DOC # 2008-0086687) filed with the San Diego Recorders Office on 20 February 2008. East West Bank was the beneficiary of a deed of trust dated 30 October 2008 made by 5th Rock LLC securing the $33 million East West Bank letters of credit. East West Bank memorialized 5th Rock LLC's payment of the $30 million by way of a full 31
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reconveyance dated 4 June 2008 (Doc # 2008-03090833 from East West Bank to 5th Rock LLC). 150. In so acting, defendant East West Bank materially assisted in the sale of the

unqualified HRHSD Investment Contracts that were sold in violation of Cal. Corp. Code Sections 25110 and 25401, which were supported by material misrepresentations of fact and concealment of facts in violation of Cal. Corp. Code 25501. The East West Bank defendants knew, or were reckless in not knowing, that their co-defendants were misrepresenting that the HRHSD rental program was not mandatory. 151. Defendants East West Bank knew or was reckless in not knowing that the reason

their co-defendants were misrepresenting that the rental program was voluntary was to conceal the fact that defendants were making a public offering of the HRHSD Investment Securities. East West Bank undertook this risk for the financial motive of getting a repayment on their construction and other loans to the HRHSD promoters. East West Bank was concerned that these loans would become impaired loans. 152. East West Bank engaged in a pattern of using reckless underwriting and legal

compliance in issuing the loans to plaintiffs. On 11 February 2010 the Congressional Oversight Panel issued a report finding that certain banks and thrifts had "problematic exposure" to commercial real estate and related loans. A related public report reviewed the largest U.S. publicly traded banks with high concentrations in commercial real estate, or CRE loans. The report found that three of the second group of five banks that meet the Congressional Oversight Panel's criteria for "CRE-concentrated" (commercial real estate) show significant weakness. In the report defendant East West Bank was found to have a large ratio of net charge-offs (actual loan losses) to average loans, with a high 5.16% for 2009. East West bank received a U.S. Treasury bailout of $306.5 million. 153. Another public report issued 1 September 2010 found that defendant East West

Bank was likely to join the 109 banks that have failed in 2010. East West Bank stock was found to be in an intermediate-term downtrend and falling. It is currently testing an important resistance zone between $14.10 and $15.00. The report found that in March 2009 shares of EWBC hit a low of $3.22. The report found that East West Bank stock was currently clinging to 32
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historical support dating back to 2009. The report found that the East West Bank holding company also had an uncertain fundamental outlook. With increasing expenses, the company issued cautious guidance for the upcoming third quarter. For the full 2010 year, analysts projected revenue would stay essentially flat, increasing only +0.8% to $887.1 million compared to $879.9 million in 2009. The report found that East West Bank revenue was expected to drop -9.2% to $805.5 million by 2011. For 2010, analysts projected that the bank would earn $0.77 a share, which means that East West Bank stock was selling for almost 20 times earnings at current prices. The report found that East West Bank stock appeared overvalued on several other metrics. The company had a projected five-year PEG ratio of 2.3. (A PEG of 1.0 or less shows attractive valuation.) 154. East West Bank attempted to cover up the unlawful and fraudulent loans it made in

connection with the HRHSD Investment Contract by using straw persons to contact HRHSD Investment purchasers who were in default on their East West Bank loans made to pay for the HRHSD Investment Contracts. On more than one occasion East West Bank arranged for a quiet transfer of ownership back to East West Bank-controlled entities. East West Bank so acted to avoid having to report the loans as charge offs. 155. Even though East West Bank was well aware that the units were commercial

properties, and had been certified as such to the City of San Diego, it papered its HRHSD loan files with second home appraisals rather than appraisals based on projected rental income from their use as hotel rooms. This was an additional part of the fraud because proper income based appraisals based on the information known to East West Bank would have shown that the projected income did not support the loans. East West Bank concealed these material facts from plaintiffs. Had plaintiffs known that the appraisals should have been based on projected occupancy rates and room rates, with deductions for costs based upon the less than 38% share of revenue less owner association fees set by the HRHSD promoters the appraisals would not have supported the sales price charged plaintiffs. East West Bank so acted in order to defraud plaintiffs into obligating themselves on East West Bank loans so East West Bank could transfer to plaintiffs the risk the project would not perform at the level required to make it a financial 33
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success. This practice had the concomitant effect of extinguishing the risk associated with the initial HRHSD construction loan issued by East West Bank. 156. It was a further part of the fraud to avoid registration and qualification because

East West Bank knew that the HRHSD Investment Contracts cold not satisfy the disclosure and qualification requirements of federal and California securities laws. 157. East West Bank further engaged in the fraud by transferring HRHSD Investment

Contract loans to third parties. East West Bank engaged in a pattern of conduct designed to shift the risk loss on their bad loans by selling them into the secondary market. 158. A February 2010 public report noted that defendant East West Bank was

marketing $244.5 million of commercial mortgages, most of them backed by condominium properties in California. The public report noted that many of the loans in the current offering were distressed. In addition to the California collateral, a few loans were backed by office buildings and land in New York, Arizona and suburban Seattle. About one-third of the portfolio had already matured. The other loans had maturity dates extending as far out as 2018. 159. XBR was fully informed of the fact that plaintiffs had good defenses to the

enforcement of the agreements supporting the HRHSD loans made by East West Bank to finance the HRHSD Investment Contracts. XBR agreed to act as a straw person buyer in order to give the false impression XBR was a good faith holder in due course of the promissory note plaintiffs were signed with East West Bank in connection with the HRHSD Investment contracts.

JP MORGAN CHASE 160. Defendant JP Morgan Chase (Doe Defendant 3) is a National Association with

U.S. branches in 17 states. At the time of the offering of the HRHSD Investment Contracts JP 34
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Morgan Chase was the 9th highest ranked national underwriter of subprime loans. JP Morgan had a business practice of using reckless underwriting standards. Internal controls related to subprime commercial loans at JP Morgan Chase had broken down at the time of the HRHSD lending by defendant JP Morgan Chase. JP Morgan Chase used loans like those made to finance HRHSD Investment Contract in securitizations which were sold fraudulently on the secondary markets. 161. Defendant JP Morgan Chase (Doe Defendant 3) knew that the HRHSD hotel units

were commercial, non-residential units that could not be used as second homes. Defendant JP Morgan Chase knew they were investment properties. JP Morgan Chase knew that it was required to evaluate the HRHSD Investment Contract loans based on the anticipated rental revenue received by plaintiffs. Defendant JP Morgan Chase, through its underwriting procedures, learned that the less than 38% of hotel room revenue, less the owner association costs, would not support the loan amounts of the HRHSD Investment Contract loans defendant JP Morgan was making to plaintiffs. JP Morgan knew that without the loans made by JP Morgan Chase plaintiffs would not be able to complete their purchases of HRHSD Contracts. JP Morgan Chase as a preferred lender worked with the HRHSD sales staff to complete the sales of the HRHSD Investment Contracts to plaintiffs. JP Morgan Chase agents vouched for the investment while not disclosing to plaintiffs that the appraisals used to support the purchase money financing did not include an analysis of value based on hotel revenue plaintiffs could reasonably expect. JP Morgan Chase knew a revenue based appraisal was required because of the commercial, nonresidential, status of the HRHSD rooms plaintiffs were investing in with their JP Morgan Chase loan money. 162. JP Morgan Chase, through their agents, officers and employees, knew that the

HRHSD Investment Contracts were not registered with the SEC or qualified by the California Department of Corporations. Defendant JP Morgan Chase knew that federal and state securities laws required registration and qualification because the HRHSD Investment Contracts constituted a public offering of securities. JP Morgan Chase knew that a review by the SEC or California Department of Corporations would result in disclosing the fact that inappropriate appraisals were being used to support the sale of the HRHSD Investment Contracts. JP Morgan knew that income 35
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based appraisals would not support the prices at which the HRHSD units were being sold. 163. JP Morgan knew that the financing had to be provided before the sales contract for

the HRHSD Investment Contracts could be consummated and that such financing was a necessary condition of the sale. JP Morgan agents worked as part of the sales team completing necessary forms and documents in order to consummate the fraudulent transactions. 164. Upon these premises, JP Morgan materially assisted in the unlawful sale of

unqualified and unregistered HRHSD Investment Contracts by acting as an underwriter for the sale of approximately $7,349,895 HRHSD Investment contracts with full knowledge that the HRHSD Investment Contracts were not registered or qualified, as required by law. Further, Defendant JP Morgan Chase (Doe Defendant 3) knew, or should have known, that sales were made to plaintiffs based upon material misrepresentations that the HRHSD Investment Contracts were not required to be registered or qualified by the SEC and the California Department of Corporations.

PROFESSIONAL MORTGAGE PARTNERS, INC. 165. Defendant Professional Mortgage Partners (PMP) (Doe Defendant 4) was founded

in 1999 by President Barton Pitts and six other investors. PMP built its business into a well known mortgage banking operation with 180 employees comprised of ten retail mortgage offices with nearly $1.6 billion in annual mortgage originations in 2008. Underwriting standards for loans like those made to plaintiffs in connection with the HRHSD Investment Contract purchases deteriorated and eventually led to PMPs financial collapse. After PMP packaged the HRHSD loans it sold the majority of them off to Defendant Independent Bank. 166. PMP worked through Defendant Erskine Corp. (Doe Defendant 6) which acted as

PMPs agent for consummating the HRHSD loans issued by PMP. The Erskine Corp. personnel involved in the loans knew that the HRHSD hotel units were commercial and non-residential and 36
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could not be sold as second homes but were in fact investment properties. Defendant Erskine Corp. agents knew that the appraisals supporting the loans were not based on the less than 38% of hotel room revenue plaintiffs were to receive, less owner association costs, set by HRHSD promoters. Defendant Erskine Corp. knew that the sales prices at which the HRHSD Investment Contracts were being sold to plaintiffs exceeded what rental income based appraisals would support. Defendant Erskine Corp. knew that the HRHSD Investment Contracts were required to be registered with the SEC and qualified by the California Department of Corporations. Defendant Erskine Corp. possessed the knowledge based on their experience and training in the mortgage banking and real estate brokerage business. They obtained this training and knowledge from their preparation for the licensing exams they were required to successfully complete. 167. Agents of Erskine Corp., on behalf of PMP, knew that plaintiffs were not informed

of the fact that the wrong appraisals were being used and that had proper appraisals been used, appraisals based on hotel revenues, they would not support the price at which the HRHSD units were being sold to plaintiffs as part of the HRHSD Investment Contracts. Agents of Erskine Corp. acted knowingly and intentionally. Their actions were within the course and scope of their agency with PMP. It was a business practice of PMP to engage in violations of underwriting standards in connection with the origination of mortgage loans and PMPs issuance of the unlawful loans in connection with HRHSD Investment Contracts was a continuation of those unlawful practices. 168. Upon these premises, defendant Professional Mortgage Partners (Doe Defendant

4) materially assisted in the unlawful sale of the unqualified and unregistered HRHSD Investment Contracts by underwriting approximately $38,536,730 of unqualified and unregistered HRHSD Investment Contracts with knowledge that the HRHSD Investment Contracts were not registered or qualified, as required by law. Further, Defendant Professional Management Partners (Doe Defendant 4) knew or should have known that sales were made to plaintiffs based upon material misrepresentations that the HRHSD Investment Contracts were not required to be registered or qualified by the SEC and the California Department of Corporations. 169. Defendant Erskine Corp., by and through its agents, materially assisted in the 37
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unlawful sale of unqualified and unregistered HRHSD Investment Contracts by acting as the agent for Professional Mortgage Partners by coordinating the financing of the investment. 170. On 23 December 2008 Wintrust Financial Corporation ("Wintrust") announced it

had acquired certain assets and the assumption of certain liabilities of the mortgage banking business of Professional Mortgage Partners ("PMP"). PMP is no longer in business. 171. After originating the loans, PMP transferred and assigned HRHSD mortgages to

Independent Bank.

INDEPENDENT BANK 172. Independent Bank Corporation is the holding company for Independent Bank (Doe

Defendant 7) and was founded in 1973 and commenced the operations in the following year. Independent Bank was incorporated as a state chartered, federally registered bank holding company in 1992. 173. With full knowledge of the underlying fraud and violations of securities laws,

Defendant Independent Bank acquired HRHSD mortgages from Defendant Professional Mortgage Partners. Agents, officers, and employees of Independent Bank, as part of its underwriting done in connection with its purchase of the HRHSD Investment Contracts, learned that the loans were made without the support of hotel revenue based appraisals. Independent Bank agents, officers, and employees learned that the HRHSD Investment Contracts had not been registered with the SEC or qualified by the California Department of Corporations. 174. Agents, officers and employees of Independent Bank knew that hotel income

based appraisals would not support the prices at which the HRHSD loans were made. Agents, officers, and employees of Independent Bank knew that plaintiffs had sound legal basis for terminating the HRHSD Investment Contracts and related loans made by PMP through Erskine Corp. at the time Independent Bank made the decision to purchase the loans supporting the 38
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HRHSD Investment Contracts financed by PMP. 175. HRHSD transactions were part of a pattern of unsound and unsafe banking

practices Independent Bank engaged in in connection with its commercial financing business activities. 176. Independent Bank engaged in a pattern of underwriting abuses that resulted in a

federal government bailout. In 2008 the federal government, through the U.S. Treasury Department, infused $72 million of capital into Independent Bank. 177. The bailout did not work. In 9 July 2010 Independent Bank Corporations stock

fell 22.5% and in 20 August 2010 Independent Bank Corporation announced it had taken steps to initiate a one-for-ten reverse stock split of the Company's common stock, effective 31 August 2010. As a result of the reverse stock split, every ten shares of the Company's common stock issued and outstanding immediately prior to the effective date was combined into one share of common stock.

BANK OF AMERICA 178. Defendant Bank of America (Doe Defendant 5) was a HRHSD project preferred

lender. Agents, officers, and employees of Bank of America were assigned to work as part of the HRHSD sales team. Bank of America agents, officers, and employees knew from their underwriting of the HRHSD transaction that HRHSD hotel rooms were commercial and nonresidential units that had to be managed as part of the HRHSD hotel. The Bank of America agents, officers, and employees knew that the appraisals used to support the purchase price of the HRHSD Investment Contracts were not based on the less than 38%, less the amount HRHSD promoters determined plaintiffs had to pay in owner association fees, of hotel room revenue plaintiffs were to receive. 179. Bank of America officers, agents, and employees knew that the financing it was 39
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providing was required to be in place before plaintiffs HRHSD Investment Contracts could be consummated. Bank of America officers, agents, and employees, as part of the HRHSD sales team, vouched for the HRHSD investment with plaintiffs and helped plaintiffs complete the papers needed to consummate the purchase of the HRHSD Investment Contract. These Bank of America officers, agents, and employees participated directly in consummating the sale while not disclosing to plaintiffs that a hotel revenue based appraisal was not being used as required by the commercial and investment nature of the transaction. 180. Bank of America officers, agents, and employees knew that the HRHSD

Investment contracts were required to be registered with the SEC and qualified by the California Department of Corporations because plaintiffs were purchasing an investment because they knew that the hotel units could not be used as second homes and plaintiffs return on investment would be determined by the managerial efforts of HRHSD promoters. Bank of America officers, agents, and employees knew that if the HRHSD Investment Contracts were provided to the SEC and Department of Corporations the fact that the appraisals supporting the price at which the HRHSD Investment Contracts were being sold to plaintiffs would be disallowed. They knew that once there was full disclosure a qualification permit would not be issued. 181. A key player at Bank of America who participated in the sale of the HRHSD

Investment Contracts to plaintiffs was Bank of America Senior Vice President for Mortgage Sales Brianne Pham-Lukas. Ms. Lukas participated in the sale of the HRHSD Investment Contracts to plaintiffs. She encouraged plaintiffs to buy the HRHSD Investment Contracts. She worked in tandem and part of the Playground and Tarsadia HRHSD sales force. She prepared the paper work needed to complete the sale and purchase of the HRHSD Investment Contracts. She knew the HRHSD project had been shifted by Tarsadia from a hotel project to a commercial nonresidential condominium project. Ms. Pham-Lukas knew from her training and her interaction with the Playground and Tarsadia sales staff that Playground was selling the HRHSD Investment Contracts without a sales license and that the HRHSD Investment Contracts were required to be but were not registered with the SEC and qualified by the Department of Corporations. 182. Ms. Pham-Lukas knew the commercial non-residential nature of the HRHSD 40
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Investment Contracts required a income based appraisal but no such appraisal was provided because it would show that the less than 38% rental revenue income plaintiffs were to receive from the HRHSD hotel units would not support the sales price. 183. Another person who participated in the fraudulent transaction on behalf of Bank of

America was a Bank of America appraiser who papered the HRHSD file with an appraisal that contained knowingly false information to the effect that the hotel units would be rented through the owners association and omitted the fact that plaintiffs had to rely upon Tarsadia to rent the units for which Tarsaida would extract in operation fees, marketing fees owner association fees and other withholdings in excess of $62% of the hotel room revenue. 184. By the time Bank of America became a preferred HRHSD lender, its underwriting

practices in connection with the its subprime and collateralized debt obligation business had broken down. 185. Defendant Bank of America (Doe Defendant 5) materially assisted in the unlawful

sale of unqualified and unregistered HRHSD Investment Contracts by underwriting approximately $14,450,870 of unqualified and unregistered HRHSD Investment Contracts with full knowledge that the HRHSD Investment Contracts were not registered or qualified, as required by law. Further, defendant Bank of America (Doe defendant 5) knew, or should have known, that sales were made to plaintiffs based upon material misrepresentations that the HRHSD Investment Contracts were not required to be registered or qualified by the SEC and the California Department of Corporations. 186. Defendants East West Bank, JP Morgan Chase (Doe Defendant 3), Professional

Mortgage Partners (Doe defendant 4), Bank of American (Doe Defendant 5), Independent Bank (Doe Defendant 7) and the remaining Doe Defendants materially assisted in the sale of the unqualified and unregistered HRHSD Investment Contracts that were sold in violation of Cal. Corp. Code Section 25110 and 25401, and 12(1) of the 1933 Securities Act. 187. Defendants East West Bank, JP Morgan Chase (Doe Defendant 3), Professional

Mortgage Partners (Doe Defendant 4), Bank of American (Doe Defendant 5), Independent Bank (Doe Defendant 7) and the remaining Doe Defendants knew, or were reckless in not knowing that 41
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their co-defendants were misrepresenting that the HRHSD rental program was not mandatory in order to give the false impression to plaintiffs that the HRHSD Investment Contracts did not have to be registered with the SEC or qualified by the California Department of Corporations. 188. Defendants East West Bank, JP Morgan Chase (Doe Defendant 3), Professional

Mortgage Partners (Doe Defendant 4), Bank of American (Doe Defendant 5), Independent Bank (Doe Defendant 7) and the remaining Doe Defendants knew, or were reckless in not knowing, that the reason their co-defendants were misrepresenting that the rental program was voluntary was to conceal the fact that defendants were making an unlawful public offering of the HRHSD Investment Securities in violation of the California and federal securities laws. 189. Defendants East West Bank, JP Morgan Chase (Doe Defendant 3), Professional

Mortgage Partners (Doe Defendant 4), Bank of American (Doe Defendant 5), Independent Bank (Doe Defendant 7) and the remaining Doe Defendants provided substantial assistance in the unlawful sale of the unqualified HRHSD Investment Contracts in violation of Cal. Corp. Code Sections 25110 and 25401 by acting as underwriters of the HRHSD Investment Contract offering by providing the essential financing needed to consummate the sales of HRHSD Investment Contracts. 190. Defendants East West Bank, JP Morgan Chase (Doe Defendant 3), Professional

Mortgage Partners (Doe Defendant 4), and Bank of American (Doe Defendant 5), Independent Bank (Doe Defendant 7) and the remaining Doe Defendants knew, or with reasonable diligence should have known, that the rental program was mandatory, and that the reason their codefendants were misrepresenting the rental program was voluntary was to conceal the fact that defendants were making a public offering of HRHSD Investment Securities. 191. Each of the defendants knew, or should have known, that plaintiffs who purchased

HRHSD Investment Contracts via bank financing, provided by the bank underwriter defendants, would have no financing available to refinance their loans; loans that were short term interest only for short durations. This information was material information to plaintiffs who bought HRHSD Investment Contracts through financing provided by the bank defendants. / // 42
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REGISTRATION WOULD HAVE DISCLOSED FLAWS IN THE INVESTMENT 192. Had defendants complied with their legal duties, they would have filed a

registration statement with the SEC describing in detail the Hard Rock Investment Contract. The Hard Rock Hotel Registration Statements would have had two principal parts: Part I would have been the prospectus, the legal offering or "selling" document. In the prospectus defendants would have been required, as the issuers of the HRHSD Investment Contracts, to describe the important facts about the defendants business operations, financial condition, and management. 193. Defendants would have been required to provide the HRHSD Prospectus to those

to whom the opportunity to buy a HRHSD was presented. 194. The SEC Division of Corporation Finance would have reviewed the HRHSD

registration statement information to make sure investors were provided with material information in order to make an informed investment decision as to whether to buy the HRHSD Investment Security. 195. SEC staff would have examined the HRHSD registration statements for

compliance with disclosure requirements. Those parts of the filing that appeared incomplete or inaccurate would have been identified in a letter to defendants from SEC staff. Defendants would have been required to file a correcting or clarifying amendment to the Hard Rock Registration Statement. 196. During this process, defendants would have been required to disclose the essential

financial information and mode of operations. 197. Defendants failed to comply with their legal duty to register the Hard Rock

Investment Contracts with the SEC in violation of 12(a)(1) of the Securities Act. Defendants also misrepresented to plaintiffs that defendants were not required to register the offering with SEC, when in fact they were required to register, in violation of 12(a)(2) of the Securities Act. OFFERING WAS NOT FAIR, JUST AND EQUITABLE 198. The HRHSD Investment Contract was a security and an issuer transaction that was

not qualified under the California Corporations Code (Cal. Corp. Code). 199. Defendants were required under Cal. Corp. Code 25110 to qualify the HRHSD 43
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Investment Contracts in California before offering and selling it to California investors including plaintiffs. 200. Plaintiffs purchased HRHSD Investment Contracts that were required to be, but

were not, qualified under the California investor protection law. Plaintiffs sue to recover the consideration they paid for the HRHSD Investment Contracts with interest thereon at the legal rate, less the amount of any income received therefrom. 201. Plaintiffs hereby tender their HRHSD Investment Contracts, including the studios

and suites, plaintiffs purchased. 202. In violation of Cal. Corp. Code 25401 defendants sold to plaintiffs HRHSD

Investment Contracts by means of written or oral communication which included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. 203. Defendants violated Cal. Corp. Code 25401 because they sold to plaintiffs

HRHSD Investment Contracts by means of untruthful information and thus are liable to plaintiffs who purchased the HRHSD Investment Contracts from defendants. Plaintiffs sue in this action for rescission and/or for damages. CONTROL PERSON AND JOINT AND SEVERAL LIABILITY 204. The Patel defendants and defendant Greg Casserly, directly or indirectly, control

Tarsadia, a corporation liable to plaintiffs under Cal. Corp. Code 25501 or 25503. The Patel defendants and defendant Casserly are principal executive officers and/or directors of the Tarsadia corporation, which is so liable. 205. Defendant Playground Destination Properties, agent of defendants Tarsadia and 5th

Rock LLC, materially aided in the act or transaction constituting the violations and is also liable, jointly and severally, with and to the same extent as the remaining defendants. UNLICENSED BROKER DEALER LIABILITY 206. Plaintiffs purchased HRHSD Investment Contracts from Defendant Playground

Destination Properties. Defendant Playground Destination Properties was required to be registered as a broker-dealer and, at the time of the sale, had not applied for and secured from the 44
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commissioner a required broker-dealer certificate. 207. Plaintiffs bring this action for rescission of the sale of the HRHSD Investment

Contracts to recover the consideration plaintiffs paid for the HRHSD Investment Contracts plus interest at the legal rate, less the amount of any income received on the HRHSD Investment Contract pursuant to Corp Code 25501.5. 208. No. First Second Third Fourth Fifth Sixth Seventh Eighth Plaintiffs allege the following violations of law by the defendants: CLAIM FOR RELIEF 12(a)(2) Securities Act of 1933 Misrepresentation and Omission of Material Fact 10(b)(5) Securities Exchange Act of 1934 Misrepresentation and Omission Corp Code 25110, 25503, 25504.1 Failure to Qualify, Material Assistance Corp Code 25401, 25501, 25504.1 Misrepresentations and Omissions, Material Assistance Corp Code 25501.5 Rescission Against Unlicensed Broker-Dealer against Playground Destination Properties only Corp Code 25504 Control Person Liability against Patel and Casserly Defendants Fraud Misrepresentation Fraud Concealment

FIRST CLAIM FOR RELIEF 12(a)(2) Securities Act of 1933 Misrepresentation and Omission of Material Fact 209. Plaintiffs incorporate each and every allegation alleged in the preceding

paragraphs as though fully set forth herein. 210. Defendants are persons who offered and sold HRHSD Investment Contracts by the

use of means or instruments of transportation or communication in interstate commerce or of the mails, by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading. 211. Defendants East West Bank, XBR Financial Services (Doe Defendant 2), JP

Morgan Chase (Doe Defendant 3), Professional Mortgage Partners (Doe Defendant 4), and Bank 45
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of American (Doe Defendant 5), Erskine Corp. (Doe Defendant 6), Independent Bank (Doe Defendant 7) and the remaining Doe defendants participated in the sale of the unregistered HRHSD Investment securities by acting as underwriters of the HRHSD Investment Contract, by providing the essential financing needed to consummate the sales of HRHSD Investment Contracts, and by materially participating in the sale itself. 212. Upon these premises, defendants are liable to plaintiffs for the consideration

plaintiffs paid for such HRHSD Investment Contracts with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if appropriate. SECOND CLAIM FOR RELIEF 10(b)(5) Securities Exchange Act of 1934 Misrepresentation and Omission 213. Plaintiffs incorporate each and every allegation alleged in the preceding

paragraphs as though fully set forth herein. 214. Defendants each violated Section 10(b) of the Exchange Act [15 U.S.C 78j(b)]

and Rule 10b-5 [17 C.F.R. 240.10b-5]. 215. As set forth above, defendants in connection with the purchase and sale of the

HRHSD investment contracts by the use of means or instrumentalities of interstate commerce or of the mails, directly or indirectly (a) employed devices, schemes or artifices to defraud; (b) made untrue statements of material facts or omissions of material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (c) engaged in transactions, practices or courses of business which operated or would operate as a fraud or deceit upon plaintiffs. 216. Defendants knowingly or recklessly misrepresented the material facts alleged and

omitted. Plaintiffs relied on the misrepresentations and omissions and those misrepresentations and omissions were the proximate and actual cause of plaintiffs damages according to proof at trial. /// /// 46
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 221. 217.

THIRD CLAIM FOR RELIEF Corp Code 25110, 25503, 25504.1 Failure to Qualify, Material Assistance Plaintiffs incorporate each and every allegation alleged in the preceding

paragraphs as though fully set forth herein. 218. The Defendants are persons who violated 25110, or who materially assisted the

violation of 25110, and are therefore liable to plaintiffs who are persons who acquired from defendants the HRHSD Investment Contract securities in violation of 25110. 219. Defendants East West Bank, XBR Financial Services (Doe Defendant 2), JP

Morgan Chase (Doe Defendant 3), Professional Mortgage Partners (Doe Defendant 4), and Bank of American (Doe Defendant 5), Erskine Corp. (Doe Defendant 6), Independent Bank (Doe Defendant 7) and the remaining Doe defendants materially assisted the violation Section 25110 by acting as underwriters of the HRHSD Investment Contract by providing the essential financing needed to consummate the sales of HRHSD Investment Contracts. 220. Upon these premises, defendants are liable to plaintiffs for the consideration

plaintiffs paid for such HRHSD Investment Contracts with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if appropriate. FOURTH CLAIM FOR RELIEF Corp Code 25401, 25501, 25504.1 Misrepresentations and Omissions, Material Assistance Plaintiffs incorporate each and every allegation alleged in the preceding

paragraphs as though fully set forth herein. 222. Defendants are persons who violated Cal. Corp. Code 25401, 25501, 25504.1

because they offered for sale and sold in the State of California the HRHSD Investment Contracts by means of written or oral communications which included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading or materially assisted in such violation. 47
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223.

Plaintiffs are persons who purchased the HRHSD Investment Contracts from

defendants. Upon these premises plaintiffs sue for rescission or for damages. FIFTH CLAIM FOR RELIEF Corp Code 25501.5 Rescission Against Unlicensed Broker-Dealer against Playground Destination Properties only 224. Plaintiffs incorporate each and every allegation alleged in the preceding

paragraphs as though fully set forth herein. 225. Defendants are persons who violated Corp Code 25501.5 because as an

unlicensed broker-dealer, they offered for sale and sold in the State of California the HRHSD Investment Contracts that were securities. 226. Plaintiffs are persons who purchased the HRHSD Investment Contracts from

defendants. Upon these premises plaintiffs sue for rescission and/or for damages according to proof at trial. SIXTH CLAIM FOR RELIEF Corp Code 25504 Control Person Liability against Patel and Casserly Defendants 227. Plaintiffs incorporate each and every allegation alleged in the preceding

paragraphs as though fully set forth herein. 228. Defendants Patel and Casserly, directly and indirectly, controlled persons liable

under 25501 and 25503 as set forth in this operative complaint and are liable jointly and severally with and to the same extent as such persons under their control. SEVENTH CLAIM FOR RELIEF Fraud Misrepresentation 229. Plaintiffs incorporate each and every allegation alleged in the preceding

paragraphs as though fully set forth herein. 230. The representations made by defendants were in fact false as alleged above. When

the defendant made these representations they knew them to be false and made these 48
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representations with the intention to deceive and defraud plaintiffs and to induce plaintiffs to act in reliance on these representations by purchasing a HRHSD Investment Contract and to not bring claims against the defendants to recover plaintiffs damages. 231. When defendants made these representations, they knew them to be false and

made these representations with the intention to deceive and defraud plaintiffs and the class to act in reliance on these representations in purchasing a HRHSD Investment Contract and to not bring claims against the defendants to recover plaintiffs damages. 232. Plaintiffs, at the time these representations were made by defendants and at the

time the plaintiffs took the actions herein alleged, were ignorant of the falsity of defendants representations and believed them to be true. In reliance on these representations, plaintiffs were induced to and did purchase and hold HRHSD Investment Contracts and did not bring a legal action to set aside their purchase of the HRHSD Investment Contracts. Had plaintiffs known the actual facts, they would not have taken such action. Plaintiffs reliance on the defendants representations was justified because defendants appeared to be speaking the truth based upon defendants track record in the hotel industry and the involvement of the Hard Rock Hotel brand. 233. As a proximate result of the fraudulent conduct of the defendants as herein alleged,

plaintiffs were damaged in an amount according to proof at trial. The aforementioned conduct of the defendants was an intentional misrepresentation, deceit, or concealment of a material fact known to the defendants with the intention on the part of the defendants of thereby depriving plaintiffs of property or legal rights or otherwise causing injury, and was despicable conduct that subjected plaintiffs to a cruel and unjust hardship in conscious disregard of plaintiffs' rights, so as to justify an award of exemplary and punitive damages. EIGHTH CLAIM FOR RELIEF Fraud-Concealment 234. Plaintiffs incorporate each and every allegation alleged in the preceding

paragraphs as though fully set forth herein. 235. The representations made by defendants were in fact false as alleged above

because defendants failed to state facts needed to make those made not misleading. When 49
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defendants made these representations they knew them to be false and made these representations with the intention to deceive and defraud plaintiffs and to induce plaintiffs to act in reliance on these representations by purchasing a HRHSD Investment Contract and to not bring claims against defendants to recover plaintiffs damages. 236. When defendants concealed facts needed to make those made not misleading they

knew them to be false and omitted the correct facts with the intention to deceive and defraud plaintiffs and the class to act in reliance on these omissions in purchasing a HRHSD Investment Contract and to not bring claims against defendants to recover plaintiffs damages. 237. Plaintiffs, at the time these omissions by defendants and at the time plaintiffs took

the actions herein alleged, were ignorant of the falsity of the defendants representations and believed them to be true. In reliance on these omissions, plaintiffs were induced to and did purchase and hold HRHSD Investment Contracts and did not bring a legal action to set aside their purchase of the HRHSD Investment Contracts. Had plaintiffs known the actual facts, they would not have taken such action. Plaintiffs reliance on the defendants omissions was justified because defendants appeared to be speaking the truth based upon defendants track record in the hotel industry and the involvement of the Hard Rock Hotel brand. 238. As a proximate result of the fraudulent conduct of defendants as herein alleged,

plaintiffs were damaged in an amount according to proof at trial. The aforementioned conduct of defendants was an intentional misrepresentation, deceit, or concealment of a material fact known to the defendants with the intention on the part of the defendants of thereby depriving plaintiffs of property or legal rights or otherwise causing injury, and was despicable conduct that subjected plaintiffs to a cruel and unjust hardship in conscious disregard of the plaintiffs' rights, so as to justify an award of exemplary and punitive damages. UPON THE FIRST, SECOND, FIFTH, SIXTH, SEVENTH, AND EIGHTH CLAIMS FOR RELIEF 1. 2. Damages in an amount according to proof at trial Alternatively, an order of recession together with the return by defendants of all

consideration paid by plaintiffs less any appropriate income offset. 50


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3. 4.

For reasonable attorneys fees, costs and expenses; and All other relief deemed appropriate by the Court; UPON THE THIRD AND FOURTH CAUSES OF ACTION

5. 6.

Damages in an amount according to proof at trial Alternatively, an order of recession together with the return by defendants of all

consideration paid by plaintiffs less any appropriate income offset. 7. 8. 9. Punitive damages according to proof at trial. For reasonable attorneys fees, costs and expenses; and All other relief deemed appropriate by the Court. Respectfully submitted, AGUIRRE, MORRIS & SEVERSON LLP

Dated: September 10, 2010

/s/ Maria C. Severson Maria C. Severson, Esq. Attorneys for Plaintiffs

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