The original Complaint alleges that Plaintiffs bring this action against three individuals (“Fraud Defendants”) for their violations of Sections 10(b) and 27 of the Securities Exchange Act of 1934 and fraudulent transfer under Florida Statutes Chapter 726. Plaintiffs’ claims arise from a fraudulent scheme perpetrated by the Fraud Defendants by which hundreds of investors were defrauded out of approximately $22 million through investments in a group of corporate entities that Defendants owned or controlled.
Specifically, Defendants used the following entities to defraud investors: Nexstar Communications, LLC; TMT Equipment Company, LLC; TMT Management Group LLC; POSA, LLC; POSA TMT, Camtucket LLC; Televest Communications, LLC; TMT International, LLC, Televest Group, LLC; KBK Partnership LLP; Chilham LLC; Spin Drift, LLC (collectively the “Defendants’ Entities”).
Most of the Defendants’ Entities are currently in receivership as a result of an action brought by the Securities and Exchange Commission on February 2, 2006, in the United States District Court for the Middle District of Florida, SEC v. Digges, et al., Case No. 6:06-cv-137-Orl-19KRS (the “SEC Action”). With the filing of the SEC Action, the Securities and Exchange Commission exposed the Defendants’ Entities’ fraud. On that day, the SEC filed a Complaint for Emergency Injunctive and Other Relief, and the Court entered an Order granting the relief sought by the SEC Complaint. It was only with the filing of the SEC Complaint that Plaintiffs and the Class became aware of the Defendants’ Entities’ fraud and uncovered the Fraud Defendants’ role in perpetrating an investment fraud.
In February and March 2008, several motions to dismiss for lack of jurisdiction by certain individuals were filed. A motion for leave to file a first amended class action Complaint and incorporate memorandum of law by certain individuals were filed on April 25, 2008. On May 27, 2008, the Court entered the Order signed by Judge Gregory A. Presnell denying as moot the motions to dismiss for lack of jurisdiction and granting in part and denying in part motion for leave to file a First Amended Class Action Complaint. On June 6, 2008, the Plaintiffs filed a First Amended Class Action Complaint. On June 17, 2008, the Plaintiffs filed a Second Amended Class Action Complaint. The Defendants filed motions to dismiss the Second Amended Complaint on June 17, 2008. On July 29, 2008, the U.S. District Judge Gregory A. Presnell issued Orders granting the Defendants’ motions to dismiss without prejudice. On August 1, 2008, the Plaintiffs filed a motion to certify the class. On August 4, 2008, the Plaintiffs filed a Third Amended Class Action Complaint which removed one of the previously named individual Defendants as well as two of the claims. On October 28, 2008, U.S. District Judge Gregory A. Presnell issued the Order denying the motion to certify the class. According to the Order, the Plaintiffs’ Motion for Class Certification (Doc. 72) is denied without prejudice. Defendants’ Motion for Leave to Supplement the Record (Doc. 94) is denied as moot. Plaintiffs’ Third Amended Complaint (Doc. 75) is dismissed sua sponte for failure to comply with the PSLRA. Plaintiffs shall have one final opportunity to file an amended Complaint by Friday, December 5, 2008.
On December 5, 2008, the Plaintiffs filed a Fourth Amended Class Action Complaint. On December 15 and 22, 2008, the Defendants filed two motions to dismiss the Fourth Amended Complaint. On February 27, 2009, the Plaintiffs filed a renewed motion to certify the class. On March 9, 2009, District Court Judge Gregory A. Presnell denied the pending motions to dismiss and the parties soon after engaged in mediation.
On May 28, 2009, the parties filed a joint motion for preliminary approval of class action settlement agreement and certification of settlement class. According to the motion, the Plaintiffs and one of the individual Defendants have agreed to a settlement providing substantial financial benefits to members of a proposed class. The individual Defendant has agreed to pay $700,000 in settlement of this case.
On August 12, 2009, the Plaintiffs filed a notice of intent to seek dismissal of claims of the remaining, non-settling individual Defendant. That same day, the Plaintiffs filed an amended joint motion to approve settlement, joint motion to certify class and motion to dismiss claims against the remaining individual Defendant. On August 13, 2009, Judge Gregory A. Presnell granted the pending motions, but deferred on the motion to dismiss claims against the remaining individual Defendant.
On August 29, 2009, an Order was entered canceling Final Pretrial and Trial hearing scheduled for September 16, 2009 and October 2009. A fairness hearing was set for November 20, 2009 by separate order.
According to the Minute Entry filed on November 20, 2009, the Fairness Hearing proceedings were held before Judge Gregory A. Presnell. The payment of $700,000.00 will be made on or before January 8, 2010. Plaintiffs will file a final distribution report and by January 15, 2010 file their paperwork to dispose of the case. The Motion for Attorney Fees 145 is granted. As to the Amended Joint Motion to Dismiss Defendant Diggs, the court will enter an order dismissing him which will be effective on January 15, 2009. Court makes a finding that the settlement is fair.
On December 22, 2009, the Final Order was entered, granting class certification, approving settlement, awarding attorneys fees and costs, and dismissing claims. The claims against Defendant Hoffman are dismissed with prejudice in accordance with the terms of the settlement agreement. The claims against Defendant Digges are dismissed without prejudice effective January 15, 2010 in accordance with the terms of the settlement agreement.
