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United States District Court, Central District of California
Case No. CV-11-01315
Summary: This lawsuit was brought by Kenneth G. Eade in U.S. Federal court, suing iHub and 10 John Doe posters for $400 million for allegedly defamatory content..
Outcome: Judgment in favor of Investors Hub. iHub's motion to strike Eade's complaint was granted on 7/12/2011 without leave for him to amend. iHub was awarded $49,000 for legal fees on 9/12/2011, which Eade was ordered to pay within 30 days.
In a subsequent event, in July, 2012 the Securities and Exchange Commission filed a lawsuit against Eade for his alleged role in the Gold Standard Mining fraud. On September 30, 2014, a judgment was entered, ordering Eade to pay $74,129.52 to the Securities and Exchange Commission for profits gained as a result of the transaction alleged in the Complaint together with prejudgment interest and civil penalties. On October 28, 2014, Eade was sanctioned by the SEC and suspended from appearing or practicing before the Commission as an attorney for five years.
In June, 2016 Eade defied the Court's order to come to the United States to appear in person and stated that he was "100 percent sure that a personal appearance would influence the DOJ's charging decision." He also stated, "I have no current invitations from the DOJ to attend further meetings and any travel that I make to the United States would be at my own peril. My father passed away January 21, 2016 and I did not travel to the United States to attend his service. Therefore, I cannot take the risk of travel to the United States." In February, 2019, Eade was indicted by the United States on multiple criminal charges including Securities Fraud and Wire Fraud.
In March, 2020, almost nine years after the original judgment in favor of iHub, the Court ruled that Eade remained in contempt of court from its previous ruling to that effect in July, 2016. The Court stated that it will file referrals with Standing Committee on Discipline of the U.S. District Court of the Central District of California and the California State Bar for any investigation and outcome as they deem appropriate.
Having considered the ample, extensive authorities cited by the parties, the Court finds persuasive the reasoning set forth in Eade v. InvestorsHub.com, Inc., et al., 11-CV-1315-JAK-CW (C.D. Cal. July 12, 2011), a case with some similarities to the matter at hand....read more
"iHub is going to go down and I am the one who is going to put them down. Have fun now guys, I could end up being the owner of iHub and there will be big changes."
-- Kenneth G. Eade, February 2, 2011
Professor: "There is no construct in the English language where two positives can equal a negative."
Student: "Yeah, right."
-- Classroom exchange, date unknown
Excerpt: "I consider the postings implying I am guilty of securities fraud or behind "pump and dump" schemes to be defamatory and libelous..."What really happened: The court found the postings to be protected speech and not legally actionable for libel or defamation. Later the SEC sued Eade, claiming in part that, "Defendant Kenneth G. Eade (“Eade”), the company’s [Gold Standard Mining] corporate counsel at the time and major shareholder, drafted the false and misleading periodic and current reports and some of the financial statements at issue. To spark interest in the company, Eade misrepresented the company’s financial activities by initially representing that the Russian mining interests were worth more than $1.3 billion."
What really happened: The court finds in favor of Investors Hub, throws out Eade's lawsuit and awards iHub legal fees and sanctions against Eade.
What really happened: Eade is repeatedly denied discovery on John Doe posters and the court throws out his case against both iHub and the John Doe posters.
Cyberstalking alleged cyberstalkers? How ironic.
What really happened: Eade filed a motion to stay the hearing on iHub's Motion to Strike so that he could conduct discovery. iHub opposed the motion. The court found that Eade failed to show cause for a delay, other than those caused by himself, and denied his motion to stay. Yet, Eade issued a press release stating that the court granted his motion, the headline failing to cite the nature of the motion, and the body of the press release fell far short in explaining the true reasons the court continued the hearing to a later date, as explained by the court:"IT IS HEREBY ORDERED that, there is not a sufficient showing of emergency or urgent circumstance, other than those caused by Plaintiff's delay. Nonetheless, the hearing on Defendant's Special Motion to Strike Plaintiffs Complaint is hereby continued to June 27, 2011 at 1:30 p.m., because this Court will be dark during the week of March 23, 2011; the case was only recently transferred to the Court; this transfer occurred after the hearing date as set."
This may explain why Eade repeatedly submitted papers to the court signed as appearing for the Defense when in fact he was the Plaintiff:
Q And what are these documents?
A They're court filings in the case of Independent Film Development Corporation
versus Arriva Capital.
Q And seems to be quite a few documents that we are identifying as Exhibit 20. Have
you looked through all these documents?
A Yes.
Q And are all these documents documents that were provided by you?
A Yes.
Q And what is the purpose of providing these documents?
A One of the categories of your request for production asked for any documents in
which I was named as a plaintiff in a lawsuit. And this is the only document --
this is the only lawsuit I'm named as a plaintiff in.
Q Outside of the matter that we're here on today correct?
A Yes. Well, I feel like the defendant in that matter.
Q Fair enough.
---- ----
Comparing Eade's sworn testimony (below) to his Form 4 dated 06/05/2012 filed with the SEC, covering the transfer of 6,486,900 shares of IFLM (IFDC) stock to his wife. The Form 4 states the "Date of the Earliest Transaction" was 6/04/2012. That was a mere 17 days prior to his Debtors Examination by iHub, 18 days prior to the SEC's lawsuit against Eade, eight months after he was ordered by the judge to pay iHub, and nearly three months after the first Order to Show Cause hearing for contempt.
Q Okay. When was the last time you received any stock from IFDC?
A In 2007 or '8.
Q Do you presently hold any stock in IFDC?
A Yes.
Q How much stock do you have of IFDC?
A I've got 600,000 shares, roughly. And my wife has about 10 million shares, something
like that.
Q For clarification, your present wife has 10 million shares?
A Yes.
Q How did your wife acquire 10 million shares of IFDC?
A That's private.
Q When did your wife acquire 10 million shares of IFDC?
A Several months ago.
Q How many shares have you had of IFDC?
A Total of a little north of 13 million.
Q Did your wife receive those 10 million shares from you?
A Yes.
Q And she received those 10 million shares just a few months ago?
A Yes.
Q Did your wife render services on behalf of IFDC?
A No. Well, yes, but not for the 10 million shares.
Q What services has your wife rendered for IFDC?
A PowerPoint presentations.
Q Were those services she rendered in helping you prepare PowerPoint presentations?
A No. She worked for the company and prepared PowerPoint presentations.
Q And who -- do you know whom she was hired by at IFDC to prepare those presentations?
A At the time, it was me. But I'm no longer with IFDC.
Q When did you terminate your relationship with IFDC?
A In January of 2012.
Q So prior to January of 2012, your wife prepared some PowerPoint presentations
for IFDC?
A Yes.
Q Did she perform any other services for IFDC?
A No.
Q Was she compensated by IFDC for those services?
A No.
Q And the 10 million shares has nothing to do with compensating her for her services
rendered to IFDC?
A No, it's completely private.
Q Well, I -- we're going to have to broach this. You transferred over 10 million
shares within the last couple months when you're indicating that you're incapable
of paying a $49,000 debt. Is there -- I'm entitled to know whether there's some
legitimate reason for the transfer of those shares.
A That's argumentative. The shares aren't worth anything anyway.
Q There's no value to the shares?
A No, not that I know.
Q And you have no means of selling those shares?
A Nope.
Q Did your wife pay you to transfer the 10 million shares to her?
A No.
Q Did any money and/or any shares change hand between you and your wife in exchange
for her getting the 10 million shares?
A No.
Q Is there any business reason -- strike that. Was the transfer of the 10 million
shares part of any business transaction?
A No.
Q And can you be more specific as to when these shares were transferred?
A Approximately three months ago.
Q Was it before or after the court order of March --
A I don't know. If your client wants to take shares for payment and the
ones I have are not enough, I'm sure that I can get my wife to sign over whatever
you need. I don't think your client would be interested in shares they can't sell,
but it's up to them.
