Opposition to Motion to Dismiss
BACKGROUND
In 2000 and possibly earlier, MSMJ (then American Jewelry symbol AMJY) financed its operations by issuing convertible debentures (CDs) that were convertible at a market price (so-called toxic convertibles). Plaintiffs believe that the CD-holders engaged in naked short-selling AMJY to depress the market-price and then converted the CDs to get more shares. The process resulted in the number of AMJY shares going to over 300 million. The practice is now generally recognized as a form of fraud.
AMJY did a reverse (1 AMJC for 300 AMJY) stock-split on May 1st 2001 resulting in 1,150,000 AMJC outstanding. But AMJC (then a Delaware corporation) still had 350 million AMJC authorized. Oddly, the trading volume remained very high following the reverse-split.
AMJC had a book value of over $7 per share and trailing earnings well over $1 per share based on the reported number of shares outstanding but was trading below $1. The company issued a Press Release stating that the small remaining CD had been purchased by a new party and the terms had been changed to remove the toxic feature. The Company also stated that the new CD-holder had assumed all responsibility for the previous AMJY fraud. So my daughters (Anna and Laura) and ex-wife Sylvia Gee each bought just under 5% of the stock.
We were amazed that the price continued to fall on unusually heavy volume. So I began posting on RagingBull's message-board for AMJC to inform other investors of our holdings. Anna complained to the SEC to no avail. When the price continued to fall, I advised them to buy the entire float to prove that the Market Makers were fraudulently selling non-existent shares. I announced that they had done this on RagingBull. I complained to the SEC to no avail and also e-mailed the Company.
Shortly thereafter, revised financial data appeared at the Company's website showing a larger float of some 2 million with no explanation. So they bought another 1 million shares as the price continued to fall.
This process continued until we held well over 200 million shares when it became apparent that far more than the authorized 350 million shares were held by the public. The price had collapsed to a few cents. I repeatedly complained to the SEC to no avail and periodically advised the Company via e-mail.
AMJC has a share structure that gives a majority vote to just two officers through a preferred stock that has no equity interest. Those two abused that power to change the company's incorporation to Nevada. Since then billions of AMJC shares were issued. My family-members hold a total of over 1.5 billion shares.
A CD with a small principal amount is still outstanding. Though the terms of the CD had been changed favorably to remove the toxic provision as announced in a PR, the CD was secretly changed in January 2002 according to an SEC Pre 14C filing dated June 11, 2002 with extremely unfavorable terms that essentially restored the toxic feature. It is quite clear that the two officers and the present Board of Directors are totally hostile to their own common shareholders and are cooperating with the crooked CD-holder to defraud us through extreme dilution.
AMJC underwent another 7000-for-1 reverse stock-split and changed its name to MSM Jewelry with a new symbol MSMJ. I suspect that MSM stands for Merrill Lynch, Smith Barney, and Morgan Stanley.
STANDING
Anna G. Brandt now holds 681,511,369 AMJC shares.
Laura G. Brandt now holds 677,012,877 AMJC shares with a claim for up to 300 million more.
Sylvia Gee has signed over her 160,516,000 AMJC shares to me.
CALCULATION OF DAMAGES
Absent the tort, AMJC shares today should have had a market-value of over $20 per share based on a current book-value of around $10 and trailing 12-month earnings of say $1.50 with a P/E of maybe 14.
ALLEGATION AGAINST BANKS
Company PRs referred to financial institutions being in control of the company. These particular Banks have been identified by regulators for past financial misconduct.
NO DISCOVERY YET
Defendants want dismissal of the COMPLAINT without any discovery. This Court should allow at least some discovery before ruling on their MOTION.
JURISDICTION
This Court has clear jurisdiction here based on the diversity of the parties and the subject matter (stock fraud). Plaintiffs are not residents of New York. Defendants are. See addresses.
CONCLUSION
This Court should deny the MOTION TO DISMISS at this time.
AI
