IS THIS THE SAME GROUP? DGIF WSML KSIH POTG
S.-Based Investment Company The Nutmeg Group, LLC Files Fraud Suit against Tropical Beverage, Inc. and Company Executives
11:40 AM EST February 6, 2006
A civil suit was filed by U.S. Investment Fund The Nutmeg Group, LLC, against Tropical Beverage, Inc. (Pink Sheets:TPBV) of Santa Ana, CA and two of its corporate executives, in the circuit court of Cook County, IL. The fourteen page complaint alleges that Tropical Beverage CEO, Mark Millsap, and CFO, Chris Lotito, conspired to defraud the Company's investors, including Nutmeg, between October, 2004 through September 30, 2005. Along with securities fraud, the five counts cited in the official complaint, include, Breach of Contract, Deceptive Business Practices, Inducement and Negligent Misrepresentation.
Some of the specific allegations of the Complaint are as follows:
From April 1, 2005 through September 30, 2005, Millsap and Lotito issued more than 389 million shares of Tropical common stock, to themselves and to entities owned and controlled by Mark Millsap and Chris Lotito. Yet, Tropical recorded no consideration for the issuance of such shares.
Tropical has at least one bank account which is not recorded in Tropical's records. Withdrawals were made from this Tropical bank account for checks issued to cash. Other disbursements from this Tropical bank account were to Chris Lotito. On information and belief, many receivables are either not being collected, or if they are being collected, are being deposited to a bank account, but not being recorded on Tropical's books and records. On information and belief, Lotito and Millsap secretly, surreptitiously and illegally sold free-trading Tropical common shares.
On information and belief, a substantial portion of the $1,000,000 invested by Nutmeg, was diverted to pay for Lotito's new home.
Attorney Randall Goulding, Managing Director of The Nutmeg Group, stated: "The Complaint provides the factual details of Lotito's and Millsap's misrepresentations concerning alleged sales to major companies including Walmart, Amway, Starbucks and others. However, none of these sales could ever be verified. The Complaint alleges that all such representations were knowing and intentional fabrications. The Complaint further alleges that Tropical did not even have the proper accounting and audit controls over its bank account to even have the capacity to have a qualified SEC audit complete, despite its contrary assurances. Lotito and Millsap's false statements violate the Securities Act of 1933, as well as Section (12)(f) of the Illinois Securities Law of 1953, as well as Section (12)(g) of the Illinois Securities Law of 1953, rendering the company as well as Lotito and Millsap subject to Section 13 of the Illinois Securities Law and penalties prescribed thereunder."
The Nutmeg Group, a U.S. Virgin Islands-based investment fund with more than 30 million dollars under management, made a One million Dollar investment in Tropical Beverage, Inc. in October of 2004. Mr. Goulding continued, "It was months after our investment that we realized that things weren't adding up. Aside from the Company's failure to honor contractual commitments to us, there was mounting evidence of ongoing illegal acts perpetrated by management - Millsap and Lotito. The total scope now includes not only all of the company's shareholders but securities regulators as well. We are currently conducting asset searches on the named parties and reviewing evidence submitted by our private investigators in preparation for the case. We will also be actively conferring with both the Securities & Exchange Commission and the Federal Bureau of Investigation in order facilitate criminal indictments. Investors should not be indiscriminately victimized by such fraudulent activities. The Nutmeg Group has a duty to the investing public to bring these perpetrators to justice."
George Stevens, Managing Partner of Stevens Resource Group, LLC, commented, "It is inconceivable why anyone in this current climate of increased corporate governance would expose themselves to even a hint of malfeasance, let alone commit it. The rash of corporate cases in recent years and the publicity of those events have met with swift action and harsh punishment in the court system. Juries, in particular, are not at all sympathetic with the alleged corporate criminals in question. They are not just out for guilty verdicts anymore; they want blood." He continued, "The unfortunate thing in all of this is that innocent people get hurt, even within the criminals' own community. When corporate miscreants know they are or will be party to lawsuit in which they are, at least, partly culpable, they begin to transfer their assets to friends and loved ones in anticipation of a judgment levied against them. Litigators are now finding themselves in a position where they have to legally pursue other parties not named in the original suit to recover their awards. We've seen entire families financially and emotionally devastated by this process. Moreover, prosecutors are taking the position that such covert uses of family members and corporations to hide assets are indicia of fraud and the family members who participate are equally culpable as coconspirators."
