RLBY Outline according to AI on status currently
Elaborate on the allegations against Vivos Holdings in the Reliability Inc. v. Doki case
The legal dispute Reliability Inc. v. Doki stemmed from allegations that Naveen Doki, along with co-defendants, fraudulently misrepresented the financial state of Maslow Media Group (MMG) during its 2019 merger with Reliability Inc.. The core of the claims, which led to a $7.7 million judgment against Doki's entities, revolved around undisclosed liabilities and a breach of contract.
Background of the dispute
In November 2016, Vivos Holdings, LLC—an entity controlled by Naveen Doki and Silvija Valleru—acquired MMG.
Under Doki's control, MMG took on millions in inter-company debt via promissory notes.
In September 2019, Reliability Inc. entered into a merger agreement to acquire MMG. Doki and Valleru's entities received 94% of Reliability's stock in the transaction.
Key allegations by Reliability Inc.
Misappropriation of funds: Reliability alleged that Doki used MMG's credit and assets to procure millions in loans for his other businesses without MMG management's knowledge.
Undisclosed liabilities: Doki and Valleru allegedly concealed significant financial obligations, including guarantees for the debts of their other companies. This made MMG's financial position appear far healthier than it actually was.
Failed assurances: During merger talks, Doki allegedly made false promises to Reliability's largest shareholder, Jeffrey Eberwein, assuring him that Maslow's loans would be repaid and the undisclosed guarantees "would be taken care of".
Default on loans: Following the merger, Doki's other businesses defaulted on the loans that MMG had guaranteed. Reliability subsequently discovered these hidden liabilities, concluding that MMG "was in fact worth nothing".
Refusal to honor agreements: Doki and other defendants allegedly refused to return pledged Maslow shares or place them in escrow, which was meant to secure repayment of the joint debts.
Breach of board agreement: Despite agreeing to allow Reliability's board to select its own directors, Doki allegedly attempted to convene a special shareholder meeting to oust the incumbent board.
Undisclosed lawsuit: Doki and his associates allegedly failed to disclose a 2019 lawsuit filed against them by a third party, which MMG was also included in as a plaintiff.
The outcome of the litigation
The dispute went to arbitration and ultimately resulted in a substantial judgment against the Doki-controlled entities.
Arbitration awards: An arbitrator issued multiple awards against the "Vivos Group" (meaning Doki and his related entities) based on Reliability's contract and tort claims.
Final judgment and receivership: By early 2024, a Maryland court entered the arbitration awards as final judgments totaling over $7.7 million. A rehabilitative receiver was appointed to seize the assets, including Doki's shares in Reliability, to enforce collection of the judgment.
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