UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION
UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Case No. 6:09-cv-1638-GAP-KRS Plaintiff
v.
K&L INTERNATIONAL ENTERPRISES, INC., SIGNATURE LEISURE, INC., SIGNATURE WORLDWIDE ADVISORS, LLC, STEPHEN W. CARNES, LAWRENCE A. POWALISZ, ENZYME ENVIRONMENTAL SOLUTIONS, INC. and JARED E. HOCHSTEDLER, Defendants. __________________________________________/
DEFENDANT SIGNATURE LEISURE, INC.’S ANSWER, AFFIRMATIVE DEFENSES AND DEMAND FOR JURY TRIAL
Defendant, Signature Leisure, Inc. (“Signature Leisure”), by the undersigned counsel, hereby answers and defends the Complaint filed by Plaintiff, United States Securities and Exchange Commission, as follows:
ANSWER
NATURE OF THE CASE
1. Signature Leisure denies the allegations in Paragraph 1 that pertain to it. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the remaining allegations.
2. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 2.
3. Signature Leisure denies the allegations in Paragraph 3 that pertain to it. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the remaining allegations.
4. Signature Leisure denies the allegations in Paragraph 4 that pertain to it. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the remaining allegations.
5. Signature Leisure denies the allegations in Paragraph 5 that pertain to it. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the remaining allegations.
JURISDICTION AND VENUE
6. Signature Leisure admits the allegations in Paragraph 6.
7. Signature Leisure admits that Venue lies with this Court, however, Signature Leisure is without sufficient knowledge or information to admit or deny the remaining allegations, and as such, therefore denies the remaining allegations in Paragraph 7.
DEFENDANTS
8. Signature Leisure admits the allegations in Paragraph 8.
9. Signature Leisure admits the allegations in Paragraph 9.
10. Signature Leisure admits the allegations in Paragraph 10.
11. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 11.
12. Signature Leisure admits the allegations contained in Paragraph Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 12.
13. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 13.
14. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 14.
THE ISSUER COMPANIES
15. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 15.
16. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 16.
17. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 17.
FACTS
18. Signature Leisure denies the allegations in Paragraph 18 that pertain to it. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the remaining allegations.
THE REVENGE PROMISSORY NOTES
19. Signature Leisure admits that it entered into agreements with Revenge Designs, and that the documentation for those transactions must be read as a whole. Signature Leisure further admits that the terms and conditions contained in the documentation governed the transactions in question. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to Revenge, and as such, therefore denies the allegations in Paragraph19.
20. Signature Leisure admits that it entered into agreements with Revenge Designs, and that the documentation for those transactions must be read as a whole. Signature Leisure further admits that the terms and conditions contained in the documentation governed the transactions in question. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to Revenge, and as such, therefore denies the allegations in Paragraph 20.
21. Signature Leisure admits that it entered into agreements with Revenge Designs, and that the documentation for those transactions must be read as a whole. Signature Leisure further admits that the terms and conditions contained in the documentation governed the transactions in question. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to Revenge, and as such, therefore denies the allegations in Paragraph 21.
22. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 22.
23. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 23.
24. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 24.
THE WRAP-AROUND AGREEMENTS:
AN OVERVIEW
25. Signature Leisure admits that it entered into agreements with Revenge Designs and International Power, and that the documentation for those transactions must be read as a whole. Signature Leisure further admits that the terms and conditions contained in the documentation governed the transactions in question. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 25.
26. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations, and as such, therefore denies the allegations in Paragraph 26.
THE CROSS ATLANTIC WRAP-AROUND AGREEMENTS
27. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 27.
28. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 28.
29. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 29.
30. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 30.
THE REVENGE DESIGNS WRAP-AROUND AGREEMENTS
31. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 31.
32. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 32.
33. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 33.
34. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 34.
THE ENZYME ENVIRONMENTAL WRAP-AROUND AGREEMENTS
35. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 35.
36. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 36.
37. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 37.
38. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 38.
39. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 39.
40. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 40.
THE INTERNATIONAL POWER WRAP-AROUND AGREEMENTS
41. Signature Leisure admits that it entered into agreements with International Power, and that the documentation for those transactions must be read as a whole. Signature Leisure further admits that the terms and conditions contained in the documentation governed the transactions in question. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to International Power, and as such, therefore denies the allegations in Paragraph 41.
42. Signature Leisure admits that it entered into agreements with International Power, and that the documentation for those transactions must be read as a whole. Signature Leisure further admits that the terms and conditions contained in the documentation governed the transactions in question. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to International Power, and as such, therefore denies the allegations in Paragraph 42.
43. Signature Leisure admits that it entered into agreements with International Power, and that the documentation for those transactions must be read as a whole. Signature Leisure further admits that the terms and conditions contained in the documentation governed the transactions in question. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to International Power, and as such, therefore denies the allegations in Paragraph 43.
44. Signature Leisure admits that it entered into agreements with International Power, and that the documentation for those transactions must be read as a whole. Signature Leisure further admits that the terms and conditions contained in the documentation governed the transactions in question. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to International Power, and as such, therefore denies the allegations in Paragraph 44.
COUNT I
DEFENDANTS’ OFFER AND SALE OF UNREGISTERED SECURITIES IN VIOLATION OF SECTIONS 5 (a) AND 5 (c) OF THE SECURITIES ACT
(Against Defendants K&L International Enterprises, Inc., Signature Leisure, Inc., Signature Worldwide Advisors, LLC, Stephen W. Carnes and Lawrence A. Powalisz)
45. Signature Leisure incorporates by reference its responses to Paragraphs 1 through 44 of the Answer as if its responses to those allegations were fully repeated herein.
46. Signature Leisure denies the allegations in Paragraph 46 that pertain to it. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the remaining allegations.
47. Signature Leisure denies the allegations in Paragraph 47 that pertain to it. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other companies and Defendants, and as such, therefore denies the remaining allegations in Paragraph 47.
48. Signature Leisure denies the allegations in Paragraph 48 that pertain to it. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the remaining allegations.
49. Signature Leisure denies the allegations in Paragraph 49 that pertain to it. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the remaining allegations.
COUNT II
DEFENDANTS’ OFFER AND SALE OF UNREGISTERED SECURITIES IN VIOLATION OF SECTIONS 5 (a) AND 5 (c) OF THE SECURITIES ACT
(Against Defendants Enzyme Environmental Solutions, Inc. and Jared E. Hochstedler)
50. Signature Leisure incorporates by reference its responses to Paragraphs 1 through 49 of the Answer as if its responses to those allegations were fully repeated herein.
51. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 51.
52. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 52.
53. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the allegations in Paragraph 53.
54. Signature Leisure denies the allegations in Paragraph 54 that pertain to it. Signature Leisure is without sufficient knowledge or information to admit or deny the allegations that pertain to other Defendants, and as such, therefore denies the remaining allegations.
REQUEST FOR RELIEF
WHEREFORE, the Defendant, Signature Leisure, Inc. respectfully requests that the Court dismiss Count I of the Complaint and that it be awarded all costs and all other relief the Court deems equitable and just; and
The Defendant demands a Trial by Jury as to all issues raised in any and all counts of the Complaint that are so triable.
AFFIRMATIVE DEFENSES
1. Failure to state a claim for which relief can be granted.
2. The securities that are the subject of the Complaint were exempt from registration, under Section 4 (1) of the Securities Act of 1933 (“Securities Act”). Signature Leisure did not act as an issuer, underwriter or dealer in any of the transactions listed in the Complaint.
3. The securities that are the subject of the Complaint were exempt from registration, under Section 4 (2) of the Securities Act. Signature Leisure was not involved in a public offering.
4. Signature Leisure acted in good faith and relied on advice of counsel when selling the securities that are the subject of the Complaint. Signature Leisure received a written opinion from counsel, after full disclosure, and relied upon said opinion.
5. To the extent that Sections 5(a) and 5(c) of the Securities Act apply, and without acknowledging or admitting that any violations occurred, the Complaint fails to state a basis upon which the Plaintiff would be entitled to a Permanent Injunction.
6. To the extent that Sections 5(a) and 5(c) of the Securities Act apply, and without acknowledging or admitting that any violations occurred, the Complaint fails to state a basis upon which Plaintiff would be entitled to a Penny Stock Bar.
7. To the extent that Sections 5(a) and 5(c) of the Securities Act apply, and without acknowledging or admitting that any violations occurred, the Complaint fails to state a basis upon which the Plaintiff would be entitled to disgorgement and prejudgment interest.
8. To the extent that Sections 5(a) and 5(c) of the Securities Act apply, and without acknowledging or admitting that any violations occurred, the Complaint fails to state a basis upon which the Plaintiff would be entitled to a civil penalty.
9. Signature Leisure reserves the right to assert additional defenses as they become known.
Respectfully submitted this 25th day of November, 2009.
/s/Irving M. Einhorn IRVING M. EINHORN Law Offices of Irving. M. Einhorn 1710-10th Street Manhattan Beach, California 90266 ime@einhornlaw.com
/s/Harrison T. Slaughter, Jr. HARRISON T. SLAUGHTER, JR. Florida Bar No. 194822 111 N. Orange Avenue, Suite 700 Orlando, Florida 32801 Telephone: 407-849-6161 Facsimile: 407-843-3738 Butch@leventhal-slaughter.com
CERTIFICATE OF SERVICE I hereby certify that on the 25th day of November 2009, I electronically filed the foregoing document with the Clerk of the Court by using the CM/ECF system which will also send a notice of electronic filing to the following:
Jonathan Stephen Polish Securities & Exchange Commission 175 West Jackson Street, Suite 900 Chicago, Illinois 60604
Margaret Gembala Nelson Securities & Exchange Commission 175 West Jackson Street, Suite 900 Chicago, Illinois 60604
Thomas J. Meier Securities & Exchange Commission 175 West Jackson Street, Suite 900 Chicago, Illinois 60604
I further certify that I caused to be sent by electronic mail the foregoing document to the following:
Irving M. Einhorn Law Offices of Irving M. Einhorn 1710 – 10th Street Manhattan Beach, California 90266 e-mail: ime@einhornlaw.com
Thomas W. Farlow Thomas E. Satrom Frost Brown Todd LLC 201 N. Illinois Street, Suite 1900 Indianapolis, Indiana 46204 e-mail: tfarlow@fbtlaw.com e-mail: tsatrom@fbtlaw.com
Charles M. Greene Law Offices of Chares M. Greene, PA 28 E Washington Street Orlando, Florida 32801 e-mail: cmglaw@cmgpa.com
Daniel Bobilya Bobilya & Reidy LLP 127 W. Berry Street Suite 300 Fort Wayne, Indiana 46802 e-mail: dbobilya@b-rlegal.com
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