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Litigation Center - New Lawsuit Filings
11/24/2009 8:39:37 AM EST
Class Action Lawsuit Filed Against SpongeTech Delivery Systems Inc.
Posted by LexisNexis Litigation Center Staff
NEW YORK— SpongeTech Delivery Systems Inc. (SPNG) on Oct. 16 announced that a class action lawsuit was filed on Oct. 9 by The Rosen Law Firm P.A. in the U.S. District Court for the Southern District of New York on behalf of all purchasers of SpongeTech stock between April 15, 2008 and Oct. 5, 2009, alleging violations of the federal securities laws.
Defendants are SpongeTech and its officers and directors, Michael L. Metter, Steven Moskowitz and Frank Lazauskas, as well as RM Enterprises International Inc., an entity in which SpongeTech’s directors and officers hold direct and/or indirect ownership interests, and of which Moskowitz and Lazauskas serve as officers and/or directors.
SpongeTech also announced that it has filed a lawsuit in the New York State Supreme Court, Suffolk County against Cresta Capital Strategies LLC. The complaint alleges breach of contract, conversion, unjust enrichment, breach of fiduciary duty and unlawful appropriation of funds. The company is seeking compensatory damages of $2.75 million as well as punitive and exemplary damages.
According to the lawsuit:
In March 2009, Cresta was hired by SpongeTech to serve as the exclusive investment banker to the company and provide advice and services concerning potential merger, acquisition and/or any business transactions. Upon modification of the agreement with Cresta, in June 2009, SpongeTech agreed to did provide Cresta with a $1 million cash advance that was to be used against future fees as a result of any transactions under the agreement. Cresta did provide investment banking services to SpongeTech on the acquisition of Dicon Technologies LLC as well as introducing SpongeTech to Getfugu Inc. Cresta was paid in full all fees due with regards to its participation in the Dicon transaction.
In August 2009, SpongeTech was introduced to Getfugu by Cresta, which was serving as investment banker for both SpongeTech and Getfugu. At the advice of Cresta, SpongeTech entered into a definitive agreement with Getfugu to invest $4 million into Getfugu’s mobile-based Web search and e-commerce technology. SpongeTech said it was to be the first company to utilize Getfugu’s innovative mobile search platform. An aggregate of $1.75 million had been advanced to Getfugu; soon after, Getfugu rescinded the transaction and to this date has not returned the monies to SpongeTech.
In September 2009, Cresta terminated its agreement to serve as the investment banker for SpongeTech, waiving and forfeiting any right to the $1 million cash advance for future fees. SpongeTech has made a demand for the $1 million, but Cresta has failed to return any part of the cash advance to SpongeTech.
SpongeTech alleges that Cresta breached its fiduciary duty by assisting Getfugu in obtaining money from SpongeTech and failing to conduct any reasonable due diligence on Getfugu or its officers and personnel and failing to provide SpongeTech with any reasonable due diligence upon which to make its investment decision. SpongeTech is seeking compensatory, punitive and exemplary damages.
SpongeTech designs, produces, and markets unique lines of reusable cleaning products for car care, child care, home care and pet care usages.
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