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VERIFIED SECOND AMENDED COMPLAINT

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GINGRASLAWO

FFICE,PLLC

3941E.CHANDLERBLVD.,#106-243

PHOENIX,AZ85048

David S. Gingras, #021097Gingras Law Office, PLLC3941 E. Chandler Blvd., #106-243Phoenix, AZ 85048Tel.: (480) 668-3623Fax: (480) [email protected]

Attorney for Plaintiff Xcentric Ventures, LLC

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

XCENTRIC VENTURES, LLC, anArizona limited liability company,

Plaintiff,

v.

LISA JEAN BORODKIN and JOHN DOEBORODKIN, husband and wife;RAYMOND MOBREZ and ILIANALLANERAS, husband and wife;

DANIEL BLACKERT and JANE DOEBLACKERT, husband and wife;ASIA ECONOMIC INSTITUTE, LLC, aCalifornia limited liability company;DOES 1-10, inclusive,

Defendants.

Case No: 11-cv-1426-GMS

[PROPOSED]

VERIFIED SECOND AMENDED

COMPLAINT

For its Verified Second Amended Complaint Plaintiff XCENTRIC VENTURES, LLC

alleges as follows:

1. This is an action to recover damages arising from a frivolous lawsuitmaliciously and wrongfully commenced and continued by Defendants against Plaintiff in

the State of California (the Asia Litigation).

PARTIES

2. Plaintiff XCENTRIC VENTURES, LLC (Xcentric) is an Arizona limitedliability company which operates, and at all relevant times has operated, the website

www.RipoffReport.com (Ripoff Report).

3. Defendant LISA JEAN BORODKIN (BORODKIN) is an attorneylicensed to practice law in the States of California and New York. At all times relevant to

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this action, Defendant BORODKIN was married to JOHN DOE BORODKIN and was

acting on behalf of, and for the benefit of, their marital community.

4. Defendants RAYMOND MOBREZ (MOBREZ) and ILIANALLANERAS (LLANERAS) are, and at all relevant times were, a married couple

residing in Los Angeles, California.

5. At all times relevant to this action, MOBREZ and LLANERAS were theprincipals of Defendant ASIA ECONOMIC INSTITUTE, LLC (AEI) which is a

California limited liability with its principal place of business in Los Angeles, California.

6. Defendant DANIEL BLACKERT (BLACKERT) is an attorney licensedto practice law in the States of California. At all times relevant to this action, Defendant

BLACKERT was married to JANE DOE BLACKERT and was acting on behalf of, and

for the benefit of, their marital community.

7. DOES 110 are individuals and/or entities, the true names of which are notcurrently known, who are or who may be liable to Xcentric for the conduct alleged

herein.

JURISDICTION/VENUE

8. Defendants, and each of them, have knowingly, intentionally anddeliberately engaged in tortious activity directed at and within the State of Arizona and

intentionally directed at Xcentric and Xcentrics principals, officers, agents and

employees including non-party EDWARD MAGEDSON (Magedson) who are

residents of the State of Arizona. As more specifically alleged herein, Defendants

actions were specifically intended to cause harm to Plaintiff within the State of Arizona

and, in fact, Defendants actions had the intended effect of actually causing substantial

harm to Plaintiff within the State of Arizona. Defendants, and each of them, are therefore

properly subject to personal jurisdiction within the State of Arizona.

9. Pursuant to 28 U.S.C. 1332, this Court has subject matter jurisdictionbecause there is complete diversity among the parties and the amount in controversy

exceeds $75,000.00.Deleted: FIRST


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10. Pursuant to 28 U.S.C. 1391(a)(2), venue is proper in this judicial districtbecause a substantial part of the events giving rise to Plaintiffs claims occurred here.

ALLEGATIONS COMMON TO ALL CLAIMS

11. The Ripoff Report is, among other things, a website for consumercomplaints. Any member of the public with access to a computer and an Internet

connection may use the Ripoff Report website to create and publish complaints about

companies or individuals who they believe have wronged them in some manner.

12. Complaints published on the Ripoff Report are automatically indexed bynumerous search engines such as Google and such complaints often rank very high in

Googles search results. Because of this high ranking, individuals or businesses with

complaints on the Ripoff Report website may be negatively impacted.

13. Since the site began in 1998, because of the negative impact thatcomplaints on the Ripoff Report website may have, Xcentric has been sued numerous

times by plaintiffs seeking to remove reports or otherwise obtain damages from Xcentric

for the publication of such reports.

14. As a matter of law and pursuant to the Communications Decency Act, 47U.S.C. 230(c)(1) (the CDA), except as to certain types of intellectual property claims

and criminal claims, Xcentric is generally immune from any civil cause of action arising

from material posted on the Ripoff Report site by a third party. As a result of the CDA,

because Xcentric normally plays no material role in the creation of the reports at issue,

lawsuits seeking to force the removal of reports through litigation have frequently been

dismissed or otherwise resolved in favor of Xcentric.

15. In addition to frequent praise and nearly unanimous judicial affirmation, theCDA has also drawn substantial and widespread commentary and passionate criticism

from those who disagree with or dislike the law or the results which it sometimes

requires.

16. Among those who have been targeted by online criticism on the RipoffReport website or elsewhere, the CDA is often seen as an unfair law which creates an

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improper loophole allowing sites such as the Ripoff Report to publish derogatory and

even defamatory speech with complete impunity.

17. One well-known commentary regarding both the CDA and the RipoffReport website is an article written by an attorney, Sarah Bird, entitled The Anatomy of

a RipOff Report Lawsuit which was originally published on January 21, 2008 on

www.SEOmoz.org (the Bird Article). The Bird Article purports to offer a legal

analysis of the Ripoff Reports successful litigation history, as well as the authors

opinions regarding the CDA and her answers to the following questions, among others:

Is it true that RipOff Report has never lost a lawsuit? Is this a failure of the legal

system? Are the allegations unfounded? If there is truth in the allegations, then how

is the system going wrong? Why cant RipOff Report be held responsible for its

conduct?

18. Among other things, the Bird Article contains a discussion of federalracketeering laws, specifically the Racketeer Influenced and Corrupt Organizations Act

or RICO, codified at 18 U.S.C. 1961, et seq., and the predicate act of extortion.

Among other things, the Bird Article suggests that plaintiffs seeking to avoid the

limitations imposed by the CDA may be able to do so by pursing federal RICO claims

against Xcentric predicated upon alleged acts of extortion.

19. In closing, the author of the Bird Article specifically encouraged litigants toattempt to overcome Xcentrics CDA immunity by bringing claims of RICO/extortion: I

hope that plaintiffs will continue to press the RICO/Extortion combo .

20. On January 28, 2009, a third party posted a complaint on the Ripoff Reportwebsite concerning AEI, MOBREZ, and LLANERAS. The report was written from the

perspective of an unhappy former employee and it contained various derogatory

statements about AEI, MOBREZ, and LLANERAS. Other similar reports were

subsequently posted on the site by third parties between early 2009 and early 2010.

21. Upon information and belief, the reports posted on Ripoff Report aboutAEI, MOBREZ and LLANERAS contained numerous statements of fact which were

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derogatory in nature but were either completely or substantially true. Specifically, in

Report #417493 posted on January 28, 2009, the author claimed, among other things:

[T]he credentials of Raymond Mobrez, Director of the [Asia Economic]Institute, and Iliana Llaneras, are as muddled as they can possibly be. Heclaims to be a Ph.D. in Human Resources or something of the other toincrease his ability to reel you in during an interview. The truth is that there

are no credentials to back up the scheme that they are running.

22. To the extent the statement in Report #417493 accused Mr. Mobrez offalsely representing himself as the holder of a legitimate doctoral degree, this statement

was entirely true. The sole basis for Mr. Mobrezs alleged doctoral status is a document

issued by La Jolla University, San Diego, California to RAYMOND MOBAREZ

[sic] which purported to confer upon him a degree of DOCTOR OF PHILOSOPHY IN

HUMAN BEHAVIOR in December 1992.

23. Mr. Mobrezs alleged doctoral degree is fake. La Jolla University (whichis no longer in operation) was a diploma mill that sold false educational credentials, not

a legitimate or accredited educational institution.

24. There is not now, nor has there ever been, any accredited university oreducational institution in San Diego, California known as La Jolla University. Upon

information and belief, the only physical presence La Jolla University has ever had in

the State of California was a post office box. Upon information and belief, Mr. Mobrez

purchased the purported doctoral degree without completing any actual course of study,

without attending any classes, without meeting a single professor, and without preparing

a thesis, dissertation, or similar work demonstrating his academic achievement.

25. Based on the publication of these reports and despite knowing that thereports contained numerous statements of fact which were entirely or substantially true ,

Defendants MOBREZ and LLANERAS decided to commence litigation against

XCENTRIC and Magedson.

26. Prior to the commencement of the Asia Litigation, Defendants MOBREZand/or LLANERAS and/or BLACKERT and/or Does 1-10 performed legal research and

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requested that unknown others perform research, on previous lawsuits involving

XCENTRIC. During the course of this research, Defendants MOBREZ, LLANERAS,

and BLACKERT reviewed the Bird Article, among other things, and determined that

based on the CDA, litigation against XCENTRIC and Magedson was extremely unlikely

to succeed, assuming the litigation merely accused XCENTRIC and/or Magedson of

publishing material submitted to the Ripoff Report website by a third party.

27. Based on this conclusion, Defendants MOBREZ, LLANERAS, andBLACKERT determined that an alternative litigation strategy was necessary such as the

RICO/extortion theory advocated in the Bird Article. However, Defendants MOBREZ,

LLANERAS, and BLACKERT knew that they could not legitimately present such a

theory because at no time was AEI actually extorted by XCENTRIC or Magedson.

28. To solve this problem, at some time in or around April 2009, DefendantsMOBREZ and LLANERAS devised a plan, to wit: Defendant MOBREZ would contact

Magedson by telephone and would attempt to induce Magedson to ask for money in

exchange for the removal of the reports about AEI thereby permitting AEI to proceed

with litigation under a RICO/extortion theory.

29. In furtherance of this plan, in April and May 2009 MOBREZ placed aseries of seven telephone calls to Magedson using the primary phone number listed on the

Ripoff Report website; (602) 359-4357. The date, time, and duration of each call from

MOBREZ to Magedson is reflected in the table below:

TABLE OF CALLS

Call

#

Date Start

Time

Call

From #

Length

Min

1 4/27/2009 3:21 PM (310) 806-3000 3.5

2 4/27/2009 3:27 PM (310) 806-3000 1.0

3 4/27/2009 3:28 PM (310) 806-3000 2.9

4 5/5/2009 11:28 AM (310) 806-3000 2.6

5 5/5/2009 1:05 PM (310) 806-3000 2.2

6 5/9/2009 1:10 PM (310) 801-5161 .5

7 5/12/2009 2:46 PM (310) 806-3000 16.5Deleted: FIRST


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30. Defendant LLANERAS was secretly listening to calls #4, 5 and 7 fromDefendant MOBREZ to Magedson without Magedsons knowledge.

31. Calls #3 and 6 were voicemails left by MOBREZ for Mr. Magedson.32. Following the completion of the calls and on the last day prior to the

expiration of the statute of limitations as to the first report about AEI, on January 27,

2010 Defendants AEI, MOBREZ, LLANERAS, and BLACKERT commenced the Asia

Litigation which began in the Los Angeles County Superior Court, Case No. SC106603.

The action was subsequently removed to the United States District Court, Central District

of California, Case No. 2:10-cv-01360-SVWPJW.

33. A true and correct copy of the original 33-page Complaint filed in the AsiaLitigation, excluding exhibits, is attached hereto as Exhibit A.

34. In their initial Complaint AEI, MOBREZ, and LLANERAS asserted twelveclaims for relief against XCENTRIC and Magedson including two federal RICO causes

of action, one predicated on extortion or attempted extortion and one predicated on

wire fraud. The Complaint accused XCENTRIC and Magedson of engaging in a

SHAKEDOWN by, among other things, offer[ing] to enroll Plaintiffs in the CAP

program for a fee of at least five thousand dollars ($5,000), plus a monthly monitoring

fee.

35. At a hearing which took place on April 19, 2010, Defendant BORODKINentered an appearance in the Asia Litigation as counsel for AEI, MOBREZ, and

LLANERAS. From April 19, 2010 through the final conclusion of the case, Defendant

BORODKIN was actively involved in the Asia Litigation as lead counsel for MOBREZ,

LLANERAS, and AEI.

36. At the conclusion of the hearing, the District Court issued an order, a trueand correct copy of which is attached hereto as Exhibit B. In the April 19

thorder, the

Court required plaintiff (meaning AEI, MOBREZ, and LLANERAS) to file a

declaration describing meetings with any representative of defendant regarding

extortion[] and to do so within two weeks.Deleted: FIRST


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37. On the last day to do so, May 3, 2010, MOBREZ and LLANERAS filedtheir declarations with the Court as ordered. True and correct copies of their declarations

are attached hereto as Exhibits C and D, respectively. Both declarations were sworn to

as true and correct under penalty of perjury pursuant to 28 U.S.C. 1746. Both

declarations contain BORODKINs name and California state bar number in the counsel

section of the caption, and upon information and belief, BORODKIN was actively

involved in the preparation of both declarations.

38. In his declaration, Defendant MOBREZ detailed the alleged contents of histelephone calls to Magedson in April and May 2009. In Paragraph 10 of his declaration,

Defendant MOBREZ described one such conversation with Magedson as follows:

On May 5, 2009, I again contacted the Ripoff Report office by phone. Iasked the man, who now identified himself as Ed Magedson, if he hadreceived the e-mail I sent to him February 28, 2009. Mr. Magedsonresponded that I would need to enroll in the CAP program. Again, I asked

for more information regarding the program, including the cost ofparticipation. Mr. Magedson proceeded to describe his Web site and how itcould benefit us. He then emphasized that his Web site has immunity underthe law and, therefore could not be sued. Moreover, he claimed to have ateam of lawyers that would fight us if we chose to sue him. He furtherwarned that others had tried but failed and that it was best to just go withthe program. Ms. Llaneras witnessed this conversation from her officephone.

39. In Paragraph 13 of his declaration, Defendant MOBREZ described asecond conversation with Mr. Magedson as follows:

Later that day, I responded to Mr. Magedsons e-mail by phone. I told Mr.Magedson that I had received his e-mail and was still uncertain what hewanted me to do. Mr. Magedson responded that I would have to go onto hisWeb site and enroll in the CAP program. When asked what it would costfor us to participate in his program, Mr. Magedson replied that it would costus at least "five grand" plus a monthly maintenance fee of a couple hundreddollars. He stated that these charges were based on the size if [sic]company. Specifically, he stated that the more money a company made, themore they would be charged. When asked the reasoning behind this, he wasnot responsive. He again instructed me to fill out the CAP forms. Again,Ms. Llaneras listened from her office phone. Formatted: Indent: Left: 0"


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40. Among other allegations, the allegation that Mr. Magedson demanded atleast five grand from Defendant MOBREZ formed the primary basis for the claim that

XCENTRIC and Magedson engaged in extortion as to AEI, MOBREZ, and LLANERAS.

41. In her May 3, 2010 declaration, Defendant LLANERAS testified underpenalty of perjury that I witnessed the conversations that took place between Mr.

Mobrez and Mr. Magedson on May 5th and 12th, 2009. Specifically, I listened in on the

conversation from my office phone.

42. In herMay 3, 2010 declaration, Defendant LLANERAS further testifiedunder penalty of perjury that Mr. Mobrezs Declaration is a true and accurate rendition

of the conversations that I witnessed between Mr. Mobrez and Mr. Magedson.

43. In her May 3, 2010 declaration, Defendant LLANERAS further testifiedunder penalty of perjury that she took handwritten notes during each conversation

between Defendant MOBREZ and Magedson as the conversations occurred. Copies of

LLANERASs handwritten notes are included within Exhibit D.

44. As shown below, LLANERASs notes of the second conversation betweenMOBREZ and Mr. Magedson which occurred around 1 pm on May 5, 2009 purport to

document a demand from Mr. Magedson for MOBREZ to pay $5,000 plus a monthly

payment for participation in Xcentrics Corporate Advocacy Program.


Formatted: Font: Bold, Unde

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line: 0.5"


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45. On Friday, May 7, 2010, Defendant MOBREZ was deposed in LosAngeles, California regarding his allegations in the Asia Litigation. During his

deposition, Defendant MOBREZ reviewed his May 3, 2010 declaration and reaffirmed,

again under penalty of perjury, that the statements contained in his declaration were

truthful and accurate.

46. Unbeknownst to Defendants MOBREZ and LLANERAS, all of DefendantMOBREZs conversations with Mr. Magedson were automatically recorded by

Xcentrics phone system. This fact was disclosed to Defendants MOBREZ and

LLANERAS for the first time near the end of MOBREZs deposition on May 7.

47. At the time the recorded phone calls were disclosed and played,BORODKIN had left the deposition. However, A CD containing the audio recordings of

each conversation was attached as Exhibit 25 to MOBREZs deposition transcript and an

additional copy of the CD containing the recordings was provided to BLACKERT at the

conclusion of the deposition on May 7, 2010. An email containing attached copies of the

recordings was also sent from XCENTRICs counsel to BLACKERT and BORODKIN

on May 8, 2010.

48. As reflected in the recordings of the conversations between DefendantMOBREZ and Magedson, Defendants MOBREZ and LLANERAS each committed

perjury when they testified that Magedson demanded $5,000 from MOBREZ in a

telephone conversation on May 5, 2009. This allegation was, and is, completely false.

49. LLANERAS committed perjury in her May 3, 2010 declaration when shestated that the documents attached to her declaration were a true and accurate copy of

the handwritten notes I took during these conversations as they occurred.

50. The notes attached to LLANERASs declaration were not truthful insofaras they purported to show that Mr. Magedson demanded $5,000 plus a monthly payment

for MOBREZs participation in Xcentrics Corporate Advocacy Program during the call

which occurred around 1 pm on May 5, 2009. At the time she signed her declaration,

LLANERAS knew this statement was completely false.


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51. In truth, at no time during any telephone conversion or at any other time didMagedson ever ask for any money from Defendants MOBREZ or LLANERAS.

52. Defendants MOBREZ and LLANERAS fabricated this allegation in aneffort to create causes of action against XCENTRIC and Magedson which they believed

would be sufficient to avoid CDA immunity. By doing so, Defendants MOBREZ and

LLANERAS hoped to force the removal of the reports about AEI, MOBREZ and

LLANERAS on the Ripoff Report website which they knew contained truthful

statements of fact and non-actionable expressions of opinion.

53. On May 11, 2010, a letter was sent to Defendants BORODKIN andBLACKERT, a true and correct copy of which is attached hereto as Exhibit E. Among

other things, this letter reiterated that Defendant MOBREZ and LLANERAS had

committed perjury and that their claims against XCENTRIC and Magedson were

completely groundless.

54. In addition, the May 11, 2010 letter reminded Defendants BORODKIN andBLACKERT that Rule 3700 of the California Rules of Professional Conduct required

the mandatory withdrawal of any attorney who: knows or should know that the client is

bringing an action, conducting a defense, asserting a position in litigation, or taking an

appeal, without probable cause and for the purpose of harassing or maliciously injuring

any person .

55. In addition, the May 11, 2010 letter cautioned Defendants BORODKIN andBLACKERT that: Xcentric has successfully sued parties and their lawyers for

knowingly commencing and continuing litigation that they knew was factually

groundless. Xcentric intends to bring such claims against your clients for their wrongful

actions and we will not hesitate to include claims against either or both of you

individually if you continue to prosecute any claims in this case which you know are

factually untrue or if the evidence demonstrates that you brought this case knowing that

the allegations contained in it were factually untrue.

56. The May 11, 2010 letter to Defendants BORODKIN and BLACKERT

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concluded with the following admonition: In closing, I want to emphasize one obvious

factyour clients have lied about the material facts of this case. As such, just as your

clients were, you now stand at a crossroads wherein you have a choice: you can do the

right thing and follow the requirements set forth by the law and by your ethical duties, or

your can ignore those duties and face the consequences.

57. Following receipt of the May 11, 2010 letter, Defendants BORODKIN andBLACKERT did not withdraw from the Asia Litigation. Instead, despite knowing that

the claims made by their clients were factually untrue, they continued to pursue the case

even more aggressively than before.

58. On May 20, 2010, Defendants MOBREZ and LLANERAS filedCorrected declarations with the court, true and correct copies of which are attached

hereto as Exhibits F and G, respectively. Both declarations contain BORODKINs name

and California state bar number in the counsel section of the caption, and upon

information and belief, BORODKIN was actively involved in the preparation of both

declarations.

59. In her corrected declaration, Defendant LLANERAS substantiallyrecanted all of her prior testimony regarding the extortion allegedly committed by

XCENTRIC and Magedson. Specifically, LLANERAS stated: After reviewing

documents that were previously solely in the possession of Defendants, I now believe that

the descriptions of the telephone conversations in my May 3, 2010 declaration were not

accurate.

60. Nothing in LLANERASs corrected declaration accused either XCENTRICof Magedson of any wrongdoing of any kind. Although she stated that she did recall

overhearing a telephone conversation in which money was discussed[],LLANERAS

specifically stated that she was unable to identify the callers voice and she did not know

if the caller was Mr. Magedson, or from the Ripoff Report or otherwise.

61. In light of the two materially conflicting declarations from LLANERASand the fact that she had recanted substantially all of her prior testimony, and upon

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reviewing the actual recorded conversations between Mr. Magedson and MOBREZ about

which LLANERAS had testified, no reasonable attorney would believe that

LLANERASs testimony as set forth in her corrected declaration provided probable

cause for any of the claims asserted by AEI, MOBREZ and LLANERAS against Mr.

Magedson and XCENTRIC in the Asia Litigation.

62. In his corrected declaration, Defendant MOBREZ also recantedsubstantial portions of his previous testimony regarding the alleged substance of his

telephone conversations with Magedson in April and May 2009. However, Defendant

MOBREZ further perjured himself by testifying for the first time, In addition, there

were a number of incoming calls to me from Ripoff Report. In truth, Defendant

MOBREZ knew that at no time were any calls ever made from Ripoff Report to him.

This allegation was simply another lie intended to further his fraud upon the Court.

63. Upon information and belief, Defendants BORODKIN and BLACKERTassisted Defendant MOBREZ with the creation of his corrected declaration and in

doing so BORODKIN and BLACKERT intentionally suborned perjury from MOBREZ.

64. In light of the two materially conflicting declarations from MOBREZ andthe fact that he had recanted material portions of his prior testimony, and upon reviewing

the actual recorded conversations between Mr. Magedson and MOBREZ about which

MOBREZ had testified, no reasonable attorney would believe that MOBREZs testimony

as set forth in his corrected declaration provided probable cause for any of the claims

asserted by AEI, MOBREZ and LLANERAS against Mr. Magedson and XCENTRIC in

the Asia Litigation.

65. On May 24, 2010, XCENTRIC and Magedson filed a Motion for SummaryJudgment in the Asia Litigation which argued that AEI, MOBREZ, and LLANERAS had

engaged in a fraud upon the Court by lying as to their extortion claims. The motion

further argued that AEI lacked standing to pursue claims under the RICO Act and could

not prevail on certain of its other claims based on uncontroverted testimony from

MOBREZ which established that the claims lacked any factual basis as to certainDeleted: FIRST


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mandatory elements including damages and causation.

66. Specifically, in their original Complaint in the Asia Litigation, AEI,MOBREZ and LLANERAS asserted claims for among other things:

a. Alleged RICO violations predicated upon attempted extortion inviolation of 18 U.S.C. 1951 and 1962(c);

b. Alleged RICO violations predicated upon wire fraud in violation of18 U.S.C. 1343;

c. Alleged RICO conspiracy in violation of 18 U.S.C. 1962(d); andd. Unfair business practices pursuant to Cal. Bus. & Prof. Code 17200

predicted in substantial part upon XCENTRICs alleged RICO

violations.

67. Based on the uncontroverted deposition testimony of MOBREZ, noreasonable attorney would believe that any factual or legal basis existed to pursue any of

the above claims. Specifically, civil claims for alleged RICO violations require proof of

actual economic loss and cannot be based on presumed damages. Instead, such claims

require proof that the plaintiff suffered actual loss to his business or property and that

such losses were actually and proximately caused by reason of the alleged conduct

constituting the RICO violation.

68. Prior to her involvement in the Asia Litigation, BORODKIN hadsubstantial experience and familiarity with the causation and damages standards for

federal civil RICO claims. Specifically, in 200304, BORODKIN was co-counsel for the

plaintiff in Ideal Steel Supply Corp v. Anza, 373 F.3d 251 (2nd Cir. 2004) (the Anza

Litigation). Among other things, the Anza Litigation involved civil RICO claims

predicated upon alleged acts of wire fraud and mail fraud.

69. Among other things, a central issue in the Anza Litigation concernedwhether the plaintiff had standing to pursue civil RICO claims based on an alleged failure

to properly plead actual damages and causation. Initially, the United States District Court

for the Southern District of New York determined that the plaintiff had failed toDeleted: FIRST

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sufficiently plead causation and damages, and the court therefore dismissed the RICO

claims pursuant to Fed. R. Civ. P. 12(b)(6).

70. BORODKIN appealed the dismissal to the United States Court of Appealsfor the Second Circuit. In the appeal BORODKIN argued that the plaintiffs claims were,

in fact, sufficiently pleaded, even though the plaintiff itself admitted that it had not relied

on any of the allegedly false statements made by the defendant in the course of the mail

and wire fraud scheme.

71. The Second Circuit agreed with BORODKINs argument and reversed thedistrict courts dismissal of the RICO claims inIdeal Steel Supply Corp v. Anza, 373 F.3d

251 (2nd

Cir. 2004).

72. The United States Supreme Court subsequently granted certiorari andreversed the Second Circuit in part, finding that the plaintiff had failed to allege sufficient

facts to show direct and proximate causation as needed to support a RICO claim under 18

U.S.C. 1962(c). See Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 126 S.Ct. 1991,

164 L.Ed.2d 720 (2006).

73. Upon information and belief, although BORODKIN was not involved inbriefing or arguing Anza before the United States Supreme Court, she reviewed the

Supreme Courts decision when it was issued in 2006.

74. Based on the Supreme Courts decision in Anza and substantial similarauthority, BORODKIN knew that civil RICO claims required a plaintiff to allege facts

sufficient to show that they suffered and actual loss to their business or property, and that

such loss was actually and proximately caused by the defendants alleged conduct

committed in violation of 18 U.S.C. 1962(c).

75. Based solely on the testimony of MOBREZ and LLANERAS, as of at leastMay 20, 2010 when their corrected declarations were filed, BOROKIN knew that AEI,

MOBEREZ and LLANERAS did not have probable cause to pursue any civil RICO

claims against XCENTRIC and Mr. Magedson because:

a. Neither XCENTRIC nor Mr. Magedson had engaged in extortion,Deleted: FIRST


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attempted extortion, or wire fraud;

b. AEI, MOBEREZ and LLANERAS suffered no actual loss to theirbusiness or property; and

c. To the extent that AEI, MOBEREZ and LLANERAS alleged that theysuffered any actual loss based on, for instance, paying an SEO company

to unsuccessfully suppress the pages on Ripoff Report, such losses were

not actually or proximately caused by the alleged predicate acts of

extortion, attempted extortion, or wire fraud as set forth in the

Complaint.

76. As a matter of law, claims pursuant to Cal. Bus. & Prof. Code 17200require evidence showing that the plaintiff (1) suffered an injury in fact and (2) lost

money or property as a result of the unfair competition.

77. During his deposition on May 7, 2010, MOBREZ was asked to explain:What kind of business is AEI? to which he responded Publication, news about

economics and financial. MOBREZ was also asked whether AEI had ever sold any

goods or services. MOBREZ answered no to both questions. MOBREZ further

testified that during nine years in operation, AEIs total revenues were $0.

78. During his deposition on May 7, 2010, MOBREZ was asked to explain,How did AEI make money or try to make money? In response, MOBREZ testified that

AEI was in the [R&D] stage, and practically they [sic] crossed the finish line. We were

about to put out seminars, conferences, perhaps selling a membership to some of the

programs. MOBREZ further explained that the types of seminars at issue were in

economics, finance.

79. When asked whether he had any experience operating a seminar business,MOBREZ stated that he had no actual experience running a seminar business but that he

had been to many seminars in the past.

80. During his deposition on May 7, 2010, MOBREZ testified that in fact, AEIhad never actually attempted to conduct any seminars of any kind, either before the

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events which gave rise to the Asia Litigation or after.

81. When asked to explain how AEI planned to prove that it would havesucceeded in the seminar business without ever having attempted to hold a seminar,

MOBREZ responded as follow:

Seminar business, its a model that has been very successful throughout the

United States and the world. Challenging that particular how the peoplewill go there and why they would go there, I cant speak of that. All I cantell you, the same thing as University of Phoenix. Opens it up the door,classrooms comes in, students will come and pay for the class. But youcant say if we would not have built the building, how will you knowsomebody will go to the building. I can't speak to the speculation of that.

82. BLACKERT, BORODKIN and LLANERAS were each personally presentin the room when the above testimony was given by MOBREZ.

83. Based on MOBREZs statements to the effect that AEI had neverconducted any business of any kind and that it had never even attempted to do so either

before the events which gave rise to the Asia Litigation or after, no reasonable attorney

would believe that AEI had standing to assert federal civil RICO claims which require

proof that the plaintiff suffered actual loss to his business or property. Further, based

solely on MOBREZs testimony, no reasonable attorney would believe that AEI had

standing to assert claims under to Cal. Bus. & Prof. Code 17200 which require

evidence showing that the plaintiff (1) suffered an injury in fact and (2) lost money or

property as a result of the unfair competition.

84. In addition to their RICO and unfair business practice claims, AEI,MOBREZ and LLANERAS also asserted additional business tort claims including:

a. Intentional Interference With Prospective Economic Advantage;b. Negligent Interference With Prospective Economic Advantage; andc. Inducing Breach of Contract.

85. Each of these claims were predicated in substantial part upon the theorythat XCENTRIC and Mr. Magedson unlawfully interfered with AEIs valid contractual

relationships with current and prospective employees [of AEI] by causing existing AEIDeleted: FIRST



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employees to quit and/or by causing prospective job seekers to avoid seeking

employment with AEI.

86. Based solely on the testimony of MOBREZ given at his May 7, 2010deposition, BLACKERT and BORODKIN knew that no factual or legal basis existed as

to any of AEIs business tort claims. Specifically, MOBREZ testified that he could not

recall the names or circumstances of any existing AEI employees who terminated their

employment as a result of the events which gave rise to the Asia Litigation. In addition,

MOBREZ offered no testimony of any kind that would establish that either XCENTRIC

or Mr. Magedson were involved in any manner whatsoever in preventing AEI from hiring

future employees. In addition, MOBREZ offered no testimony whatsoever showing that

either XCENTRIC or Mr. Magedson knew of AEIs existing relationships with its

employees or that they intentionally and wrongfully interfered in those relationships.

87. Pursuant to Local Rule L.R. 73 of the United States District Court for theCentral District of California, no party may make any motion without first discussing the

matter thoroughly with opposing counsel. Prior to seeking summary judgment based on

AEIs lack of RICO standing, lack of RICO damages, lack of proof of actual loss, and

lack of evidence of causation, XCENTRICs counsel met and conferred extensively with

BLACKERT and BORODKIN about those issues. During those conversations,

BLACKERT and BORODKIN were both informed of these deficiencies and that

MOBREZs own uncontroverted deposition testimony proved that AEI had not suffered

any injury in fact and that AEI had not been damaged by any of the events which gave

rise to the Asia Litigation.

88. At no time during the meet and confer process did either BLACKERT orBORODKIN offer any factual or legal basis to contest XCENTRICS arguments.

Because the matter could not be resolved without court intervention, on May 24, 2010,

XCENTRIC and Mr. Magedson filed a Motion for Summary Judgment, a copy of which

is attached hereto as Exhibit H.

89. Despite knowing that MOBREZ and LLANERAS had lied about theDeleted: FIRST

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factual basis of their extortion claims, and despite knowing that AEI had not suffered any

injury in fact and that AEI had not been damaged by any of the events which gave rise to

the Asia Litigation, and despite knowing that no evidence existed to support an allegation

that either XCENTRIC or Mr. Magedson had engaged in extortion, attempted extortion,

or wire fraud as to AEI, MOBREZ, and/or LLANERAS, Defendants, and each of them,

actively and aggressively opposed XCENTRICs Motion for Summary Judgment despite

knowing that each and every claim in the Asia Litigation was factually groundless and

that the action was commenced wrongfully, maliciously and for the improper purpose of

harassment and seeking relief to which Defendants were not entitled as a matter of law.

90. In an effort to prolong the action and compound the harm caused, one daybefore XCENTRICs Motion for Summary Judgment was set to be heard, on July 9, 2010

Defendant BORODKIN filed a pleading entitled, PLAINTIFFS EX PARTE MOTION

(1) UNDER RULE 56(f) TO DENY OR CONTINUE DEFENDANTS MOTION FOR

SUMMARY JUDGMENT TO CONDUCT FURTHER DISCOVERY AND (2)

COMPELLING DEFENDANT ED MAGEDSON TO APPEAR FOR DEPOSITION WITH

DOCUMENTS AND (3) FOR SANCTIONS UNDER LOCAL CIVIL RULES 37-4 AND

83-7.

91. In her July 9 pleading, Defendant BORODKIN vigorously argued againstthe disposition of any of the claims against XCENTRIC and Magedson, claiming,

Defendants [XCENTRIC and Magedson] will do anything to avoid the August 3, 2010

trial date. To support that position, Defendant BORODKIN accused XCENTRIC,

Magedson, and their counsel of a variety of improper conduct including, but not limited

to:

With escalating frequency, disobey and misrepresent this Courts Ordersand Rules, and dictating procedural rules of their own making

Harass Defendants [sic] counsel with veiled threats of administrativeproceedings and explicit threats of Rule 11 sanctions without basis.

92. At the time she filed the July 9 pleading, Defendant BORODKIN knew that Formatted: Bullets and Num

Deleted: due to D efendant MOdeposition testimony in which he

revealed that during nine years ofexistence, AEIs total revenues w

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her allegations of improper conduct against XCENTRIC, Magedson, and their counsel

were completely false.

93. XCENTRICs Motion for Summary Judgment was argued before thedistrict court on July 12, 2010. A true and correct copy of the transcript of the hearing is

attached hereto as Exhibit I. BORODKIN appeared at the hearing and argued on behalf

of AEI, MOBREZ and LLANERAS.

94. At this hearing, the district judge asked BORODKIN to explain the factualbasis for the damages aspect of the RICO/wire fraud portion of her case which was

premised on the allegation that XCENTRIC made various false statements on its site

including a statement that XCENTRIC would never agree remove reports upon request.

On that point, the following colloquy occurred:

[The Court]: The question again is if [Xcentric] had, in your view, said the truth

that these defamatory statements will be taken down as opposed to

never been taken down, how would that have defrauded your client?

[Ms. Borodkin]: Im sorry --

[The Court]: For arguments sake, Im acknowledging or accepting for the

moment that the statement wasnt true. In other words, Im

agreeing with you, just for arguments sake. How would that lead to

a wire fraud against your client? What would your client have done

differently?

[Ms. Borodkin]: Your Honor, perhaps Id have to ask my client.

[The Court]: See, thats the problem, maam. This is, in my view, pretty -- Im

looking for a word that is not pejorative that still makes the point --

pretty unacceptable lawyering because under Rule 11 youve now

admitted to a Rule 11 violation. You filed a wire fraud allegation as

a predicate act for your RICO. As you stand at the lectern, you

cant even, in a best-world sense, articulate a wire fraud. You now

say you have to speak to your client. The rules clearly say that youDeleted: FIRST

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have to have a good-faith basis for alleging something in a

complaint, and how could you have had a good-faith basis without

speaking to your client and now being totally unable to articulate a

basis?

[Ms. Borodkin]: Your Honor, with all do [sic] respect, I was not counsel of record

when the complaint was filed.

95. Despite stating truthfully that she was not counsel of record when theoriginal Complaint was filed, on July 12, 2010, BORODKIN knew that the RICO/wire

fraud claim was groundless based on the testimony of MOBREZ given during his

deposition on May 7, 2010. Specifically, BORODKIN knew the claim was groundless

because MOBREZ testified in his deposition that AEI had never attempted to conduct

any business of any kind either before or after the events which gave rise to the Asia

Litigation. Based on her clients own testimony, BORODKIN knew that AEI was not

damaged by any alleged false statements made by XCENTRIC or Mr. Magedson.

96. This was, in fact, the true reason why BORODKIN was unable to answerthe district courts question regarding the wire fraud claimnot because she lacked

familiarity with the facts of the case, but rather because she knew, with complete

certainty based on her clients own testimony, that no wire fraud had occurred.

97. In addition, on July 12, 2010 BORODKIN knew that the RICO/wire fraudclaim was groundless because she knew that XCENTRIC and Mr. Magedson had not

made any materially false statements of fact to AEI, MOBREZ or LLANERAS, and she

knew that at no time had AEI, MOBREZ or LLANERAS relied on any such statements.

98. On July 19, 2010, the District Court in the Asia Litigation issued a 53-pageorder granting partial summary judgment in favor of XCENTRIC and Magedson as to the

RICO/extortion claims and denying all relief requested in Defendant BORODKINs July

9 pleading. The court further dismissed the RICO/wire fraud claim pursuant to Fed. R.

Civ. P. 9(b) but granted leave to amend.

99. Despite knowing that the case was entirely groundless and frivolous, onDeleted: FIRST



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July 27, 2010, Defendants, and each of them, prepared and filed an 84-page First

Amended Complaint (FAC) in the Asia Litigation supported by more than 250 pages of

exhibits. A true and correct copy of the FAC (excluding exhibits) is attached hereto as

Exhibit J.

100. Shortly after the hearing on XCENTRICs Motion for Summary Judgmentbut before the FAC was filed, the parties were ordered to participate in a settlement

conference. At the time, based on oral rulings made from the bench by the district court

on July 12, 2010, the parties were aware that the court intended to grant Xcentrics

summary judgment motion as to the RICO/extortion claim and that the RICO/wire fraud

claim had been dismissed pursuant to Fed. R. Civ. P. 9(b) with leave to amend.

101. In light of the unsettled status of the claims against it, XCENTRIC askedfor clarification from AEI, MOBREZ and LLANERAS as to what claims, if any, they

intended to continue pursuing. As a result, the magistrate judge assigned to the case

ordered AEI, MOBREZ and LLANERAS to provide an email outlining their RICO/wire

fraud claim in laymens terms. On July 15, 2010, BORODKIN sent an email

containing this information as ordered. A true and correct copy of BORODKINs email

is attached hereto as Exhibit K.

102. In her email, BORODKIN explained that her RICO/wire fraud theory waspredicated on a variety of allegedly false statements made by XCENTRIC, Mr.

Magedson, and XCENTRICs general counsel, including the following:

a. There is a scheme to defraud, through use of the wires in interstatecommerce, through [XCENTRIC and Mr. Magedsons] false statements

on websites and emails that we never take reports down or reports

never come down or reports always stay up.;

b. There is a scheme to defraud, through the wires, though [XCENTRICand Mr. Magedsons] false statement You can always file a rebuttal,

or Anyone can file a free rebuttal.;

c. There is a scheme to defraud, through the wires, through [XCENTRICDeleted: FIRST




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and Mr. Magedsons] false statements on the Internet and in emails that

the best thing is to file a rebuttal, best to file a rebuttal, filing a

rebuttal will help or recommendations to file a rebuttal as a step in

how to repair your online reputation.;

d. There is a scheme to defraud, through the wires, on the Want to sueRipoff Report? page of Defendants website through which Defendants

falsely represent to the public that Ripoff Report has never, ever (not

now, and not in the past) done anything to cause Google to rank our

website higher in search results than other sites.;

e. There is a scheme to defraud in the Want to Sue RoR? sectionthrough which Defendants falsely represent themselves as authorities in

Internet and technology law with special knowledge and giving advice

on which the public is likely to rely in taking or forbearing from legal

action that is contray [sic] to their interest and serves Ror's business

interests.;

f. There is a scheme to defraud, over the wires, through false statementsto the effect that unlike Better Business Bureau, Ror does not filter or

suppress reports.

103. Each of the above bases, and many others, were subsequently incorporatedinto the FAC filed in the Asia Litigation.

104. At the time the FAC was filed, BORODKIN knew that each and everyalleged factual basis for the RICO/wire fraud claim was either factually or legally

groundless. Specifically, at the time the FAC was filed, BORODKIN knew based on

statements from MOBREZ during his May 7, 2010 deposition that AEI had not suffered

any actual loss to its business or property as the result of the alleged wire fraud.

105. At the time the FAC was filed, BORODKIN knew that no evidence existed,and had no reason to believe that any evidence existed, showing that XCENTRIC or Mr.

Magedson had made materially false statements to the effect that we never take reportsDeleted: FIRST


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down or that AEI, MOBREZ or LLANERAS had actually relied upon such statements,

or that AEI, MOBREZ or LLANERAS had any legal right to rely on such statements, or

that AEI, MOBREZ or LLANERAS had suffered any actual loss to their business or

property as a result of such statements.

106. At the time the FAC was filed, BORODKIN knew that no evidence existed,and had no reason to believe that any evidence existed, showing that XCENTRIC or Mr.

Magedson had made materially false statements to the effect that You can always file a

rebuttal, or Anyone can file a free rebuttal. At the time the FAC was filed,

BORODKIN knew these statements were not false and that MOBREZ had, in fact,

successfully post several rebuttals on XCENTRICs website for free. BORODKIN was

aware of this because she was personally present during the portion of MOBREZs

deposition on May 7, 2010 at which the actual reports (including MOBREZs rebuttals)

at issue in the case were discussed and presented as exhibits 15 to the deposition.

107. At the time the FAC was filed, BORODKIN knew that no evidence existed,and had no reason to believe that any evidence existed, showing that AEI, MOBREZ or

LLANERAS were damaged in any way by XCENTRIC and Mr. Magedsons statements

to the effect that You can always file a rebuttal, or Anyone can file a free rebuttal.

108. At the time the FAC was filed, BORODKIN knew that that XCENTRICand Mr. Magedsons statements to the effect that the best thing is to file a rebuttal,

best to file a rebuttal, filing a rebuttal will help or recommendations to file a rebuttal

as a step in how to repair your online reputation were not false and that they were not

actionable as fraud because they were merely expressions of opinion, not assertions of

material fact upon which AEI, MOBREZ and/or LLANERAS had a lawful right to rely.

109. At the time the FAC was filed, BORODKIN knew that no evidence existed,and had no reason to believe that any evidence existed, showing that the Want to sue

Ripoff Report? contained any false statements of material fact. BORODKIN only

included a reference to this page as support for the RICO/wire fraud allegations after

learning that the page was written, in substantial part, by XCENTRICs general counsel.Deleted: FIRST


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110. At the time the FAC was filed, BORODKIN knew that the statementscontained on the Want to sue Ripoff Report? page, to the extent they discussed any

points of law, were entirely truthful and accurate and that even if they were not, a party

has no right to rely upon an adversarys legal analysis; It is well established that

misrepresentations of the law are not actionable as fraud, including under the mail and

wire fraud statutes, because statements of the law are considered merely opinions and

may not be relied upon absent special circumstances not present here. Sosa v. DIRECTV,

Inc., 437 F.3d 923, 940 (9th

Cir. 2006).

111. At the time the FAC was filed, BORODKIN knew that no specialcircumstances existed that would have provided AEI, MOBREZ and/or LLANERAS

with the legal right to rely on any of the legal analysis contained on the Want to sue

Ripoff Report? page.

112. At the time the FAC was filed, BORODKIN believed that one particularstatement contained on the Want to sue Ripoff Report? page was false to the effect that

it stated: Ripoff Report has never, ever (not now, and not in the past) done anything to

cause Google to rank our website higher in search results than other sites.

113. At the time, BORODKIN believed this statement was false because she hadheard or read a widely-circulated story about a posting on the Ripoff Report website from

May 31, 2005 (Report #144627) which initially contained statements claiming that

Google co-founder Sergey Brin had sexually harassed two 16-year old girls.

BORODKIN believed, based on additional information she viewed online that Mr.

Magedson had subsequently edited the posting by changing the name Sergey Brin to

Soney Bonoi.

114. In May 2005, a third party contacted Mr. Magedson by phone anddemanded that he remove a Ripoff Report posting. After Mr. Magedson refused to

comply with this request, the third party stated that he intended to retaliate by posting

false and inflammatory information about Google co-founder Sergey Brin so Google

might, in turn, retaliate by removing Ripoff Report from its search index.Deleted: FIRST


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115. Based on the threat received from the third party, Mr. Magedsonsubsequently located Report #144627 less than an hour after it was posted. Mr.

Magedson concluded that the page was probably filed as part of the retaliation threat

expressed by the third party. For that reason, Mr. Magedson made an editorial decision

to change the name Sergey Brin to the fictitious name Soney Bonoi.

116. At no time either before the change or after did anyone from Google evercontact XCENTRIC or Mr. Magedson to request that this change be made. To the

knowledge of XCENTRIC and Mr. Magedson, Mr. Brin was never aware of this report

during the short time it contained his name, and to the knowledge of XCENTRIC and Mr.

Magedson, Mr. Brin has never taken any action as the result of either the report or the

editorial change made by Mr. Magedson.

117. At the time the FAC was filed, BORODKIN knew that no evidence existed,and had no reason to believe that any evidence existed, showing that Sergey Brin or

anyone else at Google was personally aware of Report #144627 or of the editorial change

made to the report by Mr. Magedson.

118. At the time the FAC was filed, BORODKIN had no basis of any kind ofbelieve that the editorial change made by Mr. Magedson to Report #144627 had any

impact upon Ripoff Reports ranking within Googles search results. Upon information

and belief, prior to incorporating this allegation into the FAC as part of the basis for AEI,

MOBREZ, and LLANERASs claims, BORODKIN performed no investigation of any

kind to determine whether Sergey Brin or anyone else at Google was aware of Report

#144627 or of the editorial change made to the report by Mr. Magedson.

119. Prior to incorporating this allegation into the FAC as part of the basis forAEI, MOBREZ, and LLANERASs claims, on June 8, 2010 BORODKIN deposed Mr.

Magedson and asked him to explain the basis for the change to Report #144627.

120. Based on the explanation given by Mr. Magedson during his deposition, noreasonable attorney would believe that AEI, MOBREZ or LLANERAS had any factual

or legal basis to assert any claims, under a theory of RICO/wire fraud or otherwise, basedDeleted: FIRST


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on the fact that the name Sergey Brin was changed to Soney Bonoi in Report

#144627

121. Prior to incorporating this allegation into the FAC as part of the basis forAEI, MOBREZ, and LLANERASs claims, BORODKIN knew that no evidence existed,

and had no reason to believe that any evidence existed, showing that Google was either

aware of or had rewarded XCENTRIC or Mr. Magedson for any of the alleged acts of

favoritism shown towards Google as alleged in the FAC.

122. At the time the FAC was filed, BORODKIN knew that no evidence existed,and had no reason to believe that any evidence existed, showing that AEI, MOBREZ, or

LLANERAS had relied on the allegedly false statement made by XCENTRIC and Mr.

Magedson to the effect that: unlike [the] Better Business Bureau, Ror does not filter or

suppress reports or that AEI, MOBREZ, or LLANERAS had suffered any actual harm

to their business or property as a result of their or anyone elses reliance on this

statement.

123. At the time the FAC was filed, BORODKIN knew that no evidence existed,and had no reason to believe that any evidence existed, showing that AEI, MOBREZ, or

LLANERAS had actually relied on the allegedly false statement made by XCENTRIC

and Mr. Magedson to the effect that: CAP investigation results that the business is safe,

reliable or otherwise can be trusted or that AEI, MOBREZ, or LLANERAS had suffered

any actual harm to their business or property as a result of their or anyone elses reliance

on this statement.

124. After the FAC was filed on July 27, 2010, XCENTRIC was required to filea responsive pleading within 10 days, which it did. On August 6, 2010, XCENTRIC and

Mr. Magedson filed a Motion to Dismiss the FAC, a copy of which is attached hereto as

Exhibit L.

125. After summary judgment was granted in favor of Xcentric as to theRICO/extortion claim in July 2010, Defendants did not merely abandon that claim. On

the contrary, on August 16, 2010, Defendants BLACKERT and BORODKIN filed a


Deleted: Shortly thereafter,

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Motion for Reconsideration requesting that the District Court reconsider its summary

judgment ruling as to the RICO/extortion claim. In support of this request, Defendants

BORODKIN and MOBREZ each submitted lengthy declarations which purported to

describe unlawful threats made by Magedson and his counsel during a settlement

conference which took place on July 20, 2010.

126. After Xcentric filed its Motion to Dismiss the FAC, on August 17, 2010,BLACKERT filed a Motion For Leave To Amend and a Proposed Second Amended

Complaint (SAC), a true and correct copy of which (excluding exhibits) is attached

hereto as Exhibit M. Upon information and belief, BORODKIN actively participated in

the preparation of the draft SAC.

127. The purported purpose of the draft SAC was to address certain deficienciesin the FAC which had caused XCENTRIC to serve BORODKIN and BLACKERT with a

draft Motion for Rule 11 Sanctions on August 3, 2010. However, despite omitting

certain labels such as wire fraud, the claims in the draft SAC continued to rely upon

virtually all of the same groundless factual bases as explained above, including, for

example, the suggestion that XCENTRIC had defrauded the public at large by showing

preferential treatment to Google co-founder Sergey Brin. These same factual allegations

were recast as claims for Deceit in violation of Cal. Civ. Code 1709 and 1710 and

Fraud in violation of Cal. Civ. Code 1572.

128. At the time the proposed SAC and leave to amend was filed, BORODKINknew that no probable cause existed for the Deceit and Fraud claims based on the

testimony of MOBREZ and based on her knowledge that no evidence existed to support

mandatory elements of such claims including falsity, reliance, causation, and damages.

129. On September 20, 2010, a hearing was held in Los Angeles in the AsiaLitigation. Although the docket reflected that the matter was set for oral argument on

XCENTRICs Motion to Dismiss the FAC, and other associated motions, the district

court did not consider the Motion to Dismiss. Instead, the district judge ordered that the

RICO claims were stricken and stated that the operative pleading would be theDeleted: FIRST



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existing FAC. The court further instructed Xcentric to file a Motion for Summary

Judgment within seven days. A true and correct copy of the courts minutes from the

September 20, 2010 hearing is attached hereto as Exhibit N.

130. On September 27, 2010, as ordered, XCENTRIC filed a Motion forSummary Judgment as to the First Amended Complaint in the Asia litigation. At the time

the motion was filed, the matter was set for hearing on November 1, 2010. At that time,

all discovery in the Asia Litigation was automatically stayed due to the fact that in

addition to the Motion for Summary Judgment, Xcentric also filed a Special Motion to

Strike pursuant to Cal. Code Civ. P. 425.16.

131. In or around mid-October 2010, XCENTRIC learned that BORODKIN hadbeen in touch with JAMES ROGERS (ROGERS), an individual who was previously

employed as a personal assistant to Magedson. ROGERS informed Mr. Magedson that

BORODKIN had asked him (ROGERS) to steal confidential documents from

XCENTRIC and to bring them to BORODKIN in California for possible use in the Asia

Litigation.

132. Upon learning this, although it believed that ROGERS had no relevantinformation which might affect the Asia Litigation, XCENTRIC became concerned that

BORODKIN might attempt to use her conversations with ROGERS as a basis to file a

last-minute motion for relief under Fed. R. Civ. P. 56(f) as she previously did in response

to XCENTRICs first Motion for Summary Judgment. XCENTRIC was concerned that

further delays in the case would result in additional litigation expenses.

133. To prevent this, on Friday, October 22, 2010, XCENTRICs counsel in theAsia Litigation spoke with BORODKIN by phone and offered to allow her to take the

deposition of ROGERS at any time and in any location of her choosing. At the time this

offer was made, BORODKIN had no right to pursue discovery in the California case

because of the automatic stay imposed by Cal. Code Civ. P. 425.16(g). BORODKIN

did not accept the offer to depose ROGERS, but stated that she would discuss it with

MOBREZ and LLANERAS and respond at a later time.Deleted: FIRST


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134. On Friday, October 22, 2010, XCENTRICs counsel sent an email toBORODKIN documenting their phone conversation from earlier that day. A true and

correct copy of the email is attached hereto as Exhibit O.

135. In this email, XCENTRIC offered to agree that BORODKIN may deposeROGERS at any time and in any location of her choosing. BORODKIN never accepted

or responded to XCENTRICs verbal or written offers regarding the deposition of

ROGERS.

136. Less than two hours before the November 1, 2010 summary judgmenthearing and knowing that XCENTRICs counsel would be traveling from Arizona to Los

Angeles for the hearing, Defendant BORODKIN filed a secondmotion requesting relief

under Rule 56(f). Defendant BORODKIN supported her second Rule 56(f) motion with

a declaration in which she described, at length, her recent communications with

ROGERS. Defendant BORODKIN further declared that a Rule 56(f) continuance was

needed due to her inability to obtain ROGERS deposition prior to the November 1, 2010

summary judgment hearing.

137. In her declaration, Defendant BORODKIN made knowingly false andmisleading statements to the court regarding the circumstances of ROGERS deposition.

Specifically, Defendant BORODKIN declared:

On or about October 22, 2010, I received a telephone call from Defendantsattorney David Gingras. We again spoke about the possibility of avoidingthis motion but his proposal that I fly to Phoenix the next day, Saturday,October 23, 2010 to do a joint deposition of Mr. Rogers, did not seem

feasible. Plaintiffs had already purchased an airline ticket for Mr. Rogers forOctober 23, 2010.

138. Defendant BORODKINs declaration was false and intentionallymisleading insofar as she implied that the only option she was given for taking the

deposition of ROGERS to fly to Phoenix the next day . In truth, as reflected in

Exhibit O, XCENTRIC offered to allow you to take the deposition of James Rogers

immediately at any time prior to Nov. 1st and at any place . Defendant BORODKIN


Formatted: Indent: Left: 0"line: 0.5", Numbered + Level

Numbering Style: 1, 2, 3, +at: 1 + Alignment: Left + Alig

0.5" + Tab after: 1.5" + Inde

1.5", Tabs: 1", List tab + Not1.5"



Deleted: an individual, JAMESROGERS (ROGERS) who was

previously employed as a person

assistant to Magedson

Deleted: on October 22, 2010Defendant BORODKIN receivedemail from XCENTRICs counse

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intentionally sought to mislead the Court at to this issue in the hopes that doing so would

permit her to further harm XCENTRIC and Magedson by prolonging the Asia Litigation.

139. BORODKIN did not file the second Rule 56(f) motion for any legitimatepurpose. Instead, the sole reason BORODKIN filed the motion was to delay the

disposition of the case even though she knew the entire action lacked probable cause and

was being pursued maliciously.

140. On November 1, 2010 after XCENTRICs counsel had arrived in LosAngeles from Arizona, the District Court vacated the hearing on XCENTRICs second

Motion for Summary Judgment. The hearing was vacated solely due to the last minute

filing of Defendant BORODKINs second Rule 56(f) motion.

141. On May 4, 2011, the District Court issued an order denying DefendantBORODKINs second Rule 56(f) motion in its entirety and granting summary judgment

in favor of XCENTRIC and Magedson as to all claims in the Asia Litigation. In a

footnote to its order, on the issue of Defendant BORODKINs second Rule 56(f) motion,

the District Court noted:

The Court notes that this eleventh hour filing was consistent withPlaintiffs pattern in this case. On Friday, July 9, 2010, one day before tothe previous summary judgment hearing in this case, Plaintiffs also filed anEx Parte Application to deny or continue Defendants' motion for summaryjudgment so as to allow Plaintiffs to conduct further discovery underFederal Rule of Civil Procedure 56(f). [Docket no. 87]. That ex parteapplication was denied in the Courts July [Docket no. 94]. Plaintiffs havedemonstrated a pattern of filing papers late in this case and generallydisregarding the scheduling orders of the Court.\

142. By virtue of the May 4, 2011 summary judgment order, the Asia Litigationwas resolved in favor of XCENTRIC and Magedson and against AEI, MOBREZ and

LLANERAS with respect to all claims and all relief requested.

143. On June 15, 2011, a final judgment was entered in the Asia Litigation, acopy of which is attached hereto as Exhibit P. The final judgment resolved the Asia

Litigation in favor of XCENTRIC and Magedson and against AEI, MOBREZ and


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LLANERAS with respect to all claims and all relief requested.

FIRST CAUSE OF ACTION

WRONGFUL INITIATION OF CIVIL PROCEEDINGS

(Against AEI, MOBREZ, LLANERAS and BLACKERT)

144. Xcentric incorporates the above allegations as if fully set forth herein.145. At the time the Asia Litigation was commenced, Defendants AEI,

MOBREZ, LLANERAS and BLACKERT each knew the action was factually groundless

as to each and every claim.

146. At the time the Asia Litigation was commenced, Defendants AEI,MOBREZ, LLANERAS and BLACKERT each knew the action was factually groundless

in particular as to the allegations of RICO/extortion and RICO/wire fraud.

147. Defendants AEI, MOBREZ, LLANERAS and BLACKERT commencedthe Asia Litigation without probable cause.

148. Defendants AEI, MOBREZ, LLANERAS and BLACKERT commencedthe Asia Litigation solely for improper purposes. Specifically, the action was

commenced solely for non-legitimate reasons including, but not limited to, the following:

a. To pressure Xcentric to remove material from the Ripoff Report website,without any legal basis for doing so, rather than incurring significant legal fees

defending a frivolous case;

b. To discourage XCENTRIC from allowing consumers to post complaints aboutMOBREZ, LLANERAS, AEI on the Ripoff Report website in the future;

c. To create the false impression that MOBREZ, LLANERAS, AEI werevictims of extortion when, in fact, they were not;

d. To provide unwarranted support to critics of the Ripoff Report website;e. To stifle the First Amendment rights of XCENTRIC and users of the Ripoff

Report website;

f. To cause XCENTRIC to divert its resources to defending a frivolous caserather than using those resources to improve the Ripoff Report site;

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g. To intimidate XCENTRIC into limiting the publics ability to use the RipoffReport website to publish truthful information and access truthful information

published by others;

h. To wrongfully investigate Magedsons personal life and to obtain and publiclyrelease personal, private, confidential and/or embarrassing information solely

for the purpose of embarrassment and harassment.

149. Defendants wrongful conduct was the actual and proximate cause ofinjury, damage, loss, or harm to XCENTRIC in an amount in excess of $75,000.00, the

exact amount of which shall be proven at trial.

150. The actions of Defendants AEI, MOBREZ, LLANERAS and BLACKERTwere willful, malicious, and the product of an evil hand guided by an evil mind.

Defendants, and each of them, specifically intended to harm XCENTRIC to an extent

sufficient to entitle it to recover punitive damages in an amount to be proven at trial.

SECOND CAUSE OF ACTION

WRONGFUL CONTINUATION OF CIVIL PROCEEDINGS

(Against BORODKIN, AEI, MOBREZ, LLANERAS and BLACKERT)

151. Xcentric incorporates the above allegations as if fully set forth herein.152. At the time the Asia Litigation was commenced, Defendants AEI,

MOBREZ, LLANERAS and BLACKERT each knew the action was factually groundless

as to each and every claim.

153. As of no later than May 7, 2010, Defendants BORODKIN andBLACKERT knew, with absolute certainty, that Defendants MOBREZ and LLANERAS

had committed perjury and that their claims of extortion were totally and completely

fabricated and false.

154. Following the deposition of Defendant MOBREZ on May 7, 2010,Defendant BLACKERT sent an email announcing his intent to withdraw from the Asia

Litigation. A true and correct copy of the email is attached hereto as Exhibit Q. In his

email, Defendant BLACKERT stated, among other things, You have to realize this is a



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Documents

166-1 - Proposed SAC