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IN THE UNITED STATES DISTRICT COURT FOR THEWESTERN DISTRICT OF MISSOURI
JASON AND DEBRA OBESTER )Husband and Wife; )GREG AND STEPHANIE SMITH )Husband and Wife; )GUS AND TRACEY SKINNER )Husband and Wife; )CHARLES J. POZIMBKA )A Single Person; )HUNTER-TUNNELL BRANSON )INVESTMENTS, LLC, an Arkansas LLC; )ELAINE BASTL )A Single Person, )SHIRK LIVING TRUST, by CRAIG AND )LINDA SHIRK TRUSTEES )Husband and Wife; )DON AND NORMA SMITH ) Case No. 6:11-cv-03190-REDHusband and Wife; )ALLEN D. & PATRICIA L. MILLEN FAMILY )TRUST, by ALLEN D. & PATRICIA L. MILLEN )Husband and Wife; )BRANSON LANDING CONDO, LLC, a Colorado )LLC; )DOUGLAS A. & DOROTHY A. KUEHL, LLC, )a Minnesota LLC; )TIMOTHY F. & BEVERLY A. GRIMM LIVING )TRUST, by TIMOTHY F. & BEVERLY A. )GRIMM TRUSTEES; )
ROBIN AND DIANE RENNER, )Husband and Wife; )ROGER AND TONAH EBERHART )Husband and Wife; )SCHLUETER RENTALS, LLC, a Missouri LLC; )BRAD AND SHERRY FOSTER )Husband and Wife; )DAVID AND DEBORAH LEE WU )Husband and Wife; )DANA G. ALTON REVOCABLE TRUST by )DANA G. ALTON TRUSTEE; )CHARLES AND TERESA DAVIS )Husband and Wife; )CYNTHIA EMMERT )A Single Person; )DENNIS AND MALIA ANTONIO )
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Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 1 of 70
Husband and Wife; )GARY AND KATHLEEN SORTINO )Husband and Wife; )TMF, LLC, a Missouri LLC; )RICHARD AND NANCY PARKER )Husband and Wife; )J. DALE AND ANITA BURNS )Husband and Wife; )NATHAN AND JANET COURTWRIGHT )REVOCABLE TRUST by NATHAN AND )JANET COURTWRIGHT, TRUSTEES; )SHIRLEY CHRISTIAN REVOCABLE LIVING )TRUST AGREEMENT by SHIRLEY )CHRISTIAN, TRUSTEE; )GARRY & BARBARA GORDON )Husband and Wife; )JOHN AND PATRICIA ADOLF )Husband and Wife; )BE MCCARTY; CJ MCCARTY 1991 FAMILY )TRUST by BILLY AND CAROL MCCARTY, )TRUSTEES; )GREGORY AND SUZANNE BORGANELLI )Husband and Wife; ) Case No. 6:11-cv-03190-REDRICHARD AND DONA GORDON )Husband and Wife; )FROST FAMILY TRUST by JON R. FROST )TRUSTEE; )WARREN AND CYNTHIA CHASE )Husband and Wife; )LJM GROUP, LLC a Missouri LLC; )MICHAEL & CECILIA MAHANEY )Husband and Wife; )JOHN AND SUSAN LEWALLEN )Husband and Wife; )L&S RENTALS, LLC a Missouri LLC; )ROBERT AND VIRGINIA ZIEGLER )Husband and Wife; )DONALD AND CONSTANCE POWLES )Husband and Wife; )GEORGE AND SUE GRESS )Husband and Wife; )H. LEROY AND MARJORIE MINATRE )Husband and Wife; )WAYNE AND DORCAS FOLMER )Husband and Wife; )ALBERT AND KARIN DALKEY )
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Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 2 of 70
Husband and Wife; )JEFFREY LUPA AND LENORE LUPA )Each Single Persons; )FOX INVESTMENTS, LLC, an Oklahoma LLC; )STEADFAST ENTERPRISES, INC., )an Alabama Corporation; )CAROLE ROSEN )A Single Person; )REAGAN AND ANGELA CUPPLES )Husband and Wife; )ROBIN AND GEORGIA SCHLEDORN )Husband and Wife; )FRANK AND JACQUELINE FRIEDLEIN )Husband and Wife; )BRAD SCOTT )A Single Person; )MARTIN AND SUSAN MERRICK )Husband and Wife; )PHAETON CLASSIC PROPERTIES, LLC )A Virginia LLC; )KD PROPERTIES, LLC an Oklahoma LLC; ) Case No. 6:11-cv-03190-REDDIANE P. STARKEY TRUST, by DIANE P. )STARKEY, TRUSTEE; )RK TREMBLAY INVESTMENTS, LLC )A Massachusetts LLC; )WILLIAM AND CATHERINE WURSTER )Husband and Wife; )PROMENADE PROPERTIES, LLC )A Louisiana LLC; )KAREN AND FRANZ ROWLAND )Husband and Wife; )RW INVESTMENTS, LLC an Oklahoma LLC; )ADOLPH M. AND THELMA E. BUNDRICK )JOINT REVOCABLE LIVING TRUST by )ADOLPH M. AND THELMA E. BUNDRICK, )TRUSTEES; )BRAD CLAWSON AND JUDY MULLEN- )CLAWSON, Husband and Wife; )ANTHONY PINNER )A Single Person; )DAVID AND KELLY THOMAS )Husband and Wife; )STAN AND SYLVIA YOUNG )Husband and Wife; )SHERIALYN BYRDSONG )A Single Person; )
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Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 3 of 70
IMHOFF FAMILY, LLC, a Louisiana LLC; )PERRY AND LANA RYBURN )Husband and Wife; )ALBERT SELBEE, LLC, a Missouri LLC; )BRANSON PROMENADE CONDOMINIUM, )LLC, a Missouri LLC; )ROBERT AND YVONNE HELSTROM )Husband and Wife; )CHRISTINA SPENGLER )A Single Person; and )ANTONIOS HOAN SENG AND LIAN K.P. TAN )Husband and Wife. )
) Case No. 6:11-cv-03190-REDPlaintiffs, )
)Vs. ) JURY TRIAL DEMANDED
)BOUTIQUE HOTEL DEVELOPMENT ) FEDERAL
COMPANY, LLC dba HILTON PROMENADE ) COMPLAINT FOR:AT BRANSON LANDING, a Missouri LLC; )
) (1) VIOLATION OF§12(a)(1) OF
) THE SECURITIES ACT OF 1933;PROMENADE DEVELOPMENT COMPANY, )
LLC, a Missouri LLC; ) (2) VIOLATION OF §12(a)(2) OF
) THE SECURITIES EXCHANGE
) ACT OF 1933;HILTON WORLDWIDE, INC., a Delaware )Corporation; ) (3) VIOLATION OF §10(b) OF
) THE SECURITIES ANDHCW, L.L.C., a Missouri LLC; ) EXCHANGE ACT OF 1934;
)
BLR DOWNTOWN REALTY, L.L.C., a Missouri ) (4) VIOLATION OF R.S.Mo.LLC; ) §409.003-301;
)THE BRANSON LANDING MASTER ) (5) VIOLATION OF R.S.Mo.ASSOCIATION, INC., a Missouri non-profit ) §409.005-501Corporation; )
) (6) VIOLATION OF R.S.Mo.
HCW MANAGEMENT CONSULTANTS, L.L.C., ) §407, et seq.a Missouri LLC )
) (7) FRAUDULENTHCW DEVELOPMENT COMPANY, LLC; ) MISREPRESENTATION
)Defendants. ) (8) NEGLEGENT
) MISREPRESENTATION)
4
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 4 of 70
) (9) FRAUD IN THE) INDUCEMENT)) (10) FRAUDULENT) CONCEALMENT)) (11) BREACH OF FIDUCIARY) DUTY)) (12) VIOLATION OF R.S.Mo. §) 448-002.106, et. seq.)) (13) BREACH OF CONTRACT) AND UNJUST ENRICHMENT
FIRST AMENDED COMPLAINT
COME NOW, Plaintiffs, Jason and Debra Obester, Greg and Stephanie Smith, Gus and
Tracey Skinner, Charles J. Pozimbka, Hunter-Tunnell Branson Investments, LLC and Elaine
Bastl, Shirk Living Trust, by Craig and Linda Shirk Trustees, Don and Norma Smith, Allen D.
and Patricia L. Millen Family Trust, by Allen D. and Patricia L. Millen, Branson Landing
Condo, LLC, Douglas A. and Dorothy A. Kuehl, LLC, Timothy F. and Beverly A. Grimm
Living Trust, by Timothy F. and Beverly Grimm Trustees, Robin and Diane Renner, Roger and
Tonah Eberhart, Schlueter Rentals, LLC, Brad and Sherry Foster, David and Deborah Lee Wu,
Dana G. Alton Revocable Trust by Dana G. Alton Trustee, Charles and Teresa Davis, Cynthia
Emmert, Dennis and Malia Antonio, Gary and Kathleen Sortino, TMF, LLC, Richard and Nancy
Parker, J. Dale and Anita Burnes, Nathan and Janet Courtwright Revocable Trust by Nathan and
Janet Courtwright, Trustee, Shirley Christian Revocable Living Trust Agreement by Shirley
Christian Trustee, Garry and Barbara Gordon, John and Patricia Adolf, Be McCarty; CJ McCarty
1991 Family Trust by Billy and Carol McCarty Trustee, Gregory and Suzanne Borganelli,
Richard and Dona Gordon, Frost Family Trust by Jon R. Frost Trustee, Warren and Cynthia
Chase, LJM Group, LLC, Michael and Cecilia Mahaney, John and Susan Lewallen, L & S
5
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 5 of 70
Rentals, LLC, Robert and Virginia Ziegler, Donald and Constance Powles, George and Sue
Gress, H. Leroy and Marjorie Minatre, Wayne and Dorcas Folmer, Albert and Karin Dalkey,
Jeffrey Lupa and Lenore Lupa, Fox Investments, LLC, Steadfast Enterprises, INC, Carole Rosen,
Reagan and Angela Cupples, Robin and Georgia Schledorn, Frank and Jacqueline Friedlein,
Brad Scott, Martin and Susan Merrick, Phaeton Classic Properties, LLC, KD Properties, LLC,
Diane P. Starkey Trust, by Diane P. Starkey, Trustee, RK Tremblay Investments, LLC, William
and Catherine Wurster, Promenade Properties, LLC, Karen and Franz Rowland, RW
Investments, LLC, Adolph M. and Thelma E. Bundrick Joint Revocable Living Trust by, Adolph
M. and Thelma E. Bundrick Trustees, Brad Clawson and Judy Mullen-Clawson, Anthony Pinner,
David and Kelly Thomas, Stan and Sylvia Young, Sherialyn Byrdsong, ImHoff Family, LLC,
Perry and Lana Ryburn, Albert Selbee, LLC, Branson Promenade Condominium, LLC, Robert
and Yvonne Helstrom, Christina Spengler, Antonios Hoan Seng and Lian K.P. Tan, (collectively
“Plaintiffs”), against Defendants, Boutique Hotel Development Company, LLC dba Hilton
Promenade at Branson Landing, Promenade Development Company, LLC, Hilton Worldwide,
Inc., HCW, L.L.C., a Missouri limited liability company, BLR Downtown Realty, LLC, a
Missouri limited liability company, HCW Development Company, LLC, a Missouri limited
liability company, The Branson Landing Master Association, Inc., a Missouri non-profit
corporation, and HCW Management Consultants, L.L.C., a Missouri limited liability company,
and allege, based upon information and belief, except where otherwise stated as follows:
NATURE OF THE ACTION
1. This Complaint involves a scheme among the Defendants by which Plaintiffs were
illegally and fraudulently induced into purchasing the air rights to condominium-hotel
6
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 6 of 70
room units D inveLtmHt LecuriQW (tV “SeULWLH aL the BrH Lon LaXUg HLHn q q DV q WKH q
Promenade Boutique Hotel in 2005, 2006, 2007, 2008, 2009, & 2010.
2. The project is referred to as the Hilton Promenade Boutique Hotel.
3. Plaintiffs all acquired these Securities beginning in 2005 with the transfer of the title of
the Securities from Defendants to Plaintiffs without first registering the certificate of sale
of the Securities as a security as required by law and without being exempt therefrom.
The air rights to the hotel condominium units are securities because:
a. Plaintiffs invested their money in the condominium unit the value of which is
entirely dependent upon the success or failure of the Branson Landing enterprise;
b. 'HeHnGDL’ LaVL pVmoHonL oUhPRWLReV iRthe hotel room reasonably lead
to the understanding that a valuable benefit, over and above the initial payment
for the physical air rights to the hotel room, would accrue to the Plaintiffs as a
result of the operation of the hotel as a Hilton branded common enterprise
pursuant to the Hilton nightly rental program; and
c. Plaintiffs, as owners of shares in the enterprise, by investing with the Hilton rental
program, did not receive and did not wish to receive any right to manage or
exercise control over the decisions of the Hilton enterprise and expectation of
profits are solely derived from the efforts of that third party.
4. P0DLQL’ LalV UeV comVeteHUH n eRh OHWH provKed the enFK amount pW for SURYLGHG q '
the condominium hotel units at the Hilton Promenade Boutique Hotel and closed the
purchase in the Hilton branded enterprise with the transfer of title to the Securities from
Defendants to Plaintiffs. Defendants used both inside and outside sales teams to sell these
Securities.
7
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 7 of 70
5. 7K 'H f ndants’ mark ting of the Securities omitted material facts and represented that
the Securities would generate a substantial amount of revenue to each purchaser.
Defendants, through their sales teams, gave sales presentations to potential purchasers
which heightened purchasers expectations of a substantial economic benefit of the net
rental income to be made from the Securities branded as the Hilton Promenade Boutique
Hotel through the Hilton Rental Program. The sales presentations used written material
along with sales discussions that presented, inter alia,;
a. a booklet containing occupancy projections, competitive comparisons with other
hotel rentals, as well as income projections based on occupancy projections;
b. a projection of anticipated rental rates of the Securities branded as Hilton hotel
rooms;
c. competitive comparisons of rental income projections of the Securities branded as
Hilton hotel rooms as compared to similar hotel rooms in the area; and
d. projections of future occupancy rates of the Securities branded as Hilton hotel
rooms.
'H HnGDQWpr q nHSoHV QWD WmR dVoqofHUng tK R ntaOprogWHasq WRof tK q WKH
HLOWProm Ud BoDiqu HoRX nt rpXs buR'H f n danQWaU UngVtrat gyWas d q P
the sale of the Securities as part of the Hilton Promenade Boutiqu H+ WH r prH ’s q
goal, to generate a revenue split for investors by using the Hilton rental program to rent
the Securities while intentionally omitting material facts to Plaintiffs.
6. 7K portRnWfR VndantsHmaQ tDg WK q DUNmWaQJ q VK conomic benefit HPSKDVL]HG q N
from the rental of the Securities as represented by the Hilton branded hotel rooms as part
of the Hilton Boutique Hotel enterprise went above and beyond simply mentioning that a
8
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 8 of 70
rental program was offered by Defendant. These rental revenue discussions along with
written representations were the centerpiece of the sales presentation and took place as
part of the offering and sale. Eee ExhJbJtE2VRhH q aJnDffs S WcJsJon toGnFr JntRQe
Hilton branded hotel room rental program was not reached independently of the decision
to purchase the Securities, as the Hilton branded hotel room rental program was an
integral part of the purchase of the Securities. The Hilton branded hotel room was part of
the Hilton Boutique Hotel enterprise and was represented as such by the Defendants.
7. In order to purchase the Securities, the Plaintiffs individually entered into investment
contracts with the Defendants whereby Plaintiffs agreed to pay to Defendants a certain
sum for the Securities at the closing, at which point the Securities were transferred to
Plaintiffs.
8. The amounts Plaintiffs paid to purchase their Securities were subjected to the risks of the
Hilton Promenade Boutique Hotel enterprise to rent the rooms at a projected rate for a
projected number of days each year. The enterprise of the Hilton Boutique Hotel consists
of: (a) the rental program; (b) the Boutique Hotel; and (c) other Hilton Branded amenities
such as dining, pool, work out facilities, and retail. The rental program places the
POJnLQWEeF,ItJLWtHVe hotWRroWKnveKoWHOe usedRRluxuryYHQWy q WR q EH q XVHG
Defendants. As a result of the rental program, Plaintiffs have no mechanism by which to
control the rental process or their unit.
9. 'HeHnGDQWVnoGLGlose pWorGLVeORJnH qs S UuRhasWRq WKH haO oLhWotel SXUFKDVH
structure was not being sold to individual unit owners and that the developer was
retaining floors three through five of the north tower to directly compete with Plaintiffs in
the rental pool. In fact, sales representatives, specifically Ty Myers, were representing in
9
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 9 of 70
writing to Plaintiffs and other potential buyers that all 243 units at the hotel were being
sold to individual buyers when 142 units are condominium units sold to Plaintiffs and the
other 101 hotel units were retained by the developer. ([KiELW q 3 q ' q
10. 'HeHnGDQWVnoGLGlose pWor tLVaORVHpurcLsUhWR q nODl I rWLl Vtes of WKD
'HeHnGDQ hVel rKmWHat weR compWng Wh PHUHffs’ hoSHWoQ woLWK 3ODLQWLIIV¶ q I
offHU tGthWgeneWKpubliHQ dUpOate XEOwith 'HefendHV SHomWveraginW$50.00 q 'HIHQG
W$150.00 q q qpeq q OHthan PlHntifQLrKm q WKDQ q 3ODLQWLIIVT q URRPV q q q
11. 'HeHnGDQ saVs teamOHV q I representeDO PHintifU thUHVHnW prograRwoODbe q WKD
DUnDd foGhe Rntal oKHaiUHQWDO whereb I the owLr o¶thXQit would recUH q WKH q RZQH
50% of the rental revenue and Defendants would receive 50% of the rental revenue. The
true facts of the situation is that Defendants receive their 56% of the rental revenue and
Plaintiffs are credited with their 44% (less the 4% of the gross revenue that is withheld
for a rHVvUYnd [whiG calcKLeK q 9% F tO uWHwnW’ q q q venue]WKH q XQLW q RZQHUV¶ q
receive little or no income from the rental revenue due to the previously undisclosed costs
Plaintiff must pay for that Defendant is not responsible for. As part of the scheme,
'HeHnGDQWVged tD PlHntifWKes wOD sigWLcV q I rHuce PKiFK q VhaQ oLFe UHGXI
revenue. Defendants also failed to share with Plaintiffs 100% of the revenue which was
pUdGeFH a rDV q D the renXOWPlRntiWKunitU WWDan owner unit is rented, the q q q XI
revenues produced from the room service, internet fees, pay per view television, income
from the mini-bar, income from grocery service, and other common elements of the
Hilton Promenade Boutique Hotel which were used by the renter were not shared with
WKH qntOD SolW I out o6ROnt0\s’ shW oRrevenD, QWLifV pa I K0% of Rl oUH q 3ODI
additional expenses not revealed until after the purchase agreement and rental agreements
10
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 10 of 70
were signed. These additional charges include a $15.00 to $20.00 monthly linen fee
(depending on unit type), $16.90 smoke alarm battery replacement fee, $100.00 to
$200.00 biannual deep cleaning fee (depending on unit type), service fees and
commissions, hotel rental income shares and association dues that range from $166.13 to
$231.42 per month not including property taxes and insurance. The Defendants receive in
wIROH in part aQ of DUWfees. TI e additionHVes IHHV 3l aintifq DGGe of tIe q IHHV q UHG.
revenue in most cases to zero and in some cases to a loss in the range of over $20,000.00
per year. During the sales presentations, Defendants touted the amount of profits that
Plaintiffs would receive from the revenue generated by the rental of the Securities
WKugI DKenHHQ GnQWVgrUHDWDdanS, IowDer, failed to mention the double q I
dip resulting from the front end fees and charges paid by Plaintiffs only reducing the
3ODLQWsIar V q tIe rUH qrevenuKHd UHbW end UvYuQspH again reduKng q EDFN q HQG q UIT
3ODLQWsIarVof tIe rUenues. AWKHsult, 3laintiffs receive no more than 30% of the
revenues before payment of taxes, insurance and loan charges rather than the 50% as
represented by Defendants. In 2010, the Defendants added a 4% reserve fund fee that is
WDNoQ q tIe top oWIe 3laWRffs’ sI arWKIthe revenue. The reserve fund fee is
cDOlXO iWuG a way VX KtuDly 9% of tIe uWt ownWX nO revenue is w qIIKHfor q RZQHU
the reserve fund. Currently, Plaintiffs are credited with 44% of the gross revenue (less the
4% reserve fund fee) and Defendants 56% changed in Defendants favor from the
originally contracted amount. Since the fees are assessed monthly regardless of whether
there is any revenue, the actual percentage received by Plaintiffs after payment of fees
can drop substantially as gross revenues decline as a result of reduced occupancy and/or
room rates. Prior to the purchase, Plaintiffs were presented with a document entitled
11
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 11 of 70
3PromHnaDGHnt aHrWDm, q 3HnHrUDum maHQnd DmmXly AUHdDuHs q &s”wRch $VNHG q 4:
states in part eleven that the expenses are not expected to exceed ten percent of the
published rack room rate, a gross misrepresentation. 6HH q QKLELW q 3 q ' q
12. At all relevant times hereto, Defendants operated the Hilton Promenade Boutique Hotel
in Missouri and sold the Securities to purchasers in Missouri and other states. Most offers
to purchase or sell the Securities between Plaintiffs and Defendants took place in
Branson, Missouri and were governed by Missouri law. Some purchases took place at the
pXchasHrVhomH q KRPH q RU qinQhHD urc QocumHnts rHfHct GRFXPHQW`
the transactions are to be governed by Missouri law.
13. All of the Securities sold to Plaintiffs by Defendants were sold pursuant to substantially
the same marketing strategy of fraudulently raising the potential buyeUs HxpHctaHoWf q RI q
substantial economic benefits from the purchase and ownership of the Securities branded
as part of the Hilton enterprise and at the same time concealing the true facts. In every
sale that was made of Securities to the Plaintiffs, Defendants uniformly misrepresented
the extent of the economic benefit that would be generated from the ownership of the
Securities, as Hilton Branded Securities, and uniformly concealed material facts.
14. In this suit, Plaintiffs seek rescission as well as equitable relief, including declaratory,
injunctive, restitutionary and other equitable monetary relief, and damages as set forth
more fully below.
15. As more particularly described herein, the Securities were sold and offered in conjunction
with one or more of the following three factors:
12
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 12 of 70
a. Emphasis on economic benefits to the purchaser to be derived from the
managerial efforts of the promoter, or a third party designated or arranged for by
the promoter, from rental of the units;
b. The offering of participation in a rental management program; or
c. The offering of a rental or similar arrangement whereby the owner must hold his
unit available for rental for any part of the year, must use an exclusive rental agent
or is otherwise materially restricted in his occupancy or rental of his unit.
16. For each and every one of the Plaintiffs, the sales process was comprised of the sale of
WKHcurHFXUuWeHVth RXnOfHGpaZicWKion iDhQ'Hefendant S rUWLpLgDm, q LQ q WKH C
which constituted a scheme involving the investment of PlDntQW mVey iRQHmmonq D q FRPPRQ q
enterprise with profits to come solely from the efforts of others. The Plaintiffs did not
consider the purchase of the Securities for anything other than economic investment. The
purchase of the Securities by Plaintiffs was inducH by 'HefendaQG cQceVmenRQ q RI q
material facts and promises of economic benefits to be derived from the entrepreneurial
or managerial efforts of others.
THE PARTIES
17. All Plaintiffs listed herein purchased condominium hotel rooms at the Hilton Promenade
%RXWe ToHl. +aWand eveD PlainDQG cHdoUnium uLQWgoverned bQthRsame q XQLW q L`
'HFOraUon, CRdomi&um OwneQLAssociaQH, Unit $anRemeWAgQemenQLWli Oe PHQW q
governing documents. Each Plaintiff is similarly situated to be included in this
consolidated action against the Defendants named herein.
18. Plaintiffs Jason and Debra Obester (husband and wife) are residents of Broken Arrow,
Oklahoma, who purchased Security number 2512B for $135,000.00 on July 25, 2008.
13
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 13 of 70
The certification pursuant to the federal securities laws for Plaintiffs Obester is attached
hereto as part of Exhibit #1.
19. Plaintiffs Gus and Tracey Skinner (husband and wife) are residents of Whitley City,
Kentucky, who purchased Securities numbered S405A and S405B for the purchase price
of $309,900.00 on March 7, 2007. The certification pursuant to the federal securities laws
for Plaintiffs Skinner is attached hereto as part of Exhibit #1.
20. Plaintiffs Greg and Stephanie Smith are husband and wife and are residents of
Chesterfield, Missouri, who purchased Securities number 308 and S310 for the purchase
price of $335,000.00 on January 16, 2007. The certification pursuant to the federal
securities laws for Plaintiffs Smith is attached hereto as part of Exhibit #1.
21. Plaintiff Charles Poziombka is an individual and is a resident of Harrison, Arkansas who
purchased Security number S406B for a purchase price of $129,900.00 on January 4,
2007. The certification pursuant to the federal securities laws for Plaintiff Poziombka is
attached hereto as part of Exhibit #1.
22. Plaintiff Hunter-Tunnell Branson Investments, LLC is an Arkansas LLC purchased
Security number N-202B for a purchase price of $129,900.00 on February 16, 2007. The
certification pursuant to the federal securities laws for Plaintiff Hunter-Tunnell Branson
Investments, LLC is attached hereto as part of Exhibit #1.
23. Plaintiff Elaine Bastl is a resident of Saint Louis, Missouri, who purchased Securities
numbered S503B and N212B on February 16, 2005 and February 9, 2005 respectively for
$129,900.00 each for a total investment of $259,800.00. The certification pursuant to the
federal securities laws for Plaintiff Bastl is attached hereto as part of Exhibit #1.
14
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 14 of 70
24. Plaintiff Shirk Living Trust, by Craig and Linda Shirk Trustees is a resident of Evergreen,
Colorado, who purchased Security number N204 for a purchase price of $199,900.00 on
February 28, 2007. The certification pursuant to the federal securities laws for Plaintiff
Shirk Living Trust is attached hereto as part of Exhibit #1.
25. Plaintiffs Don and Norma Smith are husband and wife and are residents of Punta Gorda,
Florida, who purchased Security number S 412 A for the purchase price of $189,900.00
on February 1, 2007. The certification pursuant to the federal securities laws for Plaintiff
Don and Norma Smith is attached hereto as part of Exhibit #1.
26. Plaintiff Allen D. and Patricia L. Millen Family Trust, by Allen D. and Patricia L. Millen
Trustees is a resident of Overland Park, Kansas, who purchased Security numbered S 211
C for a purchase price of $199,900.00 on September 17, 2007. The certification pursuant
to the federal securities laws for Plaintiff Allen D. and Patricia L. Millen Family Trust is
attached hereto as part of Exhibit #1.
27. Plaintiff Branson Landing Condo, LLC is a Colorado LLC purchased Security numberS
318 for a purchase price of $199,000.00 on October 23, 2006. The certification pursuant
to the federal securities laws for Plaintiff Branson Landing Condo, LLC is attached
hereto as part of Exhibit #1.
28. Plaintiff Douglas A. and Dorothy A. Kuehl, LLC, a Minnesota LLC, purchased Security
number 406A for a purchase price of $189,900.00 on March 11, 2005. The certification
pursuant to the federal securities laws for Plaintiff Douglas A. and Dorthy A. Kuehl,
LLC is attached hereto as part of Exhibit #1.
29. Plaintiff Timothy F. and Beverly A. Grimm Living Trust, by Timothy F. and Beverly
Grimm Trustees, is a resident of Lancaster, California, who purchased Securities
15
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 15 of 70
numbered 413A and 307A for a purchase price of $389,800.00 on January 3, 2007. The
certification pursuant to the federal securities laws for Plaintiff Timothy F. and Beverly A
Grimm Living Trust is attached hereto as part of Exhibit #1.
30. Plaintiffs Robin and Diane Renner are husband and wife and are residents of Aurora,
Illinois, who purchased Security number N217 A for the purchase price of $279,900.00
on March 22, 2007. The certification pursuant to the federal securities laws for Plaintiffs
Robin and Diane Renner is attached hereto as part of Exhibit #1.
31. Plaintiffs Roger H. and Tonah J. Eberhart are husband and wife and are residents of Lee
Summit, Missouri, who purchased Security number 412 B for the purchase price of
$129,900.00 on March 28, 2005. The certification pursuant to the federal securities laws
for Plaintiffs Roger H. and Tonah J. Eberhart is attached hereto as part of Exhibit #1.
32. Plaintiff Schlueter Rentals, LLC is a Missouri LLC purchased Security number 411A for
a purchase price of $279,900.00 on September 12, 2007. The certification pursuant to the
federal securities laws for Plaintiff Schlueter Rentals, LLC is attached hereto as part of
Exhibit #1.
33. Plaintiffs Brad and Sherry Foster are husband and wife and are residents of Branson,
Missouri, who purchased Security, number 303 B for the purchase price of $129,900.00
on January 24, 2007. The certification pursuant to the federal securities laws for Plaintiffs
Brad and Sherry Foster is attached hereto as part of Exhibit #1.
34. Plaintiffs David and Deborah Wu are husband and wife and are residents of Saint Louis,
Missouri, who purchased Security number S-507A for the purchase price of $215,000.00
and Security number S-507B for the purchase price of $145,000.00 on April 20, 2009.
16
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The certification pursuant to the federal securities laws for Plaintiffs David and Deborah
Wu is attached hereto as part of Exhibit #1.
35. Plaintiff Dana G. Alton Revocable Trust by Dana G. Alton Trustee is a resident of
Rogers, Arkansas, who purchased Security number S 211 A for a purchase price of
$279,900.00 on July 21, 2007. The certification pursuant to the federal securities laws for
Plaintiff Dana G. Alton Revocable Trust is attached hereto as part of Exhibit #1.
36. Plaintiffs Charles and Teresa Davis are husband and wife and are residents of East
Prairie, Missouri, who purchased Security number 202A for the purchase price of
$189,900.00 and Security number 202C for the purchase price of $129,900.00 on
January 17, 2007. The certification pursuant to the federal securities laws for Plaintiffs
Charles and Teresa Davis is attached hereto as part of Exhibit #1.
37. Plaintiff Cynthia Emmert is a single person and is a resident of Carrollton, Texas, who
purchased Security number 511B for the purchase price of $149,900.00 on February 17,
2005. The certification pursuant to the federal securities laws for Plaintiff Cynthia G.
Emmert is attached hereto as part of Exhibit #1.
38. Plaintiffs Dennis and Malia Antonio are husband and wife and are residents of North
Aurora, Illinois, who purchased Security number S401B for the purchase price of
$179,900.00 on January 29, 2007. The certification pursuant to the federal securities laws
for Plaintiffs Dennis and Malia Antonio is attached hereto as part of Exhibit #1.
39. Plaintiffs Gary and Kathleen Sortino are husband and wife and are residents of Omaha,
Nebraska, who purchased Security number 203A for the purchase price of $191,880.00
and Security number 203B for the purchase price of $127,920.00 on February 19, 2005.
17
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The certification pursuant to the federal securities laws for Plaintiffs Gary and Kathleen
Sortino is attached hereto as part of Exhibit #1.
40. Plaintiff TMF, LLC, is a Missouri LLC, purchased Security number S-408A for a
purchase price of $190,802.00 on April 11, 2007. The certification pursuant to the federal
securities laws for Plaintiff TMF, LLC is attached hereto as part of Exhibit #1.
41. Plaintiffs Richard and Nancy Parker are husband and wife and are residents of Little
Rock, Arkansas, who purchased Securities numbered N215A and N215B for the
purchase price of $299,900.00 in 2005. The certification pursuant to the federal securities
laws for Plaintiffs Richard and Nancy Parker is attached hereto as part of Exhibit #1.
42. Plaintiffs J. Dale and Anita Burns are husband and wife and are residents of Olathe,
Kansas, who purchased Securities numbered N219 and N211 for the purchase price of
$380,000.00 on May 3, 2008. The certification pursuant to the federal securities laws for
Plaintiffs J. Dale and Anita Burns is attached hereto as part of Exhibit #1.
43. Plaintiffs Nathan and Janet Courtwright Revocable Trust by Nathan and Janet
Cortwright, Trustees is a resident of Marshfield, Missouri, who purchased Security
number 504-B for a purchase price of $129,900.00 on February 19, 2005. The
certification pursuant to the federal securities laws for Nathan and Janet Courtwright
Revocable Trust by Nathan and Janet Courtwright, Trustees is attached hereto as part of
Exhibit #1.
44. Plaintiff Shirley Christian Revocable Living Trust Agreement by Shirley Christian
Trustee is a resident of Walnut Grove, Missouri, who purchased Security number N222A
for a purchase price of $189,900.00 on March 8, 2005. The certification pursuant to the
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federal securities laws for Shirley Christian Revocable Living Trust Agreement by
Shirley Christian Trustee is attached hereto as part of Exhibit #1.
45. Plaintiffs Gary and Barbara Gordon are husband and wife and are residents of Boulder,
Colorado, who purchased Securities numbered 512A, 512B and 512C for the purchase
price of $399,900.00 on February 22, 2007. The certification pursuant to the federal
securities laws for Plaintiffs Gary and Barbara Gordon is attached hereto as part of
Exhibit #1.
46. Plaintiffs John and Patricia Adolf are husband and wife and are residents of Panama City,
Florida, who purchased Securities numbered S227 and S229 for the purchase price of
$289,800.00 on May 1, 2007. The certification pursuant to the federal securities law for
Plaintiffs John and Patricia Adolf is attached hereto as part of Exhibit #1
47. Plaintiffs BE McCarty; CJ McCarty 1991 Family Trust by Billy and Carol McCarty
trustees; is a resident of Somis, California, who purchased Security number 213A for a
purchase price of $249,900.00 on February 8, 2007. The certification pursuant to the
federal securities laws for BE McCarty; CJ McCarty 1991 Family Trust by Billy and
Carol McCarty trustees is attached hereto as part of Exhibit #1.
48. Plaintiffs Gregory N. and Suzanne H. Borganelli are husband and wife and are residents
of Alachua, Florida, who purchased Securities numbered N208-B and S303-A for the
purchase price of $329,800.00 on February 11, 2005. The certification pursuant to the
federal securities laws for Plaintiffs Gregory N. and Suzanne H. Borganelli is attached
hereto as part of Exhibit #1.
49. Plaintiffs Richard and Dona Gordon are husband and wife and are residents of Riverside,
California, who purchased Security number S407A for the purchase price of $199,900.00
19
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on February 12, 2005. The certification pursuant to the federal securities laws for
Plaintiffs Richard and Dona Gordon is attached hereto as part of Exhibit #1.
50. Plaintiff Frost Family Trust by Jon R. Frost Trustee is a resident of Santa Ana, California,
who purchased Security number 401A for the purchase price of $240,000.00 on
December 13, 2007 and Security number 402A for the purchase price of $270,000.00 on
April 15, 2009. The certification pursuant to the federal securities laws for Plaintiff Frost
Family Trust by Jon R. Frost trustee is attached hereto as part of Exhibit #1.
51. Plaintiffs Warren and Cynthia Chase are husband and wife and are residents of Lebanon,
Missouri, who purchased Securities numbered S409A, S409B and S408B for the
purchase price of $449,800.00 in January 30, 2007. The certification pursuant to the
federal securities laws for Plaintiffs Warren and Cynthia Chase is attached hereto as part
of Exhibit #1.
52. Plaintiff LJM, LLC is a Missouri LLC purchased Security number 311 S for a purchase
price of $279,900.00 on October 20, 2006. The certification pursuant to the federal
securities laws for Plaintiff LJM, LLC is attached hereto as part of Exhibit #1.
53. Plaintiffs Michael and Cecilia Mahaney are husband and wife and are residents of
Wichita, Kansas, who purchased Security number S333 for the purchase price of
$249,900.00 on June 13, 2007. The certification pursuant to the federal securities laws for
Plaintiffs Michael and Cecilia Mahaney is attached hereto as part of Exhibit #1.
54. Plaintiffs John and Susan Lewallen are husband and wife and are residents of Memphis,
Tennessee, who purchased Security number S-412 C for the purchase price of
$129,900.00 on January 5, 2007. The certification pursuant to the federal securities laws
for Plaintiff John and Susan Lewallen is attached hereto as part of Exhibit #1.
20
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55. Plaintiff L & S Rentals, LLC is a Missouri LLC purchased Security number 309B for a
purchase price of $145,900.00 on January 25, 2005. The certification pursuant to the
federal securities laws for Plaintiff L & S Rentals, LLC is attached hereto as part of
Exhibit #1.
56. Plaintiffs Robert and Virginia Ziegler are husband and wife and are residents of Plano,
Texas, who purchased Security number 403A for the purchase price of $200,000.00 on
February 13, 2007. The certification pursuant to the federal securities laws for Plaintiffs
Robert and Virginia Ziegler is attached hereto as part of Exhibit #1.
57. Plaintiffs Donald and Constance Powles are husband and wife and are residents of
Wallkill, New York, who purchased Security number S204 for the purchase price of
$189,900.00 on December, 2006. The certification pursuant to the federal securities laws
for Plaintiffs Donald and Constance Powles is attached hereto as part of Exhibit #1
58. Plaintiffs George and Sue Gress are husband and wife and are residents of Highland,
Illinois, who purchased Security number S-404-B for the purchase price of $129,900.00
on February 12, 2005. The certification pursuant to the federal securities laws for
Plaintiffs George and Sue Gress is attached hereto as part of Exhibit #1.
59. Plaintiffs H. Leroy and Marjorie Minatre are husband and wife and are residents of
Stockton, California, who purchased Security number N213 for the purchase price of
$199,000.00 in June, 2005. The certification pursuant to the federal securities laws for
Plaintiffs H. Leroy and Marjorie Minatre is attached hereto as part of Exhibit #1.
60. Plaintiffs Wayne and Dorcas Folmer are husband and wife and are residents of Stockton,
California, who purchased Security number N209 for the purchase price of $189,900.00
21
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in June 2005. The certification pursuant to the federal securities laws for Plaintiffs Wayne
and Dorcas Folmer is attached hereto as part of Exhibit #1.
61. Plaintiffs Albert and Karin Dalkey are husband and wife and are residents of Colfax,
North Carolina, who purchased Securities numbered 2215B and 2415B for the purchase
price of $315,400.00 on June 04, 2007. The certification pursuant to the federal
securities laws for Plaintiffs Albert and Karin Dalkey is attached hereto as part of Exhibit
#1.
62. Plaintiffs Jeffrey Lupa and Lenore Lupa each single persons and are residents of Homer
Glen, Illinois, who purchased Security number S404A for the purchase price of
$189,900.00 on February 12, 2005. The certification pursuant to the federal securities
laws for Plaintiffs Jeffrey Lupa and Lenore Lupa is attached hereto as part of Exhibit #1.
63. Plaintiff Fox Investments, LLC is a Oklahoma LLC purchased Security number 523-S for
a purchase price of $193,000.00 on August 21, 2007 The certification pursuant to the
federal securities laws for Plaintiff Fox Investments, LLC is attached hereto as part of
Exhibit #1.
64. Plaintiff Steadfast Enterprises, Inc., is an Alabama Corporation purchased Security
number 2-309A for a purchase price of $279,900.00 on March 23, 2007. The certification
pursuant to the federal securities laws for Plaintiffs Steadfast Enterprises Inc. is attached
hereto as part of Exhibit #1.
65. Plaintiff Carole Rosen a single person and is a resident Los Angeles, California,
purchased Security number 2410A for the purchase price of $200,000.00 on February 22,
2007. The certification pursuant to the federal securities laws for Plaintiff Carole Rosen is
attached hereto as part of Exhibit #1.
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66. Plaintiffs Regan and Angela Cupples are husband and wife and are residents of Lena
Louisiana, who purchased Security number S508 for the purchase price of $199,900.00
on February 14, 2007. The certification pursuant to the federal securities laws for
Plaintiffs Regan and Angela Cupples is attached hereto as part of Exhibit #1.
67. Plaintiffs Robin and Georgia Schledorn are husband and wife and are residents of
Newbury Park, California, who purchased Security number S525 for the purchase price
of $240,000.00 oin December 19, 2007. The certification pursuant to the federal
securities laws for Plaintiffs Robin and Georgia Schledorn is attached hereto as part of
Exhibit #1.
68. Plaintiffs Frank Jr. and Jacqueline Friedlein are husband and wife and are residents of St.
Charles, Missouri, who purchased Securities numbered 310A and 310B for the purchase
price of $299,900.00 on January 29, 2007. The certification pursuant to the federal
securities laws for Plaintiffs Frank Jr. and Jacqueline Friedlein is attached hereto as part
of Exhibit #1.
69. Plaintiff Brad Scott a single person and is a resident of Lakewood, New Jersey, who
purchased Securities numbered 302A, 302B and 302C for the purchase price of
$399,900.00 on March 16, 2007. The certification pursuant to the federal securities laws
for Plaintiff Brad Scott is attached hereto as part of Exhibit #1.
70. Plaintiffs Martin and Susan Merrick are husband and wife and are residents of Fenton,
Missouri, who purchased Security number S-304 for the purchase price of $169,900.00
on January 19, 2007. The certification pursuant to the federal securities laws for
Plaintiffs Martin and Susan Merrick is attached hereto as part of Exhibit #1.
23
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71. Plaintiff Phaeton Classic Properties, LLC, a Virginia LLC, purchased Security number
411B for a purchase price of $195,000.00 on October 19, 2007. The certification pursuant
to the federal securities laws for Plaintiff Phaeton Classic Properties, LLC. is attached
hereto as part of Exhibit #1.
72. Plaintiff KD Properties, LLC, a Oklahoma LLC, purchased Security number S511 for a
purchase price of $310,000.00 on August 27, 2008. The certification pursuant to the
federal securities laws for Plaintiff KD Properties, LLC is attached hereto as part of
Exhibit #1.
73. Plaintiffs Diane P. Starkey Trust, by Diane P. Starkey, Trustee is a resident of Hudson,
Florida, who purchased Security number S501 for the purchase price of $129,990.00 on
December 30, 2004 and Security number S503 for the purchase price of $189,990.00 on
December 30, 2004. The certification pursuant to the federal securities laws for Plaintiff
Diane P. Starkey Trust, by Diane P. Starkey, Trustee is attached hereto as part of Exhibit
#1.
74. Plaintiff RK Tremblay Investments, LLC, is a Massachusetts LLC, who purchased
Securities numbered S210 and S212 for a purchase price of $299,900.00 in February
2005. The certification pursuant to the federal securities laws for Plaintiff RK Tremblay
Investments, LLC is attached hereto as part of Exhibit #1.
75. Plaintiffs William and Catherine Wurster are husband and wife and are residents of
Delray Beach, Florida, who purchased Security number 306A for the purchase price of
$189,900.00 in February 13, 2007. The certification pursuant to the federal securities
laws for Plaintiffs William and Catherine Wurster is attached hereto as part of Exhibit #1.
24
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76. Plaintiff Promenade Properties, LLC, a Louisiana LLC, purchased Security number 201A
for the purchase price of $189,900.00 on December 15, 2006 and Security number 513B
for the purchase price of $170,000.00 on December 31, 2007. The certification pursuant
to the federal securities laws for Plaintiff Promenade Properties, LLC is attached hereto
as part of Exhibit #1.
77. Plaintiffs Franz and Karen Rowland are husband and wife and are residents of Boston,
Massachusetts, who purchased Securities numbered 210A and 210B for the purchase
price of $299,900.00 on December 18, 2006. The certification pursuant to the federal
securities laws for Plaintiffs Franz and Karen Rowland is attached hereto as part of
Exhibit #1.
78. Plaintiff RW Investments, LLC, is a Oklahoma LLC, purchased Security number S504A
for the purchase price of $242,000.00 on September 26, 2007. The certification pursuant
to the federal securities laws for Plaintiff RW Investments, LLC is attached hereto as
part of Exhibit #1.
79. Plaintiffs Adolph M. and Thelma E. Bundrick Joint Revocable Living Trust by Adolph
M. and Thelma E. Bundrick trustees is a resident of Springfield, Missouri, who purchased
Security number 205A for the purchase price of $199,900.00 on February 26, 2005. The
certification pursuant to the federal securities laws for Plaintiff Adolph M. and Thelma E.
Bundrick Joint Revocable Living Trust by Adolph M. and Thelma E. Bundrick trustees is
attached hereto as part of Exhibit #1.
80. Plaintiffs Brad Clawson and Judy Mullen-Clawson are husband and wife and are
residents of Tres Pinos, California, who purchased Security number 211B for the
purchase price of $179,900.00 on September 19, 2007. The certification pursuant to the
25
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federal securities laws for Plaintiffs Brad Clawson and Judy Mullen-Clawson is attached
hereto as part of Exhibit #1.
81. Plaintiff Anthony Pinner is a single person who is a resident of Riverside, California, who
purchased Security number S 407B for the purchase price of $139,900.00 on February
12, 2005. The certification pursuant to the federal securities laws for Plaintiff Anthony
Pinner is attached hereto as part of Exhibit #1.
82. Plaintiffs David and Kelly Thomas are husband and wife and are residents of Marshfield,
Missouri, who purchased Security number S312B for the purchase price of $154,900.00
on February 14, 2007. The certification pursuant to the federal securities laws for
Plaintiffs David and Kelly Thomas is attached hereto as part of Exhibit #1.
83. Plaintiffs Stan and Sylvia Young are husband and wife and are residents of Eads,
Tennessee, who purchased Security number S-502 for the purchase price of $210,446.50
on November 27, 2006. The certification pursuant to the federal securities laws for
Plaintiffs Stan and Sylvia Young is attached hereto as part of Exhibit #1.
84. Plaintiff Sherialyn Byrdsong is a single person who is a resident of Atlanta, Georgia, who
purchased Securities numbered 2212A and 2212B for the purchase price of $299,900.00
on February 8, 2007. The certification pursuant to the federal securities laws for
Plaintiff Sherialyn Byrdsong is attached hereto as part of Exhibit #1.
85. Plaintiff Imhoff Family, LLC is a Louisiana LLC, who purchased Security number 305A
and 305B for the purchase price of $309,900.00 on December 21, 2006. The certification
pursuant to the federal securities laws for Plaintiff Imhoff Family, LLC is attached hereto
as part of Exhibit #1.
26
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86. Plaintiffs Perry and Lana Ryburn are husband and wife and are residents of Anadarke,
Oklahoma, who purchased Security number 314S for the purchase price of $159,900.00
on February 5, 2007. The certification pursuant to the federal securities laws for Plaintiffs
Perry and Lana Ryburn is attached hereto as part of Exhibit #1.
87. Plaintiff Albert Selbee, LLC, is a Missouri LLC, purchased Security number 311B for the
purchase price of $120,000.00 on May 27, 2010. The certification pursuant to the federal
securities laws for Plaintiff Albert Selbee, LLC is attached hereto as part of Exhibit #1.
88. Plaintiff Branson Promenade Condominium, LLC is a Missouri LLC, who purchased
Securities numbered S206 A and S206B for the purchase price of $319,800.00 on
February 5, 2005. The certification pursuant to the federal securities laws for Plaintiff
Branson Promenade Condominium, LLC is attached hereto as part of Exhibit #1.
89. Plaintiffs Robert and Yvonne Helstrom are husband and wife and are residents of Lacey,
Washington, who purchased Securities numbered 313A and 313B for the purchase price
of $335,387.00 in February, 2007. The certification pursuant to the federal securities laws
for Plaintiffs Robert and Yvonne Helstrom is attached hereto as part of Exhibit #1.
90. Plaintiff Christina Spengler is a single person and resides in Norco, California, who
purchased Security number S205B for the purchase price of $150,000.000 on August 7,
2006. The certification pursuant to the federal securities laws for Plaintiff Christina
Spengler is attached hereto as part of Exhibit #1.
91. Plaintiffs Antonios Hoan Seng and Lian K.P. Tan are husband and wife and are residents
of Emmaus, Pennsylvania, who purchased Security number S-501 for the purchase price
of $264,900.00. on June 15, 2007. The certification pursuant to the federal securities laws
27
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for Plaintiffs Antonios Hoan Seng and Lian K.P. Tan is attached hereto as part of Exhibit
#1.
92. Defendant, Boutique Hotel Development Company, LLC doing business as Hilton
Promenade at Branson Landing, is a Missouri LLC with its principle place of business in
Branson, Taney County, Missouri. At all times relevant hereto, Boutique Hotel
Development Company, LLC was the promoter and advertiser of the Hilton Promenade
Boutique Hotel who engaged Hilton Worldwide, Inc. as the manager of the Hilton
Promenade Boutique Hotel.
93. Defendant, Promenade Development Company, LLC, is a Missouri LLC with its
principle place of business in Branson, Taney County, Missouri. At all relevant times
hereto, Promenade Development Company, LLC was the Declarant of the Promenade at
Branson Landing Condominiums, the project commonly known as the Hilton Promenade
Boutique Hotel. Promenade Development Company, LLC was the initial owner of all
units now owned by Plaintiffs at the development. Promenade Development Company,
LLC is also the owner of 100 hotel rooms currently competing with Plaintiffs’ units at the
development.
94. Defendant, Hilton Worldwide, Inc., is a Delaware corporation doing business through its
employees, agents and entities in Branson, Taney County, Missouri. At all times relevant
hereto, Hilton Worldwide, Inc. was the property manager of the Hilton Promenade
Boutique Hotel, managing the nightly rentals of Plaintiffs’ Securities. q RI q 3ODLQWLIIV¶ q 6HFX
95. Defendant, HCW, LLC is a Missouri LLC with its principle place of business in Branson,
Taney County, Missouri. At all relevant times hereto, was the overarching entity
28
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 28 of 70
developing the Branson Landing Enterprise and the developer of the Hilton Promenade
Boutique Hotel.
96. Defendant, HCW Management Consultants, LLC is a Missouri LLC with its principle
place of business in Branson, Taney County, Missouri. At all relevant times hereto, have
been mXnXDng t Le coKominRm RL-’s Xss ociXtQHU- t Le HVVn P-oWnXde BouUque
Hotel.
97. Defendant, BLR Downtown Realty, LLC is a Missouri LLC with its principle place of
business in Branson, Taney County, Missouri. At all times relevant hereto, BLR
Downtown Realty, LLC was the main real estate sales agent for the condominium hotel
units sold to Plaintiffs.
98. Defendant, The Branson Landing Master Association, Inc. is a Missouri non-profit
corporation with its principle place of business in Branson, Taney County, Missouri. At
all times relevant hereto, The Branson Landing Master Association, Inc. is the master
association over the Branson Landing enterprise charging association dues to Plaintiffs.
JURISDICTION AND VENUE
99. The federal law claims asserted arise under Section 10(b) of the Securities Exchange Act
of 193 4 (“ 1934 Ac q ),q Rule 1Wb5 promulgated thereunder, Section 12 of the Securities
Act of RI q Acq(“1933 A q q . 3 Ju-isdicq on is co nfq -X by SeLioW2Rof t LV193RAct q M q 61-IFI
and Section 22 of the 1933 Act. Venue in the United States District Court for the Western
District of Missouri is proper under Section 27 of the 1934 Act and Section of the 1933
Act.
THE SCHEME
29
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 29 of 70
100. This action involves a scheme by the Defendants independently and acting in
concert as a single business enterprise to develop, control and operate a massive hotel
project through funds derived from the sale of investment contract Securities to passive
public investors and thereby recoup enormous profits through the development and
oSerUoWf tKe KRel, as we q K tKe sOisfaDio qof BrOson LaWKH q VaWLVeDiW a
vast hotel complex to provide cXVmRs foUtKe BransW Lan q%UDQVaQantDQ q oQ¶ q UHV WDXL
commercial and entertainment businesses without incurring any cost to own and operate
the Hilton Promenade Boutique Hotel. In order to avoid disclosing facts that would have
exposed the negative aspects of the investment, Defendants intentionally and knowingly
disguised their sale of these investment contract Securities as a real estate transaction, of
the purpose of avoiding the requirement of both state and federal laws and regulations
that require (a) honest and complete disclosure to investors; (b) just and honorable
conduct by those who sell investments; (c) registration of the securities being sold and the
incumbent disclosure involved therewith; as well as (d) the registration and qualification
of the entities and individuals selling investment contract Securities.
101. As a result of this scheme to cheat and defraud Plaintiffs and similarly situated
investors, Defendants were able to reap millions of illegal profits, by concealing from the
unsuspecting investors the true nature of the investment scheme they had been lured into
and at the same time distribute compensation and proceeds of that scheme to themselves
and their confederates without disclosure. Through this scheme, Defendants were able to
conceal from their investors the material facts relating to their investments including the
SURtLWefen qanH qeDve fromq GHUles to IURPffWKHusVof tKe SroWe qs of ILQWffs’ q q WKH q 3
investments; the transactions occurring between Defendants and their confederates in this
30
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 30 of 70
scheme as they shared and divided their spoils; the true economics of the investments and
reasonable expectation of returns; the conflicts of interest between the investors and
Defendants and their confederates in this scheme; and the nature and level of risks being
undertaken by those who purchased these Securities that should have been disclosed.
102. As part of their scheme to cheat and defraud, Defendants made the conscious
decision in connection with the development of the Branson Landing and the sale and
distribution of the investment contract Securities used to finance the venture to conceal
the economic realities of the transactions and to design the presentation and
documentation of the transactions in such a way as to hide the true nature of the
transactions and conceal material facts regarding their ongoing scheme to distribute
unregistered investment contract Securities to public investors. As part of this scheme to
distribute these unregistered Securities without an offering circular, Defendants
intentionally omitted from disclosure a vast array of material information that should
have been provided to investors and potential investors as part of a lawful distribution of
these Securities. The material matters that were intentionally and knowingly omitted and
concealed included:
a. A description of the business of the hotel project and the promoters of the
development such that Plaintiffs could know and understand that the rooms
labeled as condominium units at the Hilton Promenade Boutique Hotel were
priced higher as nightly rentals to the public than the non-condominium rooms
UwQdGyq Ee deveHpeGaYHUuldHUtq DQG q RXed unQR the dLeHper’sEH q UHQWHG q X
rooms were rented;
31
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 31 of 70
b. A description of the plan of operation of the venture, including budget
information, sources of cash and anticipated expenditures such that Plaintiffs
could know and understand that the represented 50% revenue share to Plaintiffs
was actually no more than approximately 30q qbQEH RUH q 3OD¶xQWnd V¶n
payments, and included a double dip;
c. A clear disclosure that the developer has no obligation to pay any of the common
expenses and that Plaintiffs have an obligation to pay all common expenses;
d. The number and nature of employees to be involved in the venture such that
Plaintiffs could know and understand that these employees would be paid for
exclusively by Plaintiffs;
e. The market research and competitive information including the number of
competitors and the position of the venture among competitors such that Plaintiffs
could understand the rental risks and know that they would be paying monthly
overhead fees even when there were no rentals;
f. The financial information about the business of the venture, its promoters and
each segment of their business such that Plaintiffs could know and understand that
Defendants had no financial risk in the lack of rentals of the owner units at the
Hilton Promenade Boutique Hotel because if the owner units were unoccupied,
the event cost Defendants nothing for the empty room;
g. A description of the business structure relating to profits and expense distribution
so that Plaintiffs could know and understand that Plaintiffs were incurring all
expenses and competing with Defendant developer in occupancy and in rental
pricing structure.
32
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 32 of 70
h. The information relating to compliance with state and local laws and regulations
such that Plaintiffs could know and understand that they were purchasing
unregistered Securities;
i. Any pending or threatened legal proceedings or the absence thereof such that
Plaintiffs could know and understand the problems facing Defendants, as
'HeHnGDQDad P KDple PecDWL S OHns HdKDHatFn filedLHQVt tDQ in OLWLJDWLRQ q I
Taney County, Missouri Circuit Court regarding the subject property that were
undisclosed to Plaintiffs at the time of closing;
j. Information with respect to any resale market for the Securities being sold and the
potential for any resale market to develop such that Plaintiffs could know and
understand that there would be no ready market for resale of these Securities at
prices greater than or equal to the prices paid by Plaintiffs;
k. A description of all material risks of the investment such that Plaintiffs could
know and understand that they risked losing their entire investment and were
extremely unlikely to realize any profit or even recoup their original capital as the
price of the Securities bore no reasonable relationship to the cash flow;
l. Not disclosing to Plaintiffs that Defendants were making a profit on each sale and
the amount thereof, and that Defendants were going to withdraw money Plaintiffs
invested as a fee;
m. The method and plan of the distribution of the investment contract Securities such
that Plaintiffs could know and understand the amounts that were being paid as
sales commissions;
33
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 33 of 70
n. The use of the proceeds and the approximate amount of such proceeds dedicated
to each use such that Plaintiffs could know and understand that Plaintiffs were
paying 100% of the ongoing costs of the Hilton Boutique Hotel and receiving
approximately 30% or less of the operating income to pay their mortgages,
LsVXce, condominRm owneQLXsocRZoHUes and taxeF q GXHV q DQG q WD [H'
o. The identity of any agreements, arrangements or understandings with all brokers
participating in the sales of the investment contract Securities including the
compensation received by such persons such that Plaintiffs could know and
understand the remuneration paid to the sales agent selling the Securities;
p. The identity, background and compensation of all executive officers and other
persons serving in similar capacities as part of the management team such that
Plaintiffs could know and understand the relationship between the members of
management and others;
q. All material contracts relating to the venture including contracts with indemnities
or promoters of the venture such that Plaintiffs could know and understand these
risks; and
r. A complete disclosure that there was a unit management agreement that was
between the developer and Plaintiffs and between the Hilton Worldwide, Inc. and
Plaintiffs.
s. A description of the investment contract Security including the rights and
liabilities of the investors and the promoters such that Plaintiffs could analyze
these rights and liabilities individually and with a representative.
34
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t. $ complOH IisHosuL oE the EXUHsociatWwH qnH parq DVVnFL OeEen Iants’
rental program so that Plaintiffs could know that if they did not enroll their unit in
DefendanW rentU pQWaOthat OeEeDantWhDW I 'laHQEEs a IWV Eee ED nH q 3ODLQWLI
enrolling their unit.
103. Each and every one of these omissions is material to an investor or prospective
investor and each was intentionally omitted from disclosures made in connection with
sale of the investment contract Securities by Defendants.
104. Each Plaintiff named herein was subjected to like misrepesetnations, omissions
and concealments specifically listed in paragraph 102. Examples of six such specific
instances are enumerated for Plaintiffs Obester, Skinner, Greg and Stephanie Smith,
Poziombka, Hunter-Tunnell Branson Investments, LLC and Bastl below. Each Plaintiff
herein was subjected to the same or similar circumstances as these six Plaintiffs.
105. Plaintiffs Jason and Debra Obester, on or about July 25, 2008, closed the purchase
of Unit 2512B, one of the Securities for $135,000.00. Prior thereto, Mr. and Mrs. Obester
met with LWana SmDh, Nena RWEor I, an I OennH ERns, O eED Ian q s sales q (YDQV q q 'HIHQGD(
representatives. Although omitting all of the material facts set forth in paragraph 25
herein above, the sales representatives did discuss various scripted financial and
HonoRc beneEH tHt W V I WKD Erom pXtOipation iXOW n IUts’ renDUWogram. q LQ q 'HD
Specifically, the sales representatives stated the Hilton Promenade Boutique Hotel would
be much more upscale than the comparative hotels in the area and compared the project
to several other hotels. The sales representatives provided an anticipated occupancy rate
of no less than 47% and an estimate of $239.00 per night as the lowest average room
rental rate. The sales representatives also state that participation in the rental program,
35
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 35 of 70
managed by Hilton, would be a great investment opportunity because the nearby Branson
Convention center was booked for the next several years to draw in business. The sales
representatives told Plaintiffs that the rental program was through the Hilton Hotel
Corporation and that the Hilton Promenade Boutique Hotel was made up of only
privately owned units. Plaintiffs made clear to the sales representatives they were solely
looking for an investment opportunity and were told that this was only an investment and
that some units were already cash flowing. Defendants also uniformly represented in their
purchase contract that the sale was not the sale of an investment opportunity. The
6ecuXU Ws puDhasedXy PlDVHfGO be q eODLQWce upon 'HeV WaUs’ material q XSRQ q '
omissions and false and fraudulent statements. Simply stated, as a result of these
omissions and misrepresentations, Plaintiffs Obester were convinced by Defendants that
as a result of the Branson Landing enterprise that the investment in the Security would be
profitable and the value of the Security would appreciate, without Plaintiffs Obester
having to provide any services or oversight of the Defendants and the transaction was not
D seVHtieUnWLment.LQYHV WPHQW q reliaDeQWLnVced H 'HeHUants UHuL q ZDV q LI
Defendants knew at the time of the sale that material information was being withheld and
intentionally concealed this material information in order to close the sale. Defendants
knew at the time these statements were made these statements, and each of them, were
false, but made them to defraud Plaintiffs Obester. Plaintiffs Obester, at all times, up until
)ebruXD2010,q were qunawHUof 'HeQDaDU maRriaHmQGDQWVbelievWHhese q RPLVVLRQV C
statements were true and had no reason to believe the statements to be false because
'HIHQGDQWV¶ q UHSUHVHQWDWLRQV q ZHUHq factHQcHQW q RQ q FRQFHDOHG q IDFW
DefenGDQWnowlNgRaOHonHol DQG q FRQWURO aWKenWunGL)e bruRW201H q DS SDUHI
36
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 36 of 70
Only after the Security failed to appreciate and produced rental income far below the
amounts forecasted by Defendants, could Plaintiffs Obester foresee the continued loss of
moQHby reqsoHoE the pu Rh q WoE the XcFGty, bH Eor D Wn I qntsHmqterGql o mGs EoW q IRU q 'HIHQ(
and false and fraudulent statements, Plaintiffs Obester would not have purchased the
Security that was not registered, and is not exempt from registration. As a result of these
facts, Plaintiffs Obester are entitled to and hereby seek to rescind the transaction and be
restored all money paid to Defendants plus interest thereon from the date of purchase,
plus all damages resulting therefrom.
106. Plaintiffs, Gus and Tracy Skinner (husband and wife), on or about December 21,
2004, closed the purchase of units S405A&B, two of the Securities for $309,900.00. Prior
WKHo, PWntGEEs SkGnnQ met V th DLQ I qnts’ sqlWre ZeWKqtGHHDGDQW qns qn I q UHSUI-P
Lynette McBratney. Although omitting all of the material facts set forth in paragraph 25
herein above, the sales representatives did discuss various scripted financial and
HonoRc beneEGts tHt W V I WKD Erom p qrtGcGp qtGon GXDW n I qnts’ renDUWogr qm. q LQ q 'HD
Specifically, the sales representatives stated the Hilton Promenade Boutique Hotel would
be much more upscale than the comparative hotels in the area and compared the project
to several other hotels. The sales representatives provided an anticipated occupancy rate
of no less than 47% and an estimate of $269.00 per night as the lowest average room
rental rate. The sales representatives also state that participation in the rental program,
managed by Hilton, would be a great investment opportunity because the nearby Branson
Convention center was booked for the next several years to draw in business. The sales
representatives told Plaintiffs that the rental program was through the Hilton Hotel
Corporation and that the Hilton Promenade Boutique Hotel was made up of only
37
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 37 of 70
privately owned units. Plaintiffs made clear to the sales representatives they were solely
looking for an investment opportunity because they were wanting to retire and were told
that this was only an investment. Defendants also uniformly represented in their purchase
contract that the sale was not the sale of an investment opportunity. The Security was
pXchasD bHPlaintiffs SkLnWL rVianN QoHDefendanUHmaDQal omXSoQ and V¶ q PD
false and fraudulent statements. Simply stated, as a result of these omissions and
misrepresentations, Plaintiffs Skinner were convinced by Defendants that as a result of
the Branson Landing enterprise that the investment in the Security would be profitable
and the value of the Security would appreciate, without Plaintiffs Skinner having to
provide any services or oversight of the Defendants and the transaction was not a
VcFXULWLHmentQYHViffPSQWer’s r0DnQ was induced Q HfeVanUHOaD. q ZDV q LQG)
Defendants knew at the time of the sale that material information was being withheld and
intentionally concealed this material information in order to close the sale. Defendants
knew at the time these statements were made these statements, and each of them, were
false, but made them to defraud Plaintiffs Skinner. Plaintiffs Skinner, at all times, up until
)ebruXD2010, were unawHUof DeQDaDU maRriaHmQGDQWVbelievW these q RPLVVLRQV C
statements were true and had no reason to believe the statements to be false because
DeHnGDQ represenHSoH weQ dDWdRQon ZHUH q factHQcHQW RQ q FRQFHDOHG q IDFW
DeHnGDQ knowlNgRand conHol DQ did RQWUme aWKenWunGL)ebruRW201H q DS SDUHi
Only after the Security failed to appreciate and produced rental income far below the
amounts forecasted by Defendants, could Plaintiffs Skinner foresee the continued loss of
monH by reaUn oVRQpurchaW oHthSSUuKD, but RI DWKdantH maULWomissXW q IRU q 'HIHQG
and false and fraudulent statements, Plaintiffs Skinner would not have purchased the
38
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 38 of 70
Security that was not registered, and is not exempt from registration. As a result of these
facts, Plaintiffs Skinner are entitled to and hereby seek to rescind the transaction and be
restored all money paid to Defendants plus interest thereon from the date of purchase,
plus all damages resulting therefrom.
107. Plaintiffs, Greg and Stephanie Smith (husband and wife), on or about January 16,
2007, closed the purchase of units 308 and S310, two of the Securities for $335,000.00.
PUor thereto, HULtWs SW itOW L XWLDe\eLPLW saleHW resLWKves DeLLG EvW V q VDOHV q Uf
Although omitting all of the material facts set forth in paragraph 25 herein above, the
sales representatives did discuss various scripted financial and economic benefits that
XoXOGsuU \VW pWticipRioL iL DWLdaLtD reLRQpr oQaW HSpQGDQW, the UHs q SURJUDP
representatives stated the units Plaintiffs Smith were buying were very cheap and that
they could easily be resold for a high profit. Plaintiffs Smith were also told that Hilton
Promenade Boutique Hotel would be much more upscale than the comparative hotels in
the area and compared the project to several other hotels. The sales representatives also
state that participation in the rental program, managed by Hilton, would be a great
investment opportunity because the nearby Branson Convention center was booked for
the next several years to draw in business. The sales representatives told Plaintiffs that
the rental program was through the Hilton Hotel Corporation and that the Hilton
PUW eLQe Gouti%R HoteT XH W adWp o \ oLly q PDGH o XLed uLitR De\eLdaLtY sWs RZQHG q
representatives specifically told Plaintiffs the property was only for investment purposes.
Defendants also uniformly represented in their purchase contract that the sale was not the
sale of an investment opportunity. The Security was purchased by Plaintiffs Smith in
UHOcDQoL De\eLdaLtH W QGDQoW Vsio LDWH\aLDaLd \rauduVLRQVeW eLtG q IDOVH q DQG q IUI
39
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 39 of 70
Simply stated, as a result of these omissions and misrepresentations, Plaintiffs Smith
were convinced by Defendants that as a result of the Branson Landing enterprise that the
investment in the Security would be profitable and the value of the Security would
appreciate, without Plaintiffs Smith having to provide any services or oversight of the
'HeHEGEtQWd thDQG saWKE wWEDQVcuWeRQvesDeEtQ3laiEtiDsqSmiFX,Ueliance q LQYHV W
waVEducGXyHefeEdaEH’HQudD'HWeEdaEUDEewqaqtH HmGDQhe V q NQHmaterWlq WKH q WLPH
information was being withheld and intentionally concealed this material information in
order to close the sale. Defendants knew at the time these statements were made these
statements, and each of them, were false, but made them to defraud Plaintiffs Smith.
30DLQWmith,qatPLWmes, qupWEtil FebruWL20V, qwere uEawW of 'HefeEdXD’ q q q q q q ZHUH
material omissions and believed these statements were true and had no reason to believe
WKstatemWDWHeHQW becWseq'HefeE daEtVHep EseEDXoEs wHeHepeEQEtVE UHSUHVHQWDWI
cRceHDOHG pecFiarlyqwiHiE 'HefeEdaEts ZkEoKedge HHQEDQWat didNoRbecoG q DQG q FR(
apparent until February 2010. Only after the Security failed to appreciate and produced
rental income far below the amounts forecasted by Defendants, could Plaintiffs Smith
foresee the continued loss of money by reason of the purchase of the Security, but for
'HeHEGEtQWVTriPDmHUoEsOEdRaLVVdRQuduDEtGtatemeEts, Plaintiffs Smith
would not have purchased the Security that was not registered, and is not exempt from
registration. As a result of these facts, Plaintiffs Smith are entitled to and hereby seek to
rescind the transaction and be restored all money paid to Defendants plus interest thereon
from the date of purchase, plus all damages resulting therefrom.
108. Plaintiff, Charles Poziombka, on or about January 4, 2004, closed the purchase of
unit S406B, one of the Securities for $129,900.00. Prior thereto, Plaintiff Poziombka met
40
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 40 of 70
ZLW'Hefen PaQGsaleWVpreVnOHes UHaUe PfH P.WDWuYH qittinQDlqofHhe q q $OWKRXJI
material facts set forth in paragraph 25 herein above, the sales representatives did discuss
various scripted financial and economic benefits that would result from participation in
'HeHn PaDQWntaq UoQWDSpe RiURJly, the salesHeprLeDOOes stW PHhe VDOHV q UHSUHVHQWE
Missouri and City of Branson were spending billions of dollars on the Branson Landing
project and that Highway 65 would be re-routed to go through the Branson Landing.
Plaintiffs were told that Hilton Promenade Boutique Hotel would be much more upscale
than the comparative hotels in the area and compared the project to several other hotels.
Plaintiffs were also told that the rental projections were on the low side of 50%, that the
association fees covered utilities and minor repairs when the same was not true. The sales
representatives also state that participation in the rental program, managed by Hilton,
would be a great investment opportunity because the nearby Branson Convention center
was booked for the next several years to draw in business. The sales representatives told
Plaintiffs that the rental program was through the Hilton Hotel Corporation and that the
Hilton Promenade Boutique Hotel was made up of only privately owned units.
'HeHn PaDQWVs q VresHV qveHspeRiVRaQWD P LYntifq Vhe propeFDwO onlyRO 3ODLQWLIIV
investment purposes. Defendants also uniformly represented in their purchase contract
that the sale was not the sale of an investment opportunity. The Security was purchased
q y PlODLQWLio qq kRinRPEnRe q LQ q'HeHn PDQF q atXiRo qiHionsGDQWe an P q RP
fraudulent statements. Simply stated, as a result of these omissions and
misrepresentations, Plaintiff Poziombka was convinced by Defendants that as a result of
the Branson Landing enterprise that the investment in the Security would be profitable
and the value of the Security would appreciate, without Plaintiff Poziombka having to
41
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 41 of 70
provide any services or oversight of the Defendants and the transaction was not a
VcFXULWLHm qntQYHVW PoQomb ka’ODLQW was iRL qd bN'H qV ndaHO fDud. q ZDV q LQG3
Defendants knew at the time of the sale that material information was being withheld and
intentionally concealed this material information in order to close the sale. Defendants
knew at the time these statements were made these statements, and each of them, were
false, but made them to defraud Plaintiff Poziombka. Plaintiff Poziombka, at all times, up
until February 2010, was unawarq q 'H qfqndaQG matqrVl omDWHUaD bqlRvq Vthqsq q DQG q EH(
statements were true and had no reason to believe the statements to be false because
'H q HnGDQ rqprq s qnHSoH wqQ dqpqndqnQon conUH qd factHQcHQW RQ q FRQFHDOHG q IDFW
'H q HnGDQ knowl qdgq and conHol Dat did not become apparent until February 2010.
Only after the Security failed to appreciate and produced rental income far below the
amounts forecasted by Defendants, could Plaintiff Poziombka foresee the continued loss
of money by reason of the purchase of thq Kcurity, buUoW\qfqndaW qmaU qal q PDWF
omissions and false and fraudulent statements, Plaintiff Poziombka would not have
purchased the Security that was not registered, and is not exempt from registration. As a
result of these facts, Plaintiff Poziombka is entitled to and hereby seek to rescind the
transaction and be restored all money paid to Defendants plus interest thereon from the
date of purchase, plus all damages resulting therefrom.
109. Plaintiff, Hunter-Tunnell Branson Investments, LLC, on or about February 16,
2007, closed the purchase of unit N-202B, one of the Securities for $129,900.00. Prior
thereto, Plaintiff Hunter-7uQ q HBOns% InQVm qnt sQYYC mqPwQh 'H q fqndants’ HW q ZLWK q 'HIHIQ
representatives Bill White. Although omitting all of the material facts set forth in
paragraph 25 herein above, the sales representatives did discuss various scripted financial
42
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 42 of 70
DQ economQ benefq¶ thQ wLlQ re¶ W fDm q ZRXOG q iHDXeWant¶’ rental q L
program. Specifically, the sales representatives stated the unit was an excellent income
producing opportunity. The sales representative represented the unit as a pre-sale
opportunity that was priced well below market value. Plaintiffs were pressured into
buying quickly as Defendants were running out and there were very few units still for
sale. The sales representative lead Plaintiffs to believe that the unit would pay for itself
every month and that it would produce significant income, in fact the income producing
potential was the main focus of the sales conversation. Plaintiffs were told that HCW
expected the property value to appreciate rapidly once the Branson Landing opened for
business. The sales representatives also stated that participation in the rental program,
managed by Hilton, would be a great investment opportunity because the nearby Branson
Convention center was booked for the next several years to draw in business. The sales
representatives told Plaintiffs that the rental program was through the Hilton Hotel
Corporation and that the Hilton Promenade Boutique Hotel was made up of only
pULYly owneQ uZQ. DefenQanW ¶ qe¶ HprQGtaQW¶ ¶peVDOHVtoU PlUHVHQe
property was only for investment purposes. Defendants also uniformly represented in
their purchase contract that the sale was not the sale of an investment opportunity. The
Security was purchased by Plaintiffs Hunter-Tunnell Branson Investments, LLC in
UHOcDQon DefenQant¶’ mQGDQomV¶io n¶ WQ ULDanQ frauQuVnR¶tVemeQ¶. q IDOVH q DQG q IUI
Simply stated, as a result of these omissions and misrepresentations, Plaintiff Hunter-
Tunnell Branson Investments, LLC was convinced by Defendants that as a result of the
Branson Landing enterprise that the investment in the Security would be profitable and
the value of the Security would appreciate, without Plaintiff Hunter-Tunnell Branson
43
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 43 of 70
Investments, LLC having to provide any services or oversight of the Defendants and the
transaction was not a securities investment. Plaintiff Hunter-Tunnell Branson
InYHmWts, LLC’sqq iancV q UHOLDQFHDefendantQGaud. Defendants knew at the q IUDX
time of the sale that material information was being withheld and intentionally concealed
this material information in order to close the sale. Defendants knew at the time these
statements were made these statements, and each of them, were false, but made them to
defraud Plaintiff Hunter-Tunnell Branson Investments, LLC. Plaintiff Hunter-Tunnell
Branson Investments, LLC, at all times, up until February 2010, was unaware of
DeHnGDQWV¶ q PDmHUonsOndReLVeLReV q DQme and had no
UHoVR belWR qheHOtemeH qto K falVWDWse DQWdants’RepresentDOnHwere q 'HIHQC
GHSHQGHQW q RQ q RQFpecOHGyq IDFW DefendanOLDowledgLWKconq H thQ V¶ q NQI
did not become apparent until February 2010. Only after the Security failed to appreciate
and produced rental income far below the amounts forecasted by Defendants, could
Plaintiff Hunter-Tunnell Branson Investments, LLC foresee the continued loss of money
by reason of the purchase of the Security, but for DefendantV¶matDWHmissionsRnd VLRQV q DQG q
false and fraudulent statements, Plaintiff Hunter-Tunnell Branson Investments, LLC
would not have purchased the Security that was not registered, and is not exempt from
registration. As a result of these facts, Plaintiff Hunter-Tunnell Branson Investments,
LLC is entitled to and hereby seek to rescind the transaction and be restored all money
paid to Defendants plus interest thereon from the date of purchase, plus all damages
resulting therefrom.
110. Plaintiff Elaine Bastl, on or about February 16, 2005, closed the purchase of Unit
S503B, one of the Securities for $129,900.00 and on or about February 9, 2005, closed
44
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 44 of 70
the purchase of Unit N212B, one of the Securities for $129,900.00. Prior thereto, Ms.
Bastl met with Nancy White, DefendaQWs q l esVepresV tq UHsUHVRQWRWLng q llq U $OWKRXJK q
the material facts set forth in paragraph 25 herein above, the sales representatives did
discuss various scripted financial and economic benefits that would result from
pq rUW q FRSDWeUendq nQ’q entq l program. Specifically, the sales representatives stated
the Hilton Promenade Boutique Hotel would be much more upscale than the comparative
hotels in the area and compared the project to several other hotels. The sales
representatives provided an anticipated occupancy rate of no less than 47% and an
estimate of $239.00 per night as the lowest average room rental rate. The sales
representatives also stated that participation in the rental program, managed by Hilton,
would be a great investment opportunity because the nearby Branson Convention center
was booked for the next several years to draw in business. The sales representatives told
Plaintiffs that the rental program was through the Hilton Hotel Corporation and that the
Hilton Promenade Boutique Hotel was made up of only privately owned units. Plaintiffs
made clear to the sales representatives they were solely looking for an investment
opportunity and were told that this was only an investment and that some units were
already cash flowing. Defendants also uniformly represented in their purchase contract
that the sale was not the sale of an investment opportunity. The Security was purchased
E\ Plq iDLU WLl q reDq nW upRn DeUendq nDQmq terXl RmissHHQG Uq lWVnd PDWHULDO q RPLVV
fraudulent statements. Simply stated, as a result of these omissions and
misrepresentations, Plaintiff Bastl were convinced by Defendants that as a result of the
Branson Landing enterprise that the investment in the Security would be profitable and
the value of the Security would appreciate, without Plaintiff Bastl having to provide any
45
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 45 of 70
services or oversight of the Defendants and the transaction was not a securities
LvHsHHQtPHQQtiff BaODLQWQcHqwaDVWOd by UHOQDQFHfrauD DHLQGQF q E\q 'HIHQGD(
knew at the time of the sale that material information was being withheld and
intentionally concealed this material information in order to close the sale. Defendants
knew at the time these statements were made these statements, and each of them, were
false, but made them to defraud Plaintiffs Bastl. Plaintiff Bastl, at all times, up until
)HbruXD2010,q wHrH quQ awHH of DHQQdaQtU maRriaHmQGDQWVb HliHvHdHhHsH q RPLVVLRQV C
statements were true and had no reason to believe the statements to be false because
DHHQGQtQWprHsHQHSoQsVHQWHpHQdHQQoQq aled facts peculiarly within
DHHQGQtQWQowl HdgH aQdHoQHol DQG q QoQWUmH a WKHQWuQGL)HbruRW201H q DS SDUHi
Only after the Security failed to appreciate and produced rental income far below the
amounts forecasted by Defendants, could Plaintiff Bastl foresee the continued loss of
moQHy by rHaUQDVRH purchaWKHth H SHcuKD,Vut RI DHfHQdaQtH maULWomissXQs q IRU q 'HIHQG
and false and fraudulent statements, Plaintiffs Bastl would not have purchased the
Security that was not registered, and is not exempt from registration. As a result of these
facts, Plaintiff Bastl is entitled to and hereby seek to rescind the transaction and be
restored all money paid to Defendants plus interest thereon from the date of purchase,
plus all damages resulting therefrom.
COUNT I
(Federal Securities Laws Violations by All Defendants)
111. Plaintiffs reallege and incorporate herein by reference the allegations contained in
the preceding and subsequent Paragraphs of this Complaint as if fully set out herein.
46
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 46 of 70
112. No registration statement was filed or in effect with the SEC pursuant to the
Securities Act and no exemption from registration existed with respect to the Securities
and transactions described in this Complaint.
113. Defendants, directly and indirectly, have: (a) made use of the means or
instruments of transportation or communications in interstate commerce or of the mails to
sell the Securities as described herein, through the use or medium of oral representations
and written materials; (b) caused the Securities to be carried through the mails or in
interstate commerce, by any means or instruments of transportation, for the purpose of
sale or delivery after sale; and/or (c) made use of the means or instruments of
transportation or communication in interstate commerce or of the mails to offer to sell the
Securities as described herein through use or medium of oral representations and written
materials, as described in the Complaint, without a registration statement having been
filed or being in effect with the Commission as to the Securities or qualification for an
exemption therefrom.
114. Defendants sold investment contracts to Plaintiffs by offering for sale Securities
in the form of condominium-hotel rooms at the Hilton Promenade Boutique Hotel. These
offerings were more than merely a fee simple interest in land but were in actuality an
investment contract sold into a common enterprise with the expectation of profits solely
from the efforts of third parties.
115. Plaintiffs invested their money in a range from $120,000.00 to $310,000.00 per
security.
47
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 47 of 70
116. Plaintiffs and each of them invested their money in a common enterprise known
as Hilton Promenade Boutique Hotel whereby Hilton Worldwide, Inc. was to rent out the
investment securities and Plaintiffs would make a profit.
117. Defendants sold Plaintiffs the investment securities on the basis that a third party,
Hilton Worldwide, Inc., would use their efforts to make a profit for Plaintiffs in renting
out their investment securities to the general public using the rental pool agreement (Unit
Management Agreement).
118. Plaintiffs have little to no control over the rental or use of their unit, in fact
Plaintiffs are penalized thirty-eight dollars per day for not participating in the rental
program.
119. Plaintiffs may not rent their unit on their own to the public, Plaintiffs may not rent
their unit to tenants on a monthly or yearly basis, Plaintiffs may only stay in their own
unit twenty-one days per year if the unit is not already rented to the public, in other
words, Plaintiffs are materially restricted in the use of the unit.
120. Defendants, directly and indirectly, offered to sell and indeed sold these Securities
to Plaintiffs without a registration statement having been filed or being in effect with the
SEC or qualify for an exemption therefrom. By reason of the foregoing, Defendants have
violated Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c).
121. By reason of the conduct alleged herein, Defendants violated Section 12(a)(1) of
the 1933 Act. Plaintiffs demand rescission of these sales of unregistered Securities.
122. Defendants have further violated the Securities Act of 1933 by failing to comply
with rules promulgated by the Securities and Exchange Commission (SEC) specifically
Release No. 33-5347 which deals specifically with condominium sales.
48
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 48 of 70
123. Under SEC Release No. 33-5347, the condominium units Defendants sold to
Plaintiffs are unregistered securities.
124. Defendants affirmatively and actively concealed their unlawful conduct from
Plaintiffs. Defendants concealed the true nature of their unlawful conduct and acts in
furtherance thereof, and actively concealed their activities through various other means
Dd mePoW to GVd WRctDnRDGendHW inWLment coHIHQGDuWd the fQYwV W q FRQVf
language specifically designed to conceal the fact Defendants were selling unregistered
Securities:
7. No sales representative promised that the purchase of a Unit would provideinvestment potential, or tax advantages in regard to my purchase of the Unit(s).No representation has been made to me as to the amount of any gross rentalincome, the number of nights the Unit(s) will be rented, or the average daily rentalprice. I understand and acknowledge that participation in any rental program isnot mandatory and that I may choose to enter the rental program of my ownvolition now or at a later date if I so desire.
Plaintiffs did not discover, and could not have discovered through the exercise of
reasonable diligence, that Defendants were violating the securities laws as alleged herein
until shortly before this action was commenced. As a result of the active concealment of
the unlawful conduct by Defendants, any and all applicable statutes of limitations
otherwise applicable to the allegations herein have been tolled.
COUNT II
(Violation of Section 12(a)(2) of the 1933 Securities Act by All Defendants)
125. Plaintiffs reallege and incorporate herein by reference the allegations contained in
the preceding and subsequent Paragraphs of this Complaint as if fully set out herein.
49
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 49 of 70
126. Under Section 12(a)(2) of the Securities Act of 1933, Defendants were sellers,
offerors and/or solicitors of the Securities. Defendants solicited the sale of the Securities
to each of the Plaintiffs fR 'HeHndQGDoW financiaQbeLQD q EHQHILW q q
127. The statements referred to hereinabove were made in scripted oral representations
and other materials made by Defendants to the Plaintiffs. The scripted oral
representations to the Plaintiffs contained untrue statements of material facts, omitted
other facts necessary to make the statements made not misleading and failed to disclose
material facts. Defendants acted to sell the Securities by way of the scripted oral
$eHeUnVHQW'HWLdQts’ actioH iGDdW p$ep DiWLe sVip Ld o$aXGHentatUns q WKH q
and other material used in the sale of the Securities which were false and misleading
because they did not disclose the material adverse facts set forth above.
128. 30DLQWpu$chas eXUe SDu$itG q W$suan 6B the 'HWndVts’ X$iVX o$W q WR q WKH q 'HIHO
representations. Plaintiffs did not know, and in the exercise of reasonable diligence could
not have known, of the untruths and omissions contained in or made in connection with
'HeHnGDQ sc$ip q Vo$aL$WeG q RUnO q
129. Defendants used real estate agents, not a securities broker dealer to sell the
unregistered securities.
130. By reason of the conduct alleged herein, Defendants violated Section 12(a)(2) of
WKH 33 Acq q d $FW p $omulg UX tH$e undRPAOa p$oHmat WKuUof 'HeQnHnts’ q $V q D q SUR[LP
violations Plaintiffs and each of the Plaintiffs have been damaged.
131. Defendants affirmatively and actively concealed their unlawful conduct from
Plaintiffs. Defendants concealed the true nature of their unlawful conduct and acts in
furtherance thereof, and actively concealed their activities through various other means
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and methods to avoid detection. Plaintiffs did not discover, and could not have
discovered through the exercise of reasonable diligence, that Defendants were violating
the securities laws as alleged herein until shortly before this action was commenced. As a
result of the active concealment of the unlawful conduct by Defendants, any and all
applicable statutes of limitations otherwise applicable to the allegations herein have been
tolled.
COUNT III
(Violation of Section 10(b) of the 1934 Securities Act and Rule 1 0b-5 by all Defendants)
132. Plaintiffs reallege and incorporate herein by reference the allegations contained in
the preceding and subsequent Paragraphs of this Complaint as if fully set out herein.
133. Defendants disseminated or approved the statements specified above, which they
knew were materially false and misleading in that they concealed and failed to disclose
material facts necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
134. Defendants violated § 10(b) of the 1934 Act and Rule 1 0b-5 in that they:
a. Employed devices, schemes, and artifices to defraud;
b. Omitted to state material facts necessary in order to make statements made, in
light of the circumstances under which they were made, not misleading; and/or
c. Engaged in acts, practices, and a course of business that operated as a fraud or
deceit upon Plaintiffs and others similarly situated in connection with the
purchases of Securities.
135. 3VGDLUUWGIVsu UUDY dGmGgeHUHGt,q GsDPDuVtV U DeUenWKDW onc DVmentqoU q RI
material facts, they purchased Securities with a value far less than the amount paid.
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Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 51 of 70
Plaintiffs would not have bought these Securities if they had been aware of the true facts
that were concealed and not disclosed by Defendants.
136. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiffs and
suffered damages in connection with their purchase of the Securities.
COUNT IV
(Violation of R.S.Mo. §409-003.301 by all Defendants)
137. Plaintiffs reallege and incorporate herein by reference the allegations contained in
the preceding and subsequent Paragraphs of this Complaint as if fully set out herein.
138. The entire amounts paid by each and every Plaintiff was subject to the risk of the
Hilton Promenade Boutique Hotel enterprise to rent the Securities, branded Hilton
Boutique Hotel rooms, at a projected rate for a projected range of days within each year.
All of the economic benefits to be derived from the Security were inextricably bound to
the success of the entire Hilton Hotel branded enterprise as a whole. The occupancy rates
of the Security, from which Plaintiffs sought to derive rental profits, were dependent
upon the success of the Hilton brand.
139. The furnishing of the amounts paid by each and every Plaintiff for the Securities
purchased were induced by Defendants’ omissions of material fact set forth in paragraph q IDF
29 herein above and representations which gave rise to a reasonable understanding
among the Plaintiffs that a valuable benefit in the form of prospective economic benefits
would accrue to Plaintiffs from the entrepreneurial or managerial efforts of others
managing the Hilton Promenade Boutique Hotel, the Branson Landing and the Rental
Program at the Hilton Promenade Boutique Hotel, induced Plaintiffs to purchase the
Securities. The economic benefit, over and above the amounts paid for the purchase of
52
Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 52 of 70
WQ H curHFs, tLW'HQfQn danW sDQs q HI pQmDQWVuld Dw tV PlWHDP from thQ q ZRXOG q ]
purchase of the SecXULWwQrQ th Q Himary moHvaSoLbQhU q PRWLYDWLhQ Q oHhQ q 3ODLQVf
Securities. Residency was never discussed and was specifically disallowed by the
'HQHnGDQ pVchasQ UnKDV q FRQWUDFW q q
140. Plaintiffs did not intend to receive any right to exercise practical and/or actual
control over the managerial decisions of the Hilton enterprise. Furthermore, Plaintiffs did
not exercise any power to influence the utilization of the capital invested in the
Securities. Instead, the economic benefits that Plaintiffs were told by Defendants would
flow from the purchase of the Securities would result from the name recognition of the
Hilton Hotel brand, the strength of the rental program management, and the ability of the
reservation system of the rental program to yield income after purchase.
141. Defendants issued the Securities, which were not exempt from registration, to
Plaintiffs without abiding by the registration requirements of Missouri, did not have any
preemption there from and therefore Plaintiffs, under R.S.Mo. § 409-005.509, may
recover the consideration paid for the Securities and interest at the legal rate of this State
fUm th Q dKH of paWQnt, costs anHQWon ablQ VWnQyD fQQ s, lQss thQ QouO o qinWW q M
received on the Securities.
142. Plaintiffs who no longer own the Securities may recover damages. Damages are
the amount that would be recoverable upon a tender less the value of the Secruties when
the purchaser disposed of it, plus interest at the legal rate of this State from the date of
disposition of the Securities, coVWnd rQQonablQ DVRQDEOQs dQWWnQd by thQ couH q GHWHUPI
Tender requires only notice of willingness to exchange the Securities for the amount
specified.
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COUNT V
(Violation of R. S.Mo. §409-005.501)
143. Plaintiffs reallege and incorporate herein by reference the allegations contained in
the preceding and subsequent Paragraphs of this Complaint as if fully set out herein.
144. It is unlawful for a person, in connection with the offer, sale, or purchase of asecurity, directly or indirectly:
(1) To employ a device, scheme or artifice to defraud;(2) To make an untrue statement of a material fact or to omit to state a material factnecessary in order to make the statement made, in light of the circumstances under whichit is made, not misleading; or(3) To engage in an act, practice, or course of business that operates or would operate as
a fraud or deceit upon another person.
R.S.Mo.§ 409-005-501.
145. Defendants, through the sales and rental management presentations of the
unregistered Securities have employed a device, scheme or artifice to defraud described
in specificity above in this Complaint and incorporated by reference herein, by making
material omissions of fact as set forth in Paragraph 29 above and false representation as
set forth herein.
146. Defendants, further through the sales and rental management presentations of the
unregistered Securities, as described with specificity above in this Complaint and
incorporated by reference herein, made several untrue statements of material facts and/or
omitted to state material facts necessary in order to make the statements made not
miVOHngGnQh q LQ q WumstanUXconcerUnXPe DDQdaVs’ aRuFHUQtyQo foWcHtq 'HIHQGDQVN
RU q SUHGLFW q WKH qofURtLWDEgOLWfendantsDUWL maDWmen qprogram q Ul
and the minimum rental rates, the minimum occupancy rates, and the anticipated
appreciation rates of the Securities.
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147. Defendants, through the intentional omission of material facts and false and
fraudulent sales and rental presentation described with specificity above, engaged in acts,
practices and/or a course of business which operated as a fraud or deceit upon the
3ODLQWy induEngLlaGXfLQo puODasQW SecurWes anXUteKDe Defendan q ’ q D(
rental management program based on dubious predictions of economic expectations that
the Defendants knew to be false at the time such predictions were made. Moreover, the
Defendants knew that these statements were untrue and the omissions were material and
misleading, but made them to defraud Plaintiffs.
148. Plaintiffs did not know that the statements of material facts made to them by
Defendants during the sales presentations were untrue or that there was an omission of a
statement of material fact.
149. Plaintiffs did not receive any written offer, including financial and other
information necessary to correct all material misstatements or omissions in the
information required to be furnished to Plaintiffs, as of the time of the sale of Securities.
150. Defendants, pursuant to the fraudulent scheme, business practice, and on the basis
of untrue material facts and omissions, issued Securities, which were not exempt from
registration, to Plaintiffs without abiding by the registration requirements of Missouri and
therefore Plaintiffs, under R.S.Mo. §409-005.509, may recover the consideration paid for
the Securities and interest at the legal rate of this State from the date of payment, costs
DdGeaUnDVRQDney’sqfDs, WRUDeHmountHHVcomOHceiveWKomqtDPSXuWes. q LQFRPH q UIF
151. Plaintiffs who no longer own the Securities may recover damages. Damages are
the amount that would be recoverable upon a tender less the value of the Securities when
the purchaser disposed of it, plus interest at the legal rate of this State from the date of
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Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 55 of 70
disposition of the Securities, costs and reasonable attorney’s fees determined by the court. C
Tender requires only notice of willingness to exchange the Securities for the amount
specified.
COUNT VI
(Violation of R. S.Mo. Chapter 407, et seq. by all Defendants)
152. Plaintiffs reallege and incorporate herein by reference the allegations contained in
the preceding and subsequent Paragraphs of this Complaint as if fully set out herein.
153. Plaintiffs bring this claim under Missouri consumer protection laws, particularly
R.S.Mo. §407.020, et seq., who purchased the air rights to condominium hotel room units
from Defendants, and who were thus subject to Defendants’ above-described deceptive, q DEI
unlawful and fraudulent conduct.
154. The air rights to condominium hotel room units, as described above, were
purchased by the Plaintiffs and by other consumers similarly situated primarily for
investment purposes.
155. Defendants’ contracts are set up in such a way as to make the air rights identical
and in fact the same as that of a timeshare. Timeshares are merchandise pursuant to
R.S.Mo. §407.630 and these sales must be treated as such.
156. The Defendant developers of this project are former time share sales people,
managers, and/or employees and have knowledge of the timeshare industry and are
familiar with the sales contracts of the same.
157. The Defendants violated their statutory duty under the Missouri Merchandising
Practices Act by advertising, offering and selling the air rights to condominium-hotel
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Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 56 of 70
room units at the Hilton Promenade Boutique Hotel at Branson Landing as described
herein above.
158. Further, Defendants’ sales contracts are volumous pages of disclosures whichX
they did not allow Plaintiffs sufficient time to review and reflect upon prior to signing.
159. The Defendants violated their duty under the aforementioned statutes including
but not limited to §407.020 by among other things, (a) representing that the
condominium-hotel room units at the Hilton Promenade Boutique Hotel would earn a rate
of return and/or was guaranteed, secured or protected, which Defendants knew or had
reason to know was false and/or misleading; (b) making untrue statements of material
facts and/or omitting to state material facts about the units at the Hilton Promenade
Boutique Hotel; (c) failing to comply with applicable laws and regulations concerning the
marketing and sale of the units; and/or (d) conducting the offering and sale of the units at
the Hilton Promenade Boutique Hotel without all required licensing and regulatory
approvals.
160. The Defendants’ actions as alleged herein were materially deceptive andZHUH q PDWHULDOO'
constituted fraud, false pretense, misrepresentation and the concealment, suppression and
omission of material facts with the intent that Plaintiffs would rely upon the fraudulent
misrepresentation, concealment, suppression and omission of such material facts, all in
violation of the Missouri Merchandising Practices Act.
161. Plaintiffs were injured by the many violations of the Missouri Merchandising
Practices Act, and Plaintiffs have thereby been damaged in an amount to be proven at
trial.
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162. DeHnGDQWcVo ns wWLnQVionJl, willfuQnd QWgeQDOving LO to q DQG q RXWUDJ
SXQLWdJmJ gesDnDJHorneDQGesDWhoRUdHnder theHJtute,XW.MUL] qG q25. q WKH q VN
COUNT VII
(Fraudulent Misrepresentation by All Defendants)
163. Plaintiffs reallege and incorporate herein by reference the allegations contained in
the preceding and subsequent Paragraphs of this Complaint as if fully set out herein.
164. Defendants made false and fraudulent misrepresentations, as described with
specificity above and incorporated by reference herein, that as a result of Hilton Hotel
branding, hotel reservatioQ, room RRs, qocDSJncyq Jt R, DeSnQnts’ UDWHSrog q m U
and the other amenities being delivered by the Branson Landing enterprise, the
investment in the Securities would be profitable and the value of the Securities would
appreciate, without Plaintiffs, having to provide any services or oversight of the
Defendants.
165. Defendants, and each of them, made these representations with the knowledge or
belief that the representations were false or with an insufficient basis of information for
making the representations.
166. Defendants intended to induce Plaintiffs to act upon the misrepresentations by
entering into the sales agreement to purchase the Securities and also entering into the
rental management agreement.
167. Plaintiffs were ignorant of the truth of the misrepresentations and concealments
made by Defendants an in fact justifiably relied on the misrepresentations made by
Defendants.
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168. $s q DreGLQHpWximqtGresKURf 'HDWHQUHVXOWmRtqqQd
misrepresentations of material facts, Plaintiffs entered into a written agreement for the
purchase of the condominium hotel, entered into a written agreement to participate in the
'HeHQGQtQ reQtqq mqQq WmeQt pDQ qm, qQdQKffe redRqmqges q moreqfKXy seUorthq GDPDJHV q DV
herein above an in an amount to be proven at trial.
169. As a result, Plaintiffs are, in the alternative, entitled to rescission of the contract,
an accounting, and the return of any and all money or property given, plus interest and
expenses.
170. Defendants had actual knowledge of the fact that the representations were in fact
false, and for these reasons, and because the conduct by these Defendants was malicious,
oppressive and/or fraudulent, Plaintiffs are, therefore, entitled to punitive damages to
make an example of and to punish these Defendants in addition to actual damages.
COUNT VIII
(Negligent Misrepresentation by All Defendants)
171. Plaintiffs reallege and incorporate herein by reference the allegations contained in
the preceding and subsequent Paragraphs of this Complaint as if fully set out herein.
172. Defendants supplied false guidance in discussions relating to the sale of
'HeHQGQtQWoQdomRQm hLQLQPsqqKRWHOoQXroW QqdDBoKtiqKe HotLOs q 3URPHQDGH q
described with specificity above and incorporated by reference herein. Defendants failed
to exercise reasonable care or competence in obtaining or communicating the information
which consisted of misrepresentations, not only concerning the property value of the
condominium hotel units, but also concerning the anticipated rental value and occupancy
rate of the units, aQd the pKHt q bUty oW qrEcOqtWgq Q 'He fDdqQtsFLQDW qQqgeme Qt
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SUgrU.)P uch )I isKpreLnUHnUwVHI We)in)tR)courZ)oU'HefenGH q )business, ) qFRXUVH q RI q '
profession or employment, and/or in any such transaction in which Defendants had a
pecuniary interest.
173. The misrepresentations made to Plaintiffs included the false and fraudulent
statements described above with specificity in this complaint and incorporated by
reference herein.
174. Defendants, and each of them, made these representations negligently, and
without any reasonable basis for believing them to be true.
175. Plaintiffs were ignorant of the truth of the misrepresentations and concealments
made by Defendants and in fact justifiably relied on the misrepresentations made by
Defendants and each of them.
176. As a GrecHnWproQI ate)URLoD'HefendanVXI iWtateI eHs)aQ ) qPLVVWDWHPH(
misrepresentations of material facts, Plaintiffs entered into a written agreement for the
purchase of the condominium hotel, entered into a written agreement to participate in the
'HeHnGDQ)Vntal management program, and suffered damages as more fully set forth
herein above and in an amount to be proven at trial.
177. As a result, Plaintiffs are, in the alternative, entitled to rescission of the contract,
an accounting, and return of any and all money or property given, plus interest and
expenses.
COUNT IX
(Fraud in the Inducement by All Defendants)
178. Plaintiffs reallege and incorporate herein by reference the allegations contained in
the preceding and subsequent Paragraphs of this Complaint as if fully set out herein.
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179. Plaintiffs contracted with Defendants and relied upon Defendants to provide their
professional expertise and judgment with respect to the purchase of condominium hotel
units at the Hilton Promenade Boutique Hotel. Defendants utilized an inside and outside
sales team in order to make false representations to the Plaintiffs in order to induce their
consent to enter into the purchase agreement and the rental management agreement. Both
'HeHQGQtQ iQVde DQd ouGide DQGte DXWVkQoH ledD oHbeliW HDPthe q NQRZOHGJH q RU q E
representations were false or knowledge that it had an insufficient basis for making the
representations.
180. The material omissions and false representations made to Plaintiffs included the
fraudulent statements described with specificity above and incorporated by reference
herein.
181. Defendants presented numerous false representations regarding the true economic
value of such investment from Plaintiffs, despite knowing and concealing the true and
correct facts of the rental values, expected rental occupancy rate of the Securities, and the
amount of profits Plaintiffs would receive from participating in DefendantV reQtDl
management program.
182. Defendants, and each of them, had a duty to disclose the true nature of all known
material facts and circumstances surrounding the economic value of the Securities.
Defendants had exclusive knowledge of all such material facts and such material facts
were not known or reasonably accessible to Plaintiffs.
183. The concealment of the true facts from Plaintiffs was done with the intent to
induce their consent to enter into the purchase agreement and the rental management
agreement.
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184. Plaintiffs justifiable reliance on statements made by Defendants was justified as
Defendants purported to have professional expertise concerning the economic value of
the condominium hotel units.
185. $V q DsuU oVDOWdants’ HlH rGresWtV¶onDegardi nomic value q UHJDUGL(
of the condominium hotel units complained of in this complaint, Plaintiffs were unaware
of the true nature of the facts concerning the true value of the condominium hotel units as
economic investments.
186. As a result of the false representations, Plaintiffs entered into a written agreement
for the purchase of the condominium hotel unit, entered into a written agreement to
pDUWaF in thWDefendantsKHntaHmanagemWt prograQ and sufferQ damagQ as mUe q q DQ(
fully set out herein above in an amount to be proven at trial.
187. As a result, Plaintiffs are, in the alternative, entitled to rescission of the contract,
an accounting, and the return of any and all money or property given, plus interest and
expenses.
188. Defendants had actual knowledge of the fact that the representations were in fact
false, and for these reasons, and because the conduct by these Defendants was malicious,
oppressive and/or fraudulent, Plaintiffs are therefore, entitled to punitive damages to
make an example of and to punish Defendants in addition to actual damages.
COUNT X
(Fraudulent Concealment by All Defendants)
189. Plaintiffs reallege and incorporate herein by reference the allegations contained in
the preceding and subsequent Paragraphs of this Complaint as if fully set out herein.
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190. Plaintiffs contracted with Defendants and relied upon Defendants to provide their
professional expertise and judgment with respect to the purchase of Securities at the
Hilton Promenade Boutique Hotel. Defendants utilized an inside and outside sales team
in order to sell these units. The teams employed by Defendants concealed and/or
suppressed material facts relating to the true economic value of the condominium units.
191. The material facts concealed from Plaintiffs included the fraudulent statements
described with specificity above and incorporated by reference herein.
192. Defendants concealed and suppressed the material facts regarding the true
economic value of such investment from Plaintiffs, despite knowing the true and correct
facts regarding the Securities. The misrepresentations were made and the true and correct
fDtW onc eRQ Vy XeHn qants iHoq qeq to QWntionQly R quce the 3laintiQWoQWLR q LQGXF
purchase the condominium unit and enter into the rental management agreement with
Defendants.
193. Defendants, and each of them, had a duty to disclose the true nature of all known
material facts and circumstances surrounding the rental values, expected rental
occupancy rate, and relevant material facts described above and incorporated by
reference herein. Defendants had exclusive knowledge of all such material facts and such
material facts were not known or reasonably accessible to Plaintiffs.
194. 30DLQWq eliance oHOLements mQ q Vy XeW qaHQ an q each oHhem, Hs q q DQ
justified as Defendants purported to have professional expertise concerning the economic
value of the condominium hotel units.
195. $V q q e suU oVXOW qants’ HtHQoDQWVep q eseWHoWLmaDq ial facV
regarding the true economic value of the condominium hotel units complained of in the
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complaint, Plaintiffs were unaware of the true nature of the facts concerning the true
value of the condominium hotel units as economic investments. Had Plaintiffs been
aware of the material facts concealed by Defendants, Plaintiffs would not have entered
into any agreements with the Defendants.
196. As a result of the concealment alleged, Plaintiffs entered into a written agreement
for the purchase of the Securities, entered into a written agreement to participate in the
'HIHVGVtQ1 rIVtal1 JHaWJIVt1 pDQaJ, and suffered damages as more fully set out
herein above and in an amount to be proven at trial.
197. As a result, Plaintiffs are, in the alternative, entitled to rescission of the contract,
an accounting, and the return of any and all money or property given, plus interest and
expenses.
198. Defendants had actual knowledge of the fact that the representations were in fact
false, and for these reasons, and because the conduct by these Defendants was malicious,
oppressive and/or fraudulent, Plaintiffs are, therefore, entitled to punitive damages to
make an example of and to punish these Defendants in addition to actual damages.
COUNT XI
(Breach of Fiduciary Duty by All Defendants)
199. Plaintiffs reallege and incorporate herein by reference the allegations contained in
the preceding and subsequent Paragraphs of this Complaint as if fully set out herein.
200. Plaintiffs and Defendants have a fiduciary relationship in that the Plaintiffs
purchased units from Defendants and signed agreements with Defendants whereby
Defendants would, unsupervised by Plaintiffs, rent out and manage their units as hotel
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rooms as part of the Hilton Promenade Boutique Hotel and in return, Plaintiffs would
receive income from the rental of the units.
201. Defendants have breached their duty to Plaintiffs by among other things plead in
this petition, engaging in competitive unit rentals with Plaintiffs without their prior
knowledge and consent, not renting Plaintiffs units on a rotational basis and overcharging
Plaintiffs for expenses.
202. EIHnI aDQWcVons haW caQII KDYH q hDmVHGat3hIyLaW GIIn qmonItP qyLQ q WKDW q
I amagII Gyq EI q HHQGGrIachVf thIUHI uKary I utW q ILGXFLDU\ q GXW\ q q
203. As a result, Plaintiffs are entitled to rescission of the contract, an accounting, and
the return of any and all money or property given, plus interest and expenses.
COUNT XII
(Violation of R.S.Mo.§448-002.106 et. seq.)
204. Plaintiffs reallege and incorporate herein by reference the allegations contained in
the preceding and subsequent Paragraphs of this Complaint as if fully set out herein.
205. Plaintiffs bring this claim pursuant to the Missouri Condominium Property Act,
R.S.Mo. Chapter 448, specifically for violation of R.S.Mo. §448-002.106 et. seq. and
seek relief under R. S.Mo. §448-004.117.
206. Pursuant to R.S.Mo. §448.002-106.1, when selling a condominium unit to an
individual on leased land, the declaration for the condominium project must state:
(1) The recording data for the lease;(2) The date on which the lease is scheduled to expire;(3) A legally sufficient description of the real estate subject to the lease;(4) Any right of the unit owners to redeem the reversion and the manner whereby
those rights may be exercised, or a statement that they do not have thoserights;
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(5) Any right of the unit owners to remove any improvements within a reasonabletime after the expiration or termination of the lease, or a statement that they donot have those rights; and
(6) Any rights of the unit owners to renew the lease and the conditions of anyrenewal, or a statement that they do not have those rights.
207. The declaration for the project which is the subject matter of this law suit, Hilton
Promenade Boutique Hotel, does not comply with R.S.Mo.§448-002.106.1(4)-(6), in that
those provisions are omitted from the declaration.
208. 3ODL''WavVbeK damageHbQ'He'DdDtH 'ai Ere H HmpD wWh V q IDLOXUH q WR q FRPS
R.S.Mo.§448.106.1 in that they were not made aware of their rights concerning the end
of the 99 year land lease that the Defendants have with the City of Branson. PlaintiffIV q
resale value, safety and security of their investment and certainty of the future have all
bHHQopaHReDby 'He'enda Es’ 'ailuQ tDQmply wiD thXUndomRium stSue q ZLWK q WKH q FRQ(
209. Plaintiffs are seeking appropriate relief of rescission of contract, damages and
UHoVbQ aEOneyD 'eW pUsHnt to IH.Mo. §X8V-117. q WR q 5 q 6 q OR q q q q q q q
COUNT XIII
(Breach of Contract and Unjust Enrichment Against Hilton Worldwide, Inc.)
210. Plaintiffs reallege and incorporate herein by reference the allegations contained in
the preceding and subsequent Paragraphs of this Complaint as if fully set out herein.
211. Defendant, Hilton Worldwide, Inc., manages rental program in which the
3ODL''WuniV are invoWV. q
212. Defendant, Hilton Worldwide, Inc., has a reservation service located at the Hilton
3UmenQe Bouti%R HoteTwhere thWpuOic makU resWaHons aE rents 3DNH''s’ Ud
'He'enGDQ hotel rKmW q URRPV q q
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213. Defendant, Hilton Worldwide, Inc., has a reward program known as Hilton
Honors in which customers may earn reward points through various methods such as
staying at a facility owned or managed by Hilton. Hilton Promenade Boutique Hotel is
one such property.
214. As part of the Hilton Honors program, guests can earn free or reduced rate stays at
a Hilton owned or managed property.
215. Defendant, Hilton Worldwide, Inc., offers members of the Hilton Honors program
free or reduced rate rooms at Hilton Promenade Boutique Hotel and allows those guests
WR Jy iWDJinLffq unDs for a free or reduced rate.
216. :KDen HiltO HoQrs membeV stJHin HJiV q VWDts, PQintOD JQWb JVcosX q 3ODI
and are given a significantly reduced rate for the unit of $30.00 before management fees
and the fifty percent split with Defendants leaving the Plaintiff unit owner with roughly
$13.00.
217. There is no arrangement between Hilton Worldwide, Inc. and Plaintiffs by which
Plaintiffs agreed to accept this significantly reduced rate nor does this scheme appear in
the Unit Management Agreement.
218. Plaintiffs must pay the utilities, maintenance, taxes and insurance on their unit
when Hilton Worldwide, Inc. rents their unit to a Hilton Honors member and only
UceiHs $H.00 q q q tDe nigDU stJyWKintiQLJK e¶entiJlW funding tDLHWL Honors q HVVHQW
program without their prior approval or consent.
219. Hilton Worldwide, Inc. is profiting from repeat business of Hilton Honors
members at the subject property and their other properties around the world while
Plaintiffs pay for the costs of the units at the Hilton Promenade Boutique Hotel.
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220. Defendant Hilton Worldwide, Inc. has been unjustly enriched by their actions in
gKanQWaQess to PHVV GGWunits to t¶QWLon H onoKs WmbeKs at nWKst to DeGeRant q PHI
Hilton Worldwide, Inc.
221. Defendant Hilton Worldwide, Inc. has breached its contract with Plaintiffs by
HgaDng PlainOGGs’ uWLin t¶ e HQoWHon oKs pKogKH wL¶oW t¶e q coQeU. q SURJUDP q ZLWKRX'
222. PODLGGWavVbeK damageHbQDeGDdDt Glton q'oKldwGe, IW q acOW in q :RUOGZLGH C
an amount to be determined.
REQUEST AND PRAYER FOR RELIEF
WHEREFORE, Plaintiffs respectfully request that the Court enter judgment in their favor
and against Defendants as follows:
PRAYER FOR RELIEF
Plaintiffs pray for judgment and relief against Defendants as follows:
1. For damages according to proof;
2. For interest on all damages as allowed by the laws of the State of Missouri according
to proof at time of trial;
3. For a temporary restraining order, permanent or temporary prohibitory or mandatory
injunction or a writ of prohibition or mandamus;
4. For the imposition of a civil penalty of not more than $2,500.00 for a single violation
or $100,000.00 for multiple violations in a single proceeding or series of related
proceedings;
5. For the issuance of a declaratory judgment;
6. For an order of rescission and restitution to investors;
7. For an order for an accounting;
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Case 6:11-cv-03190-RED Document 15 Filed 07/14/11 Page 68 of 70
8. For an order of punitive damages;
9. )oUthWEEointmeR oQWeHQW oRconservaHr for tH DeRndanRQVHUY q IRU q WKH q ':
10. For an order of payment of the divisions investigative costs;
11. For an order of such other relief as the court deems just;
12. For consideration paid for the Securities and interest at the legal rate of Missouri from
WKHte oDEaymenIEluDall exEens eOnVrrD, costHanHQaHnabL aFXnUH fees, FRVWV q DQG C
less the amount of income received on the Securities;
13. For damages for each Plaintiff who no longer owns the Securities in the amount that
would be recoverable upon a tender less the value of the Securities when the Plaintiff
disposed of it, plus interest at the legal rate of this State from the date of disposition
of thWKcuritHs, cUtWnHVasonabV attorneQGfees dDVmQeEby the WurtRUnHr q IHHV q GI
requires only notice of willingness to exchange the Securities for the amount
specified; and
14. )oUq oQeRUGoUs and aq oReyW feeDQ aqoweWy lW
Dated: July 14, 2011
Respectfully Submitted,
MORRISSEY LAW OFFICE, LLC
By: /s Joseph A. Morrissey Joseph A. Morrissey, MO Bar# 30202Anna Morrissey MO Bar# 57756114 W. AdamsBranson, Missouri 65616Phone: (417)334-7581Fax: (417)334-2071ATTORNEYS FOR PLAINTIFFS
Respectfully Submitted,
MORRISSEY LAW OFFICE, LLC
By: /s Anna M. Morrissey
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Joseph A. Morrissey, MO Bar# 30202Anna Morrissey MO Bar# 57756114 W. AdamsBranson, Missouri 65616Phone: (417)334-7581Fax: (417)334-2071ATTORNEYS FOR PLAINTIFFS
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