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ADDendL Xn‐Bl
ClvlI CNSE INFORMATION STATEMENT(crs)
Use for initial Law DivisionCivil Part pleadings (not motions) under Rure 4:5-1
Pleading will be rejected for filing, under Rure 1 :5-6(c),if information above the black bar is not completed
or attorney's signature is not affixed
PAYMENTTYPE □ CК □ CG□ CACHci/cK No.
AMoUNT:
OVERPAYMENT:
BATCH NUMBER:
AπORNEY′ PRO SE NAMEPAUL」 DILLON,ESQ
TELEPHONE NUMBER(973)758‐ 0900
COuNTY OF VENUEOcean
FIRM NAME(r applcablo)BL00M&D:LLON,PC REC[|∵こ〕&FILEE
四|
KttW列才l樹物ΨOFFICE ADDRESS70 SOUTH ORANGE AVENUESUITE 240LIVINGSTON,N」 07039
ｒｉ１１１１１１‥
DEC -2 a141
DOCCCJMENTI/PE V｀MPLAINT
」UR DEMAND E Yes ENoNAME OF PARTY(eO,」 。hn Doe,PlainuD
ELAUT USA,lNC,PLAINTIFF 卜L
CASE TYPE NUMBERISee reverse sldefor‖ sung)
699
HURR!CANE SANDYRELATED?□ YES tt N0
lS THlS A PROFESS10NAL MALPRACTlCE CASE? □ YES tt NOIFYOU HAVE CHECKED γES,"SEE 7Vユ SA 2A 53A‐ 27 AND APPLiCABLE CASE LAWRECARDING YOUR OBL10AT10N TO FlLE AN AFFIDAVlT OF MERIT
RELATED CASES PENDING?図 YES □ No
IF YES.LIST DOCκ ET NUMBERSL‐002327‐ 14
DO YOU ANTICIPATE ADDING ANY PARTlES(a‖Sing out of same transacuon Or Occurence)?
□ YES tt No
NAME OF DEFENDANT'S PRIMARYINSuRANCE COMPANY(rknom)□図NONEUNKNOWN
CASE CHARACTERiSTlCS FOR PURPOSES OF DETERMlNING IF CASEISハ PPROPRIATE FOR MEDIAT10NDO PARTIES HAVEA CuRRENT,PAST ORRECuRRENT RELAT10NSH:P?
図 YES □ NO
IF YESJS THAT RELATIONSHIP:E EMPLoYER/EMPLOYEE
E FAI L|ALE FRIENo/NEIGHBOR E OTHER (EXPIAIN)
El BusrNEss
DOESTHE STATUTE GOVERNING THIS CASE PROVIDE FOR PAYMENT OF FEES BYTHE LOSING PARTY? El YEs I No
uSETHISSPACETOALERTTHECOURTTOANYSPECIALCASECHARACTERISTICSTHATMAYWARRANTINDIVIDUALMANACEMENTORACCELERATED DlSPOSIT10N
:そ:「F~ :∫ (lせR゙ YOuR CuE‖
]N景量:ANY uSABL「Y ACCOMMODArЮ NS? IFYES,PLEASElDENTIFV THE REQUESTED ACCOMMODAT10N
WILL AN!NIERPRETER BE NEEDED?□ YES tt N0
IF YES, FOR WHAT LANGUAGE?
I certify that confldential peEonal idontifiers have been rodact€d from documents now submitted to the court, and will beredacted from all documenG submltted in tho futuro in accord8nca with Rure 1:38-7(b).
コ=■′グEffective O● 19‐2013,CN 10517‐Eng“sh page 1of2
10R USE 3V CLEFく S OIIICE OヽlLY
THEINFORMAT:ON PROViDED ON THlS FORM CANNOT BE:NTRODUCEDINTO EVIDENCE
CIVIL CASE INFORMAT10N SttATEMENTuseぉ百雨 J倒。adngsRR温 。祠 undtt RJre 4由
CASE TYPES(ChOOSe One and enter number of case type in approp‖ ate space on the reverse side)Track: ‐ 150 daysi discovery151 NAME CHANGE175 FORFEITURE302 TENANCY器::轟祠 (階盤出鳴:縫駅l場∝C°ndemmm■ ∽m口α∞mme商詢∞“mmm:舘 呂甜 利 営ヨ盤
NCE C臥IM“nCluang dedarato″ 担dgmen adbn●
]♀ 脇8V8f譜鵬 留献 3耀群記it]緞馴c¬。N:::錨翼器器糧朧 席∫蝸辟““哺
Track:! ‐ 300 days'discovery305 CONSTRUCT10N:::認:寵断だl棚:麗腐撫紫RしN603N AuTO NECLIGENCE― PERSONALlN」 URY(non‐Verbai ulreshOd)603Y AUTO NECL!GENCE― PERSONALIN」URY lvetalthreshold)605 PERSONALIN」 URY610 AuTO NEGLIGENCE― PROPERTY DAMAGE:::ギ器」‰躍M md“es bodw tturyl
Track:‖ ‐ 450 days'discovery005 CIVlL RIGHTS301 CONDEMNAT10N602 ASSAULT AND BAπ ERY604 MED!CAL MALPRACTICE606 PRODuCT LIAB:LITY607 PROFESS:ONAL MALPRACTICE608 TOXiC TORT609 DEFAMAT10N616 WH:STLEBLOWER′ CONSCIENT10uS EMPLOYEE PROTECT!ON ACT(CEPA)CASES617 1NVERSE CONDEMNA■ON618 LAW ACAINST DISCRIMINAT10N(LAD)CASES
Track Ⅳ ‐Act“ Case Managemem by hdⅥ魃 1欝招ヤ
い 'dSC°"リ156 ENVIRONMENTAL7ENVIRONMENTAL COヽ303 MT LAUREL508 COMPLEX COMMERC:AL513 COMPLEX CONSTRUCT10N514 1NSuRANCE FRAUD620 FALSE CLAIMS ACT7●l ACT10NS:N LIEU OF PREROGATiVE WRITS
MulticOunty L:t:gation(Track:Ⅵ
:'♀ 器器欝轟路囲(器THEMPY“町)
274 R:SPERDAL/SER00UEUZYPREXA278 ZOMETA/AREDIA279 GADOし INIUM281 BRISTOL‐ MYERS SOulBB ENVIRONMENTAL282 FOSAMAX284 NUVARING285 STRYKER TRlDENT HIPIMPLAhlTS286 LEVAOUIN287 YAnASMINrOCELtA
PRUDENTlAL TORT LIT:GAT10NRECLANPOMPTON LAKES ENVIRONMENTAL LITIGAT10NPELViC MESH′GYNECAREPELVIC MESH7BARDDEPUY ASR HIP IMPLANT LITlGAT10NALLODERM RECENERATlVE TISSuE MATRIX
瀾 甜 l躙 冷 T諧 晶 ↓躍DuttR HP ttEM COMPONENTS
ASBESTOSPROPECIA
２８８２８９２９０２９‐２９２２９３２９５２９６２９７団昭鷺1:=:誂‖:F零酬 膳譜慧L「er han・・ pЮudOd aboぃ,p!“ 30 hdに ate he rea80n on ttde■
P:ease check ofreach app‖ cab:e category □ PutaJve c:ass Action □ T■:e59
EfFemve 08‐ 192013,CN 10517‐ Englishpage 2 ot 2
ヽ
Paul J.Dillon,Esq.#026521981BLOOM&DILLON,P,C.70 South Orange Avenue,Suite 240Livingston,New Jersey 07039973-758‐ 0900
Mary E.Fl卿,Esq.MORRISON COI‐ IEN LLP909 Third AvenueNew York,New York 10o22212‐735-8600
Иわr″cッs力rP″′″′EJα“′研y,ルε.
ELAUT USA,INC。 ,
Plainti氏
VS.
JACK GUARNIERI,MICHAEL CARLE andJERSEY JACK PINBALLINC.,
RECEIVED&F:LED
SUPER10R C■,OCEAN
DEC -2 2014
SIIPERIOR COURT OF NEW JERSEYLAW DIVISIONOCEAN COUNTY
富ⅧQttηι籠//7
COMPLAINT
Defendants.
Plainti∬ Elaut USA,hc。 (``Elaut''),by■S attomeys,Bloom&Dillo■ ,PoC.and Mo五son
Cohen LLP,for its complamt ag,lnst Defendants Jack GuamieH,Michael Carle,and Jersey Jack
Pinball Lに ,alleges as follows:
MRODUCTION
l. h this action,Plantiff Elaut secks to recoup the inore than Sl,600,000
Defendant Jack Guamieri stole ttonl Elaut when he was Elaut's President and Chief Executive
O伍cer,with the assistance of Defendant Michael Carle,Elaut's fo....er ChiefFinancia1 0fflcer,
and■at Guamieri then iaudulently transferred in partto Defendant Jersey Jack Pinball hc.
2. Ahost i―ediately atter taking the helm of Elaut,in October 2008,
Guarnlerl began red士ecting cash papents that should have gone to an Elaut subsidiary nto
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various accounts Guamieri personally controlled. Over time, Guamieri directed hundreds of
thousands of dollars that should have gone to Elaut to pay his personal expenses, such as his and
his wife's credit cards, and he to6k more in cash. To avoid detection, Guamieri cleared out
Elaut's executive finance departnent and replaced seasoned employees with his cronies and
relatives loyal only to Guamieri. Guarnieri also replaced Elaut's long-standing accountant and
auditor. And critically, he replaced Elaut's Chief Financial Officer with an old friend from the
Monmouttr Park Racetrack, Michael Carle.
3. Carle hid Guamieri's audacious scheme with several accounting tricks.
First, Carle made bogus write-downs of inventory. Second, Carle wrote down hundreds of
thousands of dollars in accounts receivable as uncollectable, even though the accounts actually
had been collected and diverted to Guameri's personal use. Third, Carle booked hundreds of
thousands of dollars in inter-company loans ftom Elaut to a subsidiary, but when the subsidiary
was 'tnable" to repay the loans because money had been firnneled to Guamieri, Carle made
"intercompany loan adjustnents. "
4. Working together, Guamieri and Carle managed to defraud Elaut for years
and cover their tracks. Because Guamieri had placed his family and friends in key positions, and
replaced Elaut's long-standing accounting frm with a new accounting and auditing firm, Elaut
could not lmcover Guarnieri's thefts util it was too late and Guamieri had decided to move on
to a new venture, taking most of his team from Elaut with him.
5. Now that the last of Guarnieri's key employees have been removed, and
Elaut has uncovered his wholesale theft of over $1,600,000, Elaut seeks to hold Guamieri and
Carle responsible for Guamieri's theft from Elaut, and Guarnieri's and Carle's careful
collaboration to cover up Guanrieri's scheme. Further, as it appears that Guamieri has funneled
″5389316v31024225 VXX11 2
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Elaut assets and money to his new venture, Defendant Jersey Jack Pinball, Elaut seeks to recoup
its fraudulently transferred assets from Jersey Jack Pinball.
PARTIES. JT]RISDICTION ATID YEIITIE
6. PlaintiffEtaut USA, Inc. is a corporation organized and existing under the
laws of the State of New Jersey wittr its principal place of business at 1000 Towbin Avenue,
Lakewood, New Jersey. Elaut is a wholly-owned subsidiary of Elaut N.V.
7. On infonnation and belief, Defendant Jack Guamieri resides at 3l
Danielle Court, Lakewood, New Jersey. Guarnieri began working as the Chief Executive Officer
of Elaut on or about October 8, 2008, and was named the President of Elaut in or about July,
2009.
8. On information and belief, Defendant Michael Carle resides at 642
Oakwood Avenue, Jackson, New Jersey. Carle was the Chief Financial OfFrcer of Elaut from
July 1 6, 2009 through Septemb er 28, 2012.
9. On information and belief, Defendant Jersey Jack Pinball Inc. ("Jersey
Jack Pinball") is a corporation organized and existing under the laws of the State of New Jersey,
with its principal place of business at 1645 Oak Street, Lakewood, New Jersey.
10. At all times referenced herein, Elaut had its principal place of business in
Ocean County, New Jersey. At all relevant times, Defendants Guamieri and Carle both worked
at Elaut's headquarters in Ocean County, New Jersey, and conducted their tortious acts there.
11. On information and belief, Guarnieri resides in Ocean County, Carle
resides in Ocean County, and Jersey Jack Pinball's principal place of business is in Ocean
County.
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12. Venue is properly placed in Ocean County, New Jersey, and this Court has
jurisdiction over the subject matter ofthis dispute.
FACTS COMMON TOALI. COUNTS
A. Elaut Purchases Jack Guarnieri Service Co., AndGuarnieri Is Named President and Chief ExecutiveOflicer of Elaut
13. Etaut is one of the largest operators of amusement games and related
equipment in the theme park industry. These concessions include traditional amusement garne
stands and arcades located in large amusement and theme parks throughout the United States.
Elaut both sells and leases arcade equipment, and provides servicing and parts for such
equipment.
14. In 2008, seeking to expand into a broader product line and increase gross
equipment sales, Elaut acquired the assets, websites, and inventories of Pinball sales.com and
Jack Guamieri service co., Inc. (collectively, "JGSC"). JGSC became a subsidiary of Elaut, and
JGSC's former owner, Defendant Jack Guarnieri, became the Chief Executive Officer of Elaut.
Pursuant to his employment agfeement with Elaut, Guarnieri was required to "render services as
are necessary or desirable to protect and advance the best interests of. . . Blaut] and its
Subsidiaries."
B, Guarnieri Promptly Replaces Elaut's Long-ServingSenior Executives And Staff With His Family AndFriends
15. Guamieri began his employment with Elaut on or about October 8, 2008.
He swiftly moved to replace Elaut's long-serving senior executives, finance staff, and inventory
contol staff with his own loyalists.
4“38,316v3m24225ヽЮ∞1
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16. Lr January 2009, Guarnieri terminated Qslgrs[ I\4anager and founder
Bruce Kawut. A few months later, Guamieri terminated Neil Rosenberg, who served as
President and liaison to Elaut's parent company. Rather than wait for the inevitable, Elaut's
Chief Financial Officer, Knut Danielson, then resigred. Guamieri replaced Danielson that same
<tay with Michael Carle, a fiiend of Guarnieri's for over 20 years, who was working at the
Monmouth Park Raceway.
17 . Over the following months, Guarnieri terminated Parts Manager Peter
Kozak, Accounts Payable Manager Robin Gionvinazzo and Purchasing Manager Nancy Chabala.
Guamieri replaced Mr. Kozak with his brother-inJaw, and Ms. Chabala with long-time associate
Katie English.
18. Within a year ofjoining Elaut, Guamieri had installed tvso of his children,
his brother-in-law, and more than a dozen other friends and family rrembers, several of whom
had ties to the horse racing industry, and none of whom had any experience in Elaut's business.
Most of Guamieri's cronies were placed in senior positions in Elaut's finance departrnent,
inventory control and warehouse departrnent.
19. Elaut traditionally had the accounting firm MSPC prepare annual audited
financial statements. ln addition to replacing Elaut's financial stafl Guamieri replaced MSPC
with a new finn, Kreischer Miller, which did not have atry ties to Elaut's previous executives,
nor with Elaut's parent company.
C. Guarnieri Steals From Elaut By Diverting RevenuesFrom Cash Sales To Pav His Personal Expenses
20. After replacing competent Elaut financial staff and outside accounting
professionals with family members, friends, and cronies who were unlikely to question him, and
お38931`v31024225ヽつ001
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often did not have the financial expertise to do so, Guamieri drarnatically ramped up his thefts
from Elaut.
Zl. As Chief Executive Offrcer, Guarnieri was authorized to wire tansfer
Elaut,s funds. He began transferring funds from Elaut's operating account to subsidiary JGSC
so that JGSC could purchase coin operated amusement games. Guamieri would then resell the
games. For cash sales, Guamieri diverted the sales proceeds into various bank and Paypal
accounts he controlled, or even more directly to various banks and retail credit card companies to
pay his personal debts.
22. To prevent Elaut from learning about this scheme, Guamieri enlisted his
hand-picked Chief Financial Officer, Carle. The two worked together to hide the thefts in a
number of ways. First, Carle wrote down the amor:nt of reported inventory on Elaut's books.
23. Second, Carle wrote down hundreds of thousands of dollars in accounts
receivable that were diverted to Guamieri's personal use, or placed in the accounts of JGSC for
Guarnieri's use.
24. Because of the significant amounts of money Guarnieri was stealing from
Elaut, he and Carle ultimately had to come up with additional ways for Elaut to document the
lost revenues. In 2009 and 2010, Carle booked inter-company loans between Elaut and JGSC,
but rather than have JGSC repay the loans when equipment was sold, Guarnieri paid his personal
expenses with the proceeds. Then in late 2010, Carle booked the purported loans as impaired.
25. Making this maneuver even more brazen, JGSC did not have any
operating expenses. Rather, all of its costs, from payroll to insurance to rent to day-to-day
operating expenses were expensed to Elaut. Hence, JGSC owed Elaut even more.
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26. Each ycar duHng Ottlien's reign,Elaut's new aud五 ng flm au董ted
Elaut's hancial statements and opined that the mancial statements were not misstated or
inaccurate. Carle prepared the mancial statenlents for the auditors'review,and Gumderi and
Carle pЮ宙ded a representation letter to the auditing f― in support of the fmancial statetrlents
ave―g,力mOng other things,that they“had no knowledge of Lud or suspected iaud affecting
EElautl''and that all matenal transactions had been propedy recorded in the company's
accounting records.
27 0n infomation and beliet Guamioi and Carle knew that Guamien's
hand‐plcked auditors were not ven″ hg or even spot checking park assets or park mventory.
D. Guarnieri Leaves Elaut,Taling lts 14oney,JGSC,AndMost OfThe Emplovees Ⅱe Brought With Him
28. Bei″een 2009 and 2011,Elaut underperfO.Ш ed expectations. Its audited
mancial statelrlents showed■ 逍tin 2008,Elaut had approxlmately S500,000 in net inconle“ m
S9,000,000 in revenuc.h2009,however,Elaut lo威 approximttely S200,000 on revenues of
ahostSn,00o,ooo.h2010 and 2011,Elaut was again pro■ table,but barely.
29. h or about March 2011,Elaut and Guamieri agreed to end Guamie」 's
employment with Elaut.
30 To document Guamen's deparlure ttom Elaut, Elaut and Guamid
entered mto the Exchange Agreement and Plan of Reorgatllzation,dated as of March 31,2011
cthe“Exchange Agreemer')
31. h the Exchange Agreement,Elaut and Guamieri agreed that Elaut would
take back shares of Elaut it had transferred to Guamie五 , and GuamieH would take back
ownership ofJGSC.
"5389316v31024225 VXX117
32. Guamieri also made a nurnber of representations in the Exchange
Agreement conceming Elaut's and JGSC's financial status that survive execution of the
agreement, including:
. The unaudited balance sheets and income statements for year-end 2010and the quarter ending March 31, 2011 were prepared in accordance withGAAP @xchange Agreement'lf 4'6(a)-O)); and
The unaudited balance sheets for year-end 2010 and the quarter endingMarch 3 1, 201 1 "fairly present the respective financial position and resultsof operations of' Elaut and JGSC @xchange Agreement 
―、 ,
38 New staff at Elaut began to discover inancial irregularities and began
asking questions As one d七ect result of Guarmeri'S thens,Elaut was fOrced to restate certain
revenues,and tO pay additional SaleS and use tax,plus penalties and herett for late repo■ing
39. On infOmatiOn and beliet Carle waS passing idumatiOn conCeming
Elaut starinq―es about Guamleri On to Guamle五 .
40 Elaut te―ated Carle on September 28,2012.
41. With Carle gone,Guamid's scheme was revealed
FIRST COIINTcraud Against GuanieriD
42. Elaut repeats and realleges the preceて 血lg allegatiOns in ttis COmplamt as
ifmly set fon herein.
43. OMコde五 made n1lmerous false statements to Elaut,mcldhg but not
limited to statements ave―g:
・ Elaut's mancial statementS acCurately represented Elaut's fmncialcOndition;
・ Guamien was not aware ofmud or suspected iaud impacting thecompany;
・ H馘 fヽlnanc甜 1翻鶴朧電あ81阻需網留狙o There were nO materialtransactiOns that had not been properly reCOrded h
the company'S accounting records.
44. Guamieri made these statements bOth orally and in witing,inch山 電 in a
representation letter dated September 15,2010,to Elaut for use in hs amual audit for 2009.
45 Guamerl'S StatementS Were false because Guamlen Was aWare of(and
was perpetratmg)a iaud at Elaut.Elaut's fmancial ntements did not account for Guamieri'S
わ389316v3,222,｀ ∞01
thefts from Elaut, but rather hid those thefts, and thus did not accurately represent Elaut's
finances.
46. Lr addition, over the course of his employment by Elaut, Guamieri had
numerous discussions with representatives of E1aut's owner in which they discussed the
company's financial condition and ways to improve its revenues and profits. During these
discussions, Guamieri fraudulently concealed his unauth oizeddiversion of corporate funds for
personal uses and his personal uses of corporate funds and opportunities. He further fraudulently
directed, and assisted in the preparation of, inaccurate internal financial statements to hide his
thefts.
47. As Elaut's President and Chief Executive Offrcer, Guarnieri was under a
duty to disclose all facts relevant and material to Elaut's financial performance, but he instead
made misrepresentations and concealed critical information concerning Elaut's finances.
48. Guarnieri knew that his statements conceming Elaut's finances were false
and that his omissions were misleading.
49. Gua:nieri intended for Elaut to rely on his statements and omissions,
which were necessary to hide his thefts from the company.
50. Elaut reasonably relied on Guarnieri's statements, as it had no reason to
believe that its President and Chief Executive Officer would divert and steal revenues from cash
payments owed to Elaut and prepare false financial records to cover his thefts, and because his
statements were confirmed by Elaut's Chief Financial Officer, Michael Carle, and by Elaut's
outside auditor.
51. As a result of Guarnieri's actions, Elaut has been damaged in an amount to
be determined at tial, but believed to exceed $1,600,000
澤5389316v3k024225Ю 001 10
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SECOND COUNTcAiding and Abetting Fraud Against Carlo
52. Elaut repeats and realleges the preceding allegations in this Complaint as
ifmuy set fon herein。
53. Elaut's fo・・..er President and Chief Executive Ofttcer, Jack Guamieri,
deiauded Elaut,as described above.
54. Carle knew ofGuarmen'S iaud on Elaut.
55。 Carle knowlllgly and substantially assisted Guamierl llll dettauding Elaut
by,Яmong other things:
・ a1lowmg Guamie五 to d市ert corporate imds,assets,and oppormties forhis personal use;
・ wrlting down inventory,accomts receivable,and other corporate debtsand assets to hide Guamic五 's llllsapprop五ation ofcorporate assets;
・ hiding Guarme五 :s mlsappropnation ofcorporate asset
o utilizing inter―company loans for Guarmenis beneflt;
o prepanng fmancial records fbr I〕 laut that confnined false info....ation;and
O certitting false fmancid infomation and making false representations tobe used in and as a basis for Elaut's audited fmancial statements。
56。 As a result of Carle's actions,Elaut has been damaged in an amomtto be
deteHnined at trial,but believed to exceed$1,600,000.
THIRD COUNTCreaCh OfFiduciary Duty Against Guamieri and Carle)
57。 Elaut repeats and realleges the preceding allegations in this Complaint as
iffully Set fb」吐l herein.
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58 As Elaut's President/ChiefExecutive Omcer and ChiefFinancia1 0rlceL
respectively,Gw口 ien and Carle owed the highest iduciary duties of loyalty,good faith,and
fair dealing to Elaut.
59. Gに旧コde五 breached his iduciay obligations to Elaut by, among other
things:
purchasing gaming equipment with Elaut's fimds, but then diverting thesale proceeds of those games into accotmts he personally controlled,which not only cost Elaut the direct revenues, but also ultimately causedElaut to incur costs and penalties for under-reporting sales and use tax;
purchasing gaming equipment with Elaut's flmds, but then diverting thesale proceeds of those games to pay for his and his family's personalexpenses;
diverting corporate opportunities for his personal use and benefit;
diverting flmds and assets from Elaut to JGSC for his personal bernefit;
writing down inventory, accounts receivable, and other corporate debtsand assets to hide his misappropriation of corporate assets;
utili;ng inter-company loans to hide his misappropriation of corporateassets;
falsely stating that inter-company loans were impaired and writing offthose loans to hide his misappropriation of corporate assets;
preparing fi::ancial records and statements for Elaut that contained falseinfomration; and
certifying false financial infomration and making false representations tobe used in and as a basis for Elaut's audited financial statements.
Carle breached his fiduciary obligations to Elaut by, among other things:
allowing Guamieri to divert corporate firnds, assets, and opportunities forhis personal use;
writing down inventory, accounts receivable, and other corporate debtsand assets to hide Guanrieri's misappropriation of corporate assets, which
60.
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not only cost Elaut the direct revenues, but also ultimately caused Elaut toincur costs and penalties for under-reporting sales and use tax;
. utilizing inter-company loans to hide Guamieri's misappropriation ofcorporate assets;
. falsely stating that inter-company loans were impaired and writing offthose loans to hide Guamieri's misappropriation of corporate assets;
. preparing financial records for Elaut that contained false information; and
. certifying false financial information and making false representations tobe used in and as a basis for Elaut's audited financial statements'
61. As a result of these breaches, Elaut has been damaged in an amount to be
determined at trial, but believed to exceed $1,600,000.
FOURTII COI]NT(Aiding and Abetting Breach of Fiduciary Duty Against Carle)
62. Elaut repeats and realleges the preceding allegations in this Complaint as
if firlly set forth herein.
63. Elaut's formpr President and Chief Executive Officer, Jack Guamieri,
breached his fiduciary duties to Elaut, as described above.
64. Carle knew of Guarnieri's breaches ofhis fiduciary duties to Elaut.
65. Carle knowingly and substantially assisted Guamieri in breaching his
fiduciary obtigations to Elaut by, among other *Iings:
. allowing Guamieri to divert corporate funds, assets, and opportunitibs iorhis personal use;
. writing down inventory, accounts receivable, and other corporate debtsand assets to hide Guamieri's misappropriation of corporate assets, whichnot only cost Elaut the direct revenues, but also ultimately caused Elaut toincur costs and penalties for under-reporting sales and use tax;
. utilizing inter-company loans to hide Guamieri's misappropriation ofcorporate assets;
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. falsely stating that the inter-company loans were impaired and writing offthose loans to hide Guamieri's misappropriation of corporate assets;
. preparing financial records for Elaut that contained false inforrnation; and
. certiffing false financial inforrration and making false representations tobe used in and as a basis for Elaut's audited financial statements.
66. As a result ofCarle's actions, Elaut has been damaged in an amount to be
determined at tial, but believed to exceed $ 1 ,600,000.
rIF-TH COI]NT(Conversion Against Guarnieri)
67. Elaut repeats and realleges the preceding allegations in this Complaint as
if fully set forth herein.
68. At all relevant times, Elaut was entitled to the firll amount of sales
revenues for products purchased with its money.
69. By purchasing gaming equipment with Elaut's firnds and then diverting
the sales revenues for that equipment to accounts under his personal control and to pay his
personal expenses, Guamieri wrongfirlly exercised dominion and control over Elaut's property.
70. By charging JGSC's costs and expenses to Elaut, and then repuchasing
JGSC ftom Elaut Guarnieri further wrongfully exercised dominion and contol over Elaut's
property.
71. Guamieri's actions were taken without authorization.
72. Guamieri's actions were inconsistent with and to the exclusion of Elaut's
rights as title holder to its property.
73. Elaut has been damaged by Guamieri's actions in an amount to be
determined at trial, but believed to exceed $1,600,000.
お38"16v3102422'WI11 14
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SIXTII COT]NT(Aiding and Abetting Conversion Against Carle)
74. Elaut repeats and realleges the preceding allegations in this Complaint as
if fully set forth herein.
75. At all relevant times, Elaut was entifled to the fulI amount of revenues for
products purchased with its money.
76. As described above, Guanrieri wrongfully exercised dominion and control
over Elaut's property, and converted Elaut's property for his personal use.
77. Carle knew of Guarnieri's wrongful and tortious conduct.
78. Carle knowingly and substantially participated in Guarnieri's conversion
of Elaut's assets. Among other things, Carle:
faited to file appropriate sales and use tares from 2009-2012that causedthe Company to pay back tares, penalties and interest in an effort to hidetheir misconduct;
overstated revenues resulting in unexpected tar liabilities;
allowed Guarnieri to divert corporate funds, assets, and opportunities forhis personal use;
wrote down inventory, accounts receivable, and other corporate debts andassets to hide Guamieri's misappropriation of corporate assets;
utilized inter-company loans to hide Guarnieri's misappropriation ofcorporate assets;
falsely stated that inter-company loans were impaired and wrote offthoseloans to hide Guarnieri's misappropriation of corporate assets;
prepared financial records for Elaut that contained false information; and
certified false financial information and made false representations to beused in and as a basis for Elaut's audited financial statements.
#5389316v31024225k0001 15
79. Elaut has been da:naged by Carle's actions in an amount to be determined
at trial, but believed to exceed $1,600,000.
SEYENTH COI]NT(Negligent Misrepresentation Against Carle)
80. Elaut repeats and realleges the preceding allegations in this Complaint as
if fully set forth herein.
81. As Elaut's Chief Financial Ofticer, Carle owed the highest fiduciary duties
of loyalty, good faith, and fair dealing to Elaut.
82. Carle made false statements to Elaut, including but not limited to averring
that Elaut's financial statements accurately represented Elaut's financial condition, he was not
aware of fraud or suspected fraud impacting the company, Elaut's financial statements properly
recorded and disclosed all transactions and related accounts receivable or payable, and there
were no material transactions that had not been properly recorded in the company's accounting
records. Carle made these statements both orally and in writing, including in a representation
letter dated September 15, 2010, to Elaut for its annual audit.
83. In addition, Carle failed to inforrr Elaut about Guamieri's unauthorized
diversion of corporate funds for personal uses and his personal uses of corporate funds and
opportunities. Carle further failed to inform Elaut that he and Guarnieri were, improperly writing
down inventory and accounts receivable, and utilizing inter-company loans and preparing
inaccurate financial records to hide Guanrieri's thefts.
84. Carle's statements and omissions were negligently made.
85. Elaut juiffiably relied on statements by Carle, its Chief Financial Officer,
that its financial statements were accurate, and that he did not have knowledge of any fraud or
#5389316v3k024225k0001 16
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suspeded taud areding the company Elaut dso justinably relied on Carle's麟 lure to repo■
Guamieri's taud.
86. Elaut has beell dmaged by Carle's actions in an amOuntto be dete― ed
at t■al,but believed to exceed Sl,600,000.
EIGⅡTH COUNTCreaCh OfCOntract Against GuamierD
87 Elaut repeats and realleges the precedng allegatiollls in this Complaint as
ifttly set forth hereh.
88. Elaut and GuarmeH entered mto the Exchange Agreement,Wm iS dated
as OfMarch 31,2011.
89 Elaut has performed all ofis obligttions under the Exchange Agreement.
90. h the Exchange Agrecment,G田コderi made numerous representatios to
Elaut.Among other■ ●gs,Guameri represented:
o The unaudited balance sheets ofElaut and JGSC and related incomestatements for the calendar yeaJledhg Dece血 ber 31,2010 were preparedh accordance With GAAP・
o T騰 1lnЯudited balance sheets ofElaut and JGSC and related incomestatements for the for the interim quarter endhg March 31,201l wereprepared in accordance with GAAP;and
o Except as Set fo山 in the notes to the above inancial statements,thefmancial statements``fairly present the respective mancial pOs五 on andresults ofoperations of'Elaut and」 GSC
91 Each of these representtdons was false when made, as Guamen had
misappro"ated Haut'sf団 s to is pasonal use,and then had faldied]aut's recorお and
fmancial statements(wiCh mcluded JGSC)to bide his the鑓 .Guamie五 thus materially
breached is contractl obligations to Elaut
r5389316v3n422510001 17
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92. Elaut has been damaged as a direct result of Guarnieri's breaches of the
Exchange Agreement in an amount to be determined at trial, but berieved to exceed $1,600,000'
NINTH COI]NT(IndemnitY Against Guarnieri)
93. Elaut repeats and realleges the preceding allegations in this Complaint as
if fully set forth herein.
94. Elaut and Guarnieri entered into ttre Exchange Agreement, which is dated
as of March 31,2011.
95. Elaut has performed all of its obligations under the Exchange Agreement'
96. The Exchange Agreement contains an indemnity provision requiring
Guarnieri to indemnify Elaut against any "liability, claims, losses, damages or expenses'
including reasonable attorneys' fees, incurred or required to be paid by such other parties
resulting from, rerated to or arising out of any breach or failure of observance or performance of
any representation. . ."
97. As described above, several of Guamieri's representations in the
Exchange Agreement rerating to the finances and financiar statements of Elaut and JGSC were
farse when made, and Guamieri thus has breached his representations. By reason of these
breaches, Eraut has been damaged in an amount exceeding $1,600,000.
gs.Inaddition,Elauthasbeenforcedtoincurattorneys"accountingand
consultants, fees as a resurt of Guarnieri,s breaches, and win continue to incr:r these fees. under
the indemnity provision of the Exchange Agreement, Guamieri is required to reimburse Elaut
these professional fees expended in connection with Guamieri's breaches'
99. Elaut accordingly seeks its attorneys' fees incurred as a result of
Guamieri,s breaches of the Exchange Agreement, in an a,ount to be determined at or after trial'
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15389316v3k024225Ю 00118
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TENTH COI]NT@raudurent convevance X:ru:^:iffiTil$
Jersev Jack Pinball
l00.ElautrepeatsandreallegestheprecedingallegationsinthisComplaintas
if fully set forlh herein'
101. on information and belief, Guamieri tansferred funds he misappropriated
from Elaut _ including funds he stole and the misappropriated assets of JGSC -- to Jersey Jack
Pinball, an entity he for:nded and controls'
loz. on information and beliel Guarnieri transferred the misappropriated
firnds and assets to Jersey Jack pinba[ with the actual intent to defraud, delay, or hinder Elaut in
recouping its stolen funds'
103. Guarnieri's transfer of Elaut's funds and assets to Jersey Jack Pinball
constitutes a fraudurent conveyance that shourd be set aside pursuant to N'J's'A ' $ 25:2-25(a)''
l04.Asaresultoftheforegoing,Elautisentitledtoanordersettingaside
Guamieri,s transfers of funds to Jersey Jack pinball and requiring the return of those funds and
assets to Elaut.
#5389316v3Ю 24225Ю 00119
WHEREFORE,PlaintiffElautUSA,Inc.demandsjudgmentagainstDefendantsJack
Guarnieri, Michael Carle' and Jersey Jack Pinball as follows:
(a)Compensatorydamagesinanarnorrnttobeprovenattrial,plus
interest;
o)ArrordersettingasideGuarnieri,stransferofElaut,sfundsandassetstoJersey
JackPinballandrequiringtheretumofthosefundsandassetstoElaut;
(O AttOmeyS'fees and cottS OfSut;
O SuCh Other and merre■eftt the CO面 deemsiu飩 ,「Op∝ and equitable.
B100m&Di■On PoC。
AttOmeys fOr Plaintiff
DATED: December 1,2014
20#53893 16 v3 \024225 \0001
I certiff that the matter in controversy is related to ttre subject of the pending action titled
Selective Insurance company of America v. Guarnieri. Docket No. L-002327'!4, Superior court
of New Jersey, Law Division, ocean County. I further certify that I am aware of no other party
who should be joined in this action'
Ifirrthercertifythatconfidentialpersonalidentifiershavebeenredactedfromthis
submission to the co*rt, and will be redacted from all documents submiued in the future in
accordance with RuIe 1:38-7(b)'
Irecognizethecontinuingobligationofeachpartytofilewiththecor:rtandserveonall
parties an amended Certification if there is a change in the facts stated in the original
Certification.
Dated: December 1,2014BLOOM & DILLON, P.C.
#5389316v3Ю24225Ю 001
-) -)
BLOOM & DILLON, P.C.Attorneys at Law
70 South Orange Avenue, Suite 240Livingston, New Jersey 07039
Tel: 973.758.0900Fax: 973.758.0901
pdill on@bloomdillonpc. com
「百百可下'11
oEC-2ffi
December 1,2014
YIA FEDERAL EXPRESS
Finance Fee OfficeSuperior Court of New Jersey120 Hooper Avenue, Room 214Toms River, NJ 08753
Re: Elaut USA v. Guarnieri, et al.Docket No.
Dear Sir or Madam:
Enclosed are an original and one (l) copy of a Complaint and a Case InformationStatement in the above matter.
Please file the original documents and return conformed copies marked "filed" inthe enclosed return envelope. Also, please charge our attorney collateral account number142507 for any filing fee.
Thank you for your attention to this matter.
Very truly yours,
PJD:mroEnclosures
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