RMCP v. O'Brien

Microsoft Word - 20120928 Complaint RMC v O'Brien.doc

UNITESTATEDISTRICCOURT FOR THDISTRICOSOUTCAROLINA CHARLESTODIVISION

Revolutions Medical Corporation, Plaintiff;

 

v.

 

Thomas G. O’Brien, a.k.a. Tommy O’Brien, individually and acting under a fictitious designation, T.G. O’Brien Associates, Defendant.


C/A No. /

 

COMPLAINT

 

Plaintiff Revolutions Medical Corporation (hereinafter sometimes called “RMC”) alleges as its Complaint the following:

The Parties

1.      RMC is a publicly traded Nevada corporation that has a principal place of business in the City of Charleston, County of Berkeley, South Carolina.

2.     Thomas G. O’Brien, defendant herein (hereinafter sometimes called “O’Brien”), is an individual natural person residing in the City of Danvers, County of Essex, Massachusetts.

3.     O’Brien sometimes is known by the alias name “Tommy O’Brien.”

4.     O’Brien sometimes employed the alias ”T.G. O’Brien Associates” to receive funds as an artifice to engage in and conceal the conspiracy, fraud, conversion, breaches of contract, tortious actions and omissions and other violations of law alleged herein.


Jurisdiction and Venue

5.     This court has subject matter jurisdiction over this action by 28 U.S.C. § 1332(a) for the reason that there is complete diversity of citizenship between the RMC and O’Brien and the amount in controversy exceeds the sum or value of $75,000, exclusive of interest and costs.

6.     Venue is properly placed in this division of this court under 28 U.S.C. § 1391(a), (b) and (c).

7.     This court may assert personal jurisdiction over O’Brien under S.C. Code § 36-2-803 for the reason that the causes of action herein pleaded arise from O’Brien’s: transacting business in South Carolina; contracting to supply services or things in South Carolina; committing tortious acts in whole or in part in South Carolina; causing tortious injury in South Carolina by acts and omissions occurring outside South Carolina when O’Brien regularly does or solicits business, or engaging in any other persistent course of conduct, or deriving substantial revenue from services rendered in South Carolina; and entering into contract(s) to be performed in whole or in part in South Carolina by either party thereto.

Background

8.     RMC’s business is developing, manufacturing, marketing and selling medical technology and products, including the RevVac™ safety syringe.

9.     RMC owns trade secrets, valuable patent rights and other intellectual property that are essential to carry out its business.

10.    At all times material, O’Brien knew that RMC owns trade secrets, valuable patent rights and other intellectual property that are essential to carry out its business.

11.    Before joining RMC’s board of directors and agreeing to employment as RMC’s president, as is explained below in this pleading, O’Brien was the sole director and officer of Clear Image Acquisition Corporation (“sometimes referred to herein as “Clear Image”), a Nevada corporation engaged in the business of developing medical diagnostic imaging technology.

12.    In 2006, through its CEO, Rondald Wheet (“Wheet”), who had known O’Brien since the 1990s, RMC entered into merger discussions with Clear Image, through O'Brien, who was acting on behalf of Clear Image.

13.    During these discussions O'Brien first introduced Wheet, and, thereby, RMC, to Richard Theriault (“Theriault”), who is not named as a party to this action but who tortiously combined and conspired with O’Brien to cause damage RMC with as further described in this pleading.

14.    Theriault is the sole owner and CEO of a Massachusetts corporation known as Strategic Product Development, Inc. (“SPD”), which is not named as a party to this action, which at all relevant times O’Brien represented to RMC to be a highly competent and trustworthy consultant to companies needing assistance in developing and bringing to market medical technology, the role of which in the causes of action will be more particularly described below in this pleading.

15.    Theriault is also the sole owner and CEO of Medical Investment Group, Inc. (“MIG”), a Massachusetts corporation, which at all relevant times O’Brien represented to RMC to be highly competent and trustworthy to contract with RMC for the production of RMC’s syringes, the role of which in the causes of action will be more particularly described below in this pleading.

16.    While O’Brien was affiliated with Clear Image, he told Wheet that Clear Image had contracted with SPD, and that through Theriault’s efforts, Clear Image developed and was owner of a portfolio of patentable medical imaging technology that would be a valuable if acquired by RMC.

17.    O'Brien proposed to Wheet that Clear Image and RMC merge so that the resulting entity would acquire Clear Image's imaging technology, Clear Image’s only asset of real value.

18.    Before agreeing to the merger between Clear Image and RMC, Wheet questioned Theriault about the imaging technology, who told him that he had assisted Clear Image develop the imaging technology, that the imaging technology was proprietary and patentable and that the imaging technology was extremely valuable.

19.    RMC and Clear Image entered into merger discussions and, in reliance on the representations made by O'Brien and Theriault to Wheet, RMC entered into a merger agreement on January 26, 2007. It was not until months later when the merger finally closed.

20.    In October of 2007, O’Brien joined RMC’s Board of Directors and undertook progressively more responsibility for RMC and gained access to RMC’s confidential information and influence as a trusted advisor to Wheet and RMC’s board on matters relating to RMC’s business.

21.    On October 26, 2009, O’Brien became employed as RMC’s president thereby gaining further access to RMC’s confidential information and influence in RMC’s decision-making, operations and affairs.

22.    After assuming his appointment to RMC's board of directors, and continuing thereafter upon his being hired as RMC’s president, O'Brien heavily lobbied for RMC to do business with Theriault and his companies to provide services to RMC related to the development and production of its syringe technology, as is further set forth below.

23.    Before RMC entered into the series contracts with Theriault’s businesses, SPD and MIG, and at all times material to this action, O’Brien was party to a secret conspiratorial understanding with Theriault whereby they agreed that, for bribes and other valuable consideration, secretly paid and to be paid to O’Brien by Theriault through his businesses, O’Brien would act as a secret inside operative for Theriault to influence RMC to contract with SPD and MIG, and to provide secret information of RMC to RMC’s grave detriment.

24.    RMC first learned of the conspiracy above described in April of 2012 when it obtained written discovery from MIG in arbitration proceedings and found contained therein documents revealing the existence of the conspiracy.

25.    RMC is informed and believes that starting no later June 23, 2008, and continuing to no earlier than April 11, 2011, O’Brien accepted bribes and other secret improper remuneration from Theriault, SPD or MIG that represented payment to O’Brien for his role in the conspiracy.

26.    RMC has found in the arbitration discovery documents and other evidence tending to show that during the course of the conspiracy and while he was serving RMC in the fiduciary capacity of director, president or both, O’Brien received from SPD and MIG improper remuneration totaling at least $47,500.00 paid from January 1, 2010 to April 11, 2011.

27.    RMC learned through the arbitration discovery that O’Brien received and cashed the following checks from Theriault’s companies: a) SPD check No. 5450 drawn on its Bank of America account made payable to “T.G. O’Brien Associates,” dated April 10, 2010 for $4,000; b) SPD check No. 5467 drawn on its Bank of America account made payable to “T.G. O’Brien Associates,” dated May 24, 2010 for $3,500; c) SPD check No. 5498 drawn on its Bank of America account made payable to “T.G. O’Brien Associates,” dated September 2, 2010 for $2,500; d) SPD check No. 5530 drawn on its Bank of America account made payable to “T.G. O’Brien Associates,” dated September 28, 2012 for $2,500; e) SPD check No. 5543 drawn on its Bank of America account made payable to “T.G. O’Brien Associates,” dated October 1, 2010 for $5,000; and f) MIG check No. 1004 drawn on its Citizens Bank of Massachusetts account made payable to “T.G. O’Brien Associates,” dated April 11, 2011 for $30,000.

28.    RMC has found in the arbitration discovery documents and other evidence tending to show that during the course of the conspiracy and while he was serving RMC in the fiduciary capacity of director, president or both, and during the course of negotiations between RMC, on the one hand, and SPD or MIG, on the other, O’Brien furnished to Theriault RMC’s sensitive confidential information, that placed RMC at a critical transactional disadvantages in contract negotiations and post-contractual dealings with SPD and MIG.

29.    O’Brien, as president and board member of RMC, had complete access to RMC’s most sensitive and confidential information, that he secretly furnished Theriault that SPD and MIG used for improper advantage over RMC in its dealings with SPD and MIG.

30.    The individual actions of Theriault taken in furtherance of the secret conspiratorial understanding above-described are attributed to O’Brien under the doctrine recognized in South Carolina providing that “the hand of one is the hand of all.”

31.    At all times material, O’Brien knew that RMC did not know of the secret conspiratorial understanding above-described, and he actively concealed and continues to conceal the existence of this conspiratorial understanding.

32.    At all times material, in furtherance of the secret conspiratorial understanding above-described, O’Brien actively promoted to RMC the interests of Theriault, SPD, and MIG and materially corrupted RMC’s decision to contract with SPD and MIG as described below.

Contracts Between RMC and SPD

33.    O'Brien represented to RMC that Theriault, through his company SPD, would provide RMC superior services at reasonable cost to RMC to assist RMC develop and improve the design of its syringes, find and engage a supplier to manufacture the syringes and manage the production process.

34.    In reliance upon O’Brien’s assurances and representations, commencing in September of 2008, RMC entered into a series of agreements with SPD related to the development and production of RMC’s syringes and, in one instance, related to the MRI technology RMC had acquired from Clear Image.

35.    Before RMC entered into agreements with SPD, O’Brien assured RMC that Theriault and SPD had extensive expertise and experience in providing professional, fiduciary assistance to businesses engaged in the type of business in which RMC is engaged.

36.    Before RMC entered into agreements with SPD, and to induce RMC to contract with SPD as more particularly described below in this Complaint, O’Brien assured RMC that Theriault and SPD would look out for RMC’s best interests in providing professional, fiduciary assistance for RMC’s developing, manufacturing, marketing and sale of medical devices, including the RevVac™ safety syringe.

37.    O’Brien’s representations to RMC about Theriault and SPD described above were material to RMC’s decision to enter into the contracts with SPD as more particularly described below.

38.    O’Brien knew that his representations to RMC about Theriault and SPD pleaded above were material to RMC’s decision to enter into the contracts with SPD as more particularly described below.

39.    Theriault’s representations to RMC about Theriault and SPD’s suitability were false, and when he recommended Theriault and SPD to RMC, O’Brien either knew that they were false or was recklessly indifferent to whether they were false.

40.    O’Brien knew and intended that RMC would rely on his assurances of the truthfulness of Theriault’s representations to RMC when RMC entered into the contracts with SPD as are more particularly described below.

41.    In reasonable reliance upon the representations and assurances of O’Brien and Theriault, RMC entered into the contracts with SPD that are more fully described below, and paid SPD a total of $730,000, an amount that RMC is informed and believes was grossly in excess of whatRMC should have paid.

September 10, 2008 Contract Between RMC and SPD

42.    On or about September 10, 2008, at the urging of O’Brien, RMC entered into a contract with SPD whereby SPD agreed to provide RMC with “VP Engineering and VP Manufacturing Management services.” Attached hereto as Exhibit 1 is complete accurate copy of contract that hereinafter this contract will sometimes be referred to as “the September 2008 contract.”

43.    The September 2008 contract was, from its inception, fundamentally corrupted and tainted by the misrepresentations and conspiracy alleged above.

44.    The terms of the September 2008 agreement were, as a result of the misrepresentations and conspiracy pleaded above, heavily skewed against RMC and in favor of SPD.

45.    Pursuant to the September 2008 contract, SPD agreed, upon RMC’s behalf, “to select, assess and manage all manufacturing relationships” in connection with RMC’s development and production of the 3mL RevVac™ safety syringe and, as to the 3mL RevVac™ safety syringe to do the following: SPD would identify for RMC at least two pre-qualified contract manufacturers; SPD would assess and evaluate such candidates based on quality, overall price and performance history; and SPD to provide RMC with recommendations for selection of candidates based on SPD’s findings.

46.    SPD did not provide RMC the services it agreed to do under the September 2008 contract but, instead, used the money paid but RMC to research how to become the supplier of RMC’s syringes.

47.    Pursuant to the September 2008 contract, while RMC thought SPD was looking out for RMC’s interests, RMC paid SPD $8,000 per month, which was increased to $16,000 per month from September 2010 through April 2011.

48.    The sums RMC paid to SPD under the September 2008 contract were in excess of what was reasonable and were used for improper purposes, a fact that was known to O’Brien.

49.    O’Brien influenced RMC and secretly provided to Theriault RMC’s confidential information to assist SPD to extract from RMC the maximum amount it could get from RMC and, as a result, RMC paid too much to SPD.

June 1, 2009 Contract Between RMC and SPD

50.    On or about June 1, 2009, at O’Brien’s urging, RMC entered into an oral contract with SPD that provided that for $50,000 paid by RMC, SPD would make design changes to the RevVac™ safety syringe, with patents held by RMC to improve the manufacturing efficiency by reducing the number of constituent parts per syringe and improving quality. Hereinafter this contract will sometimes be referred to as “the June 2009 contract.”

51.    The June 2009 contract was, from its inception, fundamentally corrupted and tainted by the misrepresentations and conspiracy alleged above.

52.    The terms of the June 2009 contract were, as a result of the misrepresentations and conspiracy pleaded above, skewed against RMC and in favor of SPD.

53.   Theriault assured RMC that SPD required the sum of $50,000 to subcontract with Goddard Technologies, Inc., a Massachusetts design firm, to make the improvements.

54.   SPD collected $50,000 from RMC and retained Goddard Technologies, Inc. on behalf of RMC to make the improvements pursuant to the June 2009 contract but the amount SPD actually required from RMC was much greater than the value of the services Theriault represented.

55.   The sums RMC paid to SPD under the June 2009 contract were in excess of what was reasonable and were used for improper purposes, a fact that was known to O’Brien.

56.   O’Brien influenced RMC and secretly provided Theriault RMC’s confidential information to assist SPD to extract from RMC the maximum amount it could get from RMC and, as a result, RMC paid too much to SPD.

March 1, 2010 Contract Between RMC and SPD

57.   On or about March 1, 2010, RMC entered into a contract with SPD to provide engineering services for creation of a pilot mold for the production of samples for the design changes made by Goddard Engineering, Inc. Attached hereto as Exhibit 2 is complete accurate copy of contract that hereinafter will sometimes be designated as “the March 2010 contract.”

58.   The March 2010 contract was, from its inception, fundamentally corrupted and tainted by the misrepresentations and conspiracy alleged above.

59.   The terms of the March 2010 contract were, as a result of the misrepresentations and conspiracy pleaded above, skewed against RMC and in favor of SPD.

60.   Under the March 2010 contract, SPD was to set up and support the manufacturing preparation for the creation of molds to produce 500 prototype samples of the 3mL RevVac™ safety syringe.

61.   Pursuant to the March 2010 contract, RMC paid SPD $170,000 between March 2010 and September 2010.

62.   The sum RMC paid to SPD under the March 2010 contract were in excess of what was reasonable and were used for improper purposes, a fact that was known to O’Brien.

63.   O’Brien influenced RMC and secretly provided Theriault RMC’s confidential information to assist SPD to extract from RMC the maximum amount it could get from RMC and, as a result, RMC paid too much to SPD.

October, 2010 Contract Between RMC and SPD for 5 and 10 mL

64.   On or about October, 2010, at O’Brien’s urging, RMC entered into an oral contract with SPD that provided that for $30,000 paid by RMC, SPD would make designs for the RevVac™ safety syringe, sizes 5 mL and 10 mL Hereinafter this contract will sometimes be referred to as “the October 2010 -- 5 and 10 mL syringes contract.”

65.   The October 2010 -- 5 and 10 mL syringes contract was, from its inception, fundamentally corrupted and tainted by the misrepresentations and conspiracy alleged above.

66.   The terms of the October 2010 -- 5 and 10 mL syringes contract were, as a result of the misrepresentations and conspiracy pleaded above, skewed against RMC and in favor of SPD.

67.   Theriault assured RMC that SPD required the sum of $30,000 to subcontract with Goddard Technologies, Inc., a Massachusetts design firm, to make the designs.

68.    SPD collected $30,000 from RMC and retained Goddard Technologies, Inc. on behalf of RMC to make the improvements pursuant to the October 2010 -- 5 and 10 mL syringes contract but actually required from RMC was much greater than the value of the services Theriault represented.

69.   The sums RMC paid to SPD under the October 2010 -- 5 and 10 mL syringes contract were in excess of what was reasonable and were used for improper purposes, a fact that was known to O’Brien.

70.   O’Brien influenced RMC and secretly provided Theriault RMC’s confidential information to assist SPD to extract from RMC the maximum amount it could get from RMC and, as a result, RMC paid too much to SPD.

October, 2010 Contract Between RMC for pre-filled syringes

71.   On or about October, 2010, at O’Brien’s urging, RMC entered into an oral contract with SPD that provided that for $50,000 paid by RMC, SPD would make designs for the RevVac™ safety syringe for prefilled usage. Hereinafter this contract will sometimes be referred to as “the October 2010 prefilled syringes contract.”

72.   The October 2010 prefilled syringes contract was, from its inception, fundamentally corrupted and tainted by the misrepresentations and conspiracy alleged above.

73.   The terms of the October 2010 prefilled syringes contract were, as a result of the misrepresentations and conspiracy pleaded above, skewed against RMC and in favor of SPD.

74.   Theriault assured RMC that SPD required the sum of $50,000 to subcontract with Goddard Technologies, Inc., a Massachusetts design firm, to make the designs.

75.   SPD collected $50,000 from RMC and retained Goddard Technologies, Inc. on behalf of RMC to make the designs pursuant to the October 2010 prefilled syringes contract but the amount actually required from RMC was much greater than the value of the services Theriault represented.

76.   The sums RMC paid to SPD under the October 2010 prefilled syringes contract were in excess of what was reasonable and were used for improper purposes, a fact that was known to O’Brien.

77.    O’Brien influenced RMC and secretly provided Theriault RMC’s confidential information to assist SPD to extract from RMC the maximum amount it could get from RMC and, as a result, RMC paid too much to SPD.

December, 2010 Contract Between RMC and SPD for 1 mL

78.   On or about December, 2010, at O’Brien’s urging, RMC entered into an oral contract with SPD that provided that for $50,000 paid by RMC, SPD would make designs for the RevVac™ safety syringe, size 1 mL. Hereinafter this contract will sometimes be referred to as “the December 2010 -- 1 mL syringe contract.”

79.   The December 2010 -- 1 mL syringe contract was, from its inception, fundamentally corrupted and tainted by the misrepresentations and conspiracy alleged above.

80.   The terms of the December 2010 -- 1 mL syringe contract were, as a result of the misrepresentations and conspiracy pleaded above, skewed against RMC and in favor of SPD.

81.   Theriault assured RMC that SPD required the sum of $50,000 to subcontract with Goddard Technologies, Inc., a Massachusetts design firm, to make the designs.

82.   SPD collected $50,000 from RMC and retained Goddard Technologies, Inc. on behalf of RMC to make the designs pursuant to the December 2010 -- 1 mL syringe contract but actually required from RMC was much greater than the value of the services Theriault represented.

83.   The sums RMC paid to SPD under the December 2010 -- 1 mL syringe contract were in excess of what was reasonable and were used for improper purposes, a fact that was known to O’Brien.

84.   O’Brien influenced RMC and secretly provided Theriault RMC’s confidential information to assist SPD to extract from RMC the maximum amount it could get from RMC and, as a result, RMC paid too much to SPD.

August 2010 Contract Between RMC and SPD

85.   On or about August of 2010, RMC entered into an oral contract with SPD to provide upgrades to the software for the MRI technology that RMC had acquired when it merged with Clear Image. Hereinafter this contract will sometimes be referred to as “the August 2010 contract.”

86.   The August 2010 contract was, from its inception, fundamentally corrupted and tainted by the misrepresentations and conspiracy alleged above.

87.   The terms of the August 2010 contract were, as a result of the misrepresentations and conspiracy pleaded above, skewed against RMC and in favor of SPD.

88.   Pursuant to the March 2010 contract, RMC paid SPD$50,000 up front, $5,000 per month for nine months and an additional $8,000 for a total of $103,000.

89.   The sum RMC paid to SPD under the August 2010 contract were in excess of what was reasonable and were used for improper purposes, a fact that was known to O’Brien.

90.   O’Brien influenced RMC and secretly provided Theriault RMC’s confidential information to assist SPD to extract from RMC the maximum amount it could get from RMC and, as a result, RMC paid too much to SPD.

Contracts with MIG

91.   SPD did not identify for RMC any candidates to serve as manufacturers of RMC’s syringes but instead, in the summer of 2010, Theriault, with the support of O’Brien, proposed to RMC that manufacturing could be better performed by MIG, an entity owned and controlled by Theriault.

92.   Before RMC entered into agreements with MIG, O’Brien and Theriault represented to RMC that MIG had the expertise, resources and experience to manufacture, the RevVac™ safety syringe.

93.   Before RMC entered into agreements with MIG, and to induce RMC into entry into the contracts with MIG as are more particularly described below in this Complaint, O’Brien told RMC that MIG and Theriault provided the best option for production of the syringes and looking out for RMC’s best interests.

94.   O’Brien’s representations described above were material to RMC’s decision to enter into the contracts with MIG as are more particularly described below.

95.   In reliance upon O’Brien’s recommendations, RMC appointed him to negotiate the contracts between RMC and MIG, wholly ignorant of the fact that O’Brien and Theriault were conspiring to injure RMC.

September 2, 2010 Memorandum of Understanding Between RMC and MIG

96.   O’Brien and Theriault conferred to handle the negotiations between RMC and MIG for establishment of a long term strategic supply alliance and on September 2, 2010, in reliance on the misrepresentations of O’Brien and O’Brien, RMC was induced to enter into a Memorandum of Understanding that provided the initial framework for its supply alliance and for RMC to contract with MIG for MIG to manufacture RMC’s 3 mL RevVac™ safety syringes. Attached hereto as Exhibit 3 is complete accurate copy of Memorandum of Understanding that hereinafter will sometimes be designated as “MOU.”

97.   The MOU that O’Brien “negotiated” with Theriault was, from its inception, fundamentally corrupted and tainted by the misrepresentations and conspiracy alleged above for the reason that O’Brien, who was chiefly responsible for negotiating the understanding with MIG, secretly provided RMC’s confidential information to MIG that greatly increased the cost to RMC and falsely assured RMC that MIG was competent to perform the job.

98.   The terms of the MOU were, as a result of the misrepresentations and conspiracy pleaded above, skewed against RMC and in favor of MIG.

99.   The MOU provided that RMC was to pay MIG $600,000 as preproduction funding and that RMC was to pay MIG in a-country support funding of $500 per month commencing October 1, 2010 until production, not to exceed 8 months.

100. The above-alleged amounts provided for in the MOU were grossly inflated and were worked out through the secret conspiracy between O’Brien and Theriault and not through any arm’s length negotiations between independent parties.

Manufacturing Agreements Between RMC and MIG

101. On September 17, 2010, in reliance on the misrepresentations of O’Brien and Theriault, who were acting in concert in the secret conspiracy described above, and in follow up on the MOU, RMC was induced to and did enter into a Manufacture, Supply, Distribution And Licensing Agreement with MIG that provided for MIG to manufacture RMC’s 3 mL RevVac™ safety syringes. Attached hereto as Exhibit 4 is complete accurate copy of Manufacture, Supply, Distribution And Licensing Agreement that hereinafter will sometimes be designated as “the Manufacture Agreement.”

102. The Manufacture Agreement that O’Brien “negotiated” with Theriault was, from its inception, fundamentally corrupted and tainted by the misrepresentations and conspiracy alleged above.

103. During the “negotiation” of the Manufacture Agreement, O’Brien secretly provided Theriault RMC’s confidential information related thereto, including forwarding to Theriault privileged communications between RMC and its attorneys.

104. During the “negotiation” of the Manufacture Agreement, O’Brien secretly conspired with Theriault greatly to inflate the costs to RMC related to the production of the syringes and to provide further terms that worked to the disadvantage of RMC.

105. The Manufacture Agreement worked out between O’Brien and Theriault adopted the terms from the MOU that provided that RMC was to pay MIG the grossly inflated sums of $600,000 as preproduction funding, and further to pay MIG in a-country support funding of $5,000 per month commencing October 1, 2010 until production, not to exceed 8 months.

106. The Manufacture Agreement “negotiated” between O’Brien and Theriault also departed from the MOU as to the supply price of the syringes in a manner that disadvantaged RMC for the reason that the supply price that RMC was to pay was a fixed price rather then the adjustable price provided for in the MOU.

107. After RMC and MIG entered into the Manufacture Agreement, Theriault falsely advised RMC that MIG was on track with the production of the RMC’s 3 mL RevVac™ safety syringes so RMC appointed O’Brien as its representative to negotiate with MIG the terms of an amended agreement to include provision for MIG to manufacture RMC’s 1 mL RevVac™ safety syringes

108. On January 6, 2011, in reliance on the misrepresentations of SPD, Theriault and O’Brien who were acting in concert in the secret conspiracy described above, and in follow up on the MOU, RMC was induced to and did enter into an Amended Manufacture, Supply, Distribution And Licensing Agreement with MIG that superseded the Manufacture Agreement and provided for MIG to manufacture RMC’s 3 mL and 1 mL RevVac™ safety syringes. Attached hereto as Exhibit 5 is complete accurate copy of the Amended Manufacture, Supply, Distribution And Licensing Agreement that hereinafter will sometimes be designated as “the Amended Manufacture Agreement.”

109. The Amended Manufacturing Agreement was, from its inception, fundamentally corrupted and tainted by the misrepresentations and conspiracy alleged above.

110. The terms of both the Manufacturing Agreement and the Amended Manufacturing Agreement were, as a result of the misrepresentations and conspiracy pleaded above, skewed against RMC and in favor of MIG.

111. Terms of both the Manufacture Agreement and the Amended Manufacture Agreement “negotiated” between O’Brien and Theriault that were conspicuously skewed against RMC and in favor of MIG include: (a) the amounts and payment schedule for RMC to pay MIG pre-production payments; (b) the consequences of default of RMC’s failure to make the preproduction payments which included the potential for RMC to forfeit to MIG its intellectual property; and (c) the flat per unit price that RMC was to pay MIG for the product once it was produced, which arrangement was a marked departure from the MOU that had provided for the price to be“adjusted up or down based on changes in material cost, labor or currency rates than are more than TBD% against the baseline rates as of the final agreement.”

112. RMC is informed and believes that the O’Brien and Theriault deliberately intended to place RMC in an untenable position to trigger RMC’s default under the Manufacturing Agreement and Amended Manufacturing Agreement in order to loot RMC of its intellectual property so that they could profit from it and thereby to wreck RMC’s finances.

Termination of Agreements

113. Despite repeated false representations to RMC by both O’Brien and Theriault that SPD was performing the September 2008 and March 2010 contracts, in or around the summer of 2011, RMC concluded that SPD was not performing under the contracts, including that SPD had failed to set up and support the manufacturing preparation for the creation of molds to produce 500 mL RevVac™ safety syringes.

114. In July 2011, RMC terminated its contracts with SPD due to SPD’s failure to perform after having paid SPD a total of $723,000 and received very little of value in return.

115. Despite repeated false representations to RMC by Theriault that MIG was timely performing the work required for manufacturing syringes, and that MIG was production ready, the true state of affairs, as was known to O’Brien and Theriault, was that MIG had never been production ready and never been able to provide any production samples that passed inspection.

116. On September 2, 2011, RMC notified MIG that it was terminating the Amended Manufacture Agreement for the failure of MIG to perform.

117. RMC paid MIG $806,650.00 under both the Manufacture Agreement and the Amended Manufacture Agreement but, as it received nothing of value and no product to sell, it was forced to find another supplier.

118. After RMC gave MIG notice of termination of the Amended Manufacture Agreement, on September 19, 2011 MIG commenced arbitration proceedings against RMC whereby MIG sought to enforce the Amended Manufacture Agreement seeking not only inflated damage but a declaration that MIG owns of RMC’s intellectual property rights respecting the syringes.

119. On September 20, 2011, O’Brien tendered his resignation to RMC as to his position on the board of directors and as president and RMC accepted the resignation the next day.

120. RMC fulfilled all its obligations and conditions to O’Brien under the contract of employment.

121. In its arbitration petition, MIG also sought preliminary injunctive relief against RMC, alleging in support of its petition confidential data that came from O’Brien through the conspiracy described in this pleading.

122. RMC counterclaimed against MIG in the arbitration proceedings alleging that MIG had breached the agreement in various particulars.

123. In the discovery exchanges between RMC and MIG, MIG turned over to RMC materials that revealed to RMC for the first time materials that showed O’Brien’s role in the fraud and conspiracy that is alleged in this Complaint.

124. In its attempts to investigate and prepare for the claims asserted in the arbitration proceedings, RMC requested that O’Brien turn over to them his e- mail and other materials related to his dealings with Theriault and his companies but O’Brien refused, stating that he did not have the records because of a computer failure.

125. RMC is informed and believes that O’Brien has refused to turn over RMC his e-mail and other materials related to his dealings with Theriault and his companies to conceal his improper conduct and that the contention that he lost the information is an intentional falsehood.

126. On April 17, 2012 and April 18, 2012, Theriault, who appeared with legal counsel, submitted to oral deposition in the arbitration proceedings, but, when asked about the materials that had come to light related to fraud and conspiracy with O’Brien, he repeatedly refused to answer the questions by, more than 100 times, invoking the Fifth Amendment privilege against self incrimination.

127. After Theriault refused to answer questions at his deposition, MIG dismissed its arbitration claim against RMC with prejudice but specifically allowed RMC to proceed on its counterclaim against MIG.

128. RMC has been forced to spend great sums of money litigating with MIG to protect its rights and assert its remedies arising from a contract that was corrupted and tainted by O’Brien’s conspiracy and fraud alleged herein.

First Cause of Action – Breach of Contract

129. RMC re-alleges the foregoing complaint as it set forth verbatim and further pleads the following cause of action.

130. O’Brien breached his contract with RMC in the following particulars:

a.      By entering into and forwarding the conspiracy with Theriault to do damage to RMC;

b.      By not advising RMC of his relationship with Theriault and of the fact that he was receiving secret payment from him;

c.      By accepting secret payments from Theriault;

d.      By corruptly influencing RMC to do business with Theriault and his companies as pleaded above;

e.      By secretly providing Theriault and his companies confidential information of RMC that they used to RMC’s disadvantage;

f.       By breaching his fiduciary duty to RMC; and

g.      By otherwise engaging in conduct contrary to the interests of RMC.

131. As a direct and proximate cause of O’Brien’s breaches of contract, RMC has sustained and continues to sustain actual damages for which O’Brien is liable to RMC.

Second Cause of Action – Breach of Contract Accompanied by Fraudulent

Acts

132. RMC re-alleges the foregoing complaint as it set forth verbatim and further pleads the following cause of action.

133. When O’Brien breached his contract with RMC as set forth above, he committed fraudulent acts including:

a.      By accepting improper remuneration from Theriault and his companies and keeping it a secret from RMC;

b.      By secretly providing Theriault and his companies RMC’s confidential information that was used against RMC;

c.      By promoting Theriault and his companies to RMC and thereafter working out the terms and conditions of RMC’s agreements with Theriault and his companies when he was acting against the interests of RMC;

d.      By concealing his activities from RMC; and

e.      Otherwise by engaging in fraudulent acts against RMC.

134. As a direct and proximate cause of O’Brien’s breaches of contract and fraudulent acts, RMC has sustained and continues to sustain actual damages for which O’Brien is liable to RMC in an amount to be determined at trial.

135. RMC is also entitled to punitive damages against O’Brien.

Third Cause of Action – Fraud

136. RMC re-alleges the foregoing complaint as it set forth verbatim and further pleads the following cause of action.

137. By engaging in the activity alleged above, O’Brien committed fraud upon RMC that directly and proximately caused damages to RMC.

138. At all times relevant O’Brien occupied a fiduciary relationship with RMC as a member of its board of directors and as its president when he made the following representations to RMC:

a.      O’Brien repeatedly told RMC that Theriault, SPD and MIG were competent, trustworthy and honest and were suitable for RMC to do business with, when he knew such statements were not true;

b.      O’Brien repeatedly advised RMC to continue to do business with Theriault, SPD and MIG by falsely stating that they were looking out for RMC’s interests and provided good value for the money spent;

c.      O’Brien continuously concealed from RMC the fact that he was receiving money from Theriault, SPD and MIG in order to promote their interests to the detriment of RMC;

d.      O’Brien accepted the task from RMC to negotiate with MIG the terms of the MOU, the Manufacture Agreement and the Amended Manufacture Agreement without telling them that he was receiving money from Theriault, SPD and MIG in order to promote their interests to the detriment of RMC;

e.      O’Brien repeatedly refused to provide RMC e-mails and other information in his computer relating to the communications he had with Theriault, SPD and MIG by falsely telling RMC that he was unable to provide the materials because his computer had failed; and

f.       O’Brien did not disclose to RMC that he was providing Theriault with RMC’s confidential information to the detriment of RMC.

139. When O’Brien made them, his misrepresentations to RMC were, to his knowledge, false.

140. When O’Brien made them, his misrepresentations to RMC were, to his knowledge, material to RMC’s transactional decisions to enter into and continue business with Theriault, SPD and his companies.

141. RMC relied upon O’Brien’s misrepresentations in making its transactional decisions to enter into and continue business with Theriault, SPD and his companies.

142. O’Brien expected and intended that RMC would rely upon O’Brien’s misrepresentations in making its transactional decisions to enter into and continue business with Theriault, SPD and his companies.

143. RMC has been and continues to be directly and proximately damaged by the fraud of O’Brien in an amount to be determined at trial.

Fourth Cause of Action – Breach of Fiduciary Duty

144. RMC re-alleges the foregoing complaint as it set forth verbatim and further pleads the following cause of action.

145. At the time that O’Brien engaged in the activity alleged above respecting his and RMC’s dealings with Theriault and his companies, O’Brien occupied a fiduciary position with RMC.

146. In engaging in the activity alleged above respecting his and RMC’s dealings with Theriault and his companies, O’Brien breached his fiduciary duties to RMC.

147. RMC has been and continues to be directly and proximately damaged by the O’Brien’s breach of fiduciary duties in an amount to be determined at trial.

Fifth Cause of Action – Conversion

148. RMC re-alleges the foregoing complaint as it set forth verbatim and further pleads the following cause of action.

149. At the time that O’Brien engaged in the activity alleged above respecting his and RMC’s dealings with Theriault and his companies, O’Brien occupied a fiduciary position with RMC.

150. In his acceptance of the money from Theriault and his companies, as alleged above, O’Brien converted to his benefit money that rightfully belongs to RMC.

151. RMC has been and continues to be directly and proximately damaged by the O’Brien’s conversion in an amount to be determined at trial.

Sixth Cause of Action – Employee Disloyalty

152. RMC re-alleges the foregoing complaint as it set forth verbatim and further pleads the following cause of action.

153. At the time that O’Brien engaged in the activity alleged above respecting his and RMC’s dealings with Theriault and his companies, O’Brien was RMC’s employee.

154. In engaging in theactivity alleged above respecting his and RMC’s dealings with Theriault and his companies, O’Brien breached his duty of employee loyalty to his employer, RMC.

155. During the entire tenure of his employment with RMC, O’Brien accepted salary, shares of stock and other valuable financial benefits for his efforts.

156. RMC is entitled to have O’Brien return to it of the salary, shares of stock and other valuable financial benefits it provided to O’Brien during his employment.

Seventh Cause of Action – Director Disloyalty

157. RMC re-alleges the foregoing complaint as it set forth verbatim and further pleads the following cause of action.

158. At the time that O’Brien engaged in the activity alleged above respecting his and RMC’s dealings with Theriault and his companies, O’Brien was a member of RMC’s board of directors.

159. In engaging in the activity alleged above respecting his and RMC’s dealings with Theriault and his companies, O’Brien breached his duty of director loyalty to RMC.

160. During the entire tenure of his employment with RMC, O’Brien accepted shares of stock and other valuable financial benefits for his efforts.

161. RMC is entitled to have O’Brien return to it the shares of stock and other valuable financial benefits it provided to O’Brien during his tenure as director.

Eighth Cause of Action – Civil Conspiracy

162. RMC re-alleges the foregoing complaint as it set forth verbatim and further pleads the following cause of action.

163. O’Brien knowingly and willingly participated in a scheme with Theriault, SPD and MIG designed to injure RMC, that did in fact cause injury to RMC.

164. As a direct and proximate result of O’Brien’s conduct RMC has suffered and continues to suffer special damages in an amount to be determined at trial.

WHEREFORE, RMC prays for the entry of a judgment from this court: As to all causes of actions and counts:

a.      awarding RMC direct, consequential and special damages, plus applicable interest;

b.      awarding RMC its costs and attorney’s fees incurred in connection with this action; and

c.      as to the counts relating to fraud, breach of contract accompanied by a fraudulent act, breach of fiduciary duty, employee disloyalty, director disloyalty and civil conspiracy, awarding RMC punitive damages; and

d.      awarding RMC such other and further relief as this Court may deem to be just and proper.

 

Bucher Legal, LLC

 

 Dated: September 28, 2012


/s/ Stephen Bucher