Beruflich Dokumente
Kultur Dokumente
Plaintiffs,
v.
Defendants,
and
v.
Counterclaim Defendants;
and
Crossclaim Defendant.
Case 1:18-cv-00831-RBJ Document 7 Filed 05/18/18 USDC Colorado Page 2 of 56
Defendants John Michael Merritt, Jr. and Full Spectrum Nutrition, LLC submit the following
PARTIES
1. ANSWER: Defendants admit that Mazo resides in Melbourne, Florida. Defendants lack
knowledge or information sufficient to form a belief about the truth of the remaining allegations in
this paragraph.
2. Plaintiff, MARITZA RIASCOS, is a citizen of the State of Florida residing at 6331 Portofino Lane,
Melbourne, Florida 32940, and is the spouse of Mazo and Co-Member and Co- Manager with Mazo of
MAZO-RIASCOS M.D., LLC, a Florida limited liability company.
2. ANSWER: Defendants admit that Riascos resides in Melbourne, Florida. Defendants lack
knowledge or information sufficient to form a belief about the truth of the remaining allegations in
this paragraph.
3. On information and belief, Defendant, JOHN MICHAEL MERRITT, JR., is a citizen of the State
of Louisiana with his principal place of residence located at 139 E. Colbert Drive, Minden, Webster Parish,
Louisiana 71055.
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For ease of reference, Defendants will include the assertion from the Complaint before each of
their answers.
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3. ANSWER: Denied.
4. ANSWER: Admitted.
5. ANSWER: Admitted.
6. This Court has subject matter jurisdiction over this proceeding pursuant to 28 U.S.C. § 1331, because
the federal claim herein arises out of violations of the Securities Act of 1933 for which the Plaintiffs seek
relief pursuant to 15 U.S.C. § 77l and 15 U.S.C. § 77o.
6. ANSWER: Admitted that this Court has subject matter jurisdiction over the claims alleged in
7. Further, this Court has supplemental subject matter jurisdiction over Plaintiffs’ state law claims pursuant
to 28 U.S.C. § 1367, as those claims are so related to the claims arising under the Securities Act of 1933
as to form part of the same case or controversy under Article III of the U.S. Constitution.
7. ANSWER: Admitted that this Court has supplemental subject matter jurisdiction over the state
8. The Defendants have transacted business in Colorado and engaged in a substantial part of the actions
and events giving rise to this action in Colorado Springs, El Paso County, Colorado, including the
intentional, knowing, deliberately reckless, and/or negligent material misrepresentations, omissions made to
Plaintiffs and solicitation of Plaintiffs’ investments totaling One Million One Hundred Thousand Dollars.
8. ANSWER: Admitted that Defendants have transacted business in Colorado and that many of
the actions and events alleged occurred in Colorado Springs, El Paso County, Colorado. Otherwise,
denied.
9. Venue is proper in this Court pursuant to 15 U.S.C. § 77l and 28 U.S.C. § 1391, as substantial
part of the actions and events giving rise to this action in Colorado Springs, El Paso County, Colorado,
including the omissions, misrepresentations and solicitation of Plaintiffs’ investments totaling One Million
One Hundred Thousand Dollars.
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10. This Verified Complaint is not a collusive action to confer jurisdiction that the Court would otherwise
lack.
10. ANSWER: Admitted that the Court has jurisdiction. The remainder of the paragraph contains
INTRODUCTION
11. This action is being brought as a result of the intentional, knowing, deliberately reckless, and/or
negligent material misrepresentations, omissions, and other misconduct by the Defendants, performed in
connection with the solicitation and sale of securities related to Full Spectrum Nutrition, LLC, a Florida
limited liability company, and Full Spectrum Nutrition, Inc., a Delaware corporation (together “Full
Spectrum Nutrition”), which resulted in Plaintiffs being defrauded out of One Million One Hundred
Thousand Dollars. Merritt, individually, and as a controlling person of Full Spectrum Nutrition, devised
and implemented a scheme that defrauded the Plaintiffs, in furtherance of Merritt’s motive of enriching
himself.
11. ANSWER: Denied. Defendants answer further that Plaintiffs are intentionally conflating Full
Spectrum Nutrition, LLC (“FSN, LLC”) and Full Spectrum Nutrition, Inc. (“FSN, Inc.”), and do so
throughout this Complaint. Plaintiffs, along with Bryan Ferrero and Douglas Bishop, are the
controlling shareholders of FSN, Inc. Mazo is the President of the Corporation and Chair of the
Board of Directors, Douglas Bishop is the Chief Operations Manager and a Director; and Riascos
and Ferrero are Directors. Merritt is a minority shareholder with no management role. Plaintiffs,
along with Bryan Ferrero and Douglas Bishop, claim to be the controlling members of FSN, LLC,
despite the fact that none have ever received a membership interest in the Company.
GENERAL ALLEGATIONS
12. At all times material hereto, Mazo and Riascos have been medical doctors licensed to practice medicine
in the State of Florida with their medical office located at 315 E. Nasa Blvd., Melbourne, Florida 32901.
12. ANSWER: Defendants lack knowledge or information sufficient to form a belief about the
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13. At all times material hereto, Mazo and Riascos maintained a joint business account at the Space Coast
Credit Union, Melbourne, Florida, under the name Anthony Mazo-Mayorquin M.D., LLC, a Florida
limited liability company formed November 8, 2004.
13. ANSWER: Defendants lack knowledge or information sufficient to form a belief about the
14. In or about October 19, 2007, Anthony Mazo-Mayorquin M.D., LLC, a Florida limited liability
company, changed its name to Mazo-Riascos M.D., LLC; however, the Mazo and Riascos continued to
maintain the Space Coast Credit Union Account in the name of Anthony Mazo-Mayorquin M.D., LLC
(hereinafter “Mazo and Riascos’ Space Coast Account”).
14. ANSWER: Defendants lack knowledge or information sufficient to form a belief about the
15. At all times material hereto, Merritt maintained a residence at 417 East Kiowa Street, Unit 1105,
Colorado Springs, Colorado 80915.
16. At all times material hereto, Merritt maintained a business checking account in the name of Full
Spectrum Nutrition, LLC, a Florida limited liability company, which bank account was under the sole
signature authority of Merritt.
17. In or about May 2017 and continuing thereafter, Merritt induced the Plaintiffs to invest in any equity
interest and continue to invest in an equity interest in Full Spectrum Nutrition, LLC, a Florida limited
liability company, and Full Spectrum Nutrition, Inc., a Delaware corporation (together “Full Spectrum
Nutrition”).
17. ANSWER: Admitted that Mazo and Riascos invested in FSN, Inc., and that Merritt, indirectly
through his then-acquaintance Bryan Ferrero, pitched the investment to Mazo. Denied that the
Plaintiffs’ investment was made in FSN, LLC. Admitted that Merritt and Plaintiffs discussed
transferring the investment in FSN, Inc. into an investment in FSN, LLC, but no agreement was
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18. Merritt presented Full Spectrum Nutrition as a business to purchase Cannabidiol (“CBD”) infused
products at below wholesale prices (because of Merritt’s business relationship with Folium) and then to
market and sell such products at retail to obtain extraordinary net profit margins.
18. ANSWER: Admitted that Merritt presented FSN, Inc. as a business whose plan was in part to
purchase CBD-infused products wholesale and to market and sell such products at retail. Denied
that such presentation included “extraordinary” or otherwise unrealistic net profit margins. All
19. Each of the Plaintiffs and the Defendants are a “person” as defined in 28 U.S.C. § 77b(a)(2).
19. ANSWER: This paragraph calls for legal conclusions and is therefore denied.
20. ANSWER: Admitted that Merritt was the sole member of FSN, LLC and exercised control
over that company. Denied that Merritt exercised “singular control” over employees of FSN, LLC.
Admitted that Merritt is a shareholder of FSN, Inc. Admitted that Merritt was the CEO until he
was voted out of his executive role by Plaintiffs and other shareholders on or about December 2017.
Denied that Merritt had control over all of the actions taken by other shareholders and/or
employees of FSN, Inc. or by employees of FSN, LLC. Answering further, Merritt notes that
Plaintiffs are intentionally conflating FSN, LLC and FSN, Inc. Otherwise, denied.
21. Merritt had singular control over the preparation of the May 2017, written Confidential Business Plan
of Full Spectrum Nutrition, Inc., attached hereto as Exhibit “A” and personally presented Exhibit “A” to
Plaintiffs in writing in El Paso County, Colorado.
21. ANSWER: Admitted that Merritt created the business plan based on representations from
22. Merritt knew that Exhibit “A” contained intentional, knowing, deliberately reckless, and/or negligent
material misrepresentations and/or omissions in order to induce to Mazo and/or Riascos to purchase a,
equity interest, including a membership interest in Full Spectrum Nutrition, LLC, and stock in Full
Spectrum Nutrition, Inc., including, but not limited to, the following:
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a. The Forecast, Financial Highlights by Year, and Financing Need were false;
a. ANSWER: Denied.
b. The Financial Plan, including, Forecast, Key Assumptions, Revenue by Month, Expenses by Month, Net
Profit (or Loss) by Year were false;
b. ANSWER: Denied.
c. The Financing Section, including, Use of Funds, Expected Returns were false;
c. ANSWER: Denied.
d. The Statements Section, including Projected Profit & Loss, Projected Balance Sheet, Project Case Flow
Statement were false.
d. ANSWER: Denied.
23. In order to finalize the proposed sale of the security interests in Full Spectrum Nutrition by Plaintiffs,
Merritt and Full Spectrum Nutrition made the following intentional, knowing, deliberately reckless, and/or
negligent material misrepresentations and/or omissions in El Paso County, Colorado, in order to induce to
Mazo and/or Riascos to purchase an equity interest in Full Spectrum Nutrition.
23. ANSWER: Denied that Merritt made any intentional, knowing, deliberately reckless, and/or
for any reason whatsoever. Answering further, Merritt notes that Plaintiffs are intentionally
a. Merritt had an ongoing equity interest in Whole Hemp Company, LLC, a Colorado limited liability
company, d/b/a Folium Biosciences, a located in Colorado Springs, Colorado, a company fully licensed
by the State of Colorado in and prior to 2017 to extract and purify Hemp Oil containing cannabidiol
from industrial hemp (“Folium”); Folium is one of the largest hemp oil extraction companies in the
United States. Merritt knew that such a representation was false and deliberately made to Plaintiffs to
materially induce them to invest a total of One Million One Hundred Thousand Dollars
($1,100,000.00) in Full Spectrum Nutrition, LLC, a Florida limited liability company and Full
Spectrum Nutrition, Inc., a Delaware corporation;
a. ANSWER: Admitted that Merritt had an equity interest in Folium Biosciences LLC and Folium
Biosciences S.A. de C.V. (an entity organized in Mexico). Denied that Merritt made any intentional,
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regard to that fact or any other fact. Denied that Merritt knowingly made any false representation
b. Merritt utilized his business relationship with Ryan Lewis, Folium’s then Sales Manager, to gain access
to and walk the Plaintiffs through Folium’s extraction and purification plant in Colorado Springs,
Colorado, in order to reinforce the impression upon the Plaintiffs that Merritt had an ongoing equity
interest in Folium. Merritt made the walk-through presentation to Plaintiffs falsely and deliberately to
materially induce Plaintiffs to invest a total of One Million One Hundred Thousand Dollars
($1,100,000.00) in Full Spectrum Nutrition, LLC, a Florida limited liability company and Full
Spectrum Nutrition, Inc., a Delaware corporation;
b. ANSWER: Admitted that Plaintiffs took a tour of Folium’s plant. Admitted that Merritt had a
business relationship with Ryan Lewis and others at Folium. Otherwise denied.
c. The Confidential Business Plan attached hereto as Exhibit “A” reflected the minimum financial return
that could be expected by Plaintiffs.
c. ANSWER: Denied. The Business Plan is a document that speaks for itself.
d. All monies invested by Plaintiffs would be utilized solely for buildout and equipping a Full Spectrum
Nutrition business office in Colorado Springs, Colorado and for purchasing at wholesale and then
marketing and selling at retail CBD infused products as nutritional supplements and that no monies
invested by Plaintiffs would be utilized for any other purpose. In fact, Merritt had secretly been
establishing a “wildlife refuge” business in Costa Rica in conjunction with bottling and marketing Costa
Rica water under the name “iRescue”, which business he would one hundred percent (100%) control and
that Merritt intended to divert and, in fact, did divert significant monies invested by Plaintiffs to further
Merritt’s business in Costa Rica;
d. ANSWER: Admitted that invested money was intended to be used, and was used, for Full
Spectrum Nutrition Inc., business. Admitted that Merritt is involved with a separate, unrelated not
for profit entity in Costa Rica, founded in 2005. Denied that Merritt’s Costa Rica business was
“secret” or was “secretly” established. Denied that Plaintiffs were unaware of Merritt’s separate
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business in Costa Rica. Denied that any money invested in FSN, Inc. or FSN, LLC was improperly
“divert[ed]” to the Costa Rica business or was otherwise misused. Otherwise denied.
e. Full Spectrum Nutrition would not pay any salary to Merritt or otherwise benefit Merritt until such
time as the business would produce a net profit sufficient to pay dividends to the shareholders in
accordance with the “Expected Return” Section of Exhibit “A” attached hereto. Merritt knew the
representation was false because (1) he had secretly arranged to be paid commissions from Full Spectrum
Nutrition’s purchases and/or sales, (2) he arranged to make certain product sales to third party
affiliates of Merritt at below the cost which Full Spectrum Nutrition had purchased the products, and
when the affiliates sold the said products to third parties, Merritt received a percentage of the profits from
the affiliates’ sales, and (3) Merritt utilized monies invested by Plaintiffs in Full Spectrum Nutrition to
fund his personal business ventures, including, but not limited to the Costa Rica business venture
described above.
e. ANSWER: Admitted that FSN, Inc. and/or FSN, LLC did not pay any salary to Merritt.
Admitted that Merritt received certain sales commissions in accordance with the parties’ agreement.
Denied that Merritt made any false representations. The remainder of the paragraph is denied.
24. In material reliance on Defendant’s intentional, knowing, deliberately reckless, and/or negligent
material misrepresentations, omissions, and other misconduct, Mazo and Riascos made the following wire
transfers totaling One Million One Hundred Thousand Dollars ($1,100,000.00) to the Wells Fargo Bank
Account of Full Spectrum Nutrition, LLC, from Mazo and Riascos’ Space Coast Credit Union account for
the purchase of an equity interest in Full Spectrum Nutrition:
24. ANSWER: Admitted that Plaintiffs made wire transfers totaling one million one hundred
thousand dollars ($1,100,000) to the bank account of Full Spectrum Nutrition, LLC. Otherwise,
denied.
a. May 15, 2017, in the sum of Four Hundred Thousand Dollars ($400,000.00) invested on behalf of
Mazo.
a. ANSWER: Admitted that such sum was invested in Full Spectrum Nutrition, Inc. by Plaintiff
Mazo.
b. June 7, 2017, in the sum of Two Hundred Thousand Dollars ($200,000.00) invested on behalf of
Mazo.
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b. ANSWER: Admitted that such sum was invested in Full Spectrum Nutrition, Inc. by Plaintiff
Mazo.
c. July 10, 2017, in the sum of Two Hundred Thousand Dollars ($200,000.00) invested on behalf of
Riascos.
c. ANSWER: Admitted that such sum was invested in Full Spectrum Nutrition, Inc. by Plaintiff
Riascos.
d. July 26, 2017, in the sum of One Hundred Thousand Dollars ($100,000.00) invested on behalf of
Riascos.
d. ANSWER: Admitted that such sum was invested in Full Spectrum Nutrition, Inc. by Plaintiff
Riascos.
e. August 8, 2017, in the sum of One Hundred Thousand Dollars ($100,000.00) invested on behalf of
Riascos.
e. ANSWER: Admitted that such sum was invested in Full Spectrum Nutrition, Inc. by Plaintiff
Riascos.
f. August 23, 2017, in the sum of One Hundred Thousand Dollars ($100,000.00) invested on behalf of
Riascos.
f. ANSWER: Admitted that such sum was invested in Full Spectrum Nutrition, Inc. by Plaintiff
Riascos.
CLAIMS
25. Plaintiffs incorporate the preceding paragraphs as if fully set forth herein.
25. ANSWER: Defendants Merritt and FSN, LLC incorporate their previous responses.
26. Each of the Defendants are “Sellers”, “Offerors” and/or “Solicitors of securities, in connection with
such offerings, as contemplated by the Securities Act of 1933.
26. ANSWER: This paragraph calls for legal conclusions and is therefore denied.
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27. Exhibit “A” attached hereto constitutes an offering document and was inaccurate and misleading,
contained untrue statements of material facts, omitted to state other facts necessary to make the statements
made not misleading and omitted to state material facts required to be stated therein. The false and
misleading statements include:
a. The Forecast, Financial Highlights by Year, and Financing Need were false;
a. ANSWER: Denied.
b. The Financial Plan, including, Forecast, Key Assumptions, Revenue by Month, Expenses by Month, Net
Profit (or Loss) by Year were false;
b. ANSWER: Denied.
c. The Financing Section, including, Use of Funds, Expected Returns were false;
c. ANSWER: Denied.
d. The Statements Section, including Projected Profit & Loss, Projected Balance Sheet, Project Case Flow
Statement were false.
d. ANSWER: Denied.
28. The Defendants’ oral inaccurate and misleading, untrue statements of material facts, omission to state
other facts necessary to make the statements made not misleading, and omission to state material facts
required to be stated include those set forth in paragraph 23 above.
29. Plaintiffs purchased or otherwise acquired securities offered, solicited, or offered pursuant to oral and
written intentional, knowing, deliberately reckless, and/or negligent material misrepresentations, omissions,
and other misconduct by the Defendants, performed in connection with the solicitation and sale of securities
related to Full Spectrum Nutrition, LLC, a Florida limited liability company, and Full Spectrum
Nutrition, Inc., a Delaware corporation.
29. ANSWER: Admitted that Plaintiffs purchased or otherwise acquired securities from FSN, Inc.
Otherwise denied.
30. By reasons of the conduct herein alleged, Defendants have violated and/or controlled a person who
violated Section 12 of the Securities Act of 1933.
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31. Mazo and Riascos hereby elect to rescind and tender, to those Defendants named in this claim, those
securities that Mazo and Riascos own in return for the consideration paid for those securities with interest
thereon.
31. ANSWER: This paragraph either calls for legal conclusions, which are therefore denied, or else
Defendants lack knowledge or information sufficient to form a belief about the truth of the
allegations contained in this paragraph. Defendants deny that Plaintiffs are entitled to any relief
requested herein.
32. At the time Mazo and Riascos purchased the Full Spectrum Nutrition securities, each of them was
without knowledge of the facts concerning the wrongful conduct alleged herein and could not have reasonably
discovered those facts prior to making the payments to purchase the securities of Full Spectrum Nutrition.
32. ANSWER: Admitted that Mazo and Riascos purchased shares in Full Spectrum Nutrition, Inc.,
a Delaware Corporation. All other allegations contained in this paragraph are denied.
33. Less than one (1) year has elapsed from the time Plaintiffs discovered the facts upon which this claim is
based to the date of filing of this claim.
33. ANSWER: This paragraph calls for legal conclusions and is therefore denied and/or
Defendants lack knowledge or information sufficient to form a belief about the truth of the
34. Plaintiffs incorporate the preceding paragraphs as if fully set forth herein.
35. Merritt was a controlling person of Full Spectrum Nutrition by virtue of his position and role with Full
Spectrum Nutrition, LLC, a Florida limited liability company, and Full Spectrum Nutrition, Inc., a
Delaware corporation, as detailed above.
35. ANSWER: Admitted that Merritt was the sole member and CEO of FSN, LLC. Admitted that
Merritt was the CEO of FSN, Inc. until he was removed from that position in December 2017.
Denied that Merritt had a controlling share of FSN, Inc. Otherwise, denied.
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36. Merritt was a culpable participant in the violation of the Securities Act of 1933 alleged in the First
Claim for Relief above.
37. As a result, Merritt, as a controlling person, is liable for the wrongful conduct and damages sustained by
Plaintiffs as a result.
38. Plaintiffs incorporate the preceding paragraphs as if fully set forth herein.
39. Defendants are jointly and severally liable to Plaintiffs pursuant C.R.S. § 11-51- 604(3) and (4), for
soliciting and selling securities to Plaintiffs in violation of C.R.S. § 11-51- 501(1)(a), (b), and (c).
40. In connection with the offer, sale and/or purchase of securities, Defendants directly and indirectly: (1)
employed devices, schemes and/or artifices to defraud; (2) made untrue statements of material fact and/or
omitted to state material facts necessary in order to make their statements, in light of the circumstances under
which they were made, not misleading; and/or (3) engaged in acts, practices, or courses of business which
operated as a fraud or deceit upon the Plaintiffs.
41. In making the false and misleading statements and omissions to Plaintiffs, including those set forth in
paragraphs 22 and 23 above, Defendants acted with intent to defraud or with reckless disregard for
Plaintiffs’ interests. At the time Plaintiffs purchased securities from Full Spectrum Nutrition, Plaintiffs did
not know, and in the exercise of reasonable care could not have known, that the representations made to
Plaintiffs were materially false and misleading; and did not know the true facts which are alleged in this
Complaint to have been omitted.
42. Plaintiffs have suffered damages in the amount of at least One Million One Hundred Thousand
Dollars ($1,100,000.00) as a result of their reliance on the Defendants’ false and misleading statements and
omissions. Those false and misleading statements and omissions induced Plaintiffs to make the investments
which they would not have otherwise made, in whole or in part, because the misrepresentations and omissions
materially altered and/or concealed the true risks of investing in Full Spectrum Nutrition.
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43. Defendants are liable to Plaintiffs for such legal and equitable relief that the Court deems appropriate,
including rescission, actual damages, interest at the statutory rate, costs and reasonable attorneys’ fees, as
provided under C.R.S. § 11-51-604(3).
44. ANSWER: Defendants lack knowledge or information sufficient to form a belief about the
45. Plaintiffs are entitled to recover from the Defendants, jointly and severally, the consideration of One
Million One Hundred Thousand Dollars ($1,100,000.00) they paid for the securities, together with interest
at the statutory rate, and costs and attorney’s fees, as provided in C.R.S. § 11-51-604(4).
46. Plaintiffs incorporate the preceding paragraphs as if fully set forth herein.
47. Full Spectrum Nutrition, LLC, a Florida limited liability company, and Full Spectrum Nutrition,
Inc., a Delaware corporation, in connection with Merritt engaged in the primary violations of the Colorado
Securities Act.
48. Merritt, by virtue of his position, and/or undertaking the specific acts described above, was, at the time
of the wrongs alleged herein, a controlling person of Full Spectrum Nutrition, LLC, a Florida limited
liability company, and Full Spectrum Nutrition, Inc., a Delaware corporation, within the meaning of C.R.S.
§ 11-51-604(5).
48. ANSWER: This paragraph calls for legal conclusions and is therefore denied.
49. By reason of the conduct alleged herein, Merritt, the Control Defendant is liable, jointly and severally,
and to the same extent as Full Spectrum Nutrition, LLC, a Florida limited liability company, and Full
Spectrum Nutrition, Inc., a Delaware corporation, for the wrongful conduct, and is liable to Plaintiffs for the
damages Plaintiffs suffered in connection with its purchase of the securities.
49. ANSWER: Denied. Defendants answer further that Plaintiffs and their associates are
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50. ANSWER: Defendants lack knowledge or information sufficient to form a belief about the
51. Plaintiffs are entitled to recover from the Defendants, jointly and severally, the consideration of One
Million One Hundred Thousand Dollars ($1,100,000.00) they paid for the securities, together with interest
at the statutory rate, and costs and attorney’s fees, as provided in C.R.S. § 11-51-604(4).
52. Plaintiffs incorporate the preceding paragraphs as if fully set forth herein.
53. Defendants made or caused to be made false representations of material facts and/or failed to disclose
material facts to Plaintiffs, as set out with particularity in the foregoing paragraphs, including paragraphs 22
and 23.
54. At the time of the representations and/or omissions, Defendants knew that the representations were
false or were aware that Plaintiffs did not know whether the representations were true or false.
55. Defendants made the representations with the intent that Plaintiffs would rely on the representations
and/or omissions, and in fact Plaintiffs did rely on the representations and/or omissions in investing in Full
Spectrum Nutrition.
55. ANSWER: Admitted that a business plan for FSN, Inc. was presented to Plaintiffs. Denied
that any representation made was false or misleading. Defendants are without knowledge regarding
Plaintiffs’ reliance, and therefore deny the same. Stated that Plaintiffs made independent
investigation of Folium, the intended supplier of products to FSN, Inc. Denied that Defendants
2
Defendants note that there are two claims denominated “Fourth” claim for relief.
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omitted any material facts. Defendant lacks knowledge or information sufficient to form a belief
56. ANSWER: Defendants lack knowledge or information sufficient to form a belief about the
57. Plaintiffs reliance upon Defendants’ false statements and omissions of material facts caused
Plaintiffs damages.
58. Plaintiffs have suffered damages in the amount of at least One Million One Hundred Thousand
Dollars ($1,100,000.00) as a result of their reliance on the Defendants’ false and misleading statements
and omissions. Those false and misleading statements and omissions induced Plaintiffs to make the
investments which they would not have otherwise made, in whole or in part, because the misrepresentations
and omissions materially altered and/or concealed the true risks of investing in Full Spectrum Nutrition.
59. Plaintiffs incorporate the preceding paragraphs as if fully set forth herein.
60. Pursuant to Colorado Revised Statutes, section 18-4-401(1), “[a] person commits theft when he or she
knowingly obtains, retains, or exercises control over anything of value of another without authorization or by
threat or deception; or receives, loans money by pawn or pledge on, or disposes of anything of value or
belonging to another that he or she knows or believes to have been stolen, and: (a) Intends to deprive the other
person permanently of the use or benefit of the thing of value; (b) Knowingly uses, conceals, or abandons the
thing of value in such manner as to deprive the other person permanently of its use or benefit; [or] (c) Uses,
conceals, or abandons the thing of value intending that such use, concealment, or abandonment will deprive the
other person permanently of its use or benefit.”
60. ANSWER: This paragraph calls for legal conclusions and is therefore denied.
3
Actually, the Sixth Claim.
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62. Merritt knowingly obtained, retained, or exercised control over a thing of value, to wit, One Million One
Hundred Thousand Dollars ($1,100,000.00) belonging to Plaintiffs or by deception, all of which Plaintiffs
demanded to be returned in their January 11, 2018, letter emailed to Merritt.
62. ANSWER: Admitted that, as president of FSN, Merritt exercised control over the money
invested by Plaintiffs, and used that money for proper purposes under the Shareholders’ Agreement
and exercised appropriate business judgment, until he was removed from that position. The
63. Merritt knowingly obtained, retained, or exercised control over these things of value with the intent to
deprive Plaintiffs permanently of the use or benefit of the One Million One Hundred Thousand Dollars
($1,100,000.00).
63. ANSWER: Admitted that, as president of FSN, Merritt exercised control over the money
invested by Plaintiffs, and used that money for proper purposes under the Shareholders’ Agreement
and exercising business judgement, until he was removed from that position. The remainder of the
paragraph is denied.
64. Merritt’s refusal to return the One Million One Hundred Thousand Dollars ($1,100,000.00)
belonging to Plaintiffs or even respond to the emailed January 11, 2018, demand is evidence of Merritt’s
specific intent to permanently deprive Plaintiffs of these things.
64. ANSWER: Admitted that Defendant Merritt did not respond to the letter emailed by Craig A.
65. Plaintiffs have been injured for actual damages as a result of Merritt’s civil theft of Plaintiff’s personal
property in a sum in excess of One Million One Hundred Thousand Dollars ($1,100,000.00), and
Plaintiffs are entitled to treble damages, costs of suit, and a reasonable attorney’s fee pursuant to Colorado
Revised Statutes, section 18-4-405.
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66. Plaintiffs incorporate the preceding paragraphs as if fully set forth herein.
67. § 812.014(1), Florida Statutes, states: “a person commits theft if he or she knowingly obtains or uses,
or endeavors to obtain or to use, the property of another with intent to, either temporarily or permanently: (a)
deprive the other person of a right to the property or a benefit from the property and/or (b) appropriate the
property to his or her own use or to the use of any person not entitled to the use of the property.”
67. ANSWER: This paragraph calls for legal conclusions and is therefore denied.
68. § 772.11 “Civil remedy for theft or exploitation”, subsection “(1)” states in applicable part: “Any
person who proves by clear and convincing evidence that he or she has been injured in any fashion by reason of
any violation of ss. 812.012-812.037 or s. 825.103(1) has a cause of action for threefold the actual
damages sustained and, in any such action, is entitled to minimum damages in the amount of $200, and
reasonable attorney’s fees and court costs in the trial and appellate courts.
68. ANSWER: This paragraph calls for legal conclusions and is therefore denied.
69. Merritt knowingly obtained, retained, or exercised control over these things of value with the intent to
deprive Plaintiffs permanently of the use or benefit of the One Million One Hundred Thousand Dollars
($1,100,000.00).
69. ANSWER: Admitted that, as president of FSN, Merritt exercised control over the money
invested by Plaintiffs, and utilized that money for proper purposes under the Shareholders
Agreement and exercised appropriate business judgment, until he was removed from that position.
70. Written demand has been made upon Merritt for threefold damages; however, Merritt has failed and
refused and continues to fail and refuse to comply with the demand.
70. ANSWER: Denied that Plaintiffs incurred any damages. Denied that Defendant Merritt owes
Plaintiffs any damages. Admitted that Plaintiffs demanded what Plaintiffs characterized as
“threefold damages.” Admitted that Defendant Merritt has refused to comply with Plaintiffs’
4
Actually the seventh claim.
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FIRST DEFENSE
Defendants deny each and every allegation that is not expressly and specifically admitted herein.
One or more of the following preclude or limit Plaintiffs’ claims. Factual support for the
1. Barred in whole or in part for failure to state a claim upon which relief can be granted.
2. Laches.
3. Ratification.
4. Fraud.
6. Election of remedies.
7. Assumption of risk.
9. Statute of frauds.
14. Indemnification.
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Jr. (“Merritt”) individually, and John Michael Merritt as a shareholder on behalf of Full Spectrum
Nutrition, Inc. (FSN, Inc.) assert Crossclaims against Full Spectrum Nutrition, Inc.; Counterclaims
against Josse Anthony Mazo (“Mazo”); Maritza Riascos (“Riascos”); and Mazo-Riascos M.D., LLC;
Counterclaims against the following parties which are hereby joined under Federal Rules of Civil
Procedure 13(h): Bryan Robert Ferrero (“Ferrero”); Douglas Edward Bishop (“D. Bishop”); Natalia
Swindler a.k.a. Natalia Radziuk (“Swindler”); Full Spectrum Nutrition INT, INC., a Florida
Corporation; Ubiquitous Asset Group LLC, d.b.a. Full Spectrum PCR, a Florida Limited Liability
Company; iThrive, LLC, a Delaware Limited Liability Company; Sacred Root, Inc., a Colorado
Corporation; and Sacred Root, LLC, a Colorado Limited Liability Corporation (all collectively
INTRODUCTION
1. Merritt created Full Spectrum Nutrition, LLC, along with numerous trademarks, to provide
medical benefits, but is non-psychoactive, meaning it does not produce the “high” that is typically
associated with marijuana use. For this reason, CBD is not as heavily regulated as marijuana or its
properties, with proven benefits in relieving inflammation, pain, anxiety, psychosis, seizures, spasms,
and other conditions without effects such as the feelings of lethargy or dysphoria that may
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3. Dr. Mazo was a wholesale purchaser of Merritt’s products that Merritt produced and sold
through FSN, LLC. Eventually, Mazo expressed interest in going into business with Merritt, and he
and later his wife invested a total of $1.1 million dollars in Full Spectrum Nutrition, Inc., a Delaware
4. At some point Mazo and the other Counterclaim Defendants conspired to steal Merritt’s
companies from him and leave him with nothing. Shortly after Merritt terminated the employment
of Natalia Swindler, the girlfriend of employee and shareholder Bryan Ferrero, and discovered
Ferrero’s drug abuse, Swindler, Ferrero, and Douglas Bishop, along with Doctors Mazo and Riascos,
all launched a scheme to defraud and steal from Merritt and FSN, LLC. In furtherance of this
scheme, these individuals engaged in various legal and illegal acts, violated the terms of their
shareholder agreement, and purported to vote Merritt out as president of FSN, Inc. They also
purported to vote Merritt out of his other, separate company FSN, LLC, a Company in which they
5. In the course of this conspiracy, Counterclaim Defendants embezzled assets, looted FSN’s
facility, and stole thousands of dollars’ worth of product. They started new companies in order to,
among other things, illegally cash checks, launder money, sell the stolen product, and pass off the
stolen product as their own, while retaining the earnings outside of FSN, Inc., in which Merritt owns
6. The parties then filed this lawsuit hoping that Merritt would be intimidated and unable to
defend himself. By making the untrue claims in their Complaint, the Counterclaim Defendants
hope to cover up and distract from their rampant misconduct. These Counterclaims and
Crossclaims aim to set the record straight and to allow Merritt to recover for Counterclaim
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Defendants’ illegal and improper conduct and the damages Merritt, FSN, LLC, and FSN, Inc. have
suffered.
Colombia.
8. Counterclaim Plaintiff Full Spectrum Nutrition, LLC is a Florida Limited Liability Company
Florida.
11. Counterclaim-Defendant Bryan Robert Ferrero, who is, on information and belief a
convicted felon, is an individual residing at 3031 NE 20th Ave, Fort Lauderdale, Florida, 33306.
Ferrero is also the founder of Counterclaim Defendant iThrive, LLC, a Delaware Limited Liability
Company, registered to do business in Colorado, and believed to be one of the entities utilized to
13. Counterclaim-Defendant Natalia Swindler, a.k.a. Natalia Radziuk, upon information and
14. Swindler is also the founder of Counterclaim Defendant Sacred Root, Inc., a Colorado
Corporation registered in Colorado in February 2018, and believed to be one of the entities used to
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15. Upon information and belief, Swindler is also a member, along with Ferrero, of
Counterclaim Defendant Sacred Root, LLC, a Colorado limited liability corporation registered in
Colorado in December 2017, and believed to be one of the entities used to usurp the corporate
16. Counterclaim-Defendant Full Spectrum Nutrition, INT, Inc., is a Florida Corporation that
was registered at the direction of Mazo on January 5, 2018, with a principal address of 315 East
17. Counterclaim-Defendant Ubiquitous Asset Group LLC, d.b.a. Full Spectrum PCR,5 is a
Florida Limited Liability Company registered at the Direction of Ferrero, with a principal address of
18. Nominal Plaintiff, and Crossclaim Defendant Full Spectrum Nutrition, Inc., is a Delaware
Corporation that, since December 2018, is fully controlled and operated by Mazo, Riascos, Ferrero,
and D. Bishop. Merritt retains 42% of share of the stock in the Company, but was removed from
his role as president in December 2017 and frozen out of any further involvement with FSN, Inc.
Mazo is the director of the board, and Riascos, Ferrero, and D. Bishop are board members.
19. This Court has subject matter jurisdiction over these Counterclaims under 28 U.S.C. § 1367
because the Counterclaims are related to the claims brought in the Complaint and form part of the
GENERAL ALLEGATIONS
20. Merritt has been passionate about wildlife conservation and rescue since he was a child. As a
realization of a lifelong dream, in 2005, in partnership with the Costa Rican Government, Merritt
5PCR stands for “phyto-cannabinoid rich” and is an industry buzzword that refers generally to cannabis extracts in the
CBD family.
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founded a 501(c)(3) non-profit organization called iRescue, which is dedicated to caring for wildlife
in Costa Rica. The organization is completely funded by Merritt and his family and is a fully-
licensed wildlife care facility with five full-time employees. iRescue has over 100 animals that it cares
21. After 6 years of living in Costa Rica and working with iRescue, Merritt returned to the
United States in 2016, leaving iRescue management in the hands of his staff. He began looking for
potential new business opportunities and became interested in the budding cannabidiol (“CBD”)
market. He began researching suppliers and developing a business plan for the marketing and
22. After much research, Merritt identified Folium Biosciences (“Folium”), a hemp oil and CBD
supplier located in Colorado Springs, Colorado, as a promising source for provision of CBD. He
began working for them in sales, developing a relationship with the Chief Executive Officer, Kashif
Shan.
23. Merritt developed a business plan based on purchasing wholesale CBD oils from Folium and
24. On September 26, 2016, Merritt, using a loan received from a family member, individually
25. Merritt’s business plan was retailing CBD products under his own trademarks. To this end,
he registered the trademark “Farmaceutical CBD” on behalf of Full Spectrum Nutrition LLC on or
about November 4, 2016, and he registered the trademark Zero THC CBD on or about
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26. On October 21, 2016, Merritt caused the organization of Full Spectrum Nutrition, LLC, a
Florida Limited Liability Company (“FSN LLC”), by filing Articles of Organization and an
Operating Agreement.
27. Bryan Ferrero and Merritt became acquaintances in or about August 2016. Ferrero knew
that Merritt was building a CBD company and that Merritt was a successful entrepreneur, and
28. In approximately late April 2017, Merritt told Ferrero that he was seeking investors for a
29. The plan for FSN, Inc. was to obtain CBD products wholesale from Folium and then resell
them at a profit. Unlike FSN, LLC, which was funded with Merritt’s own limited personal capital
and therefore focused on marketing retail brands Farmaceutical CBD ® and Zero THC CBD ®
online and through small personal accounts, FSN, Inc. was designed to be a larger entity, set up to
facilitate a new bulk and raw material distribution business, assisting Folium by filling its orders.
FSN, Inc. would not revolve around branding and selling online, but rather directly filling orders for
wholesale customer leads provided by Folium. Thus, it was designed to be its own separate
corporate entity that would take investments and operate the planned business.
30. Mazo was a customer of FSN, LLC and had been distributing Merritt’s Zero THC CBD ®
and Farmaceutical CBD ® Branded products. As a result, Mazo was aware of Merritt as a
businessman and entrepreneur, and Mazo believed in Merritt’s company, product, and brand.
31. On or about early May of 2017, Ferrero, along with his cousin, Douglas Bishop, contacted
Mazo and told him about the investment opportunity with FSN, Inc. Merritt provided a business
plan which contained hypothetical projected financial information. The projected profits that were
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contained in the May 2017 business plan were dependent on FSN, Inc., receiving the proper amount
33. On or about May 9, 2017, Mazo had a telephone call with the CEO of Folium, Kashif Shan,
in which Mazo discussed FSN, Inc. and some of the international opportunities that the two
companies might take advantage of by working together. During that call, Mazo himself set up an
34. On or about May 12, 2017, the Shareholders of FSN, Inc., executed the Shareholder
agreements defining the ownership interests and rights of the shareholders, with 3000 shares
distributed: Mazo (15%), D. Bishop (9%), Ferrero (9%), David Moceri (25%), and Merritt (42%).
35. As had been agreed, in exchange for a 15% ownership interest in FSN, Inc., Mazo would
provide the seed capital for the purchase of initial inventory from Folium as well as necessary office
space, business set up, and other organizational and startup costs, totaling $600,000 in two
36. Because FSN LLC already had a bank account, while final formal incorporation papers were
being prepared, the FSN Inc. agreement specified that Mazo’s investment funds would be deposited
in FSN, LLC’s bank account to facilitate making the initial product order.
37. This money was not intended to be an investment in FSN, LLC. The LLC was, at all times,
solely in Merritt’s name and at no time was any agreement to change the membership structure of
38. Mazo made the first capital investment in FSN, Inc., with the funds deposited into FNC,
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39. On June 17, 2017, FSN, Inc., through FSN, LLC, submitted a purchase order for $440,750
40. In or around July 2017 the group began to have issues with Moceri and determined he
41. Knowing that Moceri would soon forfeit his shares, and that there was thus an opening for
another investor to purchase all or some portion of Moceri’s 25% shares, Plaintiff Maritza Riascos,
Mazo’s wife, stated her desire to invest in FSN, Inc. It was not clear how complicated negotiations
with Moceri would be or when the shares in FSN, Inc would be available for issuance to Riascos.
Thus, preliminary discussions were held about realigning the ownership in FSN, LLC in the same
42. Ultimately, and while the discussions relating to potential membership interests in FSN, LLC
were still ongoing, the Moceri issues were resolved by a corporate Resolution, and Riascos was able
to purchase a 20% interest in FSN, Inc. The remaining 5%, along with other shares, remained in the
company treasury.
43. In exchange for her ownership interest in FSN, Inc., Riascos invested $200,000 on July 10,
2017; $100,000 on July 26, $100,000 on August 8, and $100,000 on August 23, 2017.
44. Documents establishing these events, including the September 9, 2017 Amended and
Restated Articles of Incorporation were filed with the Delaware Secretary of State.
45. The FSN, Inc. Resolution resolving the issues with Moceri terminated discussion regarding
any change in ownership of FSN, LLC, with Merritt remaining the sole member.
46. Merritt, Mazo, Riascos, Ferrero, and D. Bishop received their official stock certificates in
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47. As described in the FSN, Inc. Business Plan, the FSN, Inc. model was dependent on buying
and receiving 50 kilos per month from Folium, and in turn selling those kilos for a profit into the
wholesale market with customers’ leads that Folium was providing to FSN, Inc.
48. Folium claimed to be selling 700+ kilos per month of CBD, and that it would send FSN,
Inc. a large portion of their wholesale business, with 50 kilos of product per month allocated to fill
49. Unfortunately, Folium could not and did not live up to this promise. While FSN, Inc.
ordered approximately 20 kilos of product in May 2017, making the preliminary payment of
$300,000 on May 15, 2017 and a second payment of $175,000 on June 9, 2017, Folium could not
even deliver on the initial Purchase Order of 20 kilos when submitted. It took between 3-4 months
from the time of payment for FSN, Inc. to receive all the ordered product. The complete order was
50. While FSN, Inc. had been in negotiations to formalize a supply contract with Folium
anticipated to be signed in December 2017, because there were still outstanding paid for and
51. On or about October 1, 2017, Merritt hired Natalia Swindler to help with marketing, office,
and clerical work. Unbeknownst to Merritt, Swindler and Ferrero were romantically involved.
Swindler began living with Ferrero at 4080 Emerald Drive Colorado Springs, CO 80915, where
Arnold Ballew, Douglas Bishop (“D. Bishop”), and Mike Bishop (“M. Bishop”)—the “Chief Science
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52. This home was shared by FSN, LLC employees and FSN, Inc. shareholders. Although it was
not intended to be paid for by FSN entities, it was later learned that Ferrero misappropriated funds
53. On November 6, 2017, Merritt and Ferrero took a trip to Medellin, Colombia, to participate
54. On November 20, 2017, knowing Merritt was out of the country, Mazo made an
unannounced visit to FSN, LLC’s facility. The bookkeeper provided Mazo with the information he
requested, including the Profit and Loss Statements and bank balances. This included
55. On November 23, 2017, Merritt terminated the employment of Swindler for poor
performance and disruptive behavior. The termination letter was sent via email to Swindler and the
rest of the team. She was reminded of her confidentiality obligations and instructed on returning all
company property.
56. On November 24, 2017, Swindler posted on Facebook “I can’t wait till my better half gets
back into the states, we have an empire to build! How does it get any better than this?
#chaoscreateschange #sheplaysharder #cbd4me […].” Her posting indicated that she was “with”
“Tiffany Theen and Bryan Ferrero.” Upon information and belief, Swindler was referring to her
scheme, with Ferrero, to steal from and conspire against Merritt and his companies.
57. On or about November 24, 2017, Arnold Ballew, an independent contractor performing
sales and fulfillment tasks for FSN, LLC, met with a man named Randi Aleve (possibly a
pseudonym) to discuss a purchase. D. Bishop and Ballew together had previously met with Aleve
on a few occasions. During that meeting, Mr. Aleve placed an order for approximately $175,000
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58. In the days to follow, with the full awareness and support of the Counterclaim Defendants,
the products were prepared and delivered to Aleve without receiving payment for them. For
reasons that are still unclear, upon information and belief, Mr. Aleve never paid for the products he
received and Counterclaim Defendants have made no effort to collect this outstanding receivable.
This incident is an example of the mismanagement and gross negligence that surrounded the
59. On November 25, 2017, while still with Ferrero in Colombia, Merritt discovered that
Ferrero was a pill addict and had been heavily under the influence of pills and cocaine for a large
60. As a result of Ferrero’s unprofessional behavior, criminal activity, and substance abuse,
61. But Ferrero missed his flight to Colorado, likely because of his continued substance abuse.
Swindler became hysterical, claiming that Merritt was abandoning Ferrero in Colombia even though
Merritt himself remained in Colombia. Nevertheless, she pressured Mazo to buy Ferrero another
flight—without explaining that Ferrero had missed his first flight due to his own behavior. Mazo
62. The firing of Swindler and exposure of Ferrero’s drug addiction had a galvanizing effect on
the nascent conspiracy. The group, including Ferrero, D. Bishop, Swindler, and Kyle Scasny (the
bookkeeper), and potentially Mazo and Riascos, launched a campaign to oust Merritt from his
ownership of the FSN entities, take over the Companies, steal from Merritt, embezzle Company
assets, misappropriate Company and investor funds, shut down company websites, and otherwise
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63. The co-conspirators took advantage of the fact that Merritt was still out of the country and
less able to defend his interests or uncover their wrongdoing than he would have been if he had
64. Swindler, Ferrero, and D. Bishop quickly contacted Mazo, making false accusations and
telling him lies about Merritt’s conduct, in an effort to turn Mazo against Merritt and stage a coup.
65. Alternatively, Mazo and Riascos were already a part of the conspiracy and fully aware of the
plan to betray and steal from Merritt, and the entire group was just waiting for the right opportunity.
Either way, the termination of Swindler and abrupt end of Ferrero’s business trip to Colombia
66. In the time period between November 24, 2017 and November 27, 2017 there were a series
of unauthorized transfers made from FSN, LLC’s bank account, including transfers of $5,000 to
67. In furtherance of the conspiracy, on or about Saturday, November 25, 2017, D. Bishop and
Ferrero illegally directed that the locks to the building at 781 Seedling Court be changed, despite the
fact that the lease was held by FSN, LLC, an entity whose sole member and manager was Merritt.
68. Merritt had signed the lease for this property on behalf of FSN, LLC and as personal
guarantor. As a result of the events detailed herein, the landlord of 781 Seedling Court has now filed
69. On November 27, 2017 Julie Helmer and Jason Helmer, FSN, LLC employees, arrived at
work and found the locks changed. They reported these events to Merritt.
70. On or about November 29, 2017, Ballew overheard Ferrero outlining a scheme to steal all of
the assets of the FSN entities and “leave all debts and obligations” to Merritt.
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71. On or about November 30, 2017, Mazo, Riascos, D. Bishop, and Ferrero held an
unauthorized and improper special meeting and voted to remove Merritt as Director of the
72. On or about November 30, 2017, Mazo, Riascos, D. Bishop, and Ferrero executed
documents that purported to remove Merritt as Operating Manager and Managing Member of FSN,
LLC, and which purported to appoint Mazo as Operating Manager of the LLC and Chair of the
“Board of Managers,” which was to have D. Bishop and Ferrero as its initial board members.
73. These documents are of no legal effect because no membership agreement had ever been
executed by Mazo, Riascos, D. Bishop, and Ferrero with regard to FSN, LLC. Accordingly, Merritt
remained, and to this day remains, the sole member of FSN, LLC. However, at present, the
company has been looted by the Counterclaim Defendants and reduced to an essentially worthless
shell.
74. On or about November 30, Ballew discovered Swindler in the manufacturing department
filling bottles with 25 milligram gel caps. She stole 40,000 25 milligram gel caps, at a value of
$36,000. These gel caps had been delivered to FSN, Inc. as a result of an accounting error by
Folium. Merritt had previously directed Ferrero to return the product to Folium. Unbeknownst to
Merritt, Ferrero had retained the product with the intent to sell the product and retain the profits for
himself. Upon information and belief, those products were then stolen by Swindler, with Ferrero’s
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The Helmers Attempt to Enter FSN LLC’s Leased Premises and Discover That it has been
Looted
75. On Saturday, December 2, 2017, Julie and Jason Helmer arrived at FSN, LLC’s facility at
781 Seedling Court to have the locks changed again per Merritt’s request. When the Helmers
arrived, a locksmith was already there and had begun changing interior locks at the direction of D.
Bishop, who had improperly asserted the authority to have that done.
76. D. Bishop blocked the Helmers’ entry and told them that they could not come into the
building. The locksmith determined that he could not stay due to the dispute and left. The Helmers
77. Because the sheriff didn’t come, the Helmers called a second locksmith. D. Bishop and
Ferrero departed. As the second locksmith was evaluating the property and surveying the locks, the
Helmers discovered that a back door had been left open, and they entered the building.
78. Upon touring the building, the Helmers discovered that the facility’s inventory had been
largely cleared out and the security system was no longer on.
79. Shortly thereafter, D. Bishop reappeared with an attorney who purported to have a copy of a
lease with D. Bishop’s and Ferrero’s name on it. While Counterclaim Plaintiffs do not have a copy
80. The Helmers again called the sheriff—three times—but were unable to get an officer to
81. D. Bishop then stated that he wanted “the Board” to get everything “straightened out” and
that he wanted the Helmers to leave. The Helmers explained that they were not there to remove
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82. D. Bishop and his attorney reluctantly agreed to let the Helmers remove Merritt’s files, all
the while D. Bishop filmed them doing so on his cellular phone. Upon retrieving the files, the
83. On or about December 2, 2017, Arnold Ballew—Director, Product Research and Design
and Medical Sales for FSN, LLC—reported to Mazo that he had witnessed rampant
misappropriation and theft of company property, questionable accounting practices, lack of proper
documentation, violations of company policy, and other serious misconduct perpetrated by Kyle
84. In response to these concerns, on December 3, 2017, Mazo asked Ballew to keep the
information quiet because he “needed [Ferrero’s] support” in order to take over the company.
85. On or about December 4, 2017, Arnold Ballew was evicted from his home by Ferrero, as a
86. On or about December 11, 2017, D. Bishop told Ballew that he, Ferrero, Mazo, and Riascos
were in the process of quickly “dismantling” the entire business and moving all of the assets to
personal accounts and/or different businesses before Merritt returned from his trip to Colombia.
87. On or about December 22, 2017, on information and belief, Ballew was escorted by law
enforcement into his former home to retrieve his personal property. He observed thousands of
dollars’ worth of inventory purchased on behalf of FSN, Inc. (paid for out of FSN, LLC accounts)
88. On or about Friday, December 22, 2017, Ferrero improperly accessed personal data
belonging to Mr. Ballew and text-messaged one of Ballew’s contacts, claiming, falsely, that Ballew
had “embezzled $175,000.” These messages were sent in retaliation for Ballew standing up to the
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rampant fraud and criminal activity being perpetrated by Ferrero and his accomplices. Ferrero also
repeated these false statements to other associates of Mr. Ballew, damaging his reputation.
89. Following the takeover of FSN, Inc. and the purported takeover of the LLC, Mazo, Riascos,
Ferrero, D. Bishop, and Swindler embezzled, misappropriated and/or stole FSN, Inc. and FSN,
LLC’s property, including its websites, money, inventory, equipment, and physical office space. This
90. From late November 2017 through the present, Mazo, Riascos, Ferrero, D. Bishop, and/or
Swindler stole and/or converted Merritt’s personal property, including a personal computer, clothes,
91. From July 2017 through the present, Mazo, Riascos, Ferrero, D. Bishop, and/or Swindler
committed check fraud, bank fraud, and wire fraud by forging Merritt’s signature on checks from
92. From November 2017 through the present Mazo, Riascos, Ferrero, D. Bishop, Swindler,
and their attorney, Craig Brand, defamed Merritt to business associates, other individuals, and in the
press.
93. The defamatory statements included but are not limited to Craig Brand’s description of
Merritt as a “classic con artist” and his statement that Merritt’s business plans are “all done as a
sham”—both statements that were quoted in a Denver Post article that was published on April 12,
2018 and which article was circulated widely on Cannabis industry news aggregators and blogs.
94. On information and belief, Mazo, Riascos, Ferrero, D. Bishop, Swindler, and possibly other
associates, illegally, unjustly, and in breach of contract and fiduciary duties, conspired to oust
Merritt, steal his money, deplete the Company’s assets, and make off with whatever profits they
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could salvage, keeping them for themselves and to the exclusion of FSN, Inc. and Merritt,
95. Mazo, Riascos, Ferrero, D. Bishop, and Swindler took over Merritt’s website domain names,
disabled Merritt’s access to FSN, LLC’s online systems, including its order and inventory system,
96. On information and belief, Mazo, Riascos, D. Bishop, and Swindler are currently operating
the FSN entities—and other related companies—on a foundation of lies, misconduct, and theft.
97. Throughout this ordeal, Merritt has been an innocent victim of corrupt, self-interested
behavior by Mazo, Riascos, Ferrero, and D. Bishop, all of whom, in breach of contract, fiduciary
duty, criminal law, civil law, and common decency, conspired to steal the companies that Merritt
worked so hard to build, and stole Merritt’s personal and company property, squandered his assets,
commandeered his trademarks and brands, and slandered his reputation in the community.
98. Even after the looting of the Company and the events of the illicit takeover, Merritt reached
out to Mazo repeatedly in November and December of 2017 to try to save the Companies and get
Mazo to see reason. Mazo ignored those attempts because he was a full and willing participant in
the conspiracy, breach of contract, breach of fiduciary duty, and other misconduct directed against
Merritt and his company, FSN, LLC; and FSN, Inc and its shareholders.
99. The Counterclaim Defendants have illegally misappropriated Merritt and FSN, LLC’s
trademarks by, among other things, registering domain names with those trademarks and using
100. Ferrero, Swindler, and Mazo have all set up their own companies to exploit and otherwise
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101. As a result of the wrongful conduct alleged herein, FSN, LLC was forced to default on its
lease obligation at 781 Seedling Court. The Company had provided a $25,000 security deposit and
paid $40,000 to build out and renovate the warehouse space into an office. These funds have been
lost and the landlord has sued FSN, LLC, and Merritt in his personal capacity as a result of the
102. Mazo registered a new corporation on January 5, 2018, in Florida, named Full Spectrum
Nutrition Int., Inc., with a principal address of 315 East Nasa Blvd, Melbourne, Florida, 32901.
103. On June 10, 2016, Ferrero secretly created a limited liability company called Ubiquitous
Asset Group LLC in Florida, which currently has a registered mailing address of 781 Seedling Court,
Colorado Springs, CO 80915—the address of the original property that was leased by FSN, LLC.
104. On October 24, 2017, Ferrero reinstated Ubiquitous Asset Group LLC with the Florida
105. On December 6, 2017, Ferrero registered the name “Full Spectrum PCR” as a fictitious
106. On or about September 13, 2017, Ferrero registered the website domain name
fullspectrumpcr.com.
107. On February 15, 2018, Ferrero registered iThrive, LLC, a Delaware Limited Liability
Company, and on February 15, 2018, he registered it in Colorado as a Foreign Limited Liability
Company.
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108. Sometime after November of 2017, Swindler registered a company called Sacred Root, LLC
as a Colorado Limited Liability Company. Later, on or about February 12, 2018, Swindler registered
109. Each of these new corporate entities are being used to convert and hide Merritt’s and
FSN, LLC’s property and the assets and profits of FSN, Inc. These new corporate entities are also
being used to store the proceeds from the sale of stolen property and to cash forged and illegally
110. The lawsuit brought against Merritt, and the Plaintiffs and their attorney’s aggressive and
wrongful defamation of Merritt in the press is a classic example of a party going “on offense” to
111. This lawsuit is a shameless, bad faith effort to bully and intimidate Merritt into backing down
and allowing the Plaintiffs to get away with their conspiracy, theft, defamation, and other criminal
CAUSES OF ACTION
FIRST CLAIM FOR RELIEF
Violation of Colorado Organized Crime Control Act, C.R.S. § 18-17-104
(Against All Counterclaim Defendants, except FSN, Inc.)
112. Counterclaim Plaintiffs hereby incorporate the allegations set forth in the preceding
113. At all relevant times, Counterclaim Defendants were persons within the meaning of C.R.S. §
18-17-103(4).
114. Beginning in late November 2017, Counterclaim Defendants operated FSN, Inc. as an
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115. As alleged above, beginning in late 2017, Counterclaim Defendants agreed to, concocted,
orchestrated, and directed the fraudulent and illicit scheme set forth in these Counterclaims through
a pattern of racketeering activity as defined in Colo. Rev. Stat. § 18-17-103(3), (5), including
numerous incidences of civil theft, forgery, wire fraud, embezzlement, misappropriation of funds.
116. Such conduct constitutes racketeering activity under Colo. Rev. Stat. § 18-17-103(5)(b)(II),
because such acts permitted Counterclaim Defendants to obtain and/or retain money by false
pretenses or misrepresentations with the intent to permanently deprive Merritt and FSN, LLC of
their property, and thereby constituted theft in violation of Colo. Rev. Stat. § 18-4-401.
117. Counterclaim Defendants’ conduct also may constitute racketeering activity under Colo.
Rev. Stat. § 18-17-103(5)(b)(III), because such acts involved access of computers, computer
networks, or computer systems for the purpose of devising or executing a scheme or artifice to
defraud, and/or to obtain and/or retain money by false pretenses or misrepresentations, thereby
118. Counterclaim Defendants’ conduct also may constitute racketeering activity under Colo.
Rev. Stat. § 18-17-103(5)(b)(XIII) because such acts constitute offenses relating to controlled
and maintain an interest in and control of an enterprise and/or real property, including numerous
instances of civil theft, forgery, wire fraud, embezzlement, misappropriation of funds, violation of
120. These predicate acts were performed by, at the direction of, and/or were foreseeable to the
Counterclaim Defendants, and conducted for the purpose of using subterfuge, deceit,
misinformation, and dishonest means to acquire Merritt and FSN, LLC’s property.
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121. Counterclaim Defendants committed and caused to be committed a series of overt predicate
acts of racketeering in furtherance of their conspiracy, including but not limited to the acts described
herein.
by Counterclaim Defendants. The activities were interrelated, not isolated, and were perpetrated for
the same or similar purpose by the same persons. The activities occurred in Colorado within the last
125. Counterclaim Plaintiffs are entitled to triple damages, attorney fees, and costs reasonably
incurred.
126. Counterclaim Plaintiffs hereby incorporate the allegations set forth in the preceding
127. At all relevant times, Counterclaim Plaintiffs were persons within the meaning of 18 U.S.C. §
1961(3).
128. Beginning in late November 2017, Counterclaim Defendants operated FSN, Inc. and other
entities held by them as an “enterprise” or enterprises within the meaning of 18 U.S.C. § 1961(4).
129. As alleged above, beginning in late 2017, Counterclaim Defendants agreed to, concocted,
orchestrated, and directed the fraudulent and illicit scheme set forth in these Counterclaims through
a pattern of racketeering activity as defined in 18 U.S.C. § 1961(5) and (1), including numerous
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incidences of civil theft, forgery, wire fraud, embezzlement, conversion, and misappropriation of
funds.
130. Such conduct constitutes racketeering activity under 18 U.S.C. § 1961(1) because such acts
misrepresentations with the intent to permanently deprive Merritt and FSN, LLC of their property,
and thereby constituted theft; and because such acts involved violation of both federal and state
laws, including (a) access of computers, computer networks, or computer systems for the purpose of
devising or executing a scheme or artifice to defraud, and/or to obtain and/or retain money by false
pretenses or misrepresentations, thereby constituting computer crimes under Colo. Rev. Stat. § 18-
5.5-102; and (b) offenses relating to controlled substances in violation of Colo. Rev. Stat. § 18-18-
414.
an interest in or control of an enterprise (FSN, Inc.) which is engaged in, or the activities of which
and maintain an interest in and control of an enterprise and/or real property, including numerous
instances of civil theft, forgery, wire fraud, embezzlement, misappropriation of funds, and violation
133. These predicate acts were performed by, at the direction of, and/or were foreseeable to the
Counterclaim Defendants, and conducted for the purpose of using subterfuge, deceit,
misinformation, and dishonest means to acquire Merritt and FSN, LLC’s property.
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134. Counterclaim Defendants committed and caused to be committed a series of overt predicate
acts of racketeering in furtherance of their conspiracy, including but not limited to the acts described
herein.
by Counterclaim Defendants. The activities were interrelated, not isolated, and were perpetrated for
the same or similar purpose by the same persons. The activities occurred in Colorado within the last
137. Counterclaim Plaintiffs were injured in their business and property as a result of such
conduct.
138. Counterclaim Plaintiffs are entitled to triple damages, the cost of the suit, and reasonable
attorney’s fees.
139. Counterclaim Plaintiffs hereby incorporate the allegations set forth in the preceding
fraud, conversion, trespass, breach of conduct, breach of fiduciary duty, and other unlawful goals
141. Counterclaim Defendants performed one or more unlawful acts to accomplish these
unlawful goals.
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142. These unlawful acts included but were not limited to embezzlement, theft, fraud, forgery,
143. Counterclaim Plaintiffs were injured, damaged, and/or suffered losses that were caused by
144. Counterclaim Plaintiffs hereby incorporate the allegations set forth in the preceding
145. Counterclaim Defendants knowingly and wrongfully obtained, retained, and exercised
control over Counterclaim Plaintiffs’ valuable property, including but not limited to hemp oil
products, office equipment, personal property, inventory, bank accounts, software and electronic
equipment, customer lists, website domains, social media accounts, and key corporate and financial
documents.
146. Further, Counterclaim Defendants knowingly and intentionally committed forgery and theft
by signing checks from FSN, LLC’s bank account, in some cases issued to themselves or their own
147. Despite demands, Counterclaim Defendants refused to return such funds, assets, and
property.
148. As a direct and proximate result of Counterclaim Defendants’ civil theft as outlined herein,
149. Under C.R.S. § 18-4-405, Counterclaim Plaintiffs are entitled to treble damages, plus interest,
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151. Counterclaim Defendants have wrongfully taken and exercised control and dominion over
Counterclaim Plaintiffs’ assets without cause or legal justification. Such property includes, but is not
limited to, hemp oil products, office equipment, personal property, inventory, bank accounts,
software and electronic equipment, customer lists, website domains, social media accounts, and key
152. Counterclaim Defendants have converted Counterclaim Plaintiffs’ property for their own
153. Despite demands, Counterclaim Defendants have refused to return such funds and assets.
154. Counterclaim Plaintiffs have suffered damages as a result of the acts of such conversion in
155. Counterclaim Plaintiffs hereby incorporate the allegations set forth in the preceding
156. Josse Anthony Mazo and Maritza Riascos, through their authorized agent and attorney Craig
Brand, published defamatory statements of fact concerning Merritt and his business and his
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157. These statements included that Merritt is a “classic con artist” who “preys on people,” that
his business strategy is a “sham,” and that he misappropriated investor, company, and or
158. These statements were published to, at a minimum, the Denver Post, and thereafter
republished by the Denver Post, which were in turn republished in multiple hemp and cannabis
trade journals in print and/or online. Upon information and belief, they also individually published
159. These statements were made knowing they were false, or at a minimum with negligent or
160. The statements are defamatory per se imputing either a criminal offense or a matter
incompatible with Merritt’s business, trade, and with intent to impeach the honesty, integrity, virtue,
and reputation of Merritt and thereby exposes him to public hatred, contempt, or ridicule.
161. The statements were made maliciously, and with the intent to insult and injure Merritt, his
business and reputation, and with reckless disregard of the Merritt's rights.
162. These statements have caused Merritt to lose sales and other business.
163. As a result of the defamatory statements, made by Brand and on behalf of Mazo and Riascos
with their authorization and consent, Merritt has been damaged in an amount to be proven at trial.
164. Counterclaim Plaintiffs hereby incorporate the allegations set forth in the preceding
165. The property located at 781 Seedling Court, Colorado Springs, Colorado was leased to FSN,
LLC, which made FSN, LLC the lawful possessor of the property.
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167. The Counterclaim Defendants unlawfully occupied and continued to occupy the property
from November 2017 through approximately December 12, 2017, by changing the locks to the
168. On December 19, 2017, Merritt wrote a letter to the landlord of 781 Seedling Court letting
him know that the property had been vacated and could be re-leased, in an effort to mitigate
damages for both himself and FSN, LLC and FSN, Inc.
169. Counterclaim Plaintiffs Merritt and FSN, LLC have been sued in the District Court of El
Paso County, Colorado for Breach of Lease Agreement and Personal Guaranty.
170. As a result of the trespass, Counterclaim Plaintiffs have incurred, and continue to incur,
171. Counterclaim Plaintiffs hereby incorporate the allegations set forth in the preceding
172. A person tortiously interferes with a contract when he knew of the existence of a contract,
intentionally and improperly interfered with the performance of the contract, and the interference
173. Counterclaim Defendants knew of contracts held by Merritt and FSN, LLC., including a
lease contract for the property at 781 Seedling Court, as well as contracts to deliver products, and
174. Counterclaim Defendants intentionally and improperly interfered with the performance of
those and other contracts by, among other things, taking over the business operations of FSN, Inc.
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and FSN, LLC and failing to perform the contracts, taking control of the leased premises and failing
to perform under the lease, misusing the software license, and otherwise making it impossible for
175. Merritt and FSN, LLC has been damaged as a result of the Counterclaim Defendants’
176. Counterclaim Plaintiffs hereby incorporate the allegations set forth in the preceding
177. The Shareholder Agreement for FSN, Inc. is a valid and binding contract between Mazo,
Riascos, Ferrero, D. Bishop, and/or FSN, INC. and Merritt, entered into on May 12, 2017 and
178. Mazo, Riascos, Ferrero, D. Bishop, and/or FSN, INC. breached that contract.
179. The Counterclaim Plaintiffs suffered damages as a result of the breach, in an amount to be
determined at trial.
180. Counterclaim Plaintiffs hereby incorporate the allegations set forth in the preceding
181. Mazo, Riascos, Ferrero, D. Bishop, and Swindler each separately and acting in concert
182. Mazo, Riascos, Ferrero, D. Bishop, and Swindler disclosed and/or used Merritt and FSN,
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183. Mazo, Riascos, Ferrero, D. Bishop, and Swindler’s disclosure or use of the trade secrets was
done by improper means because each breached his or her fiduciary and/or contractual duty to
maintain secrecy.
184. Counterclaim Plaintiffs suffered actual loss as a result of the misappropriation of its trade
185. Mazo, Riascos, Ferrero, D. Bishop, and Swindler were unjustly enriched by their
186. The misappropriation was attended by circumstances of fraud, malice, and a willful and
wanton disregard of Counterclaim Plaintiffs’ rights and feelings, and therefore Counterclaim
187. Such misappropriation was willful and malicious, and therefore under C.R.S. § 7-74-105,
188. Counterclaim Plaintiffs hereby incorporate the allegations set forth in the preceding
189. Merritt, on behalf of FSN, LLC, registered a trademark for his brand Farmaceutical CBD
with the United States Patent and Trademark Office on November 4, 2016.
190. Merritt, on behalf of FSN, LLC, registered a trademark for his brand Zero THC CBD with
the United States Patent and Trademark Office on November 21, 2016.
and/or imitations of these registered marks without Merritt or FSN LLC’s consent.
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192. This use included, but was not limited to, use by Ferrero of the trademarks in connection
with his company Ubiquitous Asset Group, LLC, d.b.a. “Full Spectrum PCR,” use by Mazo and
Riascos in connection with their corporation Full Spectrum Nutrition Int, Inc., and use by D.
193. Such use was likely to deceive in that the Counterclaim Defendants had no right to use these
registered trademarks.
194. Additionally, all Counterclaim Defendants used Merritt’s symbols, trademarks, terms, words,
names, and devices, and made false or misleading descriptions and representations of facts in a way
that is likely to cause confusion, mistake, or deception as to the affiliation, connection, or association
195. The Counterclaim Plaintiffs have been damaged by such infringement, false designation,
197. Counterclaim Plaintiffs hereby incorporate the allegations set forth in the preceding
198. Merritt, on behalf of FSN, LLC, registered a trademark for his brand Farmaceutical CBD
with the United States Patent and Trademark Office on November 4, 2016.
199. Merritt, on behalf of FSN, LLC, registered a trademark for his brand ZeroTHC CBD with
the United States Patent and Trademark Office on November 21, 2016.
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and/or imitations of these registered marks without Merritt or FSN LLC’s consent.
201. This use included, but was not limited to, use by Ferrero of the trademarks including in
connection with his company Ubiquitous Asset Group, LLC, d.b.a. “Full Spectrum PCR,” use by
Mazo and Riascos in connection with their corporation Full Spectrum Nutrition INT, Inc., and use
202. Counterclaim Defendants knowingly passed off goods, services, or property of Merritt
and/or FSN, LLC as their own and knowingly made false representations as to the source,
sponsorship, approval, affiliation, connection, or association with another of those goods, services,
and property.
203. Such use was likely to deceive in that the Counterclaim Defendants had no right to use these
registered trademarks
204. Additionally, all Counterclaim Defendants used Merritt’s symbols, trademarks, terms, words,
names, and devices, and made false or misleading descriptions and representations of facts in a way
that is likely to cause confusion, mistake, or deception as to the affiliation, connection, or association
205. The Counterclaim Plaintiffs were damaged by such infringement, false designation, false
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206. Counterclaim Defendant Merritt, by and on behalf of himself and the other Shareholders of
FSN, Inc, individually and derivatively, hereby incorporates the allegations set forth in the preceding
207. Merritt, Mazo, Riascos, Ferrero, and D. Bishop are the shareholders of Full Spectrum
208. At all relevant times, Merritt owned—and still owns, at present—1,260 Shares, or 42 percent
of the corporation. Riascos owned 600 shares, or 20 percent of the corporation. Mazo owned 450
Shares, or 15 percent of the corporation. D. Bishop owned 270 shares, or 9 percent of the
209. Merritt fairly and adequately represents the interests of shareholders who are similarly
situated.
210. This action is not a collusive one to confer jurisdiction that this Court would otherwise lack.
211. The officers, directors, and controlling shareholders of a corporation have a fiduciary duty,
which is imposed as a matter of law, to act in good faith and in a manner they reasonably believe to
212. Fiduciaries are also charged with exercising a duty of care in fulfilling their responsibilities.
This duty of care applies in both overseeing the company’s business as well as in making specific
business decisions. A fiduciary fulfills this duty by exercising the care and skill that an ordinarily
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213. Mazo, Riascos, Ferrero, and D. Bishop owed a fiduciary duty to Merritt and to the
corporation itself, which they breached, individually and together, by engaging in conduct that
includes but is not limited to minority shareholder oppression, self-dealing, failure to comply with
conversion of corporate property, bad faith, dishonesty, oppression, and other illegal conduct.
214. Merritt, individually as a minority shareholder, and FSN, Inc. have suffered damages as a
215. Pursuant to Fed. R. Civ. P. 23.1, Merritt pleads demand futility where, as detailed above,
Mazo, Riascos, D. Bishop, and Ferrero purported to take control of FSN, Inc. and FSN, LLC and
have excluded Merritt and ignored or denied all of his attempts to resolve the dispute.
216. To the extent that any of the claims herein are deemed to be derivative claims owned by FSN,
Inc., the parties responsible for the actions control both the board of directors, are officers and
directors of the company, and own and control all of the controlling shares.
217. Given the board, officers and directors, and controlling shareholders’ involvement in the
actions against FSN, Inc. as alleged herein, demand on the FSN, Inc. or its board of directors would
be futile.
218. Counterclaim Plaintiffs hereby incorporate the allegations set forth in the preceding
219. An actual and justiciable controversy exists between the parties with respect to the
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220. Pursuant to Fed. R. Civ. P. 57, Merritt seeks an order declaring that he is the sole member of
FSN, LLC.
JURY DEMAND
Counterclaim Defendants receive nothing from their Complaint and that judgment be entered on all
be determined at trial;
b. Treble damages for all damages and harm incurred by Counterclaim Plaintiffs on all
Plaintiffs all profits derived by Counterclaim Defendants resulting from their use of
d. Exemplary damages;
affiliates, or Partners;
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f. Equitable relief in the form of an accounting of FSN, Inc., and any and all entities in
which the property of FSN, Inc., FSN, LLC or Merritt were paid, converted, stored
or transferred;
h. Awarding pre- and post-judgment and moratory interest, costs incurred and
i. And for any and all other such relief as the Court deems just and proper.
Respectfully submitted,
/s/Henry M. Baskerville
Henry M. Baskerville, Atty. Reg. #49431
Lenora B. Plimpton, Atty. Reg # 48194.
1900 Wazee Street, Suite 300
Phone Number: (303) 565-8066
Fax Number: (303) 295-9701
hbaskerville@fortislawpartners.com
lplimpton@fortislawpartners.com
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VERIFICATION OF COMPLAINT
I, JOHN MICHAEL MERRITT, JR., certify that the facts asserted in the foregoing verified
complaint are true and accurate to the extent of my knowledge.
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CERTIFICATE OF SERVICE
I hereby certify that on May 17, 2018, I electronically filed the foregoing ANSWER TO
PLAINTIFF’S COMPLAINT AND COUNTERCLAIMS with the Clerk of the Court using the
CM/ECF system which will send notification of such filing to the following:
Craig A. Brand
Ganja Law P.L.L.C.
GAI Building
618 E. South Street, Suite 500
Orlando, FL 32801
Craig@ganjalaw.com
Attorney for Plaintiffs
s/Patricia Foos
Patricia Foos
FORTIS LAW PARTNERS LLC
1900 Wazee Street, Suite 300
Denver, CO 80202
Telephone: (720) 904-6000
Facsimile: (303) 295-9701
Email: pfoos@fortislawpartners.com
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