Sewanee vp pp sees tesiakee MARK B. FREDKIN, ESQ. [State Bar No. 53550] ‘WILLIAM SIAMAS, ESO. [State Bar No. 133111} APR 07 2009 MORGAN, FRANICH, FREDKIN & MARSH 99 Almaden Boulevard, Suite 1000 GORDON PARK-LI, Clerk San Jose, California 95113-1613 spy, _ROSSALY DELAVESA ‘Telephone:(408) 288-8288 ‘Depuly lek Facsimile: (408) 288-8325 Attomeys for Plaintiff SAMUEL MILLS, individually and on behalf of the MILLS FAMILY TRUST J. DAVID BLACK, FSQ. [State Bar No. 44860] LAW OFFICES OF J. DAVID BLACK P.O. Box 398 254 Pilot's Reach The Sea Ranch, California 95497-0398 ‘Attorney For Plaintiff MARY DALSIN MILLS, individually and on behalf of the MILLS FAMILY TRUST SUPERIOR COURT OF CALIFORNIA, COUNTY OF SAN FRANCISCO SAMUEL MILLS and MARY DALSIN Case No, CGC-09-486708 MILLS, individually and in their capacities as trustees of the MILLS FAMILY TRUST FIRST AMENDED COMPLAINT Plaintiffs, ve By AX ‘SAMUEL “MOULI" COHEN, also known as SHMUEL COHEN, SHMUAL COHEN, | individually and as Trustee of THE MYRD | ‘MILLENIUM TRUST, E-CAST, INC., 0 jon, STACY COHEN, also known as STACY STRIPLING and DOES 1-100, inclusive, Defendants. eee eee RO} IN 1. This is an action to remedy a massive, long-running fraud, as well as breaches of fiduciary duty and contract, committed by a self-described entrepreneur and philanthropist, Samuel “Mouli” Cohen (“Cohen”), against Plaintiffs and others affiliated with Vanguard Public Foundation RST AMENDED COMPLART 1ee a a 8 oe 10] 1 12} 13] 14] 15| 16} 17] 18] 19) (“Vanguard”), a prominent nonprofitentity dedicated to advancing the causes of civil rights and social justice. Plaintiffs bring this action to redress the devastating effeets of Cohen’s fraudulent activities and misconduct, which involved the swindling of tens of millions of dollars from Plaintiffs and others. ‘The roots of Cohen's scheme were his representations that Plaintiffs’ funds, and funds of others, would be and had been used to procure shares of stock in one of Cohen’s companies, E-cast, Ine. (“E~ cast”) which had, it was claimed, been acquired by Microsoft pending regulatory approval. Plaintiffs’ placed millions of dollars in partnerships known as the Dillon Group and the Glover Group upon representations of Cohen that these monies would be used to acquire the E-cast shares. Plaintiffs also paid millions more directly to Cohen to pay for “bonds and fees” which Cohen represented were necessary to obtain governmental approval of the transaction and required in order to protect Plaintiffs’ prior investment. None of this was true and all of the money was taken under false pretenses. Cohen repeated and further embellished these falsehoods in numerous communications and meetings with Plaintiffs and other Vanguard benefactors, including as recently as December 10, 2008, ‘As a direct and proximate result of Cohen's improper and wrongful conduct, Plaintiffs lost no less than $19 million, Cohen also breached a May 2007 contract under which he agreed to repay Plaintiffs all of the monies they paid toward “bonds and fees” as part of an agreement by which Plaintiffs would authorize, through their partnerships, the resale of all interests in the E-Cast shares at a discounted price of $19 per share. 2. By this action, Plaintiffs seek to redress Cohen’s breach of contract and tortious conduct, which he committed both in his individual capacity and as an agent of E-Cast. E-Cast assisted Cohen in the commission of his tortious conduct and therefore is liable under established tenets of principal and agency law. ‘The story begins in late 2002, when Cohen reached out to two senior leaders of ‘Vanguard and champions of the social justice movement ~ Danny Glover, the actor, and Hari Dillon, the President of Vanguard. Cohen, a self-described very successful multi-millionaire entrepreneur and philanthropist, claimed to be seeking additional public interest organizations with which to become involved, as part of his philanthropic endeavors, and in this regard claimed to be very enthusiastic about becoming involved with Vanguard and helping to advance its mission of civil rights and social FIRST AMENDED COMPLAINT 2ee a a ke 10) 1 12] 13) 14 15] 16] 17] 18| 19) a 2| justice. Cohen, the founder and Executive Chairman of the start-up company E-cast, offered to make available to the Vanguard investors a portion of the shares of E-cast that he held through a family trust, with the express purpose and understanding that a portion of the proceeds would flow back to Vanguard (which would not be directly participating in the investment itself), Cohen induced this investment through a series of false representations, including that Microsoft was on the verge of acquiring E-cast at a very favorable exchange rate and that the transaction would close in a matter of months, Based on these representations, Plaintiffs’ invested in partnerships created by Mr. Dillon and Mr. Gloverto acquire the E-Cast shares. Between October 2002 to July 2003, Plaintiffs paid no less than $800,000 to the partnerships for their proportionate interests in E-Cast shares. 4. ‘This was not the first time that Cohen made false representations to induce purchases of E-castshares. Unknown to Plaintiffs, Cohen had made similar misrepresentations to other investors — which later led to two separate lawsuits in this Court (Farrell v. Cohen, Case No. CGC-03-422354 and Ashkenazi v. Cohen, Case No. CGC-04-429059). 5. Having falsely induced Plaintiffs and others to provide funds ostensibly for the purchase of B-cast shares, Cohen then added in an element of coercion, along with additional fraudulent misrepresentations, in order to extract millions of dollars more from Plaintiffs. Cohen set the stage for this next phase of the fraud by representing that E-cast and Microsoft had in fact finalized and executed the acquisition agreement, which definitively set the share exchange ratio at a “1-to-1 peg” - meaning that, based on the then-current stock price of Microsoft, Plaintiffs’ “investment” in the E-cast shares was worth ten times the initial investment. Cohen falsely represented that U.S regulatory approval had been obtained and that only E.U. regulatory approval remained, but would be obtained shortly. In this context, Cohen then falsely represented that Plaintiffs and the other investors were responsible for, and were obligated to pay, their “proportionate share” of certain fees and expenses related to the alleged transaction and the purported regulatory approval thereof, including “transaction fees,” counsel fees, certain “bonds” related to E.U. approval, and various other fees (such as “contract fees.” “stamping fees,” “holding fees,” etc.). Cohen emphasized that the stake in E-cast represented a very valuable “assct” that needed to be preserved and protected through the making of these payments, and that if the payments were not made, then the Plaintiffs and other RST AMENDED COMPLAINT 3