FILED: NEW YORK COUNTY CLERK 03/21/ :31 PM INDEX NO /2017 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 03/21/2017

Transcription

1 (# v 1) SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X ANDREA PAGLIUGHI and STEFANO UDARELLI, -against- Plaintiffs, Index No. Date Purchased: SUMMONS SOCIALQ, INC., ROBERT TROY WOOLLEY a/k/a TROY WOOLLEY and KATIE CAMERON, Defendants X TO THE ABOVE NAMED DEFENDANT(S): YOU ARE HEREBY SUMMONED to answer the complaint in this action and to serve a copy of your answer, or, if the complaint is not served with this summons, to serve a notice of appearance, on the Plaintiff s Attorneys) within twenty (20) days after the service of this summons, exclusive of the day of service (or within 30 days after the service is complete if this summons is not personally delivered to you within the State of New York); and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the complaint. The basis for venue is plaintiffs' residence. Dated: New York, New York March 20, 2017 I:.: ~Y ~ ~ -- ~ ~.,, ' I ;'_.,.- Alan A. Heiler -attorneys f ~ }Plaintiffs' 100 Wall S tet, 20th Floor New York, New York (212) of 20

2 ~#isssio ~ 1> TO: SOCIALQ, INC. 680 West End Avenue, Apt. 6A New York, NY ROBERT TROY WOOLLEY A/K/A TROY WOOLLEY 106 Colony Court Nashville TN or th Ave N, Ste. 100 Nashville, TN KATIE CAMERON 106 Colony Court Nashville TN Q ~i~ 53 Century Boulevard, Suite 100 Nashville, Tennessee GSB: of 20

3 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X ANDREA PAGLIUGHI and STEFANO UDARELLI, -against- Plaintiffs, Index No. Date Purchased: VERIFIED COMPLAINT SOCIALQ, INC., ROBERT TROY WOOLLEY a/k/a TROY WOOLLEY and KATIE CAMERON, Defendants X Plaintiffs, by their attorneys, Garvey Schubert Barer, as and for their Verified Complaint against the defendants, allege as follows: ThP PartiPc 1. Plaintiff Andrea Pagliughi is an individual residing in the State of New York with an address at 240 W. 73rd Street, New York, NY Plaintiff Stefano Udarelli is an individual residing in the State of New York with an address at 240 W. 73rd Street, New York, NY Upon information and belief, defendant SocialQ, Inc. is a domestic corporation with its last known business address at 680 West End Avenue, Apt. 6A, New York, NY Upon information and belief, defendant Robert Troy Woolley a/k/a Troy Woolley ("Woolley") is a resident of the State of Tennessee with a last known place of business at 209 7th Ave N, Ste. 100, Nashville, TN Upon information and belief, Woolley resides at 106 Colony Court, Nashville TN of 20

4 5. Upon information and belief, defendant Katie Cameron ("Cameron") is Woolley's wife, is a resident of the State of Tennessee with a last known place of business at 53 Century Boulevard, Suite 100, Nashville, Tennessee Upon information and belief, Cameron resides at 106 Colony Court, Nashville TN Introduction 6. This action arises out of the deceptive and fraudulent conduct of Woolley whereby he induced plaintiffs to "invest" an aggregate of $115,000 in defendant SocialQ, Inc. under the guise that, inter alia, SocialQ was "about to take off," was getting a lot of interest from potential investors, was about to turn a profit, had big name clients, needed to hire more employees, was earning tens of thousands of dollars in monthly revenues and was in advanced stages of a sale discussion with a division of WPP at a price of $15,000,000. It was thereafter learned that the representations and promises made by Woolley to defendants to induce them to "invest'g monies into SocialQ were false when made and that, instead of using the monies delivered by plaintiffs to SocialQ for company operations and growth, he almost immediately siphoned those monies off to himself and used them to sustain and enhance his and his wife's already extravagant personal lifestyle and for other personal and family purposes. 7. As a direct result of Woolley's outright theft defendants lost $115,000. Background 8. Defendant Pagliughi met Woolley while working at Fahrenheit 212, LLC ("F212"). Woolley was its business development director. Pagliughi kept in touch with Woolley after he resigned from F212 to devote his full time to Defendant SocialQ. Because Pagliughi and 2 4 of 20

5 Woolley had children of similar ages and spent time outside of work together with their families, Pagliughi and Woolley became close and trusted friends. 9. During this time, Woolley informed Pagliughi that SocialQ was successful and growing. He told her that the company was about to turn a profit and that he was getting a lot of interest from potential acquirers. He also told Pagliughi that he was looking to raise "another" round of investments and sent Pagliughi an investor "deck." The deck allegedly "demonstrated" that as of May 2012 SocialQ had available cash balances from an initial seed round of $240,000, with $120,000 of that cash remaining in the bank as of the end of August In reality, as defendants later learned, there was no initial seed round, and the actual August 2012 bank statements showed a balance of $0. Pa~liughi's $25,000 "Investment" 10. The deck and s sent to Pagliughi by Woolley in and around this time period claimed that SocialQ was about to be profitable and was "beating projections." Moreover, in their conversations, Woolley told Pagliughi that he was looking to add to staff to support the growth of the Company, presented SocialQ to Pagliughi as a company that was "about to take off' and, since he had a limited amount of notes remaining as part of his next seed round, if Pagliughi wanted to participate she needed to let him know quickly. Based on these statements and based on the trust Pagliughi had in her friend, on September 25, 2012 Pagliughi invested $25,000 in SocialQ. 11. In return for Pagliughi's $25,000, SocialQ delivered to Pagliughi a Convertible Promissory Note in the principal amount of $25,000 with interest thereon at 4% ("Pagliughi Note 1 "). The maturity date of Pagliughi Note 1 was February 13, of 20

6 12. As it turns out, the Pagliughi's money was not used to fund the salaries of additional staff or for other SocialQ obligations it all went into Woolley's pocket. This is corroborated by SocialQ's September 2012 and October 2012 Bank Statements which reveal that the Pagliughi money was used as follows: (i) $18,000 was transferred to Woolley's personal account between September 25 and September 28, 2012, and (ii) the $7,000 remainder was transferred to Woolley's personal account in October, Woolley never disclosed to Pagliughi that he did not and would not use the money she gave to SocialQ for business purposes or that he almost immediately upon clearance siphoned those monies off through SocialQ to himself to be used for his personal purposes. 14. Between September 2012 and September 2013 Woolley provided Pagliughi with updates on SocialQ. All of these updates were positive and often mentioned that he had firms interested in buying SocialQ. Some of the false or misleading information provided to Pagliughi included: An alleged deal with Oracle and Virture (positioning them for a potential acquisition by Oracle). Alleged big name clients such as Ogilvy, BBC World News, Ford Motors, Buddy Media/Salesforce Marketing Cloud, WPP. An alleged robust pipeline of no less than 50 deals (identified opportunities) at any one time. Alleged product extensions being added to the company's offerings. Alleged $60,000 in new revenue alone in the first quarter of of 20

7 An allegation that there was no need to raise additional capital except to make the balance sheet look better to a potential acquirer (March 2013). An alleged closed deal with Insight Express that would net the company between $350,000 and $500,000 annually. SocialQ's alleged need to hire additional employees to service the secondary line of business he created. That SocialQ was allegedly in advanced stages of a sale discussion with a division of WPP at a price of $15,000,000, and that the talks were allegedly "moving quickly". SocialQ was allegedly looking to hire two additional employees, who were considering other options and he wanted to know he was secure with his funding before actually hiring them. 15. The aforementioned allegations were false when made, and were made to induce her into infusing additional monies into SocialQ monies that were all siphoned off to Woolley and used to fund his lavish lifestyle. Additional $40,000 Pa~liu~hi "Investment" 16. Based on the false information Woolley gave Pagliughi, Pagliughi gave SocialQ an additional $25,000 and $15,000 on September 9, 2013 and September 17, 2013, respectively. 17. In return, Pagliughi received promissory notes in the same form as Pagliughi Note 1 and both had maturity dates of January 1, of 20

8 18. All of these monies were transferred Woolley's personal account by the end of September Thereafter Woolley continued to supply Pagliughi with additional false "good news" about SocialQ, and additional false claims that third parties were interested in buying the SocialQ for multi millions of dollars. He approached Pagliughi several more times during this time period asking for additional "investments" to be used for marketing and the deployment of SocialQ's newer product. 20. While scheming to extract additional monies from Pagliughi, in June 2014, Woolley told Pagliughi that he ended up spending "a lot more on development costs" than planned, and was again looking to raise additional money. Pagliughi did not reply to that so Woolley followed up with another and mentioned yet another firm interested in buying SocialQ (Brandwatch). 21. Thereafter, Woolley continued to reach out to Pagliughi asking for additional investments. Each time there was another angle. Woolley continued to trail Pagliughi through the end of September looking for investments, going so far as to ask her if she knew anyone who might be interested after she said she was not. 22. On April 10, 2014, Pagliughi told Woolley that Stefano Udarelli might be interested. Stefano Udarelli "Investments" 23. In April 2014, Woolley informed Udarelli that his Company, Social Q, had been successful to date and was breaking even. He told him about its strong client list, suite of products and solid team as well as multiple indications of acquisition interest from potential :'~ 8 of 20

9 buyers in the $12 million to $15 million dollar range. He said he was not really in need of raising funds but since there was a lot interested investors, he decided he would raise money to fund a marketing budget. When Udarelli asked him what the return on the investment would be, and ultimately, if there was any chance he could lose his money, Woolley told Udarelli that he could not think of any way Udarelli could lose his money. 24. In reliance upon Woolley's statements, on April 15, 2014 Udarelli decided to invest $30,000 in SocialQ. 25. In exchange, Udarelli received a convertible promissory note in the amount of $30,000 in the same form as Pagliughi Note 1. The maturity date of this note was September 10, By dated July 17, 2014, Woolley provided Udarelli with another "positive", but false, update on the company. Woolley stated, among other things, sales cycles were even shorter and that customer reception of SocialQ's new product offering was on target. He mentioned a litany of big name brands who were all "very happy" and wanted to raise additional money to run paid advertisements and sponsored content to generate additional sales. 27. In reliance on Woolley's statements, on July 23, 2014 Udarelli "invested" an additional $20,000 in SocialQ. 28. In exchange, Udarelli received a convertible promissory note in the amount of $20,000 in the same form as Pagliughi Note 1. The maturity date of this note was January 21, In truth, at the time of Udarelli's "investments" SocialQ was not breaking even, there was no cash in its bank account, SocialQ was not even paying its employees. 7 9 of 20

10 30. Woolley did not use any of the monies given to SocialQ by Udarelli for SocialQ. As he did with Pagliughi, Woolley stole the money and put it directly into his pocket. Woolley Admits His Fraudulent Conduct 31. In November, 2014, Woolley confessed his wrongdoing to his employees and cofounder; but he continued to lie to Plaintiffs. 32. In January 2015, Woolley made up a story that he was sabatoged by the new CEO he had hired for SocialQ who was trying to oust him and wrestle control of the company away from him -- forcing him to take "emergency actions" which included firing all the employees to reduce the operating costs and preserve SocialQ's cash. Woolley explained to Plaintiffs that his sudden move out of New York City was because he had stopped taking a salary in order to preserve SocialQ's cash. He even told Plaintiffs in January 2015 that SocialQ's assets were valuable, they would be sold for more than the debt on the books and that she would get back their "investments" inclusive of interest. 33. In or about 2015, Woolley was indicted by the New York District Attorney's office for financial fraud. This indictment was not disclosed by Woolley to the Plaintiffs and, although he had been indicted, through the end of July 2015, Woolley continued to imply that he had options for selling the SocialQ assets. 10 of 20

11 AS AND FOR A FIRST CAUSE OF ACTION AS AGAINST WOOLLEY AND SOCIALQ (Fraud and Deceit) 34. Plaintiffs repeat and reallege each and every allegation set forth in paragraphs "1"through "33" herein as though fully set forth at length herein. 35. As hereinabove alleged, throughout the time throughout the time Woolley solicited monies from the Plaintiffs, he lied about SocialQ, its accomplishments, its needs and the use of those monies. These lies, deceptions, fabrications and omissions of material fact included, but are not limited to, the following: That the money raised would be used for SocialQ. That SocialQ was about to be profitable and was "beating projections." That he was looking to add to staff to support the growth of the Company. That SocialQ was a company that was "about to take off." That he had a limited amount of notes remaining as part of his next seed round and if Plaintiffs wanted to participate she needed to let him know quickly. That he had an alleged deal with Oracle and Virture (positioning them for a potential acquisition by Oracle). That he had an alleged big name clients such as Ogilvy, BBC World News, Ford Motors, Buddy Media/Salesforce Marketing Cloud, WPP. That he had an alleged robust pipeline of no less than 50 deals (identified opportunities) at any one time. L ~ 11 of 20

12 That he had an alleged product extensions being added to the company's offerings. That he had alleged $60,000 in new revenue alone in the first quarter of That there was no need to raise additional capital except to make the balance sheet look better to a potential acquirer (March 2013). That he had an alleged closed deal with Insight Express that would net the company between $350,000 and $500,000 annually. That SocialQ's alleged need to hire additional employees to service the secondary line of business he created. That SocialQ was allegedly in advanced stages of a sale discussion with a division of WPP at a price of $15,000,000, and that the talks were allegedly "moving quickly". That SocialQ was allegedly looking to hire two additional employees, who were considering other options and he wanted to know he was secure with his funding before actually hiring them. That SocialQ had a strong client list. That SocialQ had a suite of products. That SocialQ had a solid team as well as multiple indications of acquisition interest from potential buyers in the $12 million to $15 million dollar range of 20

13 That SocialQ was not really in need of raising funds but since there was a lot interested investors, Woolley decided he would raise money to fund a marketing budget. 36. The aforementioned representations of facts were false when made. Specifically: The money was not to be used for SocialQ. SocialQ was not about to be profitable and was "beating projections." Woolley was not looking to add to staff to support the growth of the Company. That SocialQ was not a company that was "about to take off." That SocialQ did not have a limited amount of notes remaining as part of his next seed round. That SocialQ did not have an alleged deal with Oracle and Virture (positioning them for a potential acquisition by Oracle). That SocialQ did not have an alleged big name clients such as Ogilvy, BBC World News, Ford Motors, Buddy Media/Salesforce Marketing Cloud, WPP. That SocialQ did not have an alleged robust pipeline of no less than 50 deals (identified opportunities) at any one time. That SocialQ did not have an alleged product extensions being added to the company's offerings of 20

14 That SocialQ did not have an alleged $60,000 in new revenue alone in the first quarter of That SocialQ had a need to raise additional capital except to make the balance sheet look better to a potential acquirer (March 2013). That SocialQ did not have an alleged closed deal with Insight Express that would net the company between $350,000 and $500,000 annually. That SocialQ's did not have alleged need to hire additional employees to service the secondary line of business he created. That SocialQ was not allegedly in advanced stages of a sale discussion with a division of WPP at a price of $15,000,000, and that the talks were not allegedly "moving quickly". That SocialQ was not looking to hire two additional employees, who were considering other options and he did not want to know he was secure with his funding before actually hiring them. That SocialQ did not have a strong client list. That SocialQ did not have a suite of products. That SocialQ did not have a solid team as well as multiple indications of acquisition interest from potential buyers in the $12 million to $15 million dollar range. That SocialQ was really in need of raising funds. 37. At the time the aforementioned representations were made, Woolley knew that they were false when made and that the purpose for these false representations andlor of 20

15 omissions of material fact was to induce plaintiffs to invest, and to continue to invest, their money into SocialQ. In other words, Woolley lied, cheated and fabricated facts so that plaintiffs would use their money for SocialQ and each time they wavered, he would fabricate a new "fact" to lure them into spending more money on this "friends" company. 38. Plaintiffs, on the other hand, did not know, and were never on notice that the aforementioned facts were false when made or that Woolley was omitting material facts from them while they were investing their monies into SocialQ. 39. Plaintiffs also did not know that almost immediately after the investments were made that Woolley would take these monies and siphon them off into his personal account. 40. Plaintiffs reasonably relied on Woolley's representations, disclosures and omissions of material facts. 41. Such reliance by Plaintiffs was fully known to Woolley. 42. The representations by Woolley, as hereinabove alleged, (i) were material; (ii) they were false when made; (iii) Woolley knew that they were false and (iv) they were made in an attempt to deceive plaintiffs, and to induce them to "invest" monies into SocialQ so that Woolley can steal such monies to fund his lavish lifestyle a lifestyle that included an $9,000 a month apartment, private school for his children, a brand new BMW automobile and vacations. 43. By virtue of the fraudulent conduct of the Woolley, as hereinabove alleged, Pagliughi and Udarelli, have been defrauded and deceived by Woolley. 44. As a result of the Woolley's fraudulent and deceitful conduct, Pagliughi and Udarelli have been damaged in the aggregate amount $115,000.00, with interest thereon. [[c~ 15 of 20

16 45. Woolley's fraudulent and deceitful acts, constituted willful indifference, were willful and wanton, and in reckless disregard for Pagliughi and Udarelli. Such conduct entitles Pagliughi and Udarelli to an award of punitive damages in the amount of $500, AS AND FOR A SECOND CAUSE OF ACTION AS AGAINST WOOLEY AND CAMERON (Unjust Enrichment) 46. Plaintiffs repeat and reallege each and every allegation set forth in paragraphs "1"through "45" herein as though fully set forth at length herein. 47. The monies stolen by Woolley from the Plaintiffs were used to fund his and Cameron's extravagant lifestyle. Plaintiffs. 48. Cameron, like Woolley, unjustly benefitted from the monies stolen from the 49. By reason of the foregoing wrongful conduct, Defendants Woolley and Cameron have been unjustly enriched at the expense of plaintiffs. 50. As a result, Pagliughi and Udarelli have been damaged in the aggregate amount $115,000.00, with interest thereon; and plaintiffs are also entitled to punitive damages in the amount of $500, AS AND FOR A THIRD CAUSE OF ACTION AGAINST SOCIALQ (Breach of Contract) 51. Plaintiffs repeat and reallege each and every allegation set forth in paragraphs "1"through "50" herein as though fully set forth at length herein. 52. As hereinabove alleged, at the time plaintiffs "invested" in SocialQ, SocialQ executed promissory notes in their favor as follows: (i) dated September 25, 2012 in the amount of $25,000 to Pagliughi with a maturity date of February 13, 2014; (ii) dated September 9, 2013 in the of 20

17 amount of $25,000 to Pagliughi with a maturity date of January 1, 2015; (iii) dated September 17, 2013 in the amount of $15,000 to Pagliughi with a maturity date of January 1, 2015; (iv) dated April 15, 2014 in the amount of $30,000 to Udarelli with a maturity date of September 10, 2015; and (v) dated July 23, 2014 in the amount of $20,000 to Udarelli with a maturity date of January 21, Upon the maturity dates, SocialQ failed to pay the principal due with interest to the Plaintiffs. 54. As a result, SocialQ is in default under the promissory notes. 55. Accordingly, judgment should be entered against SocialQ as follows: (i) In favor of Pagliughi (a) in the amount of $25,000 with 4% interest thereon from September 25, 2012 to February 13, 2014 and 9%interest thereon from February 14, 2014 to the date of judgment; (b) in the amount of $25,000 with 4% interest thereon from September 9, 2013 to January 1, 2015 and 9%interest thereon from January 1, 2015 to the date of judgment; and (c) in the amount of $15,000 with 4% interest thereon from September 17, 2013 to January 1, 2015 and with 9%interest thereon from January 1, 2015 to the date of judgment; and (ii) in favor of Udarelli (a) in the amount of $30,000 with 4% interest thereon from April 15, 2014 to September 10, 2015 and 9%interest thereon from September 10, 2015 to the date of judgment; and (b) in the amount of $20,000 with 4%interest thereon from July 23, 2014 to January 21, 2016 and 9% interest thereon from January 21, 2016 to the date of judgment. WHEREFORE, plaintiffs demand judgment as follows: i. On their First Cause of Action, damages against defendants Woolley and SocialQ in the aggregate amount of $115,000, with interest thereon; of 20

18 ii. On their Second Cause of Action, damages against defendants Woolley and Cameron in the aggregate amount of $115,000, with interest thereon; iii. On their Third Cause of Action, damages against SocialQ as follows: (i) In favor of Pagliughi (a) in the amount of $25,000 with 4%interest thereon from September 25, 2012 to February 13, 2014 and 9%interest thereon from February 14, 2014 to the date of judgment; (b) in the amount of $25,000 with 4% interest thereon from September 9, 2013 to January 1, 2015 and 9% interest thereon from January 1, 2015 to the date of judgment; and (c) in the amount of $15,000 with 4% interest thereon from September 17, 2013 to January 1, 2015 and with 9% interest thereon from January 1, 2015 to the date of judgment; and (ii) in favor of Udarelli (a) in the amount of $30,000 with 4% interest thereon from April 15, 2014 to September 10, 2015 and 9% interest thereon from September 10, 2015 to the date of judgment; and (b) in the amount of $20,000 with 4% interest thereon from July 23, 2014 to January 21, 2016 and 9%interest thereon from January 21, 2016 to the date of judgment; iv.. Punitive damages in the amount of $500,000.00; and v. Such other and further relief as to the Court may seem just and proper. Dated: New York, New York March 20, 2017 :~. ~~ Attorneys for P~ 100 Wall Stree~ New York, Nev (212) ~A. Helle~r~ ~intiffs 20th Floor York of 20

19 ~~a: _~ ~., s- ~: ~ s s - ~- ~~~ of 20

20 i ~ ~~l ';~ _ ~ ~_ s~,~ x ~ ~ ~ ~ a,,}". ~~' `~ P ; 20 of 20