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Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 1 of 25 Page ID #:46

1 JASON DE BRETTEVILLE, SBN 195069


(jdebretteville@sycr.com)
2 BRADLEY E. MARRETT, SBN 288079
(bmarrett@sycr.com)
3 STRADLING YOCCA CARLSON & RAUTH, P.C.
660 Newport Center Drive, Suite 1600
4 Newport Beach, CA 92660-6422
Telephone: (949) 725-4000
5 Facsimile: (949) 725-4100
6 Attorneys for Plaintiffs
QUALITY INVESTMENT FUND, MALTA 1,
7 LTD., and QUALITY INVESTMENT FUND
8 UNITED STATES DISTRICT COURT
9 CENTRAL DISTRICT OF CALIFORNIA
10 WESTERN DIVISION
11 QUALITY INVESTMENT FUND, CASE NO.: 2:16-cv-5720 TJH(JEMx)
MALTA 1, LTD., a Malta company,
12 and QUALITY INVESTMENT PLAINTIFFS AMENDED
FUND, a Malta company, COMPLAINT FOR
13
Plaintiffs, (1) VIOLATIONS OF
14 CALIFORNIA
vs. CORPORATIONS CODE
15 25401, 25501, 25504, &
MARTIN SCHUERMANN, an 25504.1
16 individual, and VISION (2) FRAUD
INDUSTRIES CORP. dba VISION (3) NEGLIGENT
17 MOTOR CORPORATION, a Florida MISREPRESENTATION,
corporation, AND
18 (4) VIOLATIONS OF FLORIDA
Defendants. STATUTES 517.301 &
19 517.211
(5) VIOLATIONS OF
20 CALIFORNIA BUSINESS &
PROFESSIONS CODE
21 17200 ET SEQ.
22 DEMAND FOR JURY TRIAL
23
24
25
26
27
28
1
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 2 of 25 Page ID #:47

1 Plaintiffs Quality Investment Fund and Quality Investment Fund, Malta 1,


2 Ltd. (Plaintiffs), by their undersigned counsel, hereby bring the following
3 Complaint for Violations of California Corporations Code 25401, 25501,
4 25504, & 25504.1, Fraud, Negligent Misrepresentation, Violations of Florida
5 Statutes 517.301 & 517.211, and Violations of California Business &
6 Professions Code 17200 et seq., against Martin Schuermann (Schuermann) and
7 Vision Industries Corp. dba Vision Motor Corporation (Vision, and collectively
8 with Schuermann, Defendants) and aver as follows:
9 THE PARTIES
10 1. Quality Investment Fund, Malta 1, Ltd. is a private limited liability
11 company organized under the laws of Malta and has its principal place of business
12 in Valletta, Malta.
13 2. Quality Investment Fund is a private limited liability company
14 organized under the laws of Malta and has its principal place of business in
15 Valletta, Malta.
16 3. Defendant Martin Schuermann is, on information and belief, an
17 individual residing in Mexico and a former officer of Vision.
18 4. Defendant Vision Industries Corp. dba Vision Motor Corporation is,
19 on information and belief, a corporation organized under the laws of Florida and
20 has its principal place of business in Long Beach, California.
21 JURISDICTION AND VENUE
22 5. This Court has subject matter jurisdiction over this action pursuant to
23 28 U.S.C. 1332. The amount in controversy in this action is in excess of
24 $3,700,000.00.
25 6. This Court has personal jurisdiction over Defendant Schuermann
26 because, on information and belief, he regularly conducts business in this judicial
27 district and committed substantially all of the acts at issue in this judicial district.
28
2
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 3 of 25 Page ID #:48

1 7. This Court has personal jurisdiction over Defendant Vision because,


2 on information and belief, Vision has its principal place of business in this judicial
3 district, regularly conducts business in this judicial district, and committed
4 substantially all of the acts at issue in this judicial district.
5 8. Venue is proper in this district pursuant to 28 U.S.C. 1391.
6 INTRODUCTION
7 9. From 2010 through 2014, Schuermann and his company Vision, and
8 with the knowing assistance of Visions Cleantech Alliance partner TTSI
9 Logistics, LLC (TTSI), defrauded Plaintiffs out of millions of dollars that
10 Plaintiffs invested in Vision.
11 10. One manner in which Schuermann and Vision carried out the fraud
12 was by issuing misleading, material information into the marketplace with the
13 intention that investors would rely upon the inaccurate information and invest
14 millions of dollars into the joint venture/partnership. For example, in 2011,
15 Schuermann on behalf of Vision executed a letter of intent (the Letter of Intent)
16 with TTSI for the purchase of Visions hydrogen-electric drive trucks. Schuermann
17 then caused Vision put out a press release announcing TTSIs intent to purchase
18 $27 million worth of Visions hydrogen-electric drive Tyrano trucks, with an
19 option to purchase $100 million more. A year later, in May 2012, Schuermann on
20 behalf of Vision executed a false and fraudulent purchase order which purportedly
21 was a definitive agreement[] by TTSI to purchase $27 million worth of Visions
22 hydrogen-electric drive Tyrano trucks, with an option to purchase $100 million
23 more (the Purchase Order). In reality, as Schuermann and Vision knew and
24 understood, the Purchase Order did not definitive[ly] commit TTSI to purchase
25 any Tyrano trucks, let alone $27 million worth. That did not stop Schuermann from
26 using the sham Purchase Order to raise millions of dollars of investor money from
27 Plaintiffs on the false pretense that TTSI had actually definitive[ly] committed to
28 purchasing Tyrano trucks.
3
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 4 of 25 Page ID #:49

1 11. For its part, TTSI knew that by forming the Cleantech Alliance
2 partnership with Vison and by signing sham contracts, TTSI was facilitating
3 Schuermann and Visions solicitation of substantial investments from investors
4 duped by the false promise of at least $27 million in truck sales. In return, TTSI
5 received not only positive publicity for TTSI and its green truck initiatives (even
6 getting former Governor Arnold Schwarzenegger to publicly tout the Tyrano
7 truck), but the ability to bid for government subsidies for the use of Tyrano trucks
8 and building of hydrogen fueling stations at major ports, including the Ports of Los
9 Angeles and Long Beach and the Port of Houston, with the financial risk of
10 success or failure resting squarely on the backs of the duped investors, not
11 Schuermann and Vision.
12 12. The fraud eventually collapsed, however, when Schuermann and
13 Vision could not find additional investors to prop up Vision and the co-
14 conspirators failed to secure the critical government subsidies. In the end, Plaintiffs
15 and Plaintiffs investors where left holding the bag, suffering losses of more than
16 $3.7 million. Meanwhile, Defendants made off handsomely. Schuermann and
17 Vision collected more than $1.2 million in salary payments, and TTSI received
18 all of Visions intellectual property and the two remaining Tyrano trucks that
19 Vision actually built, all without paying a penny back the defrauded investors.
20 13. Plaintiffs bring this action to make themselves and their investors
21 whole after being victimized by Schuermann and Visions fraud.
22 BACKGROUND
23 14. Schuermann was at all times relevant to the Complaint the Chief
24 Executive Officer of Vision. Before joining Vision, Schuermann was the
25 Chairman and CEO of IM-Internationalmedia AG and Intermedia Inc., which
26 produced and distributed feature films such as Terminator 3 and Basic Instinct 2.
27 Schuermann also is a pseudo-celebrity in his own right, having starred in an
28 episode of celebrity wife-swap with his wife Downtown Julie Brown.
4
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 5 of 25 Page ID #:50

1 15. Vision initially was incorporated in 2004 as Cheetah Consulting, Inc.,


2 a Florida corporation engaged in the business of valuing companies and executing
3 exit strategies for business owners. In late-2008, Cheetah executed a strategic pivot
4 and entered into a licensing agreement with a hydrogen technology company. At
5 the same time, Cheetah changed its name to Vision and Schuermann took control
6 of the company. In statements made to Plaintiffs, Schuermann held Vision out as a
7 company in the business of designing, manufacturing, and selling zero emission
8 Class 8 Trucks called Tyranos, powered by hydrogen fuel cells. Schuermann and
9 Visions stated goal was to develop zero-emission transport solutions for the 21st
10 century.
11 16. TTSI is one of the largest delivery carriers in Los Angeles and the
12 Port of Long Beach. TTSI advertises itself as having developed a highly
13 successful, comprehensive, and environmentally conscious business model while
14 focusing on two goals Staying a Step Ahead and Leaving Small Footprints
15 and claims to have been the first in the world to have deployed a hydrogen/electric,
16 Class 8 truck as part of its fleet.
17 17. The Cleantech Alliance was a joint venture/partnership formed
18 between TTSI and Vision in or about 2011. TTSI states on its own website that
19 Tyrano truck is a joint effort between TTSI and Vision . . . . Similarly, the Letter
20 of Intent purports to set forth the terms of a proposed joint venture agreement
21 between TTSI and Vision. The Cleantech Alliance of TTSI and Vision was
22 ostensibly formed for the purpose of pursuing and receiving federal and/or state
23 funding to build fleets of Tyrano trucks (and fueling stations) across the United
24 States, including at the Port of Long Beach and the Port of Houston. In furtherance
25 of the joint venture, Vision agreed to manufacture the Tyrano trucks and operate
26 hydrogen fueling stations, and TTSI agreed to develop, purchase, and operate the
27 trucks at the ports. The joint venture would profit from both the manufacturing and
28 operation of the truck fleet and fueling stations. TTSI and Vision jointly controlled
5
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 6 of 25 Page ID #:51

1 the Cleantech Alliance, as evidenced by their joint submissions to representatives


2 of the United States Congress and various state agencies.
3 SCHUERMANN AND VISION MAKE FALSE REPRESENTATIONS
4 18. From at least 2010 through 2014, Schuermann, as Chief Executive
5 Officer of Vision, caused Vision to issue various press releases and statements
6 discussing Visions financials and operations. Many of these statements included
7 information that was false or substantially misleading. For example, in Visions
8 2009 10-K/A, Schuermann caused Vision to report the value of Visions
9 intellectual property as $514,403. In reality, however, as confirmed in Visions
10 bankruptcy filings, Visions intellectual property was worthless or practically
11 worthless. Indeed, the 2009 10 K/A overstated the value of the intellectual property
12 by at least 1,000%.
13 19. Schuermann not only caused Vision to overstate the value of Visions
14 intellectual property, he also caused Vision to enter into sham contracts which
15 allowed Schuermann to falsely represent that Vision had received millions of
16 dollars in purchase orders for Tyrano trucks. For its part, TTSI agreed to enter into
17 these sham contracts to assist Schuermann and Vision in duping investors into
18 investing substantial sums of money in Visionmoney which could be used to
19 build-out a fleet of Tyrano trucks for the Cleantech Alliance at zero risk to TTSI.
20 In fact, TTSI expressly acknowledges in the Letter of Intent that it knew Vision
21 was using the agreements with TTSI to raise investor funds, agreeing that Vision
22 may engage [TTSIs financial advisor] at a later date to secure additional financing
23 for Vision to enable it to meet the production commitment required by the
24 Transaction.
25 20. In furtherance of Schuermann and Visions scheme, on or about April
26 4, 2011, Schuermann on behalf of Vision signed the Letter of Intent. The Letter of
27 Intent provides that TTSI Logistics, LLC . . . and Vision Industries Corp. [] will
28 enter into a strategic partnership to (a) provide zero emissions transportation
6
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 7 of 25 Page ID #:52

1 services in connection with logistics services for the Port of Long Beach
2 Infrastructure projects, and (b) provide zero emissions transportation vehicles to
3 TTSI for TTSIs drayage services in Southern California on a first-priority basis.
4 The Letter of Intent also states that this Term Sheet shall not be binding and no
5 contractual obligation will exist among the parties hereto until such time as
6 definitive documents have been entered into . . . . Specifically, the Letter of Intent
7 contemplates that TTSI shall provide Vision with a firm order to purchase the
8 first 100 Tyrano trucks produced by Vision with an option to purchase the next 300
9 Tyrano trucks.
10 21. On July 18, 2011, Vision announced that it had signed the Letter of
11 Intent with TTSI. Vision announced that the Letter of Intent declared TTSIs
12 intention to purchase 100 Tyrano trucks with an option to purchase 300 more.
13 Vision also announced that TTSI will take delivery of the initial zero emission
14 truck at a Kick-off Event on July 22, 2011 . . . .
15 22. On December 21, 2011, Schuermann on behalf of Vision sent an e-
16 mail to Plaintiffs which attached TTS-I[s] official submission to Congress
17 requesting an additional subsidy for the first 100 trucks. The attached official
18 submission purports to be made by TTSI and Visions joint venture the
19 Cleantech Alliance and notes that TTSI had presented Vision [] with a Letter
20 of Intent to purchase one hundred Class 8 Hydrogen Fuel Cell / Electric Hybrid
21 Trucks, with the option to purchase an additional 300 units.
22 23. On May 10, 2012, Schuermann on behalf of Vision e-mailed Plaintiffs
23 to announce that he had finalized the purchase order agreement for 100 Tyrano
24 Class 8 Trucks with TTSI. The e-mail contained a draft of a press release. The
25 draft press release represented that Vision and TTSI had closed definite
26 agreements.
27 24. On May 11, 2012 Vision announced that it had Receive[d] a $27MM
28 Purchase Order for 100 Zero-Emission Class 8 Trucks. In the May 2012 press
7
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 8 of 25 Page ID #:53

1 release, Schuermann was quoted as stating: [i]t has been a long road from [the]
2 letter of intent signed a year ago to the closing of definite agreements.
3 25. Plaintiffs reasonably understood Schuermann and Visions
4 representation that Vision and TTSI had closed definite agreements to be
5 confirmation that Vision had received a firm order, and that Vision and TTSI
6 had executed the definitive documents referenced in the Letter of Intent signed a
7 year earlier. In making its investment decisions, Plaintiffs reasonably relied on
8 Defendants and TTSIs representations about their partnership in the Letter of
9 Intent and the statement in the Letter of Intent that definitive documents would
10 be a binding . . . contractual obligation.
11 26. Plaintiffs were unaware that each of the statements was false and
12 misleading because, as Schuermann and Vision knew, Vision did not have a
13 definitive purchase order from TTSI, and TTSI never committed to purchasing 100
14 Tyrano trucks.
15 27. Relying, however, on the false and misleading information released
16 into the marketplace by Schuermann and Vision, Plaintiffs invested millions of
17 dollars into Vision.
18 28. By February 2013, Schuermann and Vision had already squandered
19 most of the money they had fraudulently obtained from Plaintiffs. Instead of
20 admitting their fraud, Schuermann and Vision doubled down and approached
21 Plaintiffs for additional funding. This time, Schuermann and Vision specifically
22 represented to Plaintiffs that the additional funding would be used solely to build
23 twenty-four Tyrano trucks. On the basis of that presentation, Plaintiffs loaned
24 Vision an additional $1,290,000. Schuermann and Visions assurance to Plaintiffs
25 was then published in a February 4, 2013 8-K filing by Vision, which announced
26 that it had secured a $1,290,000.00 loan from Plaintiffs [t]o fund the build out of
27 twenty-four (24) zero-emission demonstration trucks . . . . Plaintiffs understood
28 these trucks would be built and used by the Cleantech Alliance in the Port of
8
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 9 of 25 Page ID #:54

1 Houston, where TTSI and Vision had recently been awarded a grant by the U.S.
2 Department of Transportation.
3 29. In fact, Vision never built the promised twenty-four trucks. Instead,
4 Schuermann used the money to pay himself a salary of more than $300,000 per
5 year, to pay off debts owed to other investors, and/or to settle lawsuits. Of course
6 Schuermann never told Plaintiffs that Schuermann and Vision did not actually
7 intend to use the money invested by Plaintiffs to build the promised twenty-four
8 Tyrano trucks.
9 30. In addition to the above-described false and misleading statements,
10 Schuermann also individually met at various times (in-person, telephonically, and
11 via e-mail) with Plaintiffs representatives, where additional false and misleading
12 statements were made. In those meetings with Plaintiffs representatives,
13 Schuermann made many false representations to induce further investment in
14 Vision. For example, on one occasion Schuermann affirmed to Plaintiffs that
15 although there was a joint venture between Vision and TTSI, Vision remained the
16 owner of the two prototype Tyrano trucks Vision had built. As stated in recent
17 bankruptcy filings, however, that affirmation was false and, in fact, TTSI owned
18 the prototype trucks.
19 PLAINTIFFS RELY ON SCHUERMANN AND VISIONS
20 MISREPRESENTATIONS AND INVEST MILLIONS OF DOLLARS
21 31. Unaware that Visions critical intellectual property was worthless, that
22 TTSI had not actually committed to purchasing a minimum of $27 million worth of
23 Tyrano trucks, or that Vision had transferred its only prototype trucks and all of its
24 purported intellectual property to TTSI, Plaintiffs entered into a series of loan and
25 convertible note agreements with Vision.
26 32. On or about February 19, 2010, Plaintiffs invested $300,000 in Vision
27 through a private placement.
28
9
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 10 of 25 Page ID #:55

1 33. On or about April 5, 2010, Plaintiffs converted $300,000 from the


2 February 19, 2010 investment into 1,200,000 shares of Vision common stock.
3 34. On or about October 6, 2010, Plaintiffs invested EUR 300,000
4 ($450,696) in Vision through a convertible promissory note with Vision for
5 $450,696 at an interest rate of 12% per annum.
6 35. On or about November 15, 2010, Plaintiffs invested $600,000 in
7 Vision through a convertible promissory note with Vision at an interest rate of 12%
8 per annum.
9 36. On or about December 12, 2010, Plaintiffs invested $500,000 in
10 Vision through a loan at an interest rate of 5% per annum.
11 37. On or about June 7, 2011, Plaintiffs converted $300,000 from the
12 October 6, 2010 investment into 6,985,777 shares of Vision common stock.
13 38. On or about June 25, 2012, Plaintiffs converted $600,000 from the
14 November 15, 2010 investment into 13,443,945 shares of Vision common stock.
15 39. On or about June 25, 2012, Plaintiffs converted $500,000 from the
16 December 12, 2010 investment into 10,750,000 shares of Vision common stock.
17 40. On or about September 12, 2012, Plaintiffs invested $500,000 in
18 Vision through a loan an interest rate of 8% per annum.
19 41. On or about February 4, 2013, Plaintiffs invested $1,290,000 in
20 Vision through a loan at an interest rate of 8% per annum.
21 42. On or about December 31, 2013, Plaintiffs converted the September
22 12, 2012 and February 4, 2013 loans into equity. Plaintiffs converted the loans and
23 interest owed by Vision into 6,533,100 shares of Vision common stock.
24 43. On or about February 3, 2014, Plaintiffs made a final investment into
25 Vision of $80,000 through a loan bearing interest at a rate of 8% per annum.
26 44. In total, Plaintiffs invested more than $3,700,000.00 in Vision.
27 Plaintiffs made these investments in reliance on Schuermann and Visions
28
10
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 11 of 25 Page ID #:56

1 representations about Visions proprietary technology, the purchase order from


2 TTSI, and other false statements by Schuermann and Vision.
3 THE FRAUD COLLAPSES AND SCHUERMANN AND VISION MAKE
4 OFF WITH MILLIONS
5 45. In June 2014, Schuermann again approached Plaintiffs to make
6 additional investments. By this time, Plaintiffs had become frustrated by the
7 repeated requests for capital infusions and became suspicious of Schuermann, his
8 company Vision, and the Vision-TTSI joint venture. Plaintiffs began to question
9 Schuermann about his misrepresentations, including the misrepresentations
10 regarding the supposed Purchase Order from TTSI.
11 46. With pressure mounting, Schuermann and Vision turned to one of the
12 oldest tricks in a fraudsters book the Ponzi scheme. Schuermann tried to call a
13 special vote to increase the authorized share limit of Vision from 500,000,000 to
14 1,000,000,000, which would have allowed Schuermann and Vision to defraud a
15 new round of investors by selling additional shares to pay back early investors.
16 When Plaintiffs refused to capitulate to Schuermanns scheme, Schuermann put
17 Vision into bankruptcy.
18 47. The full extent of Schuermann and Visions fraud became apparent
19 around the time Vision declared bankruptcy. At that time, it became clear that
20 investors like Plaintiffs had been duped, that Vision was worthless as a company,
21 and that Schuermann and TTSI had taken the majority of the invested funds and
22 Visions assets for themselves.
23 48. On information and belief, Schuermann and Vision made off with
24 millions of dollars of investor money. From at least 2010 through 2014,
25 Schuermann used investor money to fund his very stylish lifestyle, paying
26 himself a salary of $300,000 per year, plus millions more in stock incentives.
27 During that time, Schuermann maintained a $2.85 million ocean-view mansion in
28 Los Angeles as well as a lakeside home in Lago Maggiore, Italy.
11
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 12 of 25 Page ID #:57

1 49. For its part in the scheme, TTSI obtained all of Visions assets.
2 Despite never bearing any real risk on behalf of the TTSI-Vision joint venture,
3 TTSI walked away with Visions prototype Tyrano trucks, the intellectual
4 property, and whatever other assets Vision had, while Visions investors were left
5 with losses totaling in the millions.
6 FIRST CLAIM FOR RELIEF
7 Violations of Cal. Corp. Code 25401, 25501, 25504, & 25504.1
8 (Against Schuermann and Vision)
9 50. Plaintiffs incorporate by reference the allegations in paragraphs 1-49.
10 51. California Corporations Code section 25401 provides that [i]t is
11 unlawful for any person to offer to sell a security in this state . . . by means of any
12 written or oral communication which includes an untrue statement of a material
13 fact or omits to state a material fact necessary in order to make the statements
14 made, in light of the circumstances under which they were made, not misleading.
15 52. California Corporations Code section 25401 does not require any
16 fraudulent misrepresentation or intent to deceive; rather it is the making of untrue
17 statements or omissions of material facts that is unlawful.
18 53. California Corporations Code section 25501 is a remedial statute
19 which allows private plaintiffs to bring an action for violations of California
20 Corporations Code 25401. Section 25501 provides that [a]ny person who
21 violates Section 25401 shall be liable to the person who purchases a security from
22 him . . . who may sue either for rescission or damages.
23 54. California Corporations Code section 25504 provides that [e]very
24 person who directly or indirectly controls a person liable under Section 25501 or
25 25503, . . . every principal executive officer or director of a corporation so liable, .
26 . . are also liable jointly and severally with and to the same extent as such person,
27 unless the other person who is so liable had no knowledge of or reasonable
28
12
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 13 of 25 Page ID #:58

1 grounds to believe in the existence of the facts by reason of which the liability is
2 alleged to exist.
3 55. California Corporations Code section 25504.1 provides that [a]ny
4 person who materially assists in any violation of Section . . . 25401 . . . with the
5 intent to deceive or defraud, is jointly and severally liable with any other person
6 liable under this chapter for such violation.
7 56. Defendants sold securities to Plaintiffs. Securities are defined in
8 California Corporations Code section 25019 to mean any note; stock; . . .
9 evidence of indebtedness; . . . transferable share; investment contract; . . . or, in
10 general, any interest or instrument commonly known as a security . . . .
11 57. Defendants sold Plaintiffs numerous securities within the State of
12 California by means of both oral and written communications by Schuermann and
13 Vision. Schuermann and Visions statements contained misrepresentations of
14 material facts or omitted to state facts necessary to make the statements not
15 misleading. Defendants misrepresentations or omissions include but are not
16 limited to the following examples:
17 a. Defendants represented to Plaintiffs that TTSI had entered into
18 definitive purchase order for at least 100 Tyrano trucks. In reality, however, the
19 supposed purchase order was a sham, and TTSI was not committed to purchasing
20 even a single Tyrano truck. Defendants knew that TTSI was not committed to
21 purchasing a single Tyrano truck. Despite this, Defendants assured Plaintiffs
22 during a meeting with Plaintiffs representative that the purchase order was real
23 and not a sham.
24 b. In an October 24, 2013 e-mail, Defendants represented to
25 Plaintiffs that Vision owned the two prototype Tyrano trucks and that TTSI was a
26 mere lessee. Defendants knew this was false. As stated in bankruptcy filings,
27 prior to October 24, 2013, on or about February 29, 2012, Vision agreed to transfer
28 the two prototype Tyrano trucks to TTSI. See In re Vision Industries Corp., Case
13
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 14 of 25 Page ID #:59

1 No. 2:14-bk-28225-RK, ECF No. 114 at 14-15. Contrary to Defendants


2 representations, TTSI not Vision owned the trucks and Vision not TTSI
3 was the lessee.
4 c. Defendants represented in public filings that the value of
5 Visions intellectual property was $514,403. In reality, Defendants knew that the
6 intellectual property was worthless. In fact, in a recent filing by the bankruptcy
7 trustees representative, it was confirmed that Visions intellectual property was
8 worthless. See In re Vision Industries Corp., Case No. 2:14-bk-28225-RK, ECF
9 No. 132 at 4-5. TTSI also knew that the intellectual property was worthless or
10 nearly worthless. Contrary to Defendants representation, TTSI believed the
11 intellectual property had a value of no more than $55,000.
12 58. The securities sold by Defendants to Plaintiffs that were induced by
13 Defendants misrepresentations or omissions include but are not limited to:
14 a. On or about February 19, 2010, Plaintiffs invested $300,000 in
15 Vision through a private placement.
16 b. On or about April 5, 2010, Plaintiffs converted $300,000 from
17 the February 19, 2010 investment into 1,200,000 shares of Vision common stock.
18 c. On or about October 6, 2010, Plaintiffs invested EUR 300,000
19 ($450,696) in Vision through a convertible promissory note with Vision for
20 $450,696 at an interest rate of 12% per annum.
21 d. On or about November 15, 2010, Plaintiffs invested $600,000
22 in Vision through a convertible promissory note with Vision at an interest rate of
23 12% per annum.
24 e. On or about December 12, 2010, Plaintiffs invested $500,000 in
25 Vision through a loan at an interest rate of 5% per annum.
26 f. On or about June 7, 2011, Plaintiffs converted $300,000 from
27 the October 6, 2010 investment into 6,985,777 shares of Vision common stock.
28
14
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 15 of 25 Page ID #:60

1 g. On or about June 25, 2012, Plaintiffs converted $600,000 from


2 the November 15, 2010 investment into 13,443,945 shares of Vision common
3 stock.
4 h. On or about June 25, 2012, Plaintiffs converted $500,000 from
5 the December 12, 2010 investment into 10,750,000 shares of Vision common
6 stock.
7 i. On or about September 12, 2012, Plaintiffs invested $500,000
8 in Vision through a loan an interest rate of 8% per annum.
9 j. On or about February 4, 2013, Plaintiffs invested $1,290,000 in
10 Vision through a loan at an interest rate of 8% per annum.
11 k. On or about December 31, 2013, Plaintiffs converted the
12 September 12, 2012 and February 4, 2013 loans into equity. Plaintiffs converted
13 the loans and interest owed by Vision into 6,533,100 shares of Vision common
14 stock.
15 l. On or about February 3, 2014, Plaintiffs made a final
16 investment into Vision of $80,000 through a loan bearing interest at a rate of 8%
17 per annum.
18 m. In total, Plaintiffs invested more than $3,700,000.00 in Vision.
19 Plaintiffs made these investments in reliance on Defendants representations about
20 Visions proprietary technology, the purchase order from TTSI, and other false
21 statements by Defendants.
22 59. As a result of Defendants misrepresentations and omissions,
23 Plaintiffs purchased the above-identified securities. Plaintiffs hereby seek
24 damages in an amount to be proven at trial but which is not less than
25 $3,700,000.00, plus pre- and post-judgment interest at the maximum allowable
26 rate.
27
28
15
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 16 of 25 Page ID #:61

1 SECOND CLAIM FOR RELIEF


2 Fraud
3 (Against Schuermann and Vision)
4 60. Plaintiffs incorporate by reference the allegations in paragraphs 1-59.
5 61. Defendants made misrepresentations of material fact to Plaintiffs,
6 which Defendants knew were false or misleading. These misrepresentations
7 include but are not limited to the following:
8 a. Defendants represented to Plaintiffs that TTSI had entered into
9 definitive purchase order for at least 100 Tyrano trucks. In reality, however, the
10 supposed purchase order was a sham, and TTSI was not committed to purchasing
11 even a single Tyrano truck. Defendants knew that TTSI was not committed to
12 purchasing a single Tyrano truck. Despite this, Defendants assured Plaintiffs
13 during a meeting with Plaintiffs representative that the purchase order was real
14 and not a sham.
15 b. In an October 24, 2013 e-mail, Defendants represented to
16 Plaintiffs that Vision owned the two prototype Tyrano trucks and that TTSI was a
17 mere lessee. Defendants knew this was false. As stated in recent bankruptcy
18 filings, prior to October 24, 2013, on or about February 29, 2012, Vision agreed to
19 transfer the two prototype Tyrano trucks to TTSI. See In re Vision Industries
20 Corp., Case No. 2:14-bk-28225-RK, ECF No. 114 at 14-15. Contrary to
21 Defendants representations, TTSI not Vision owned the trucks and Vision
22 not TTSI was the lessee.
23 c. Defendants represented in public filings that the value of
24 Visions intellectual property was $514,403. In reality, Defendants knew that the
25 intellectual property was worthless. In fact, in a recent filing by the bankruptcy
26 trustees representative, it was confirmed that Visions intellectual property was
27 worthless. See In re Vision Industries Corp., Case No. 2:14-bk-28225-RK, ECF
28 No. 132 at 4-5. TTSI also knew that the intellectual property was worthless or
16
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 17 of 25 Page ID #:62

1 nearly worthless. Contrary to Defendants representations, TTSI believed the


2 intellectual property had a value of no more than $55,000.
3 62. Defendants intended for Plaintiffs to rely on Defendants
4 representations in deciding whether to invest capital in Vision. Defendants knew
5 that without Plaintiffs investments in Vision, Vision would not have sufficient
6 capital to operate, let alone pay its officers exorbitant salaries.
7 63. Plaintiffs justifiably relied on Defendants misrepresentations in
8 connection with their decisions to execute promissory notes, purchase stock, and
9 convert the interest on the promissory notes to stock.
10 64. As a result of Defendants fraud, Plaintiffs have suffered damages in
11 an amount to be proven at trial but which is not less than $3,700,000.00, plus pre-
12 and post-judgment interest at the maximum allowable rate.
13 65. Defendants conduct was undertaken with the intent to injure
14 Plaintiffs, or with a willful and conscious disregard of Plaintiffs rights, and
15 constitutes oppressive, malicious, and fraudulent conduct warranting an award of
16 punitive damages in an amount appropriate to punish or set an example of
17 Defendants.
18 THIRD CLAIM FOR RELIEF
19 Negligent Misrepresentation
20 (Against Schuermann and Vision)
21 66. Plaintiffs incorporate by reference the allegations in paragraphs 1-65.
22 67. Defendants made misrepresentations of material fact to Plaintiffs,
23 which Defendants had no reasonable grounds for believing to be true. These
24 misrepresentations include but are not limited to the following:
25 a. Defendants represented to Plaintiffs that TTSI had entered into
26 definitive purchase order for at least 100 Tyrano trucks. In reality, however, the
27 supposed purchase order was a sham, and TTSI was not committed to purchasing
28 even a single Tyrano truck. Defendants knew that TTSI was not committed to
17
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 18 of 25 Page ID #:63

1 purchasing a single Tyrano truck, or Defendants had no reasonable grounds for


2 believing that all of the conditions precedent to TTSIs purchase of at least 100
3 Tyrano trucks would be satisfied. Despite this, Defendants assured Plaintiffs
4 during a meeting with Plaintiffs representative that the purchase order was real
5 and not a sham.
6 b. In an October 24, 2013 e-mail, Defendants represented to
7 Plaintiffs that Vision owned the two prototype Tyrano trucks and that TTSI was a
8 mere lessee. Defendants knew this was false or lacked reasonable grounds for
9 believing it to be true. As confirmed by recent bankruptcy filings, prior to October
10 24, 2013, on or about February 29, 2012, Vision agreed to transfer the two
11 prototype Tyrano trucks to TTSI. See In re Vision Industries Corp., Case No.
12 2:14-bk-28225-RK, ECF No. 114 at 14-15. Contrary to Defendants
13 representations, TTSI not Vision owned the trucks and Vision not TTSI
14 was the lessee.
15 c. Defendants represented in public filings that the value of
16 Visions intellectual property was $514,403. In reality, Defendants knew that the
17 intellectual property was worthless, or had no reasonable grounds for believing that
18 the intellectual property had a value of $514,403. In fact, in a recent filing by the
19 bankruptcy trustees representative, it was confirmed that Visions intellectual
20 property was worthless. See In re Vision Industries Corp., Case No. 2:14-bk-
21 28225-RK, ECF No. 132 at 4-5.
22 68. Defendants intended for Plaintiffs to rely on Defendants
23 representations in deciding whether to invest capital in Vision. Defendants knew
24 that without Plaintiffs investments in Vision, Vision would not have sufficient
25 capital to operate let alone pay its officers exorbitant salaries.
26 69. Plaintiffs justifiably relied on Defendants misrepresentations in
27 connection with their decisions to execute promissory notes, purchase stock, and
28 convert the interest on the promissory notes to stock.
18
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 19 of 25 Page ID #:64

1 70. As a result of Defendants misrepresentations, Plaintiffs have suffered


2 damages in an amount to be proven at trial but which is not less than
3 $3,700,000.00, plus pre- and post-judgment interest at the maximum allowable
4 rate.
5 FOURTH CLAIM FOR RELIEF
6 Violations of Fla. Stat. 517.211 & 517.301
7 (Against Schuermann and Vision)
8 71. Plaintiffs incorporate by reference the allegations in paragraphs 1-70.
9 72. Florida Statutes section 517.301 provides that [i]t is unlawful and a
10 violation of the provisions of this chapter for a person: (a) . . . in connection with
11 the offer [or] sale [] of any investment or security . . . directly or indirectly: (1) To
12 employ any device, scheme, or artifice to defraud; (2) To obtain money or property
13 by means of any untrue statement of a material fact or any omission to state a
14 material fact necessary in order to make the statements made, in light of the
15 circumstances under which they were made, not misleading; or (3) To engage in
16 any transaction, practice, or course of business which operates or would operate as
17 a fraud or deceit upon a person.
18 73. Florida Statutes section 517.211 provides that [a]ny person . . .
19 selling a security in violation of s. 517.301, and every director, officer, partner, or
20 agent of or for the . . . seller, if the director, officer, partner, or agent has personally
21 participated or aided in making the sale . . . , is jointly and severally liable to the
22 person . . . purchasing the security from such person . . . . Section 517.211 further
23 provides that [i]n any action brought under this section, including an appeal, the
24 court shall award reasonable attorneys fees to the prevailing party . . . .
25 74. Defendants sold securities to Plaintiffs.
26 75. Defendants sold Plaintiffs numerous securities from the State of
27 Florida by means of both oral and written communications by Defendants.
28 Defendants statements contained misrepresentations of material facts or omitted to
19
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 20 of 25 Page ID #:65

1 state facts necessary to make the statements not misleading. Defendants


2 misrepresentations or omissions include but are not limited to the following
3 examples:
4 a. Defendants represented to Plaintiffs that TTSI had entered into
5 definitive purchase order for at least 100 Tyrano trucks. In reality, however, the
6 supposed purchase order was a sham, and TTSI was not committed to purchasing
7 even a single Tyrano truck. Defendants knew that TTSI was not committed to
8 purchasing a single Tyrano truck. Despite this, Defendants assured Plaintiffs
9 during a meeting with Plaintiffs representative that the purchase order was real
10 and not a sham.
11 b. In an October 24, 2013 e-mail, Defendants represented to
12 Plaintiffs that Vision owned the two prototype Tyrano trucks and that TTSI was a
13 mere lessee. Defendants knew this was false. As stated in recent bankruptcy
14 filings, prior to October 24, 2013, on or about February 29, 2012, Vision agreed to
15 transfer the two prototype Tyrano trucks to TTSI. See In re Vision Industries
16 Corp., Case No. 2:14-bk-28225-RK, ECF No. 114 at 14-15. Contrary to
17 Defendants representations, TTSI not Vision owned the trucks and Vision
18 not TTSI was the lessee.
19 c. Defendants represented in public filings that the value of
20 Visions intellectual property was $514,403. In reality, Defendants knew that the
21 intellectual property was worthless. In fact, in a subsequent filing by the
22 bankruptcy trustees representative, it was confirmed that Visions intellectual
23 property was worthless. See In re Vision Industries Corp., Case No. 2:14-bk-
24 28225-RK, ECF No. 132 at 4-5.
25 76. The securities sold by Defendants which were induced by Defendants
26 misrepresentations or omissions include but are not limited to:
27 a. On or about February 19, 2010, Plaintiffs invested $300,000 in
28 Vision through a private placement.
20
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 21 of 25 Page ID #:66

1 b. On or about April 5, 2010, Plaintiffs converted $300,000 from


2 the February 19, 2010 investment into 1,200,000 shares of Vision common stock.
3 c. On or about October 6, 2010, Plaintiffs invested EUR 300,000
4 ($450,696) in Vision through a convertible promissory note with Vision for
5 $450,696 at an interest rate of 12% per annum.
6 d. On or about November 15, 2010, Plaintiffs invested $600,000
7 in Vision through a convertible promissory note with Vision at an interest rate of
8 12% per annum.
9 e. On or about December 12, 2010, Plaintiffs invested $500,000 in
10 Vision through a loan at an interest rate of 5% per annum.
11 f. On or about June 7, 2011, Plaintiffs converted $300,000 from
12 the October 6, 2010 investment into 6,985,777 shares of Vision common stock.
13 g. On or about June 25, 2012, Plaintiffs converted $600,000 from
14 the November 15, 2010 investment into 13,443,945 shares of Vision common
15 stock.
16 h. On or about June 25, 2012, Plaintiffs converted $500,000 from
17 the December 12, 2010 investment into 10,750,000 shares of Vision common
18 stock.
19 i. On or about September 12, 2012, Plaintiffs invested $500,000
20 in Vision through a loan an interest rate of 8% per annum.
21 j. On or about February 4, 2013, Plaintiffs invested $1,290,000 in
22 Vision through a loan at an interest rate of 8% per annum.
23 k. On or about December 31, 2013, Plaintiffs converted the
24 September 12, 2012 and February 4, 2013 loans into equity. Plaintiffs converted
25 the loans and interest owed by Vision into 6,533,100 shares of Vision common
26 stock.
27
28
21
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 22 of 25 Page ID #:67

1 l. On or about February 3, 2014, Plaintiffs made a final


2 investment into Vision of $80,000 through a loan bearing interest at a rate of 8%
3 per annum.
4 m. In total, Plaintiffs invested more than $3,700,000.00 in Vision.
5 Plaintiffs made these investments in reliance on Defendants representations about
6 Visions proprietary technology, the purchase order from TTSI, and other false
7 statements by Defendants.
8 77. As a result of Defendants misrepresentations and omissions,
9 Plaintiffs purchased the above-identified securities. Plaintiffs hereby seek damages
10 in an amount to be proven at trial but which is not less than $3,700,000.00, plus
11 pre- and post-judgment interest at the maximum allowable rate and attorneys fees
12 as allowed by statute.
13 FIFTH CLAIM FOR RELIEF
14 Violations of Californias Unfair Competition Law,
15 Cal. Bus. & Prof. Code 17200 et seq.
16 (Against Schuermann and Vision)
17 78. Plaintiffs incorporate by reference the allegations in paragraphs 1-77.
18 79. Defendants engaged in unlawful business practices in violation of the
19 Unfair Competition Law by violating: Cal. Corp. Code 25401, 25501, 25504, &
20 25504.1; and Fla. Stat. 517.211 & 517.301. Defendants also engaged in
21 unlawful business practices in violation of the Unfair Competition Law by
22 committing fraudulent misrepresentation and inducement and negligent
23 misrepresentation.
24 80. Defendants engaged in fraudulent business practices in violation of
25 the Unfair Competition Law by making misrepresentations of material fact to
26 Plaintiffs, which Defendants knew were false or misleading. These
27 misrepresentations include but are not limited to the following:
28
22
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 23 of 25 Page ID #:68

1 a. Defendants represented to Plaintiffs that TTSI had entered into


2 definitive purchase order for at least 100 Tyrano trucks. In reality, however, the
3 supposed purchase order was a sham, and TTSI was not committed to purchasing
4 even a single Tyrano truck. Defendants knew that TTSI was not committed to
5 purchasing a single Tyrano truck. Despite this, Defendants specifically assured
6 Plaintiffs that the purchase order was real and not a sham.
7 b. In an October 24, 2013 e-mail, Defendants represented to
8 Plaintiffs that Vision owned the two prototype Tyrano trucks and that TTSI was a
9 mere lessee. Defendants knew this was false. As stated in recent bankruptcy
10 filings, prior to October 24, 2013, on or about February 29, 2012, Vision agreed to
11 transfer the two prototype Tyrano trucks to TTSI. See In re Vision Industries
12 Corp., Case No. 2:14-bk-28225-RK, ECF No. 114 at 14-15. Contrary to
13 Defendants representations, TTSI not Vision owned the trucks and Vision
14 not TTSI was the lessee.
15 c. Defendants represented in public filings that the value of
16 Visions intellectual property was $514,403. In reality, Defendants knew that the
17 intellectual property was worthless. In fact, in a recent filing by the bankruptcy
18 trustees representative, it was confirmed that Visions intellectual property was
19 worthless. See In re Vision Industries Corp., Case No. 2:14-bk-28225-RK, ECF
20 No. 132 at 4-5. TTSI also knew that the intellectual property was worthless or
21 nearly worthless. Contrary to Defendants representations, TTSI believed the
22 intellectual property had a value of no more than $55,000.
23 81. Defendants engaged in unfair business practices in violation of the
24 Unfair Competition Law because their business practices are immoral, unethical,
25 oppressive, and unscrupulous, and the gravity of their conduct outweighs any
26 alleged benefits attributable to such conduct. Defendants business practices
27 violate public policy because they directly implicate the public interest by
28 impacting matters of great importance to the public. Blue sky laws like Californias
23
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 24 of 25 Page ID #:69

1 Corporate Securities Law of 1968 were enacted to protect the public from fraud
2 and deception in transactions involving securities, like the investments at issue
3 here.
4 82. The conduct of Defendants caused substantial injury to Plaintiffs.
5 Plaintiffs have suffered injury in fact and have lost money as a result of
6 Defendants unlawful, fraudulent, and unfair conduct.
7 83. Plaintiffs are entitled to restitution in the amount of their investment
8 in Vision because that investment was obtained through unlawful, fraudulent, and
9 unfair business practices.
10 PRAYER FOR RELIEF
11 WHEREFORE, Plaintiffs pray for judgment against Defendants follows:
12 1. On the First Claim:
13 a. Compensatory damages in an amount to be proven at trial but
14 which is not less than $3,700,000.00; and
15 b. Pre- and post-judgment interest at the maximum allowable rate;
16 2. On the Second Claim:
17 a. Compensatory damages in an amount to be proven at trial but
18 which is not less than $3,700,000.00;
19 b. Punitive damages according to proof at trial; and
20 c. Pre- and post-judgment interest at the maximum allowable rate;
21 3. On the Third Claim:
22 a. Compensatory damages in an amount to be proven at trial but
23 which is not less than $3,700,000.00; and
24 b. Pre- and post-judgment interest at the maximum allowable rate;
25 4. On the Fourth Claim:
26 a. Compensatory damages in an amount to be proven at trial but
27 which is not less than $3,700,000.00;
28
24
AMENDED COMPLAINT
Case 2:16-cv-05720-TJH-JEM Document 17 Filed 12/21/16 Page 25 of 25 Page ID #:70

1 b. Pre- and post-judgment interest at the maximum allowable rate;


2 and
3 c. Attorneys fees and costs as permitted by statute;
4 5. On the Fifth Claim:
5 a. Restitution in an amount to be proven at trial but which is not
6 less than $3,700,000.00;
7 6. For such other and further relief the Court deems just and equitable.
8 DEMAND FOR JURY TRIAL
9 Plaintiffs hereby demand a trial by jury on all claims so triable.
10
DATED: December 21, 2016 STRADLING YOCCA CARLSON &
11 RAUTH, P.C.
12
13 By: /s/ Jason de Bretteville
JASON DE BRETTEVILLE
14 BRADLEY E. MARRETT
15 Attorneys for Plaintiffs
QUALITY INVESTMENT FUND
16 and QUALITY INVESTMENT
FUND, MALTA 1, LTD.
17
18
19
20
21
22
23
24
25
26
27
28
25
AMENDED COMPLAINT