Preview
FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024
STATE OF NEW YORK
SUPREME COURT COUNTY OF CHEMUNG
MICHAEL OBORN, MICHAEL PUGLIESE and
DARRIN KNOWLES, Individually and in the right and on VERIFIED COMPLAINT
behalf of DSE PROPERTY SOLUTIONS, LLC
Plaintiffs, Index No.:
v.
SHAUN MARKS, Individually and d/b/a STERLING
PROPERTY MANAGEMENT,
Defendant.
Plaintiffs, Michael Obom, Michael Pugliese, and Darrin Knowles, individually and in the
right and on behalf of DSE Property Solutions, LLC, by and through their attorneys, Bousquet
Holstein PLLC, as and for their Verified Complaint against Defendant Shaun Marks, individually
and d/b/a Sterling Property Management hereby allege as follows:
NATURE OF THE ACTION
1. This is an action seeing monetary and equitable relief, individually, and derivatively
on behalf of DSE Property Solutions, LLC ("DSE" or "the LLC"), as alleged herein, for an
accounting, for breach of the fiduciary duties of loyalty and care, conversion, for breach of
contract, and for fraudulent inducement to contract.
2. This action is brought as a result of the fraudulent acts of Shaun Marks, who, upon
information and belief, drove the creation of DSE Property Solutions, LLC, as a vehicle to induce
Plaintiffs Obom, Pugliese, and Knowles to transmit their capital contributions to the LLC to him,
with the false promise that he would purchase certain parcels of real property to be rented, and that
rental income would be shared between Plaintiffs and Defendant, who are all members of DSE.
Once in receipt of Plaintiffs' capital contributions, however, Defendant Marks simply kept the
Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500
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funds, failed to purchase the real estate on behalf of the LLC, and refused requests to refund
Plaintiffs their money. Plaintiffs therefore have multiple claims against Defendant Marks, both as
individuals and as members of the LLC, which are set forth herein.
THE PARTIES
3. Plaintiff, Michael Obom, ("Obom"), is an individual over the age of 18 and a
resident of the County of Salt Lake, State of Utah, with an address of 10808 S. River Front Parkway
3015 South Jordan, Utah 84095.
4. Plaintiff, Michael Pugliese, ("Pugliese"), is an individual over the age of 18 and a
resident of the County of Spalding, State of Georgia, with an address of 1545 N. Expressway 316,
Griffin, Georgia 30223.
5. Plaintiff, Darin Knowles, ("Knowles"), is an individual over the age of 18 and a
resident of the County of Salt Lake, State of Utah, with an address of 1587 W. Wyngate Park
Drive, South Jordan, Utah 84095.
6. Plaintiff, DSE Property Solutions, LLC, ("DSE") is a limited liability company
formed under the laws of the State ofNew York and is duly authorized to do business in the State
ofNew York, and having its principal place of business at 219 East 14th Street, Elmira, New York
14903.
7. Upon information and belief, Defendant, Shaun Marks, ("Defendant" or "Marks"),
is an individual over the age of 18 and a resident of the County of Chemung, State of New York,
with an address of 152 Robinwood Ave, Apt C, Elmira, New York 14903.
8. Upon information and belief, Defendant Shaun Marks does business as Sterling
Property Management, which has an address of2146 College Ave, Elmira, New York 14903-1664.
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VENUE & JURISDICTION
9. Jurisdiction is proper pursuant to CPLR § 301.
10. Venue in the State ofNew York, County of Chemung is proper because Defendant
is a resident of Chemung County, because the events from which this action arise occurred in
Chemung County, and because the Operating Agreement for DSE specifies Chemung County,
New York as the proper venue for any and all disputes arising thereunder.
THE FACTS
11. Plaintiffs Michael Oborn, Michael Pugliese, and Darin Knowles (collectively, the
"Individual Plaintiffs") are members and managers ofDSE Property Solutions, LLC.
12. Defendant Shaun Marks is a member and manager of DSE Property Solutions,
LLC.
13. The Individual Plaintiffs and Defendant Marks first communicated regarding real
estate investment opportunities in and around Elmira, New York in approximately June of 2022.
Defendant Marks suggested the formation of the LLC to facilitate these investments.
14. DSE was formed in approximately September 2022 by the Individual Plaintiffs and
Defendant, who all signed an Operating Agreement dated September 12, 2022.
15. DSE was formed for the purpose of purchasing residential real property in and
around Elmira, New York, rehabilitating those properties, managing, renting them to residential
tenants, and potentially selling the properties.
16. To fund the purchase of such real property, Plaintiffs Michael Oborn and Michael
Pugliese each provided a capital contribution of $25,500 and Plaintiff Darrin Knowles provided a
capital contribution of $51,000.
17. Defendant Shaun Marks did not provide a capital contribution.
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18. According to the Operating Agreement, Plaintiffs Michael Obom and Michael
Pugliese are entitled to a 22.5% share of any profits of DSE, Plaintiff Darrin Knowles is entitled
to a 45% share of any profits of DSE, and Shaun Marks, despite making zero capital contribution,
is entitled to a 10% share of any profits of DSE.
19. According to the Operating Agreement, management responsibilities for DSE are
vested with the Managers, the Individual Plaintiffs and Defendant, and most actions taken by DSE
are to be approved by a majority of the Managers.
20. The Operating Agreement makes clear that the fiduciary duties of loyalty and care
apply to the Managers ofDSE.
21. At or about the time that DSE was formed, the Managers of DSE unanimously
agreed to purchase two properties in Elmira, New York: 99 Canton Street, Elmira, New York, and
264 West Henry Street, Elmira, New York (the "Elmira Properties") for the purposes of
rehabilitating them and renting them.
22. The Managers' agreement to purchase the Elmira Properties is reflected in the
Operating Agreement.
23. The Managers further agreed that Defendant Marks would take the steps necessary
to purchase the Elmira Properties and transfer ownership of the Elmira Properties to DSE.
24. Defendant Marks specifically represented to, and assured, the Plaintiffs that he
would take the steps necessary to purchase the Elmira Properties on behalf of DSE.
25. It was generally understood between the Managers of DSE that Defendant Marks
would take responsibility for the day-to-day activities of purchasing the Elmira Properties, as well
as the day-to-day management of the books, records, finances, and assets ofDSE.
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26. Defendant Marks specifically represented to and assured the Plaintiffs that he
would take responsibility for the day-to-day activities of purchasing the Elmira Properties, as well
as the day-to-day management of the books, records, finances, and assets of DSE.
27. The Managers of DSE also identified two additional properties for purchase,
renovation, and rental at a later time.
28. Defendant Marks represented to Individual Plaintiffs that their capital contributions
would be used to purchase and renovate the Elmira Properties to prepare them for rental.
29. As a result of the above representation by Defendant Marks, Plaintiffs understood
that their capital contributions would be used to purchase and renovate the Elmira Properties to
prepare them for rental, and this understanding is reflected by the terms of the Operating
Agreement.
30. Defendant Marks requested that the Individual Plaintiffs transmit their capital
contributions to DSE by placing the funds in an electronic portal associated with Marks's property
management d/b/a, Sterling Property Management.
31. Defendant Marks further represented to Plaintiffs that upon receipt of the capital
contributions, he would arrange to purchase of the Elmira Properties, and that following his
purchase of the Elmira Properties, he would transfer the Elmira Properties to DSE.
32. Defendant Marks further represented to Plaintiffs that he would take responsibility
for renovating the Elmira Properties such that DSE could then order appraisals of and refinance
the Elmira Properties. Plaintiffs agreed to this course of action.
33. The Individual Plaintiffs did, in fact, place their capital contributions, totaling
$102,000 into the electronic portal as requested by Defendant Marks.
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34. On or about October 15, 2022 Defendant Marks drafted a Purchase and Sale
Agreement for the Elmira Properties showing that he was selling the Elmira Properties to DSE.
35. Defendant Marks provided copies of the Purchase and Sale Agreement to the
Individual Plaintiffs and represented that a closing at which DSE would take formal ownership of
the Elmira Properties was forthcoming.
36. Upon information and belief, there has never been a closing at which DSE took
ownership of the Elmira Properties.
37. DSE does not own either of the Elmira Properties.
38. According to public records, Jennifer M. Lyon currently owns 99 Canton Street,
Elmira, New York.
39. According to public records, TPOH, Inc. currently owns 264 West Henry Street,
Elmira, New York.
40. The Elmira Properties have never generated rental income for the members ofDSE.
41. When it became apparent that Defendant Marks had failed to purchase the Elmira
properties on behalf of DSE and that the Elmira Properties were not going to generate rental
income for the Individual Plaintiffs, the Individual plaintiffs, on multiple occasions, requested that
Defendant Marks return their capital contributions.
42. To date, Defendant Marks has not returned the capital contributions of the
Individual Plaintiffs.
43. When confronted by the other members ofDSE, Defendant Marks, at various times,
has claimed that he would refund the Individual Plaintiffs capital contributions once he had sold
other real property, that another realtor was going to purchase the Elmira Properties and he would
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refund the Individual Plaintiffs capital contributions when that sale closed, and that he would
refinance the Elmira Properties so that they could be renovated and rented.
44. Upon information and belief, none of the plans referenced in the above paragraph
have been put into action by Defendant Marks.
45 . Upon information and belief, Defendant Marks and/or Sterling Property
Management has retained the $102,000 of capital contributions that the Individual Plaintiffs
transmitted to the Sterling Property Management portal, or has spent that money on other
investments or things.
46. Despite request, Defendant Marks has not provided financial information regarding
DSE to any of the Individual Plaintiffs.
4 7. Defendant Marks has not provided any information regarding the identity of the
cun-ent owner of the Elmira Properties to the Individual Plaintiffs.
48. Defendant Marks has denied the Individual Plaintiffs access to DSE's books and
records.
49. As a result of Defendant Marks's misappropriation of Plaintiffs' capital
contributions, DSE has not purchased the Elmira Properties and therefore has not generated rental
income for Plaintiffs.
50. As a result of Defendant Marks's misappropriation of Plaintiffs' capital
contributions, Plaintiffs are unable to use those funds for other income-generating investment
opportunities.
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AS AND FOR A FIRST CAUSE OF ACTION
(Plaintiffs' Individual Claim for Equitable Accounting from
Marks for DSE Property Solutions, LLC )
51. Plaintiffs repeat and reallege each and every allegation contained in the paragraphs
above as if fully set forth herein.
52. Plaintiffs Obom, Pugliese, and Knowles have been members of DSE Property
Solutions, LLC since its formation in September of 2022.
53. Plaintiffs Obom, Pugliese, and Knowles remain members of DSE as of the date of
the filing of this Complaint, with Obom and Pugliese each holding a 22.5% membership interest
in DSE and with Knowles holding a 51 % membership interest.
54. Defendant Marks, as a fellow member and as the de facto managing member of
DSE, owes fiduciary duties to Obom, Pugliese, and Knowles.
55. Obom, Pugliese, and Knowles entrusted Defendant Marks with the management of
the responsibility for the day-to-day activities of purchasing the Elmira Properties, as well as the
day-to-day management of the books, records, finances, and assets of DSE, which include the
$102,000 of capital contributions to DSE made by the Plaintiffs.
56. On several occasions between March 2023 and the present, Plaintiffs Obom,
Pugliese, and/or Knowles specifically requested to know what was done with their capital
contributions to DSE and generally requested information about DSE's finances.
57. On or about February 6, 2024, Plaintiffs Obom, Pugliese, and Knowles, through
counsel, specifically requested DSE's accounting records from September 2022 through the
present date.
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58. Despite these repeated requests, Defendant Marks has not produced any financial
information regarding DSE Property Solutions, LLC, and has never provided the full and complete
records of DSE to Obom, Pugliese, and Knowles.
59. An accounting is necessary because upon information and belief, Marks transferred
and/or otherwise diverted assets and/or funds that were or should have been paid to DSE Property
Solutions, LLC, including but not limited to, the capital contributions of Obom, Pugliese, and
Knowles.
60. Such conduct constitutes waste and mismanagement of the assets of DSE Property
Solutions, LLC.
61. Based upon his actions as alleged herein, Defendant Marks has breached and
continues to breach his fiduciary duties to Obom, Pugliese, and Knowles as members of DSE
Property Solutions, LLC.
62. As alleged herein, Marks has systematically excluded Obom, Pugliese, and
Knowles from the management and operations ofDSE Property Solutions, LLC and has repeatedly
refused to provide them with and has otherwise denied them access to its financial information and
its full and complete books and records, As such, Marks has usurped all control ofDSE Property
Solutions, LLC from Oborn, Pugliese, and Knowles and has become its de facto managing member
with access to all relevant financial records required for an accounting.
63. Oborn, Pugliese, and Knowles do not have access to the full and complete books
and records ofDSE Property Solutions, LLC.
64. Based upon Marks's actions, including his repeated refusal to provide access to the
books and records of DSE Property Solutions LLC, Oborn, Pugliese, and Knowles, individually,
are entitled to an accounting.
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65. Accordingly, Obom, Pugliese, and Knowles, individually, request an Order of this
Court directing Marks to produce an accounting for DSE Property Solutions, LLC from the date
of its inception to the present day, with all supporting documentation, and to return any pilfered
funds in his possession.
66. No prior application has been made for the relief requested herein.
67. Plaintiffs have no adequate remedy at law.
AS AND FOR A SECOND CAUSE OF ACTION
(Plaintiffs' Derivative Claim for Equitable Accounting from Marks)
68. Plaintiffs repeat and reallege each and every allegation contained in the paragraphs
above as if fully set forth herein.
69. Plaintiffs Obom, Pugliese, and Knowles have been members of DSE Property
Solutions, LLC since its formation in September of 2022.
70. Plaintiffs Obom, Pugliese, and Knowles remain members ofDSE as of the date of
the filing of this Complaint, with Obom and Pugliese each holding a 22.5% membership interest
in DSE and with Knowles holding a 51 % membership interest.
71. Marks, as a member and as the de facto managing member of DSE Property
Solutions, LLC, owes fiduciary duties to DSE Property Solutions, LLC.
72. Obom, Pugliese, and Knowles entrusted Defendant Marks with the management of
the responsibility for the day-to-day activities of purchasing the Elmira Properties, as well as the
day-to-day management of the books, records, finances, and assets of DSE which include the
$102,000 of capital contributions to DSE made by the Plaintiffs.
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73. On several occasions between March 2023 and the present, Obom, Pugliese, and/or
Knowles specifically requested to know what was done with their capital contributions to DSE
and generally requested information about DSE's finances.
74. On or about February 6, 2024, Obom, Pugliese, and Knowles, through counsel,
specifically requested DSE's accounting records from September 2022 through the present date
and put Defendant on notice that failure to comply could result in litigation.
75. Despite these repeated requests, Defendant Marks has not produced any financial
information regarding DSE Property Solutions, LLC, and has never provided the full and complete
records of DSE to Obom, Pugliese, and Knowles.
76. Demands in any further detail would have been futile based upon Obom's failure
to provide Obom, Pugliese, and Knowles meaningful responses to all previous demands, and
Marks's self-interest in the disputed activity.
77. An accounting is necessary because upon information and belief, Marks transferred
and/or otherwise diverted assets and/or funds that were or should have been paid to DSE Property
Solutions, LLC, to wit, the capital contributions of Obom, Pugliese, and Knowles.
78. Such conduct constitutes waste and mismanagement of the assets ofDSE Property
Solutions, LLC.
79. Based upon his actions as alleged herein, Defendant Marks has breached and
continues to breach his fiduciary duties to DSE Property Solutions, LLC.
80. Accordingly, Oborn, Pugliese, and Knowles request an Order of this Court
directing Marks to produce an accounting for DSE Property Solutions, LLC from the date of its
inception to the present day, with all supporting documentation.
81. No prior application has been made for the relief requested herein.
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82. Plaintiffs have no adequate remedy at law.
AS AND FOR A THIRD CAUSE OF ACTION
(Plaintiffs' Individual Claims Against Marks for Access
to the Company Books and Records)
83. Plaintiffs repeat and reallege each and every allegation contained in the paragraphs
above as if fully set forth herein.
84. Plaintiffs Obom, Pugliese, and Knowles have been members of DSE Property
Solutions, LLC since its formation in September of 2022.
85. Plaintiffs Obom, Pugliese, and Knowles remain members ofDSE as of the date of
the filing of this Complaint, with Obom and Pugliese each holding a 22.5% membership interest
in DSE and with Knowles holding a 51 % membership interest.
86. Marks, as a member and as the de facto managing member of DSE Property
Solutions, LLC, owes fiduciary duties to Obom, Pugliese, and Knowles.
87. Obom, Pugliese, and Knowles entrusted Defendant Marks with the management of
the responsibility for the day-to-day activities of purchasing the Elmira Properties, as well as the
day-to-day management of the books, records, finances, and assets ofDSE.
88. On several occasions between March 2023 and the present, Obom, Pugliese, and/or
Knowles specifically requested to know what was done with their capital contributions to DSE
and generally requested information about DSE's finances.
89. On or about February 6, 2024, Obom, Pugliese, and Knowles, through counsel,
specifically requested DSE's books, records, accounting records, and financial information from
September 2022 through the present date.
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90. Despite these repeated requests, Defendant Marks has not produced any financial
information regarding DSE Property Solutions, LLC, and has never provided the full and complete
records of DSE to Obom, Pugliese, and Knowles.
91. As members, Obom, Pugliese, and Knowles are entitled to access to the full and
complete books and records of DSE Property Solutions, LLC pursuant to the express terms of its
Operating Agreement and pursuant to Section 1102 of the New York Limited Liability Company
Law.
92. Accordingly, Obom, Pugliese, and Knowles, individually, request and Order of this
Court directing Marks to produce the full and complete books and records of DSE Property
Solutions, LLC from the date of its inception to the present day.
AS AND FOR A FOURTH CAUSE OF ACTION
(Plaintiffs Individual Claims Against Marks for Breach of Fiduciary Duty of Loyalty)
93. Plaintiffs repeat and reallege each and every allegation contained in the paragraphs
above as if fully set forth herein.
94. Plaintiffs Obom, Pugliese, and Knowles have been members of DSE Property
Solutions, LLC since its formation in September of 2022.
95. Plaintiffs Obom, Pugliese, and Knowles remain members of DSE as of the date of
the filing of this Complaint, with Obom and Pugliese each holding a 22.5% membership interest
in DSE and with Knowles holding a 51 % membership interest.
96. As a member of DSE Property Solutions, LLC and as its de facto managing
member, Marks owes a fiduciary duty of loyalty at all times to Plaintiffs Obom, Knowles, and
Pugliese, starting in or about September 2022 and through the present day.
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97. As a member of DSE Property Solutions, LLC and as its de facto managing
member, Marks assured the Individual Plaintiffs that he would arrange to purchase of the Elmira
Properties, and that following his purchase of the Elmira Properties, he would transfer the Elmira
Properties to DSE.
98. As a member of DSE Property Solutions, LLC and as its de facto managing
member, Marks assured the Individual Plaintiffs that he would take responsibility for the day-to-
day activities of purchasing the Elmira Properties, as well as the day-to-day management of the
books, records, finances, and assets of DSE.
99. As a member of DSE Property Solutions, LLC and as its de facto managing
member, Marks directed the Individual Plaintiffs to place their capital contributions into Marks
requested that the Individual Plaintiffs transmit their capital contributions to DSE by placing the
funds in an electronic portal associated with Marks's property management company, Sterling
Property Management.
100. The Individual Plaintiffs did, in fact, transmit their capital contributions to Marks
via the electronic portal associated with Sterling Property Management.
101. Marks failed to purchase the Elmira Properties, and they have generated no income
forDSE.
102. Upon information and belief, Marks and/or Sterling diverted the $102,000 of capital
contributions from the Individual Plaintiffs, and retained these funds for themselves instead of
placing them in the account( s) of DSE.
103. Upon information and belief, Marks and/or Sterling acted, as alleged herein, in bad
faith for his personal gain and to the exclusion of the Individual Plaintiffs' rights to 22.5% (Obom
and Pugliese) and 51 % (Knowles) of DSE's profits.
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104. On or about February 6, 2024, the Individual Plaintiffs, through counsel, demanded
that Marks cease and desist the conversion of assets ofDSE to himself and/or Sterling and to return
the capital contributions to the Individual Plaintiffs.
105. Upon information and belief, Marks did not remedy the conversion of assets from
DSE despite requests to do so.
106. Marks's actions, as alleged herein, constitute intentional breaches of his fiduciary
duty of loyalty to the Oborn, Pugliese, and Knowles.
107. Accordingly, Oborn, Pugliese, and Knowles, at a minimum, suffered damages in
an amount to be determined at trial, including, but not limited to, $102,000 for the loss of their
capital contributions, the distributions they would have enjoyed from the rental of the Elmira
Properties but for Marks's and/or Sterling's fraudulent diversion and misappropriation of DSE's
assets, and punitive damages along with permanent injunctive relief prohibiting Marks from
engaging in further breaches of fiduciary duties.
AS AND FOR A FIFTH CAUSE OF ACTION
(Plaintiffs Derivative Claims Against Marks for Breach of Fiduciary Duty of Loyalty)
108. Plaintiffs repeat and reallege each and every allegation contained in the paragraphs
above as if fully set forth herein.
109. Plaintiffs Oborn, Pugliese, and Knowles have been members of DSE Property
Solutions, LLC since its formation in September of 2022.
110. Plaintiffs Oborn, Pugliese, and Knowles remain members ofDSE as of the date of
the filing of this Complaint, with Oborn and Pugliese each holding a 22.5% membership interest
in DSE and with Knowles holding a 51 % membership interest.
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111. As a member of DSE Property Solutions, LLC and as its de facto managing
member, Marks owes a fiduciary duty of loyalty at all times to Plaintiffs Obom, Knowles, and
Pugliese, starting in or about September 2022 and through the present day.
112. As a member of DSE Property Solutions, LLC and as its de facto managing
member, Marks assured the Individual Plaintiffs that he would arrange to purchase of the Elmira
Properties, and that following his purchase of the Elmira Properties, he would transfer the Elmira
Properties to DSE.
113. As a member of DSE Property Solutions, LLC and as its de facto managing
member, Marks assured the Individual Plaintiffs that he would take responsibility for the day-to-
day activities of purchasing the Elmira Properties, as well as the day-to-day management of the
books, records, finances, and assets of DSE.
114. As a member of DSE Property Solutions, LLC and as its de facto managing
member, Marks directed the Individual Plaintiffs to place their capital contributions into Marks
requested that the Individual Plaintiffs transmit their capital contributions to DSE by placing the
funds in an electronic portal associated with Marks's property management company, Sterling ...
115. The Individual Plaintiffs did, in fact, transmit their capital contributions to Marks
via the electronic portal associated with Sterling Property Management.
116. Marks failed to purchase the Elmira Properties, and they have generated no income
forDSE.
117. Upon information and belief, Marks and/or Sterling diverted the $102,000 of capital
contributions from the Individual Plaintiffs, and retained these funds for themselves instead of
placing them in the account(s) ofDSE.
16
Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500
2024-03-14 Verified Complaint- DSE Property Solutions v Marks (6725458.3).pdf 16 16 of 29 3/14/2024 11 :39:27 AM
FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024
Preview
FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 STATE OF NEW YORK SUPREME COURT COUNTY OF CHEMUNG MICHAEL OBORN, MICHAEL PUGLIESE and DARRIN KNOWLES, Individually and in the right and on VERIFIED COMPLAINT behalf of DSE PROPERTY SOLUTIONS, LLC Plaintiffs, Index No.: v. SHAUN MARKS, Individually and d/b/a STERLING PROPERTY MANAGEMENT, Defendant. Plaintiffs, Michael Obom, Michael Pugliese, and Darrin Knowles, individually and in the right and on behalf of DSE Property Solutions, LLC, by and through their attorneys, Bousquet Holstein PLLC, as and for their Verified Complaint against Defendant Shaun Marks, individually and d/b/a Sterling Property Management hereby allege as follows: NATURE OF THE ACTION 1. This is an action seeing monetary and equitable relief, individually, and derivatively on behalf of DSE Property Solutions, LLC ("DSE" or "the LLC"), as alleged herein, for an accounting, for breach of the fiduciary duties of loyalty and care, conversion, for breach of contract, and for fraudulent inducement to contract. 2. This action is brought as a result of the fraudulent acts of Shaun Marks, who, upon information and belief, drove the creation of DSE Property Solutions, LLC, as a vehicle to induce Plaintiffs Obom, Pugliese, and Knowles to transmit their capital contributions to the LLC to him, with the false promise that he would purchase certain parcels of real property to be rented, and that rental income would be shared between Plaintiffs and Defendant, who are all members of DSE. Once in receipt of Plaintiffs' capital contributions, however, Defendant Marks simply kept the Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint- DSE Property Solutions v Marks (6725458.3).pdf 1 1 of 29 3/14/2024 11 :39:24 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 funds, failed to purchase the real estate on behalf of the LLC, and refused requests to refund Plaintiffs their money. Plaintiffs therefore have multiple claims against Defendant Marks, both as individuals and as members of the LLC, which are set forth herein. THE PARTIES 3. Plaintiff, Michael Obom, ("Obom"), is an individual over the age of 18 and a resident of the County of Salt Lake, State of Utah, with an address of 10808 S. River Front Parkway 3015 South Jordan, Utah 84095. 4. Plaintiff, Michael Pugliese, ("Pugliese"), is an individual over the age of 18 and a resident of the County of Spalding, State of Georgia, with an address of 1545 N. Expressway 316, Griffin, Georgia 30223. 5. Plaintiff, Darin Knowles, ("Knowles"), is an individual over the age of 18 and a resident of the County of Salt Lake, State of Utah, with an address of 1587 W. Wyngate Park Drive, South Jordan, Utah 84095. 6. Plaintiff, DSE Property Solutions, LLC, ("DSE") is a limited liability company formed under the laws of the State ofNew York and is duly authorized to do business in the State ofNew York, and having its principal place of business at 219 East 14th Street, Elmira, New York 14903. 7. Upon information and belief, Defendant, Shaun Marks, ("Defendant" or "Marks"), is an individual over the age of 18 and a resident of the County of Chemung, State of New York, with an address of 152 Robinwood Ave, Apt C, Elmira, New York 14903. 8. Upon information and belief, Defendant Shaun Marks does business as Sterling Property Management, which has an address of2146 College Ave, Elmira, New York 14903-1664. 2 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint - DSE Property Solutions v Marks (672S458.3).pdf 2 2 of 29 3/14/2024 11 :39:25 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 VENUE & JURISDICTION 9. Jurisdiction is proper pursuant to CPLR § 301. 10. Venue in the State ofNew York, County of Chemung is proper because Defendant is a resident of Chemung County, because the events from which this action arise occurred in Chemung County, and because the Operating Agreement for DSE specifies Chemung County, New York as the proper venue for any and all disputes arising thereunder. THE FACTS 11. Plaintiffs Michael Oborn, Michael Pugliese, and Darin Knowles (collectively, the "Individual Plaintiffs") are members and managers ofDSE Property Solutions, LLC. 12. Defendant Shaun Marks is a member and manager of DSE Property Solutions, LLC. 13. The Individual Plaintiffs and Defendant Marks first communicated regarding real estate investment opportunities in and around Elmira, New York in approximately June of 2022. Defendant Marks suggested the formation of the LLC to facilitate these investments. 14. DSE was formed in approximately September 2022 by the Individual Plaintiffs and Defendant, who all signed an Operating Agreement dated September 12, 2022. 15. DSE was formed for the purpose of purchasing residential real property in and around Elmira, New York, rehabilitating those properties, managing, renting them to residential tenants, and potentially selling the properties. 16. To fund the purchase of such real property, Plaintiffs Michael Oborn and Michael Pugliese each provided a capital contribution of $25,500 and Plaintiff Darrin Knowles provided a capital contribution of $51,000. 17. Defendant Shaun Marks did not provide a capital contribution. 3 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint- DSE Property Solutions v Marks (6725458.3).pdf 3 3 of 29 3/14/2024 11 :39:25 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 18. According to the Operating Agreement, Plaintiffs Michael Obom and Michael Pugliese are entitled to a 22.5% share of any profits of DSE, Plaintiff Darrin Knowles is entitled to a 45% share of any profits of DSE, and Shaun Marks, despite making zero capital contribution, is entitled to a 10% share of any profits of DSE. 19. According to the Operating Agreement, management responsibilities for DSE are vested with the Managers, the Individual Plaintiffs and Defendant, and most actions taken by DSE are to be approved by a majority of the Managers. 20. The Operating Agreement makes clear that the fiduciary duties of loyalty and care apply to the Managers ofDSE. 21. At or about the time that DSE was formed, the Managers of DSE unanimously agreed to purchase two properties in Elmira, New York: 99 Canton Street, Elmira, New York, and 264 West Henry Street, Elmira, New York (the "Elmira Properties") for the purposes of rehabilitating them and renting them. 22. The Managers' agreement to purchase the Elmira Properties is reflected in the Operating Agreement. 23. The Managers further agreed that Defendant Marks would take the steps necessary to purchase the Elmira Properties and transfer ownership of the Elmira Properties to DSE. 24. Defendant Marks specifically represented to, and assured, the Plaintiffs that he would take the steps necessary to purchase the Elmira Properties on behalf of DSE. 25. It was generally understood between the Managers of DSE that Defendant Marks would take responsibility for the day-to-day activities of purchasing the Elmira Properties, as well as the day-to-day management of the books, records, finances, and assets ofDSE. 4 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422- 1500 2024-03-14 Verified Complaint- DSE Property Solutions v Marks (6725458.3).pdf 4 4 of 29 3/14/2024 11 :39:25 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 26. Defendant Marks specifically represented to and assured the Plaintiffs that he would take responsibility for the day-to-day activities of purchasing the Elmira Properties, as well as the day-to-day management of the books, records, finances, and assets of DSE. 27. The Managers of DSE also identified two additional properties for purchase, renovation, and rental at a later time. 28. Defendant Marks represented to Individual Plaintiffs that their capital contributions would be used to purchase and renovate the Elmira Properties to prepare them for rental. 29. As a result of the above representation by Defendant Marks, Plaintiffs understood that their capital contributions would be used to purchase and renovate the Elmira Properties to prepare them for rental, and this understanding is reflected by the terms of the Operating Agreement. 30. Defendant Marks requested that the Individual Plaintiffs transmit their capital contributions to DSE by placing the funds in an electronic portal associated with Marks's property management d/b/a, Sterling Property Management. 31. Defendant Marks further represented to Plaintiffs that upon receipt of the capital contributions, he would arrange to purchase of the Elmira Properties, and that following his purchase of the Elmira Properties, he would transfer the Elmira Properties to DSE. 32. Defendant Marks further represented to Plaintiffs that he would take responsibility for renovating the Elmira Properties such that DSE could then order appraisals of and refinance the Elmira Properties. Plaintiffs agreed to this course of action. 33. The Individual Plaintiffs did, in fact, place their capital contributions, totaling $102,000 into the electronic portal as requested by Defendant Marks. 5 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint - DSE Property Solutions v Marks (6725458.3).pdf 5 5 of 29 3/14/2024 11 :39:26 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 34. On or about October 15, 2022 Defendant Marks drafted a Purchase and Sale Agreement for the Elmira Properties showing that he was selling the Elmira Properties to DSE. 35. Defendant Marks provided copies of the Purchase and Sale Agreement to the Individual Plaintiffs and represented that a closing at which DSE would take formal ownership of the Elmira Properties was forthcoming. 36. Upon information and belief, there has never been a closing at which DSE took ownership of the Elmira Properties. 37. DSE does not own either of the Elmira Properties. 38. According to public records, Jennifer M. Lyon currently owns 99 Canton Street, Elmira, New York. 39. According to public records, TPOH, Inc. currently owns 264 West Henry Street, Elmira, New York. 40. The Elmira Properties have never generated rental income for the members ofDSE. 41. When it became apparent that Defendant Marks had failed to purchase the Elmira properties on behalf of DSE and that the Elmira Properties were not going to generate rental income for the Individual Plaintiffs, the Individual plaintiffs, on multiple occasions, requested that Defendant Marks return their capital contributions. 42. To date, Defendant Marks has not returned the capital contributions of the Individual Plaintiffs. 43. When confronted by the other members ofDSE, Defendant Marks, at various times, has claimed that he would refund the Individual Plaintiffs capital contributions once he had sold other real property, that another realtor was going to purchase the Elmira Properties and he would 6 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint - DSE Property Solutions v Marks (6725458.3).pdf 6 6 of 29 3/14/2024 11 :39:26 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 refund the Individual Plaintiffs capital contributions when that sale closed, and that he would refinance the Elmira Properties so that they could be renovated and rented. 44. Upon information and belief, none of the plans referenced in the above paragraph have been put into action by Defendant Marks. 45 . Upon information and belief, Defendant Marks and/or Sterling Property Management has retained the $102,000 of capital contributions that the Individual Plaintiffs transmitted to the Sterling Property Management portal, or has spent that money on other investments or things. 46. Despite request, Defendant Marks has not provided financial information regarding DSE to any of the Individual Plaintiffs. 4 7. Defendant Marks has not provided any information regarding the identity of the cun-ent owner of the Elmira Properties to the Individual Plaintiffs. 48. Defendant Marks has denied the Individual Plaintiffs access to DSE's books and records. 49. As a result of Defendant Marks's misappropriation of Plaintiffs' capital contributions, DSE has not purchased the Elmira Properties and therefore has not generated rental income for Plaintiffs. 50. As a result of Defendant Marks's misappropriation of Plaintiffs' capital contributions, Plaintiffs are unable to use those funds for other income-generating investment opportunities. 7 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint- DSE Property Solutions v Marks (6725458.3).pdf 7 7 of 29 3/14/2024 11 :39:26 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 AS AND FOR A FIRST CAUSE OF ACTION (Plaintiffs' Individual Claim for Equitable Accounting from Marks for DSE Property Solutions, LLC ) 51. Plaintiffs repeat and reallege each and every allegation contained in the paragraphs above as if fully set forth herein. 52. Plaintiffs Obom, Pugliese, and Knowles have been members of DSE Property Solutions, LLC since its formation in September of 2022. 53. Plaintiffs Obom, Pugliese, and Knowles remain members of DSE as of the date of the filing of this Complaint, with Obom and Pugliese each holding a 22.5% membership interest in DSE and with Knowles holding a 51 % membership interest. 54. Defendant Marks, as a fellow member and as the de facto managing member of DSE, owes fiduciary duties to Obom, Pugliese, and Knowles. 55. Obom, Pugliese, and Knowles entrusted Defendant Marks with the management of the responsibility for the day-to-day activities of purchasing the Elmira Properties, as well as the day-to-day management of the books, records, finances, and assets of DSE, which include the $102,000 of capital contributions to DSE made by the Plaintiffs. 56. On several occasions between March 2023 and the present, Plaintiffs Obom, Pugliese, and/or Knowles specifically requested to know what was done with their capital contributions to DSE and generally requested information about DSE's finances. 57. On or about February 6, 2024, Plaintiffs Obom, Pugliese, and Knowles, through counsel, specifically requested DSE's accounting records from September 2022 through the present date. 8 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint - DSE Property Solutions v Marks (672S458.3).pdf 8 8 of 29 3/14/2024 11 :39:26 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 58. Despite these repeated requests, Defendant Marks has not produced any financial information regarding DSE Property Solutions, LLC, and has never provided the full and complete records of DSE to Obom, Pugliese, and Knowles. 59. An accounting is necessary because upon information and belief, Marks transferred and/or otherwise diverted assets and/or funds that were or should have been paid to DSE Property Solutions, LLC, including but not limited to, the capital contributions of Obom, Pugliese, and Knowles. 60. Such conduct constitutes waste and mismanagement of the assets of DSE Property Solutions, LLC. 61. Based upon his actions as alleged herein, Defendant Marks has breached and continues to breach his fiduciary duties to Obom, Pugliese, and Knowles as members of DSE Property Solutions, LLC. 62. As alleged herein, Marks has systematically excluded Obom, Pugliese, and Knowles from the management and operations ofDSE Property Solutions, LLC and has repeatedly refused to provide them with and has otherwise denied them access to its financial information and its full and complete books and records, As such, Marks has usurped all control ofDSE Property Solutions, LLC from Oborn, Pugliese, and Knowles and has become its de facto managing member with access to all relevant financial records required for an accounting. 63. Oborn, Pugliese, and Knowles do not have access to the full and complete books and records ofDSE Property Solutions, LLC. 64. Based upon Marks's actions, including his repeated refusal to provide access to the books and records of DSE Property Solutions LLC, Oborn, Pugliese, and Knowles, individually, are entitled to an accounting. 9 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint- DSE Property Solutions v Marks (672S458.3).pdf 9 9 of 29 3/14/2024 11 :39:26 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 65. Accordingly, Obom, Pugliese, and Knowles, individually, request an Order of this Court directing Marks to produce an accounting for DSE Property Solutions, LLC from the date of its inception to the present day, with all supporting documentation, and to return any pilfered funds in his possession. 66. No prior application has been made for the relief requested herein. 67. Plaintiffs have no adequate remedy at law. AS AND FOR A SECOND CAUSE OF ACTION (Plaintiffs' Derivative Claim for Equitable Accounting from Marks) 68. Plaintiffs repeat and reallege each and every allegation contained in the paragraphs above as if fully set forth herein. 69. Plaintiffs Obom, Pugliese, and Knowles have been members of DSE Property Solutions, LLC since its formation in September of 2022. 70. Plaintiffs Obom, Pugliese, and Knowles remain members ofDSE as of the date of the filing of this Complaint, with Obom and Pugliese each holding a 22.5% membership interest in DSE and with Knowles holding a 51 % membership interest. 71. Marks, as a member and as the de facto managing member of DSE Property Solutions, LLC, owes fiduciary duties to DSE Property Solutions, LLC. 72. Obom, Pugliese, and Knowles entrusted Defendant Marks with the management of the responsibility for the day-to-day activities of purchasing the Elmira Properties, as well as the day-to-day management of the books, records, finances, and assets of DSE which include the $102,000 of capital contributions to DSE made by the Plaintiffs. 10 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint- DSE Property Solutions v Marks (6725458.3).pdf 10 10 of 29 3/14/2024 11 :39:26 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 73. On several occasions between March 2023 and the present, Obom, Pugliese, and/or Knowles specifically requested to know what was done with their capital contributions to DSE and generally requested information about DSE's finances. 74. On or about February 6, 2024, Obom, Pugliese, and Knowles, through counsel, specifically requested DSE's accounting records from September 2022 through the present date and put Defendant on notice that failure to comply could result in litigation. 75. Despite these repeated requests, Defendant Marks has not produced any financial information regarding DSE Property Solutions, LLC, and has never provided the full and complete records of DSE to Obom, Pugliese, and Knowles. 76. Demands in any further detail would have been futile based upon Obom's failure to provide Obom, Pugliese, and Knowles meaningful responses to all previous demands, and Marks's self-interest in the disputed activity. 77. An accounting is necessary because upon information and belief, Marks transferred and/or otherwise diverted assets and/or funds that were or should have been paid to DSE Property Solutions, LLC, to wit, the capital contributions of Obom, Pugliese, and Knowles. 78. Such conduct constitutes waste and mismanagement of the assets ofDSE Property Solutions, LLC. 79. Based upon his actions as alleged herein, Defendant Marks has breached and continues to breach his fiduciary duties to DSE Property Solutions, LLC. 80. Accordingly, Oborn, Pugliese, and Knowles request an Order of this Court directing Marks to produce an accounting for DSE Property Solutions, LLC from the date of its inception to the present day, with all supporting documentation. 81. No prior application has been made for the relief requested herein. 11 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422 - 1500 2024-03-14 Verified Complaint - DSE Property Solutions v Marks (6725458.3).pdf 11 11 of 29 3/14/2024 11 :39:26 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 82. Plaintiffs have no adequate remedy at law. AS AND FOR A THIRD CAUSE OF ACTION (Plaintiffs' Individual Claims Against Marks for Access to the Company Books and Records) 83. Plaintiffs repeat and reallege each and every allegation contained in the paragraphs above as if fully set forth herein. 84. Plaintiffs Obom, Pugliese, and Knowles have been members of DSE Property Solutions, LLC since its formation in September of 2022. 85. Plaintiffs Obom, Pugliese, and Knowles remain members ofDSE as of the date of the filing of this Complaint, with Obom and Pugliese each holding a 22.5% membership interest in DSE and with Knowles holding a 51 % membership interest. 86. Marks, as a member and as the de facto managing member of DSE Property Solutions, LLC, owes fiduciary duties to Obom, Pugliese, and Knowles. 87. Obom, Pugliese, and Knowles entrusted Defendant Marks with the management of the responsibility for the day-to-day activities of purchasing the Elmira Properties, as well as the day-to-day management of the books, records, finances, and assets ofDSE. 88. On several occasions between March 2023 and the present, Obom, Pugliese, and/or Knowles specifically requested to know what was done with their capital contributions to DSE and generally requested information about DSE's finances. 89. On or about February 6, 2024, Obom, Pugliese, and Knowles, through counsel, specifically requested DSE's books, records, accounting records, and financial information from September 2022 through the present date. 12 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint- DSE Property Solutions v Marks (6725458.3).pdf 12 12 of 29 3/14/2024 11 :39:26 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 90. Despite these repeated requests, Defendant Marks has not produced any financial information regarding DSE Property Solutions, LLC, and has never provided the full and complete records of DSE to Obom, Pugliese, and Knowles. 91. As members, Obom, Pugliese, and Knowles are entitled to access to the full and complete books and records of DSE Property Solutions, LLC pursuant to the express terms of its Operating Agreement and pursuant to Section 1102 of the New York Limited Liability Company Law. 92. Accordingly, Obom, Pugliese, and Knowles, individually, request and Order of this Court directing Marks to produce the full and complete books and records of DSE Property Solutions, LLC from the date of its inception to the present day. AS AND FOR A FOURTH CAUSE OF ACTION (Plaintiffs Individual Claims Against Marks for Breach of Fiduciary Duty of Loyalty) 93. Plaintiffs repeat and reallege each and every allegation contained in the paragraphs above as if fully set forth herein. 94. Plaintiffs Obom, Pugliese, and Knowles have been members of DSE Property Solutions, LLC since its formation in September of 2022. 95. Plaintiffs Obom, Pugliese, and Knowles remain members of DSE as of the date of the filing of this Complaint, with Obom and Pugliese each holding a 22.5% membership interest in DSE and with Knowles holding a 51 % membership interest. 96. As a member of DSE Property Solutions, LLC and as its de facto managing member, Marks owes a fiduciary duty of loyalty at all times to Plaintiffs Obom, Knowles, and Pugliese, starting in or about September 2022 and through the present day. 13 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint- DSE Property Solutions v Marks (6725458.3).pdf 13 13 of 29 3/14/2024 11 :39:27 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 97. As a member of DSE Property Solutions, LLC and as its de facto managing member, Marks assured the Individual Plaintiffs that he would arrange to purchase of the Elmira Properties, and that following his purchase of the Elmira Properties, he would transfer the Elmira Properties to DSE. 98. As a member of DSE Property Solutions, LLC and as its de facto managing member, Marks assured the Individual Plaintiffs that he would take responsibility for the day-to- day activities of purchasing the Elmira Properties, as well as the day-to-day management of the books, records, finances, and assets of DSE. 99. As a member of DSE Property Solutions, LLC and as its de facto managing member, Marks directed the Individual Plaintiffs to place their capital contributions into Marks requested that the Individual Plaintiffs transmit their capital contributions to DSE by placing the funds in an electronic portal associated with Marks's property management company, Sterling Property Management. 100. The Individual Plaintiffs did, in fact, transmit their capital contributions to Marks via the electronic portal associated with Sterling Property Management. 101. Marks failed to purchase the Elmira Properties, and they have generated no income forDSE. 102. Upon information and belief, Marks and/or Sterling diverted the $102,000 of capital contributions from the Individual Plaintiffs, and retained these funds for themselves instead of placing them in the account( s) of DSE. 103. Upon information and belief, Marks and/or Sterling acted, as alleged herein, in bad faith for his personal gain and to the exclusion of the Individual Plaintiffs' rights to 22.5% (Obom and Pugliese) and 51 % (Knowles) of DSE's profits. 14 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint - DSE Property Solutions v Marks (6725458.3).pdf 14 14 of 29 3/14/2024 11 :39:27 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 104. On or about February 6, 2024, the Individual Plaintiffs, through counsel, demanded that Marks cease and desist the conversion of assets ofDSE to himself and/or Sterling and to return the capital contributions to the Individual Plaintiffs. 105. Upon information and belief, Marks did not remedy the conversion of assets from DSE despite requests to do so. 106. Marks's actions, as alleged herein, constitute intentional breaches of his fiduciary duty of loyalty to the Oborn, Pugliese, and Knowles. 107. Accordingly, Oborn, Pugliese, and Knowles, at a minimum, suffered damages in an amount to be determined at trial, including, but not limited to, $102,000 for the loss of their capital contributions, the distributions they would have enjoyed from the rental of the Elmira Properties but for Marks's and/or Sterling's fraudulent diversion and misappropriation of DSE's assets, and punitive damages along with permanent injunctive relief prohibiting Marks from engaging in further breaches of fiduciary duties. AS AND FOR A FIFTH CAUSE OF ACTION (Plaintiffs Derivative Claims Against Marks for Breach of Fiduciary Duty of Loyalty) 108. Plaintiffs repeat and reallege each and every allegation contained in the paragraphs above as if fully set forth herein. 109. Plaintiffs Oborn, Pugliese, and Knowles have been members of DSE Property Solutions, LLC since its formation in September of 2022. 110. Plaintiffs Oborn, Pugliese, and Knowles remain members ofDSE as of the date of the filing of this Complaint, with Oborn and Pugliese each holding a 22.5% membership interest in DSE and with Knowles holding a 51 % membership interest. 15 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint - DSE Property Solutions v Marks (672S458.3).pdf 1S 15 of 29 3/14/2024 11 :39:27 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024 111. As a member of DSE Property Solutions, LLC and as its de facto managing member, Marks owes a fiduciary duty of loyalty at all times to Plaintiffs Obom, Knowles, and Pugliese, starting in or about September 2022 and through the present day. 112. As a member of DSE Property Solutions, LLC and as its de facto managing member, Marks assured the Individual Plaintiffs that he would arrange to purchase of the Elmira Properties, and that following his purchase of the Elmira Properties, he would transfer the Elmira Properties to DSE. 113. As a member of DSE Property Solutions, LLC and as its de facto managing member, Marks assured the Individual Plaintiffs that he would take responsibility for the day-to- day activities of purchasing the Elmira Properties, as well as the day-to-day management of the books, records, finances, and assets of DSE. 114. As a member of DSE Property Solutions, LLC and as its de facto managing member, Marks directed the Individual Plaintiffs to place their capital contributions into Marks requested that the Individual Plaintiffs transmit their capital contributions to DSE by placing the funds in an electronic portal associated with Marks's property management company, Sterling ... 115. The Individual Plaintiffs did, in fact, transmit their capital contributions to Marks via the electronic portal associated with Sterling Property Management. 116. Marks failed to purchase the Elmira Properties, and they have generated no income forDSE. 117. Upon information and belief, Marks and/or Sterling diverted the $102,000 of capital contributions from the Individual Plaintiffs, and retained these funds for themselves instead of placing them in the account(s) ofDSE. 16 Bousquet Holstein PLLC • 110 West Fayette Street, Suite 1000 • Syracuse, New York 13202 • (315) 422-1500 2024-03-14 Verified Complaint- DSE Property Solutions v Marks (6725458.3).pdf 16 16 of 29 3/14/2024 11 :39:27 AM FILED: CHEMUNG COUNTY CLERK 03/14/2024 01:52 PM INDEX NO. 2024-5258 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/14/2024