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1 SPERTUS, LANDES & UMHOFER, LLP
Matthew Donald Umhofer (SBN 206607)
2 Diane H. Bang (SBN 271939)
1990 South Bundy Dr., Suite 705
3 Los Angeles, California 90025
Telephone: (310) 826-4700
4 Facsimile: (310) 826-4711
matthew@spertuslaw.com
5 diane@spertuslaw.com
6 Attorneys for Mark Schaub and TLG Ltd.
7
SUPERIOR COURT OF THE STATE OF CALIFORNIA
8
FOR THE COUNTY OF SANTA BARBARA
9
10 MARK SCHAUB, an individual; Case No.: 20CV02113
TELEPHONE 310-826-4700; FACSIMILE 310-826-4711
Spertus, Landes & Umhofer, LLP
TLG LTD., a Hong Kong limited
11 liability company,
1990 SOUTH BUNDY DR., SUITE 705
Hon. Donna D. Geck
12
LOS ANGELES, CA 90025
Plaintiffs,
13 REQUEST FOR JUDICIAL NOTICE
v. IN SUPPORT OF MOTION TO
14 COMPEL FURTHER RESPONSES
ANDREW WYLES WATERS, an TO WRITTEN DISCOVERY BY
individual; FCP CORPORATE LTD., DEFENDANT FCP CORPORATE
15 a Hong Kong limited liability LTD. AND REQUEST FOR
company; FCP PRIVATE, LLC, a SANCTIONS IN THE AMOUNT OF
16 California limited liability $10,500.00
corporation; and DOES 1 through 10
17 inclusive,
[Notice of Motion, Memorandum of
18 Defendants. Points and Authorities, Declaration of
19 Diane H. Bang, and Separate Statement
filed concurrently]
20
21 Hearing Date: April 29, 2022
Hearing Time: 10:00 a.m.
22 Dept.: 4
23 Amended Complaint filed: June 14, 2021
Trial: Not set
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REQUEST FOR JUDICIAL NOTICE
1 Pursuant to California Evidence Code §§ 451-453, Plaintiff Mark Schaub
2 hereby requests judicial notice be taken of the following exhibits in support of his
3 motion to compel further responses to written discovery:
4 • EXHIBIT F: the Second Amended Complaint that was filed on June 14,
5 2021 in this civil action, Mark Schaub, et al. v. Andrew Waters, et al.,
6 Santa Barbara Superior Court Case No. 20CV02113 (the “Action”).
7 • EXHIBIT G: the Answer of Defendants Andrew Waters, FCP Corporate,
8 Ltd., and FCP Private, LLC, filed in this Action on October 25, 2021.
9 • EXHIBIT H: the Notice of Motion and Motion to be Relieved as Counsel
10 filed in this Action on October 12, 2021, by Kevin Nimmons.
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11 • EXHIBIT I: the Notice of Non-Opposition to Motion to be Relieved as
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12 Counsel filed in this Action on December 29, 2021.
LOS ANGELES, CA 90025
13 • EXHIBIT J: the Order Granting Motion to be Relieved as Counsel issued
14 in this Action on January 7, 2022.
15
16 Dated: February 15, 2022 SPERTUS, LANDES & UMHOFER, LLP
17
18 By:
Matthew Donald Umhofer
19 Diane H. Bang
20 Attorneys for Plaintiffs
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1.
REQUEST FOR JUDICIAL NOTICE
EXHIBIT F
1 SPERTUS, LANDES & UMHOFER, LLP ELECTRONICALLY FILED
Matthew Donald Umhofer (SBN 206607) Superior Court of California
2 Diane H. Bang (SBN 271939) County of Santa Barbara
1990 South Bundy Dr., Suite 705 Darrel E. Parker, Executive Officer
3 Los Angeles, California 90025 6/14/2021 2:09 PM
Telephone: (310) 826-4700 By: Elizabeth Spann, Deputy
4 Facsimile: (310) 826-4711
matthew@spertuslaw.com
5 diane@spertuslaw.com
6 Attorneys for Mark Schaub and TLG Ltd.
7
SUPERIOR COURT OF THE STATE OF CALIFORNIA
8
FOR THE COUNTY OF SANTA BARBARA
9
10 MARK SCHAUB, an individual; Case No.: 20CV02113
TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711
Spertus, Landes & Umhofer, LLP
TLG LTD., a Hong Kong limited
11 liability company,
VERIFIED SECOND AMENDED
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12 COMPLAINT FOR DAMAGES:
LOS ANGELES, CA 90025
Plaintiffs,
13 v. (1) CONVERSION;
(2) INTENTIONAL
14 ANDREW WYLES WATERS, an MISREPRESENTATION—FRAUD;
individual; FCP CORPORATE (HK) (3) CONCEALMENT;
15 LTD., a Hong Kong limited liability (4) BREACH OF CONTRACT—
company; FCP PRIVATE, LLC, a $1,940,000;
16 California limited liability company; (5) BREACH OF CONTRACT—
and DOES 1 through 10 inclusive, $400,000; and
17 (6) UNJUST ENRICHMENT.
Defendants.
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JURY TRIAL DEMANDED
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SECOND AMENDED COMPLAINT
1 Plaintiffs Mark Schaub and TLG Ltd. (“Plaintiffs”) allege as follows:
2 INTRODUCTION
3 1. Defendant Andrew Waters is a fraud. Through his companies,
4 Defendants FCP Corporate Ltd. and FCP Private, LLC, as well as other
5 companies or businesses, including but not limited to Food Box Network, Co-
6 Brands USA, Co-Brands Australia, Co-Brands UK, and International Brands
7 Direct, Defendant Waters has been operating a fraudulent Ponzi scheme, luring
8 wealthy investors into sending him hundreds of thousands of dollars, and
9 misappropriating those funds for his own personal use. Defendant Waters has
10 essentially been creating various shell companies to mislead potential investors
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11 into believing each company would be operating and profitable.
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12 2. Defendants have also committed theft. Plaintiffs’ funds were stolen
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13 by Defendants, who now refuse to return it in full. Plaintiffs acknowledge that
14 the Defendant Waters returned $750,000 to Plaintiffs in order to avoid Mr.
15 Schaub uncovering the fraud. However, Defendant Waters claimed that these
16 were his own funds and not Plaintiffs’ funds, as he claimed Plaintiff’s funds were
17 frozen in a Hong Kong bank account.
18 3. In July 2019, through a series of unforeseen events, approximately
19 US$1.9 million was transferred from Plaintiffs to two different accounts under
20 Defendants’ control.
21 4. Despite his pleas to Defendants to return the funds that rightfully
22 belong to him, Mr. Schaub’s long-time supposed friend and business associate,
23 Defendant Waters, lied about the following: (a) that the bank had frozen the
24 accounts where the funds had been transferred to; (b) that the bank believed the
25 funds were from an illegitimate source; and (c) that he would have to go to Hong
26 Kong to resolve the situation with the frozen accounts.
27 5. On January 22, 2020, Mr. Schaub discovered Defendant Waters had
28 been lying to him all along when he came into possession of FCP Corporate
1.
SECOND AMENDED COMPLAINT
1 (HK)’s Citibank records that clearly showed fraud had been committed and that
2 Defendant Waters had immediately withdrawn all the funds from the allegedly
3 frozen accounts until nothing remained. All monies transferred from the Hong
4 Kong account to Waters’ U.S. account should be treated as money laundering, as
5 the funds were acquired by fraud.
6 6. Prior to Plaintiffs’ transfer of funds, the balance of FCP Corporate
7 (HK)’s USD account was $38.99, and the balance of its HKD account was
8 HK$2,784.29 (or US$360).1 After Plaintiffs’ funds were transferred, no further
9 payments from any sources were received into FCP Corporate (HK)’s Citibank
10 accounts. This shows that at the time Plaintiffs’ funds were transferred, the FCP
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11 Corporate (HK) bank account could not be used for real business.
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12 7. Mr. Schaub confronted Defendant Waters with the truth, but
LOS ANGELES, CA 90025
13 Defendant Waters refuses to acknowledge the theft, refuses to return the money
14 (except for the $750,000 that was returned in order to maintain the fraud), and
15 claims the funds are still frozen in the Citibank accounts that he controls.
16 8. As part of his scheme, and in an effort to cover up his fraud,
17 Defendant Waters has threatened litigation against Mr. Schaub for failed business
18 transactions, including an alleged transaction with Hearst Communications. Mr.
19 Schaub has not communicated with Hearst Communications or any other third
20 parties regarding Defendant Waters’ alleged transaction. Upon information and
21 belief, no transaction between Defendant Waters, or the companies he represents,
22 and Hearst Communications was ever executed.
23 THE PARTIES
24 9. Plaintiff Mark Schaub is an individual residing in the United
25 Kingdom.
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1
All future references to dollar amounts are in USD unless otherwise noted.
2.
SECOND AMENDED COMPLAINT
1 10. Plaintiff TLG Ltd., is a Hong Kong limited liability company,
2 owned by Mr. Schaub.
3 11. Defendant Andrew Wyles Waters, is a natural person who is, and at
4 all times relevant hereto, was a resident of the County of Santa Barbara, State of
5 California, and was conducting substantial business in the State of California,
6 including the County of Santa Barbara.
7 12. Defendant FCP Corporate (HK) Ltd., upon information and belief, is
8 a Hong Kong limited liability company. For all intents and purposes, FCP
9 Corporate (HK) is controlled by Defendant Waters.
10 13. Defendant FCP Private, LLC is a California limited liability
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11 company, conducting substantial business in the State of California, including the
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12 County of Santa Barbara, and its principal place of business located at 555
LOS ANGELES, CA 90025
13 Montgomery St., Suite 500, San Francisco, California 94111. For all intents and
14 purposes, upon information and belief, FCP Private is controlled by Defendant
15 Waters.
16 14. Plaintiffs are unaware of the true names and capacities, whether
17 individual, corporate, associate or otherwise, of Defendants Does 1 through 10,
18 inclusive, and therefore sues these Defendants by such fictitious names.
19 Plaintiffs will seek leave of Court to amend this Complaint to show the true
20 names and capacities of such Defendants when the same have been ascertained.
21 VENUE AND JURISDICTION
22 15. Venue is proper in Santa Barbara County because: (1) one or more
23 Defendants reside in the County of Santa Barbara and is subject to the personal
24 jurisdiction of this Court; and (2) the events giving rise to the claims in issue
25 occurred in the County of Santa Barbara.
26 16. The amount in controversy exceeds the jurisdictional limits of the
27 Superior Court, Limited Jurisdiction.
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3.
SECOND AMENDED COMPLAINT
1 GENERAL ALLEGATIONS
2 17. Defendant Waters targeted Mr. Schaub, befriending him and then
3 ultimately defrauding him.
4 18. Mr. Schaub and Defendant Waters developed a business relationship
5 beginning around 2008 when they were both living in Shanghai, China. Mr.
6 Schaub believed Defendant Waters to be a successful businessman and that he
7 was running real businesses with real potential for growth and profitability.
8 Defendant Waters presented himself as being well-connected to major players in
9 China, Hong Kong, and Australia, including one of Australia’s richest men, Peter
10 Scanlon.
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11 19. Over time, Defendant Waters introduced Mr. Schaub to his
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12 businesses and encouraged Mr. Schaub to be involved with Defendant Waters’
LOS ANGELES, CA 90025
13 ecommerce business, Ecom Products Group (“EPG”). Upon information and
14 belief, EPG is one of Defendant Waters’ sham companies, used to lure
15 unsuspecting investors.
16 20. Due to the high level of trust Mr. Schaub had in Defendant Waters,
17 as a result of their close relationship, Mr. Schaub agreed to be named as a
18 director, shareholder, or investor in several of Defendant Waters’ companies,
19 including EPG and The Food Box Network, as a favor to Defendant Waters.
20 This was done solely at Defendant Waters’ request, and Mr. Schaub had no
21 authority or decision-making power in any of the said companies. Practically,
22 Mr. Schaub had no involvement in FCP Corporate (HK) Ltd.
23 21. Mr. Schaub also made occasional loans to Defendant Waters, some
24 of which were repaid. The first major transaction between Mr. Schaub and
25 Defendant Waters took place in May 2010. Mr. Schaub sent approximately
26 $400,000 to a company controlled by Defendant Waters called China Network
27 Logistics. Defendant Waters had informed Mr. Schaub that he intended to build
28 a new ecommerce business by transferring the consumer retail operations and
4.
SECOND AMENDED COMPLAINT
1 business of China Network Logistics into a new consumer facing ecommerce
2 business. Defendant Waters advised Mr. Schaub that the $400,000 would result
3 in Mr. Schaub having a 25% interest in such business as it was organized. The
4 deal was struck between close friends and a handshake. Mr. Schaub has no
5 knowledge as to China Network Logistics’ actual operations or whether it was a
6 sham or not. Upon information and belief, China Network Logistics is no longer
7 operational.
8 22. In August 2010, Mr. Schaub loaned Defendant Waters
9 approximately $45,000, which was repaid by Waters.
10 23. In December 2010, Mr. Schaub made another loan to Defendant
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11 Waters in the amount of approximately $100,000, which was also repaid.
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12 24. In 2016, Mr. Schaub agreed that the $400,000 he had initially
LOS ANGELES, CA 90025
13 transferred to China Network Logistics would now be shares in a different
14 ecommerce company controlled by Defendant Waters, called the Food Box
15 Network. Believing that this was the new main ecommerce business, Mr. Schaub
16 agreed that he would now hold shares in the Food Box Network. Mr. Schaub
17 was told that the $400,000 would be treated as a loan and believed he would be
18 repaid once the company went public on the Australian Stock Exchange via a
19 backdoor listing. The backdoor listing fell through. Upon information and
20 belief, the Food Box Network is another one of Defendant Waters’ fake
21 companies that was used to scam investors.
22 25. Mr. Schaub has never been repaid the $400,000 he transferred to
23 China Network Logistics and now fears the money will not be repaid and the
24 shares do not have any value. Upon information and belief, according to an
25 email Mr. Schaub received in January 2020 from the then Executive Chairman,
26 the Food Box Network is no longer a viable business and is another defunct
27 company of Defendant Waters which faces claims in China by former employees
28 and suppliers.
5.
SECOND AMENDED COMPLAINT
1 26. In June 2019, Mr. Schaub was informed that HSBC in Hong Kong
2 was planning to close his company account, TLG Ltd. The majority of the funds
3 in the TLG HSBC account consisted of long-term investment instruments, which
4 the bank had managed and accepted for many years. When Mr. Schaub learned
5 that his TLG account would be closed, he requested that the investment
6 instruments be transferred to his personal Credit Suisse account. HSBC was
7 unable to accept Mr. Schaub’s request to transfer the investment instruments to
8 his Credit Suisse account as the investments in the HSBC account were in the
9 name of TLG, whereas the Credit Suisse account was in Mr. Schaub’s name.
10 Accordingly the investments had to be redeemed.
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11 27. In June 2019, Mr. Schaub discussed HSBC’s intent to close TLG’s
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12 account with Defendant Waters, who misled Mr. Schaub into believing that
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13 HSBC was closing the account because the bank believed the account contained
14 tainted funds. Defendant Waters advised that HSBC was considering a cash on
15 account journal entry in the amount of approximately $50,000 to be a tainted
16 transfer, and that it would be safest for Mr. Schaub to place the funds in the FCP
17 Corporate (HK) account, which was a trust account for clients. Mr. Schaub
18 believed Defendant Waters’ misrepresentations and intended to transfer
19 approximately $50,000 to the FCP Corporate (HK) account controlled by Waters.
20 However, after the TLG investment instruments were redeemed, HSBC
21 mistakenly transferred all the funds to the FCP Corporate (HK) account, not just
22 the $50,000.
23 28. FCP Corporate (HK) was a corporate services company that acted as
24 an agent for Western companies and investors establishing companies in Hong
25 Kong. FCP Corporate (HK)’s business was to support international companies
26 with establishing subsidiaries, opening bank accounts, and carrying out filings on
27 their behalf. It is common in Hong Kong for corporate services companies such
28 as FCP Corporate (HK) to hold client funds on trust or escrow. Defendant
6.
SECOND AMENDED COMPLAINT
1 Waters was based for many years in Hong Kong, claimed to be very experienced
2 in Hong Kong business, and professed to have close relationships with Hong
3 Kong banks. FCP Corporate (HK) established and also handled the corporate
4 filings of Plaintiff TLG.
5 29. Defendant Waters told Mr. Schaub that the FCP Corporate (HK) was
6 a trust account on more than one occasion. One such occasion was through
7 Wechat on May 14, 2018, when Defendant Waters wrote that “it’s just a client
8 trust typ[e] account for corporate services.” Defendant Waters promised Mr.
9 Schaub that the $50,000 was going to a client account and that the funds would
10 be held in trust. Mr. Schaub believed Defendant Waters’ misrepresentations.
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11 30. Defendant Waters induced Mr. Schaub to transfer the funds despite
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12 the fact that on June 19, 2019, Citibank, N.A. sent a letter to Defendant FCP
LOS ANGELES, CA 90025
13 Corporate (HK), stating that its accounts ending in 029 and 002 would be closed
14 after July 19, 2019. Even though he knew that Defendant FCP Corporate (HK)’s
15 Citibank accounts would be closed in the near future, on July 8, 2019, Defendant
16 Waters instructed William Griffin Thomas (a/k/a “Trip Thomas”) to provide Mr.
17 Schaub with the wire transfer details to complete the transfer. Mr. Thomas was
18 the CFO and company secretary of EPG, and later referred to as Defendant
19 Waters’ “money mover.” Defendant Waters forwarded Mr. Thomas’s email to
20 Mr. Schaub with the FCP Corporate (HK) wire transfer details on July 9, 2019.
21 Defendant Waters knew at the time he advised Mr. Schaub of the bank details
22 that the bank account was not operating as a trust account, and this was a
23 knowing intentional fraud.
24 31. Had Mr. Schaub known the truth that his funds would not be held in
25 trust, and that Citibank had notified Defendant Waters that it intended to close the
26 account where his funds were to be transferred, he never would have approved of
27 the transfer of his funds.
28 32. On July 22, 2019, a bank error led to the transfer of approximately
7.
SECOND AMENDED COMPLAINT
1 $1,950,000 (instead of the intended $50,000) from Mr. Schaub’s TLG account to
2 Defendant FCP Corporate (HK)’s Citibank account in Hong Kong. Two separate
3 transfers were made from TLG’s HSBC account, which is controlled by Mr.
4 Schaub, to two different FCP Corporate (HK) Citibank accounts that are
5 controlled by Defendant Waters. Specifically, the following transfers were made
6 on July 22, 2019:
7
8 Account Amount
9 FCP Corporate account ending 029 US$1,762,894.27
10 FCP Corporate account ending 002 HK$1,404,699.74
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11
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12
LOS ANGELES, CA 90025
33. On the same day that the funds were transferred, Mr. Schaub was
13 admitted to the hospital, in need of two separate emergency surgeries for a
14 ruptured gall bladder and a perforated duodenum. These were major, life-
15 threatening surgeries, and Mr. Schaub was required to remain in the hospital until
16 August 14, 2019. He then recovered at home until September 16, 2019.
17 Defendant Waters was fully aware of Mr. Schaub’s health condition, and even
18 feigned concern, while at the same time using Mr. Schaub’s illness to
19 fraudulently steal his funds.
20 34. The transferred funds unquestionably belonged—and still belong—
21 to Mr. Schaub and TLG. They were not a loan, gift, or payment, and at no time
22 were Defendants authorized to do anything with these funds.
23 35. Mr. Schaub asked Defendant Waters to return the funds to him, but
24 instead of complying, Defendant Waters insisted that the Citibank accounts that
25 held Mr. Schaub’s funds were somehow frozen.
26 36. In an email dated August 22, 2019, Defendant Waters wrote to Mr.
27 Schaub and stated, “hey called the bank to check that money is there[.] [T]hey
28 said they want to close the FCP corporate account . . . . There must be something
8.
SECOND AMENDED COMPLAINT
1 wrong with that money[.]”
2 37. On August 28, 2019, Defendant Waters told Mr. Schaub that he
3 “needs to fix things with [C]iti first so [he] can use the account and make sure it
4 does not affect [his] other accounts.”
5 38. On August 30, 2019, Defendant Waters told Mr. Schaub that he has
6 to go to Hong Kong to “fill out some statutory declarations” related to the origin
7 of the funds that were transferred to the FCP Corporate (HK) accounts.
8 39. On September 2, 2019, Defendant Waters told Mr. Schaub that he
9 would find out from Citibank the next day what needs to be provided in order for
10 the funds to be released.
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11 40. On September 3, 2019, Defendant Waters told Mr. Schaub that
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12 “[his] account is locked” and that information will have to be provided to
LOS ANGELES, CA 90025
13 compliance to unfreeze the accounts.
14 41. Meanwhile, Defendant Waters withdrew all the money transferred
15 from TLG’s HSBC accounts to FCP Corporate (HK)’s Citibank accounts. The
16 majority of the funds were transferred the FCP Private, LLC account that
17 Defendant Waters controls. Funds were also transferred directly to Defendant
18 Waters, or to fund his extravagant lifestyle including trips to Bali and a home in
19 Montecito, California, or to repay other employees/investors he defrauded,
20 including Lachlan Miller and Hamish Davidson. By September 10, 2019, the
21 balance in both Citibank accounts was zero.
22 a. Luxury Payments
23 The bank statements of FCP Corporate (HK) show the money stolen from
24 Mr. Schaub was used to fund Defendant Waters’ luxurious lifestyle as detailed
25 below:
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9.
SECOND AMENDED COMPLAINT
1 Transfer Transfer
Date Description USD Comment
2
Jul 24, 2019 FT outgoing - swift 3719205542 11,000.65
3 Home in Montecito,
Jill Harris 20490KQ7MDX California
4
Jul 24, 2019 FT outgoing - swift 3729205034 4,308.67
5 Luxury Charter Group PTY LTD
20290K01FA Yacht hire
6
7 Jul 31, 2019 FT outgoing - swift 3749212742 1,717.90
Ida Bagus Agung 21190KX6HUK Balinese name
8
Jul 31, 2019 FT outgoing - swift 3749212740 10,359.18
9 Home in Montecito,
Jill Harris 21190KX6HUN California
10
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Jul 31, 2019 FT outgoing - swift 3749212735 900.94
11 Bali based architect
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Valentina Audrito 21190KX6HUH with a villa
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13 b. Payments to employees/defrauded Investors
14 The FCP Corporate (HK) bank statements show funds stolen from Mr.
15 Schaub were used to pay other investors defrauded by Defendant Waters as set
16 forth below:
17
Hamish Davidson
18 Transfer
Transfer Date Description USD
19
Aug 08, 2019 FT outgoing - swift 3729220542 10,017.86
20 Hamish Davidson 21990l3x76y
21 Aug 28, 2019 FT outgoing - swift 3729240853 10,017.84
22 Hamish Davidson 23990LKIXKB
23 Lachlin Miller
Transfer
24 Transfer Date Description USD
Outgoing Rtgs Transfer
25 Aug 27, 2019 3779234972 35,213.00
Lachlin Miller 23890LJ22PJ
26 Outgoing Rtgs Transfer
Aug 29, 2019 3789241626 35,203.00
27 Lachlin Miller 24090LLJR01
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10.
SECOND AMENDED COMPLAINT
1 42. In an effort to further conceal his fraud, and with the knowledge that
2 he is in fact unlawfully in possession of Plaintiffs’ funds, in November and
3 December 2019, Defendant Waters made transfers totaling $750,000 from a
4 Chase bank account belonging to Defendant FCP Private to Mr. Schaub. The
5 purpose of the transfer was to maintain the pretense that the stolen funds
6 remained frozen in the Citibank accounts in Hong Kong and deter Mr. Schaub
7 from approaching Citibank or any other party who could clarify the actual
8 situation. The commencement of the transfers coincided with Mr. Schaub
9 making greater demands upon Defendant Waters. Defendant Waters
10 continuously claimed, and still claims, that the $750,000 came from his own
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11 personal funds. However, FCP Private’s Chase bank account is one of the
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12 accounts to which most of Plaintiffs’ stolen funds were transferred to and is
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13 controlled by Defendant Waters.
14 43. After being strung along for many months, Mr. Schaub was alarmed
15 to discover that Defendant Waters had been lying to him the whole time.
16 44. On January 7, 2020, Mr. Schaub received an email from an associate
17 of Defendant Waters, Tim Smith, who was Executive Chairman of the Food Box
18 Network at the time, and former Chairman of the EPG advisory board. Mr.
19 Smith is also an ex-senior banking manager and head of Westpac’s private bank
20 (one of Australia’s largest banks) and had been acquainted with Defendant
21 Waters for many years. Mr. Smith was actively working for the Food Box
22 Network and EPG, businesses controlled by Defendant Waters. He also took an
23 active role in finding investors for Defendant Waters.
24 45. According to the email from Mr. Smith, he and the investors he
25 introduced to Defendant Waters suspected they were being conned by Defendant
26 Waters, and that all of Defendant Waters’ businesses were a sham, investor
27 money had gone unaccounted for, and those who asked questions were threatened
28 and obstructed from performing their due diligence. Defendant Waters had
11.
SECOND AMENDED COMPLAINT
1 managed to also defraud Mr. Smith, even though he was actively involved in
2 managing Waters’ businesses.
3 46. According to the email from Mr. Smith, an individual by the name
4 of Lachlin Miller invested a large sum with Defendant Waters “in 2018 based on
5 trust.” Also according to Mr. Smith, an individual by the name of Hamish
6 Davidson went to work with Defendant Waters and invested $170,000. Both
7 Miller and Davidson were paid some amounts from the funds stolen from
8 Plaintiffs.
9 47. Defendant Waters took the money that had been raised by his
10 associates, as well as Mr. Schaub’s money, and converted it to his own personal
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11 use.
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12 48. Upon information and belief, when a company controlled by
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13 Defendant Waters was in need of being shut down, Defendant Waters would
14 transfer the investor shares for that company to another company under his
15 control, in order to maintain a façade of legitimacy and to keep the money
16 received from investors.
17 49. After being alerted to Defendant Waters’ fraud, Mr. Schaub
18 requested the immediate return of his funds. Defendant Waters refused and
19 continues to refuse to this day.
20 50. Defendant Waters accuses Mr. Schaub of having instructed HSBC to
21 transfer the funds to FCP Corporate (HK)’s Citibank accounts so as to avoid
22 detection and to prevent his own account from being closed. Defendant Waters
23 attempts to blame Mr. Schaub for the closing of the FCP Corporate (HK)
24 Citibank accounts and claims he himself has been damaged as a result.
25 Defendant Waters claims this even though he was notified on June 19, 2019, that
26 Citibank was closing his accounts.
27 51. On January 17, 2020, after additional pressure from Mr. Schaub,
28 who was wishing to take action against Defendant Waters, Defendant Waters
12.
SECOND AMENDED COMPLAINT
1 offered to transfer an additional $250,000. Mr. Schaub refused such transfer
2 because of the email from Mr. Smith, alleging that Defendant Waters was a serial
3 fraudster. Mr. Schaub was concerned that the funds offered by Defendant Waters
4 may be from another victim.
5 52. On January 22, 2020, Mr. Schaub was provided the bank records of
6 FCP Corporate (HK) by Defendant Waters’ accountant, which showed the fraud
7 committed by Defendants and that the funds stolen from Plaintiffs had been sent
8 to Defendant FCP Private’s bank account.
9 53. Defendant Waters and other sources told Mr. Schaub that Defendant
10 Waters intended to build connections with wealthy family businesses in
TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711
Spertus, Landes & Umhofer, LLP
11 California to raise money for companies under his control, including a business
1990 SOUTH BUNDY DR., SUITE 705
12 known as Co-Brands, which would allow those California businesses to enter the
LOS ANGELES, CA 90025
13 Chinese market at an accelerated pace.
14 54. As part of his scheme, and in an effort to cover up his fraud,
15 Defendant Waters has threatened litigation against Mr. Schaub for failed business
16 transactions, including an alleged deal with Hearst Communications. Mr. Schaub
Preview
1 SPERTUS, LANDES & UMHOFER, LLP Matthew Donald Umhofer (SBN 206607) 2 Diane H. Bang (SBN 271939) 1990 South Bundy Dr., Suite 705 3 Los Angeles, California 90025 Telephone: (310) 826-4700 4 Facsimile: (310) 826-4711 matthew@spertuslaw.com 5 diane@spertuslaw.com 6 Attorneys for Mark Schaub and TLG Ltd. 7 SUPERIOR COURT OF THE STATE OF CALIFORNIA 8 FOR THE COUNTY OF SANTA BARBARA 9 10 MARK SCHAUB, an individual; Case No.: 20CV02113 TELEPHONE 310-826-4700; FACSIMILE 310-826-4711 Spertus, Landes & Umhofer, LLP TLG LTD., a Hong Kong limited 11 liability company, 1990 SOUTH BUNDY DR., SUITE 705 Hon. Donna D. Geck 12 LOS ANGELES, CA 90025 Plaintiffs, 13 REQUEST FOR JUDICIAL NOTICE v. IN SUPPORT OF MOTION TO 14 COMPEL FURTHER RESPONSES ANDREW WYLES WATERS, an TO WRITTEN DISCOVERY BY individual; FCP CORPORATE LTD., DEFENDANT FCP CORPORATE 15 a Hong Kong limited liability LTD. AND REQUEST FOR company; FCP PRIVATE, LLC, a SANCTIONS IN THE AMOUNT OF 16 California limited liability $10,500.00 corporation; and DOES 1 through 10 17 inclusive, [Notice of Motion, Memorandum of 18 Defendants. Points and Authorities, Declaration of 19 Diane H. Bang, and Separate Statement filed concurrently] 20 21 Hearing Date: April 29, 2022 Hearing Time: 10:00 a.m. 22 Dept.: 4 23 Amended Complaint filed: June 14, 2021 Trial: Not set 24 25 26 27 28 REQUEST FOR JUDICIAL NOTICE 1 Pursuant to California Evidence Code §§ 451-453, Plaintiff Mark Schaub 2 hereby requests judicial notice be taken of the following exhibits in support of his 3 motion to compel further responses to written discovery: 4 • EXHIBIT F: the Second Amended Complaint that was filed on June 14, 5 2021 in this civil action, Mark Schaub, et al. v. Andrew Waters, et al., 6 Santa Barbara Superior Court Case No. 20CV02113 (the “Action”). 7 • EXHIBIT G: the Answer of Defendants Andrew Waters, FCP Corporate, 8 Ltd., and FCP Private, LLC, filed in this Action on October 25, 2021. 9 • EXHIBIT H: the Notice of Motion and Motion to be Relieved as Counsel 10 filed in this Action on October 12, 2021, by Kevin Nimmons. TELEPHONE 310-826-4700; FACSIMILE 310-826-4711 Spertus, Landes & Umhofer, LLP 11 • EXHIBIT I: the Notice of Non-Opposition to Motion to be Relieved as 1990 SOUTH BUNDY DR., SUITE 705 12 Counsel filed in this Action on December 29, 2021. LOS ANGELES, CA 90025 13 • EXHIBIT J: the Order Granting Motion to be Relieved as Counsel issued 14 in this Action on January 7, 2022. 15 16 Dated: February 15, 2022 SPERTUS, LANDES & UMHOFER, LLP 17 18 By: Matthew Donald Umhofer 19 Diane H. Bang 20 Attorneys for Plaintiffs 21 22 23 24 25 26 27 28 1. REQUEST FOR JUDICIAL NOTICE EXHIBIT F 1 SPERTUS, LANDES & UMHOFER, LLP ELECTRONICALLY FILED Matthew Donald Umhofer (SBN 206607) Superior Court of California 2 Diane H. Bang (SBN 271939) County of Santa Barbara 1990 South Bundy Dr., Suite 705 Darrel E. Parker, Executive Officer 3 Los Angeles, California 90025 6/14/2021 2:09 PM Telephone: (310) 826-4700 By: Elizabeth Spann, Deputy 4 Facsimile: (310) 826-4711 matthew@spertuslaw.com 5 diane@spertuslaw.com 6 Attorneys for Mark Schaub and TLG Ltd. 7 SUPERIOR COURT OF THE STATE OF CALIFORNIA 8 FOR THE COUNTY OF SANTA BARBARA 9 10 MARK SCHAUB, an individual; Case No.: 20CV02113 TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP TLG LTD., a Hong Kong limited 11 liability company, VERIFIED SECOND AMENDED 1990 SOUTH BUNDY DR., SUITE 705 12 COMPLAINT FOR DAMAGES: LOS ANGELES, CA 90025 Plaintiffs, 13 v. (1) CONVERSION; (2) INTENTIONAL 14 ANDREW WYLES WATERS, an MISREPRESENTATION—FRAUD; individual; FCP CORPORATE (HK) (3) CONCEALMENT; 15 LTD., a Hong Kong limited liability (4) BREACH OF CONTRACT— company; FCP PRIVATE, LLC, a $1,940,000; 16 California limited liability company; (5) BREACH OF CONTRACT— and DOES 1 through 10 inclusive, $400,000; and 17 (6) UNJUST ENRICHMENT. Defendants. 18 JURY TRIAL DEMANDED 19 20 21 22 23 24 25 26 27 28 SECOND AMENDED COMPLAINT 1 Plaintiffs Mark Schaub and TLG Ltd. (“Plaintiffs”) allege as follows: 2 INTRODUCTION 3 1. Defendant Andrew Waters is a fraud. Through his companies, 4 Defendants FCP Corporate Ltd. and FCP Private, LLC, as well as other 5 companies or businesses, including but not limited to Food Box Network, Co- 6 Brands USA, Co-Brands Australia, Co-Brands UK, and International Brands 7 Direct, Defendant Waters has been operating a fraudulent Ponzi scheme, luring 8 wealthy investors into sending him hundreds of thousands of dollars, and 9 misappropriating those funds for his own personal use. Defendant Waters has 10 essentially been creating various shell companies to mislead potential investors TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP 11 into believing each company would be operating and profitable. 1990 SOUTH BUNDY DR., SUITE 705 12 2. Defendants have also committed theft. Plaintiffs’ funds were stolen LOS ANGELES, CA 90025 13 by Defendants, who now refuse to return it in full. Plaintiffs acknowledge that 14 the Defendant Waters returned $750,000 to Plaintiffs in order to avoid Mr. 15 Schaub uncovering the fraud. However, Defendant Waters claimed that these 16 were his own funds and not Plaintiffs’ funds, as he claimed Plaintiff’s funds were 17 frozen in a Hong Kong bank account. 18 3. In July 2019, through a series of unforeseen events, approximately 19 US$1.9 million was transferred from Plaintiffs to two different accounts under 20 Defendants’ control. 21 4. Despite his pleas to Defendants to return the funds that rightfully 22 belong to him, Mr. Schaub’s long-time supposed friend and business associate, 23 Defendant Waters, lied about the following: (a) that the bank had frozen the 24 accounts where the funds had been transferred to; (b) that the bank believed the 25 funds were from an illegitimate source; and (c) that he would have to go to Hong 26 Kong to resolve the situation with the frozen accounts. 27 5. On January 22, 2020, Mr. Schaub discovered Defendant Waters had 28 been lying to him all along when he came into possession of FCP Corporate 1. SECOND AMENDED COMPLAINT 1 (HK)’s Citibank records that clearly showed fraud had been committed and that 2 Defendant Waters had immediately withdrawn all the funds from the allegedly 3 frozen accounts until nothing remained. All monies transferred from the Hong 4 Kong account to Waters’ U.S. account should be treated as money laundering, as 5 the funds were acquired by fraud. 6 6. Prior to Plaintiffs’ transfer of funds, the balance of FCP Corporate 7 (HK)’s USD account was $38.99, and the balance of its HKD account was 8 HK$2,784.29 (or US$360).1 After Plaintiffs’ funds were transferred, no further 9 payments from any sources were received into FCP Corporate (HK)’s Citibank 10 accounts. This shows that at the time Plaintiffs’ funds were transferred, the FCP TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP 11 Corporate (HK) bank account could not be used for real business. 1990 SOUTH BUNDY DR., SUITE 705 12 7. Mr. Schaub confronted Defendant Waters with the truth, but LOS ANGELES, CA 90025 13 Defendant Waters refuses to acknowledge the theft, refuses to return the money 14 (except for the $750,000 that was returned in order to maintain the fraud), and 15 claims the funds are still frozen in the Citibank accounts that he controls. 16 8. As part of his scheme, and in an effort to cover up his fraud, 17 Defendant Waters has threatened litigation against Mr. Schaub for failed business 18 transactions, including an alleged transaction with Hearst Communications. Mr. 19 Schaub has not communicated with Hearst Communications or any other third 20 parties regarding Defendant Waters’ alleged transaction. Upon information and 21 belief, no transaction between Defendant Waters, or the companies he represents, 22 and Hearst Communications was ever executed. 23 THE PARTIES 24 9. Plaintiff Mark Schaub is an individual residing in the United 25 Kingdom. 26 27 28 1 All future references to dollar amounts are in USD unless otherwise noted. 2. SECOND AMENDED COMPLAINT 1 10. Plaintiff TLG Ltd., is a Hong Kong limited liability company, 2 owned by Mr. Schaub. 3 11. Defendant Andrew Wyles Waters, is a natural person who is, and at 4 all times relevant hereto, was a resident of the County of Santa Barbara, State of 5 California, and was conducting substantial business in the State of California, 6 including the County of Santa Barbara. 7 12. Defendant FCP Corporate (HK) Ltd., upon information and belief, is 8 a Hong Kong limited liability company. For all intents and purposes, FCP 9 Corporate (HK) is controlled by Defendant Waters. 10 13. Defendant FCP Private, LLC is a California limited liability TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP 11 company, conducting substantial business in the State of California, including the 1990 SOUTH BUNDY DR., SUITE 705 12 County of Santa Barbara, and its principal place of business located at 555 LOS ANGELES, CA 90025 13 Montgomery St., Suite 500, San Francisco, California 94111. For all intents and 14 purposes, upon information and belief, FCP Private is controlled by Defendant 15 Waters. 16 14. Plaintiffs are unaware of the true names and capacities, whether 17 individual, corporate, associate or otherwise, of Defendants Does 1 through 10, 18 inclusive, and therefore sues these Defendants by such fictitious names. 19 Plaintiffs will seek leave of Court to amend this Complaint to show the true 20 names and capacities of such Defendants when the same have been ascertained. 21 VENUE AND JURISDICTION 22 15. Venue is proper in Santa Barbara County because: (1) one or more 23 Defendants reside in the County of Santa Barbara and is subject to the personal 24 jurisdiction of this Court; and (2) the events giving rise to the claims in issue 25 occurred in the County of Santa Barbara. 26 16. The amount in controversy exceeds the jurisdictional limits of the 27 Superior Court, Limited Jurisdiction. 28 3. SECOND AMENDED COMPLAINT 1 GENERAL ALLEGATIONS 2 17. Defendant Waters targeted Mr. Schaub, befriending him and then 3 ultimately defrauding him. 4 18. Mr. Schaub and Defendant Waters developed a business relationship 5 beginning around 2008 when they were both living in Shanghai, China. Mr. 6 Schaub believed Defendant Waters to be a successful businessman and that he 7 was running real businesses with real potential for growth and profitability. 8 Defendant Waters presented himself as being well-connected to major players in 9 China, Hong Kong, and Australia, including one of Australia’s richest men, Peter 10 Scanlon. TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP 11 19. Over time, Defendant Waters introduced Mr. Schaub to his 1990 SOUTH BUNDY DR., SUITE 705 12 businesses and encouraged Mr. Schaub to be involved with Defendant Waters’ LOS ANGELES, CA 90025 13 ecommerce business, Ecom Products Group (“EPG”). Upon information and 14 belief, EPG is one of Defendant Waters’ sham companies, used to lure 15 unsuspecting investors. 16 20. Due to the high level of trust Mr. Schaub had in Defendant Waters, 17 as a result of their close relationship, Mr. Schaub agreed to be named as a 18 director, shareholder, or investor in several of Defendant Waters’ companies, 19 including EPG and The Food Box Network, as a favor to Defendant Waters. 20 This was done solely at Defendant Waters’ request, and Mr. Schaub had no 21 authority or decision-making power in any of the said companies. Practically, 22 Mr. Schaub had no involvement in FCP Corporate (HK) Ltd. 23 21. Mr. Schaub also made occasional loans to Defendant Waters, some 24 of which were repaid. The first major transaction between Mr. Schaub and 25 Defendant Waters took place in May 2010. Mr. Schaub sent approximately 26 $400,000 to a company controlled by Defendant Waters called China Network 27 Logistics. Defendant Waters had informed Mr. Schaub that he intended to build 28 a new ecommerce business by transferring the consumer retail operations and 4. SECOND AMENDED COMPLAINT 1 business of China Network Logistics into a new consumer facing ecommerce 2 business. Defendant Waters advised Mr. Schaub that the $400,000 would result 3 in Mr. Schaub having a 25% interest in such business as it was organized. The 4 deal was struck between close friends and a handshake. Mr. Schaub has no 5 knowledge as to China Network Logistics’ actual operations or whether it was a 6 sham or not. Upon information and belief, China Network Logistics is no longer 7 operational. 8 22. In August 2010, Mr. Schaub loaned Defendant Waters 9 approximately $45,000, which was repaid by Waters. 10 23. In December 2010, Mr. Schaub made another loan to Defendant TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP 11 Waters in the amount of approximately $100,000, which was also repaid. 1990 SOUTH BUNDY DR., SUITE 705 12 24. In 2016, Mr. Schaub agreed that the $400,000 he had initially LOS ANGELES, CA 90025 13 transferred to China Network Logistics would now be shares in a different 14 ecommerce company controlled by Defendant Waters, called the Food Box 15 Network. Believing that this was the new main ecommerce business, Mr. Schaub 16 agreed that he would now hold shares in the Food Box Network. Mr. Schaub 17 was told that the $400,000 would be treated as a loan and believed he would be 18 repaid once the company went public on the Australian Stock Exchange via a 19 backdoor listing. The backdoor listing fell through. Upon information and 20 belief, the Food Box Network is another one of Defendant Waters’ fake 21 companies that was used to scam investors. 22 25. Mr. Schaub has never been repaid the $400,000 he transferred to 23 China Network Logistics and now fears the money will not be repaid and the 24 shares do not have any value. Upon information and belief, according to an 25 email Mr. Schaub received in January 2020 from the then Executive Chairman, 26 the Food Box Network is no longer a viable business and is another defunct 27 company of Defendant Waters which faces claims in China by former employees 28 and suppliers. 5. SECOND AMENDED COMPLAINT 1 26. In June 2019, Mr. Schaub was informed that HSBC in Hong Kong 2 was planning to close his company account, TLG Ltd. The majority of the funds 3 in the TLG HSBC account consisted of long-term investment instruments, which 4 the bank had managed and accepted for many years. When Mr. Schaub learned 5 that his TLG account would be closed, he requested that the investment 6 instruments be transferred to his personal Credit Suisse account. HSBC was 7 unable to accept Mr. Schaub’s request to transfer the investment instruments to 8 his Credit Suisse account as the investments in the HSBC account were in the 9 name of TLG, whereas the Credit Suisse account was in Mr. Schaub’s name. 10 Accordingly the investments had to be redeemed. TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP 11 27. In June 2019, Mr. Schaub discussed HSBC’s intent to close TLG’s 1990 SOUTH BUNDY DR., SUITE 705 12 account with Defendant Waters, who misled Mr. Schaub into believing that LOS ANGELES, CA 90025 13 HSBC was closing the account because the bank believed the account contained 14 tainted funds. Defendant Waters advised that HSBC was considering a cash on 15 account journal entry in the amount of approximately $50,000 to be a tainted 16 transfer, and that it would be safest for Mr. Schaub to place the funds in the FCP 17 Corporate (HK) account, which was a trust account for clients. Mr. Schaub 18 believed Defendant Waters’ misrepresentations and intended to transfer 19 approximately $50,000 to the FCP Corporate (HK) account controlled by Waters. 20 However, after the TLG investment instruments were redeemed, HSBC 21 mistakenly transferred all the funds to the FCP Corporate (HK) account, not just 22 the $50,000. 23 28. FCP Corporate (HK) was a corporate services company that acted as 24 an agent for Western companies and investors establishing companies in Hong 25 Kong. FCP Corporate (HK)’s business was to support international companies 26 with establishing subsidiaries, opening bank accounts, and carrying out filings on 27 their behalf. It is common in Hong Kong for corporate services companies such 28 as FCP Corporate (HK) to hold client funds on trust or escrow. Defendant 6. SECOND AMENDED COMPLAINT 1 Waters was based for many years in Hong Kong, claimed to be very experienced 2 in Hong Kong business, and professed to have close relationships with Hong 3 Kong banks. FCP Corporate (HK) established and also handled the corporate 4 filings of Plaintiff TLG. 5 29. Defendant Waters told Mr. Schaub that the FCP Corporate (HK) was 6 a trust account on more than one occasion. One such occasion was through 7 Wechat on May 14, 2018, when Defendant Waters wrote that “it’s just a client 8 trust typ[e] account for corporate services.” Defendant Waters promised Mr. 9 Schaub that the $50,000 was going to a client account and that the funds would 10 be held in trust. Mr. Schaub believed Defendant Waters’ misrepresentations. TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP 11 30. Defendant Waters induced Mr. Schaub to transfer the funds despite 1990 SOUTH BUNDY DR., SUITE 705 12 the fact that on June 19, 2019, Citibank, N.A. sent a letter to Defendant FCP LOS ANGELES, CA 90025 13 Corporate (HK), stating that its accounts ending in 029 and 002 would be closed 14 after July 19, 2019. Even though he knew that Defendant FCP Corporate (HK)’s 15 Citibank accounts would be closed in the near future, on July 8, 2019, Defendant 16 Waters instructed William Griffin Thomas (a/k/a “Trip Thomas”) to provide Mr. 17 Schaub with the wire transfer details to complete the transfer. Mr. Thomas was 18 the CFO and company secretary of EPG, and later referred to as Defendant 19 Waters’ “money mover.” Defendant Waters forwarded Mr. Thomas’s email to 20 Mr. Schaub with the FCP Corporate (HK) wire transfer details on July 9, 2019. 21 Defendant Waters knew at the time he advised Mr. Schaub of the bank details 22 that the bank account was not operating as a trust account, and this was a 23 knowing intentional fraud. 24 31. Had Mr. Schaub known the truth that his funds would not be held in 25 trust, and that Citibank had notified Defendant Waters that it intended to close the 26 account where his funds were to be transferred, he never would have approved of 27 the transfer of his funds. 28 32. On July 22, 2019, a bank error led to the transfer of approximately 7. SECOND AMENDED COMPLAINT 1 $1,950,000 (instead of the intended $50,000) from Mr. Schaub’s TLG account to 2 Defendant FCP Corporate (HK)’s Citibank account in Hong Kong. Two separate 3 transfers were made from TLG’s HSBC account, which is controlled by Mr. 4 Schaub, to two different FCP Corporate (HK) Citibank accounts that are 5 controlled by Defendant Waters. Specifically, the following transfers were made 6 on July 22, 2019: 7 8 Account Amount 9 FCP Corporate account ending 029 US$1,762,894.27 10 FCP Corporate account ending 002 HK$1,404,699.74 TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP 11 1990 SOUTH BUNDY DR., SUITE 705 12 LOS ANGELES, CA 90025 33. On the same day that the funds were transferred, Mr. Schaub was 13 admitted to the hospital, in need of two separate emergency surgeries for a 14 ruptured gall bladder and a perforated duodenum. These were major, life- 15 threatening surgeries, and Mr. Schaub was required to remain in the hospital until 16 August 14, 2019. He then recovered at home until September 16, 2019. 17 Defendant Waters was fully aware of Mr. Schaub’s health condition, and even 18 feigned concern, while at the same time using Mr. Schaub’s illness to 19 fraudulently steal his funds. 20 34. The transferred funds unquestionably belonged—and still belong— 21 to Mr. Schaub and TLG. They were not a loan, gift, or payment, and at no time 22 were Defendants authorized to do anything with these funds. 23 35. Mr. Schaub asked Defendant Waters to return the funds to him, but 24 instead of complying, Defendant Waters insisted that the Citibank accounts that 25 held Mr. Schaub’s funds were somehow frozen. 26 36. In an email dated August 22, 2019, Defendant Waters wrote to Mr. 27 Schaub and stated, “hey called the bank to check that money is there[.] [T]hey 28 said they want to close the FCP corporate account . . . . There must be something 8. SECOND AMENDED COMPLAINT 1 wrong with that money[.]” 2 37. On August 28, 2019, Defendant Waters told Mr. Schaub that he 3 “needs to fix things with [C]iti first so [he] can use the account and make sure it 4 does not affect [his] other accounts.” 5 38. On August 30, 2019, Defendant Waters told Mr. Schaub that he has 6 to go to Hong Kong to “fill out some statutory declarations” related to the origin 7 of the funds that were transferred to the FCP Corporate (HK) accounts. 8 39. On September 2, 2019, Defendant Waters told Mr. Schaub that he 9 would find out from Citibank the next day what needs to be provided in order for 10 the funds to be released. TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP 11 40. On September 3, 2019, Defendant Waters told Mr. Schaub that 1990 SOUTH BUNDY DR., SUITE 705 12 “[his] account is locked” and that information will have to be provided to LOS ANGELES, CA 90025 13 compliance to unfreeze the accounts. 14 41. Meanwhile, Defendant Waters withdrew all the money transferred 15 from TLG’s HSBC accounts to FCP Corporate (HK)’s Citibank accounts. The 16 majority of the funds were transferred the FCP Private, LLC account that 17 Defendant Waters controls. Funds were also transferred directly to Defendant 18 Waters, or to fund his extravagant lifestyle including trips to Bali and a home in 19 Montecito, California, or to repay other employees/investors he defrauded, 20 including Lachlan Miller and Hamish Davidson. By September 10, 2019, the 21 balance in both Citibank accounts was zero. 22 a. Luxury Payments 23 The bank statements of FCP Corporate (HK) show the money stolen from 24 Mr. Schaub was used to fund Defendant Waters’ luxurious lifestyle as detailed 25 below: 26 27 28 9. SECOND AMENDED COMPLAINT 1 Transfer Transfer Date Description USD Comment 2 Jul 24, 2019 FT outgoing - swift 3719205542 11,000.65 3 Home in Montecito, Jill Harris 20490KQ7MDX California 4 Jul 24, 2019 FT outgoing - swift 3729205034 4,308.67 5 Luxury Charter Group PTY LTD 20290K01FA Yacht hire 6 7 Jul 31, 2019 FT outgoing - swift 3749212742 1,717.90 Ida Bagus Agung 21190KX6HUK Balinese name 8 Jul 31, 2019 FT outgoing - swift 3749212740 10,359.18 9 Home in Montecito, Jill Harris 21190KX6HUN California 10 TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP Jul 31, 2019 FT outgoing - swift 3749212735 900.94 11 Bali based architect 1990 SOUTH BUNDY DR., SUITE 705 Valentina Audrito 21190KX6HUH with a villa 12 LOS ANGELES, CA 90025 13 b. Payments to employees/defrauded Investors 14 The FCP Corporate (HK) bank statements show funds stolen from Mr. 15 Schaub were used to pay other investors defrauded by Defendant Waters as set 16 forth below: 17 Hamish Davidson 18 Transfer Transfer Date Description USD 19 Aug 08, 2019 FT outgoing - swift 3729220542 10,017.86 20 Hamish Davidson 21990l3x76y 21 Aug 28, 2019 FT outgoing - swift 3729240853 10,017.84 22 Hamish Davidson 23990LKIXKB 23 Lachlin Miller Transfer 24 Transfer Date Description USD Outgoing Rtgs Transfer 25 Aug 27, 2019 3779234972 35,213.00 Lachlin Miller 23890LJ22PJ 26 Outgoing Rtgs Transfer Aug 29, 2019 3789241626 35,203.00 27 Lachlin Miller 24090LLJR01 28 10. SECOND AMENDED COMPLAINT 1 42. In an effort to further conceal his fraud, and with the knowledge that 2 he is in fact unlawfully in possession of Plaintiffs’ funds, in November and 3 December 2019, Defendant Waters made transfers totaling $750,000 from a 4 Chase bank account belonging to Defendant FCP Private to Mr. Schaub. The 5 purpose of the transfer was to maintain the pretense that the stolen funds 6 remained frozen in the Citibank accounts in Hong Kong and deter Mr. Schaub 7 from approaching Citibank or any other party who could clarify the actual 8 situation. The commencement of the transfers coincided with Mr. Schaub 9 making greater demands upon Defendant Waters. Defendant Waters 10 continuously claimed, and still claims, that the $750,000 came from his own TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP 11 personal funds. However, FCP Private’s Chase bank account is one of the 1990 SOUTH BUNDY DR., SUITE 705 12 accounts to which most of Plaintiffs’ stolen funds were transferred to and is LOS ANGELES, CA 90025 13 controlled by Defendant Waters. 14 43. After being strung along for many months, Mr. Schaub was alarmed 15 to discover that Defendant Waters had been lying to him the whole time. 16 44. On January 7, 2020, Mr. Schaub received an email from an associate 17 of Defendant Waters, Tim Smith, who was Executive Chairman of the Food Box 18 Network at the time, and former Chairman of the EPG advisory board. Mr. 19 Smith is also an ex-senior banking manager and head of Westpac’s private bank 20 (one of Australia’s largest banks) and had been acquainted with Defendant 21 Waters for many years. Mr. Smith was actively working for the Food Box 22 Network and EPG, businesses controlled by Defendant Waters. He also took an 23 active role in finding investors for Defendant Waters. 24 45. According to the email from Mr. Smith, he and the investors he 25 introduced to Defendant Waters suspected they were being conned by Defendant 26 Waters, and that all of Defendant Waters’ businesses were a sham, investor 27 money had gone unaccounted for, and those who asked questions were threatened 28 and obstructed from performing their due diligence. Defendant Waters had 11. SECOND AMENDED COMPLAINT 1 managed to also defraud Mr. Smith, even though he was actively involved in 2 managing Waters’ businesses. 3 46. According to the email from Mr. Smith, an individual by the name 4 of Lachlin Miller invested a large sum with Defendant Waters “in 2018 based on 5 trust.” Also according to Mr. Smith, an individual by the name of Hamish 6 Davidson went to work with Defendant Waters and invested $170,000. Both 7 Miller and Davidson were paid some amounts from the funds stolen from 8 Plaintiffs. 9 47. Defendant Waters took the money that had been raised by his 10 associates, as well as Mr. Schaub’s money, and converted it to his own personal TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP 11 use. 1990 SOUTH BUNDY DR., SUITE 705 12 48. Upon information and belief, when a company controlled by LOS ANGELES, CA 90025 13 Defendant Waters was in need of being shut down, Defendant Waters would 14 transfer the investor shares for that company to another company under his 15 control, in order to maintain a façade of legitimacy and to keep the money 16 received from investors. 17 49. After being alerted to Defendant Waters’ fraud, Mr. Schaub 18 requested the immediate return of his funds. Defendant Waters refused and 19 continues to refuse to this day. 20 50. Defendant Waters accuses Mr. Schaub of having instructed HSBC to 21 transfer the funds to FCP Corporate (HK)’s Citibank accounts so as to avoid 22 detection and to prevent his own account from being closed. Defendant Waters 23 attempts to blame Mr. Schaub for the closing of the FCP Corporate (HK) 24 Citibank accounts and claims he himself has been damaged as a result. 25 Defendant Waters claims this even though he was notified on June 19, 2019, that 26 Citibank was closing his accounts. 27 51. On January 17, 2020, after additional pressure from Mr. Schaub, 28 who was wishing to take action against Defendant Waters, Defendant Waters 12. SECOND AMENDED COMPLAINT 1 offered to transfer an additional $250,000. Mr. Schaub refused such transfer 2 because of the email from Mr. Smith, alleging that Defendant Waters was a serial 3 fraudster. Mr. Schaub was concerned that the funds offered by Defendant Waters 4 may be from another victim. 5 52. On January 22, 2020, Mr. Schaub was provided the bank records of 6 FCP Corporate (HK) by Defendant Waters’ accountant, which showed the fraud 7 committed by Defendants and that the funds stolen from Plaintiffs had been sent 8 to Defendant FCP Private’s bank account. 9 53. Defendant Waters and other sources told Mr. Schaub that Defendant 10 Waters intended to build connections with wealthy family businesses in TELEPHONE 310‐826‐4700; FACSIMILE 310‐826‐4711 Spertus, Landes & Umhofer, LLP 11 California to raise money for companies under his control, including a business 1990 SOUTH BUNDY DR., SUITE 705 12 known as Co-Brands, which would allow those California businesses to enter the LOS ANGELES, CA 90025 13 Chinese market at an accelerated pace. 14 54. As part of his scheme, and in an effort to cover up his fraud, 15 Defendant Waters has threatened litigation against Mr. Schaub for failed business 16 transactions, including an alleged deal with Hearst Communications. Mr. Schaub