Reality TV Star Called a Fraudster By IULIA FILIP
Tuesday, August 21, 2012Last Update: 1:24 PM PT
Reality TV Star Called a Fraudster
By IULIA FILIP
LOS ANGELES (CN) - "Big Brother" contestant Mike "Boogie" Malin and his partner pulled a "long-running, systematic, and pervasive" fraud, running their restaurant group into the ground by using it as a piggybank, an investor claims in a derivative complaint.
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Lead plaintiff David Hilty sued Lonnie Moore, Michael Robert Carri aka Michael Robert Malin aka Mike Boogie Malin, and three of their companies, in Superior Court.
Hilty sued on his own behalf and derivatively on behalf of Geisha House LLC, Geisha Santa Ana LLC and Dolce Group Atlanta LLC.
Also named as defendants are 2Hype Productions, LTM Consulting, Moore & Malin Enterprises, all of California, and James McDonald and Robert Pau.
Hilty claims Moore and Malin "siphoned off" millions of dollars from the restaurant group to support their "lavish lifestyles," at investors' expense.
The complaint states: "This action arises from the long-running, systematic, and pervasive course of fraud, waste, mismanagement, embezzlement, and diversion of corporate assets and opportunities that, from the business's inception, has characterized the management of The Dolce Group, a conglomerate of restaurants, clubs, and hospitality consulting services formed and operated through several operating entities (the 'Dolce Group Entities'), by defendants Lonnie Moore ('Moore') and Michael Robert Carri aka Michael Robert Malin aka Mike Boogie aka Mike Boogie Malin ('Malin').
"Since founding The Dolce Group in 2003, Moore and Malin have used the Dolce Group Entities as their personal piggybank, siphoning off to themselves millions of dollars in corporate funds, to the detriment of the entities and their other investors. Through this and other intentional misconduct, along with their gross negligence and incompetence in running the Dolce Group Entities, Moore and Malin have run several of those entities into the ground.
"Plaintiff Hilty is part of the unfortunate group of investors induced by Moore and Malin to invest in Dolce Group Entities. Hilty is, and, as relevant hereto, has been, a member of three of the Dolce Group Entities, Geisha L.A., Geisha Santa Ana, and Dolce Atlanta, investing approximately $1 million in the aggregate in those entities.
"Since Hilty first started investing in Dolce Group entities in 2004, he has received only minimal distributions on account of his investments, Geisha Santa Ana became unable to continue operating the branch of Geisha House it was formed to open in Orange County, and Hilty has been told that his investment in Dolce Atlanta is worthless, with each of the restaurants in Atlanta opened by that entity having closed."
Hilty, of New York, says he never received any significant returns on his $1 million investment because of the defendants' mismanagement and fraud.
Moore and Malin opened their first restaurant, a tapas lounge called "Belly," in Los Angeles in 2001, but closed it 3 years later, according to the complaint.
"Belly's closing in 2004, just a few years after it opened, established the paradigm for ventures founded by Moore and Malin," the complaint states. "On information and belief, in the decade since Moore and Malin founded Belly, several other of their restaurant and club ventures have closed, and others have had to be sold off or otherwise disassociated with The Dolce Group, due to, among other things, Moore and Malin's fraud, mismanagement, and diversion to themselves of corporate assets and opportunities."
Moore and Malin formed The Dolce Group in 2003, and operated 16 restaurants and clubs under its umbrella, according to the complaint. Hilty claims that only 3 of those ventures are still in business and affiliated with The Dolce Group.
He says Moore and Malin induced investors to pour millions of dollars into The Dolce Group entities, but excluded them from management, keeping exclusive control of their operation.
According to the complaint, Moore, Malin and their co-conspirators falsified accounting records, moved money between entities, made side deals with vendors and kept an "off-the-books ledger" to keep track of the money they diverted from the businesses to themselves.
Hilty claims Moore and Malin often traded gift cards redeemable at the Dolce Group restaurants for personal items and services, pocketed fees from party promoters and film and video producers, and hosted private events for their friends and associates at Dolce Group venues.
"Malin, Moore, McDonald and Pau's individual and collective misconduct has virtually destroyed all the value in these restaurants and clubs, as they have caused the restaurants and clubs to incur enormous debts, they have accumulated multiple lawsuits amounting to hundreds of thousands of dollars in liability claims resulting in increased insurance premiums or loss of insurance altogether, and generated bad publicity for the restaurants and clubs, causing a significant decrease in business," the complaint states.
"For instance, following the highly publicized 2007 incident in which Moore was personally accused of sexually battering an intoxicated nineteen-year-old patron of one of the Dolce Group ventures, the reputation of the various Dolce Group Entities, including Geisha L.A., suffered dramatically. While Geisha House was significantly profitable before the media reported on Moore's alleged sexual tortious misconduct, at least in part as a result of the negative media publicity, the restaurant continued to lose revenue such that, on information and belief, it is no longer profitable or is barely profitable."
Hilty claims patrons and former employees have sued Geisha House for employment discrimination, sexual harassment, wage violations and negligence, among other things. And when creditors sued to collect unpaid bills and rent, Hilty says, Malin and Moore responded by hiding assets in offshore accounts and affiliated entities.
Hilty says the defendants denied him access to books and records, and destroyed several boxes of Geisha House/Dolce Group documents in April, after Hilty filed a federal lawsuit against them.
A federal judge dismissed that complaint this month for lack of jurisdiction, according to the complaint.
Hilty seeks restitution and damages for fraud, breach of fiduciary duty, civil conspiracy, unjust enrichment and unfair competition, individually and on behalf of Geisha House, Geisha Santa Ana, and Dolce Group Atlanta.
He is represented by Louis Kempinsky, with Valensi Rose. http://www.courthousenews.com/2012/08/21/49472.htm