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1 11. For its part, TTSI knew that by forming the Cleantech Alliance
2 partnership with Vison and by signing sham contracts, TTSI was facilitating
3 Schuermann and Visions solicitation of substantial investments from investors
4 duped by the false promise of at least $27 million in truck sales. In return, TTSI
5 received not only positive publicity for TTSI and its green truck initiatives (even
6 getting former Governor Arnold Schwarzenegger to publicly tout the Tyrano
7 truck), but the ability to bid for government subsidies for the use of Tyrano trucks
8 and building of hydrogen fueling stations at major ports, including the Ports of Los
9 Angeles and Long Beach and the Port of Houston, with the financial risk of
10 success or failure resting squarely on the backs of the duped investors, not
11 Schuermann and Vision.
12 12. The fraud eventually collapsed, however, when Schuermann and
13 Vision could not find additional investors to prop up Vision and the co-
14 conspirators failed to secure the critical government subsidies. In the end, Plaintiffs
15 and Plaintiffs investors where left holding the bag, suffering losses of more than
16 $3.7 million. Meanwhile, Defendants made off handsomely. Schuermann and
17 Vision collected more than $1.2 million in salary payments, and TTSI received
18 all of Visions intellectual property and the two remaining Tyrano trucks that
19 Vision actually built, all without paying a penny back the defrauded investors.
20 13. Plaintiffs bring this action to make themselves and their investors
21 whole after being victimized by Schuermann and Visions fraud.
22 BACKGROUND
23 14. Schuermann was at all times relevant to the Complaint the Chief
24 Executive Officer of Vision. Before joining Vision, Schuermann was the
25 Chairman and CEO of IM-Internationalmedia AG and Intermedia Inc., which
26 produced and distributed feature films such as Terminator 3 and Basic Instinct 2.
27 Schuermann also is a pseudo-celebrity in his own right, having starred in an
28 episode of celebrity wife-swap with his wife Downtown Julie Brown.
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1 services in connection with logistics services for the Port of Long Beach
2 Infrastructure projects, and (b) provide zero emissions transportation vehicles to
3 TTSI for TTSIs drayage services in Southern California on a first-priority basis.
4 The Letter of Intent also states that this Term Sheet shall not be binding and no
5 contractual obligation will exist among the parties hereto until such time as
6 definitive documents have been entered into . . . . Specifically, the Letter of Intent
7 contemplates that TTSI shall provide Vision with a firm order to purchase the
8 first 100 Tyrano trucks produced by Vision with an option to purchase the next 300
9 Tyrano trucks.
10 21. On July 18, 2011, Vision announced that it had signed the Letter of
11 Intent with TTSI. Vision announced that the Letter of Intent declared TTSIs
12 intention to purchase 100 Tyrano trucks with an option to purchase 300 more.
13 Vision also announced that TTSI will take delivery of the initial zero emission
14 truck at a Kick-off Event on July 22, 2011 . . . .
15 22. On December 21, 2011, Schuermann on behalf of Vision sent an e-
16 mail to Plaintiffs which attached TTS-I[s] official submission to Congress
17 requesting an additional subsidy for the first 100 trucks. The attached official
18 submission purports to be made by TTSI and Visions joint venture the
19 Cleantech Alliance and notes that TTSI had presented Vision [] with a Letter
20 of Intent to purchase one hundred Class 8 Hydrogen Fuel Cell / Electric Hybrid
21 Trucks, with the option to purchase an additional 300 units.
22 23. On May 10, 2012, Schuermann on behalf of Vision e-mailed Plaintiffs
23 to announce that he had finalized the purchase order agreement for 100 Tyrano
24 Class 8 Trucks with TTSI. The e-mail contained a draft of a press release. The
25 draft press release represented that Vision and TTSI had closed definite
26 agreements.
27 24. On May 11, 2012 Vision announced that it had Receive[d] a $27MM
28 Purchase Order for 100 Zero-Emission Class 8 Trucks. In the May 2012 press
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1 release, Schuermann was quoted as stating: [i]t has been a long road from [the]
2 letter of intent signed a year ago to the closing of definite agreements.
3 25. Plaintiffs reasonably understood Schuermann and Visions
4 representation that Vision and TTSI had closed definite agreements to be
5 confirmation that Vision had received a firm order, and that Vision and TTSI
6 had executed the definitive documents referenced in the Letter of Intent signed a
7 year earlier. In making its investment decisions, Plaintiffs reasonably relied on
8 Defendants and TTSIs representations about their partnership in the Letter of
9 Intent and the statement in the Letter of Intent that definitive documents would
10 be a binding . . . contractual obligation.
11 26. Plaintiffs were unaware that each of the statements was false and
12 misleading because, as Schuermann and Vision knew, Vision did not have a
13 definitive purchase order from TTSI, and TTSI never committed to purchasing 100
14 Tyrano trucks.
15 27. Relying, however, on the false and misleading information released
16 into the marketplace by Schuermann and Vision, Plaintiffs invested millions of
17 dollars into Vision.
18 28. By February 2013, Schuermann and Vision had already squandered
19 most of the money they had fraudulently obtained from Plaintiffs. Instead of
20 admitting their fraud, Schuermann and Vision doubled down and approached
21 Plaintiffs for additional funding. This time, Schuermann and Vision specifically
22 represented to Plaintiffs that the additional funding would be used solely to build
23 twenty-four Tyrano trucks. On the basis of that presentation, Plaintiffs loaned
24 Vision an additional $1,290,000. Schuermann and Visions assurance to Plaintiffs
25 was then published in a February 4, 2013 8-K filing by Vision, which announced
26 that it had secured a $1,290,000.00 loan from Plaintiffs [t]o fund the build out of
27 twenty-four (24) zero-emission demonstration trucks . . . . Plaintiffs understood
28 these trucks would be built and used by the Cleantech Alliance in the Port of
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1 Houston, where TTSI and Vision had recently been awarded a grant by the U.S.
2 Department of Transportation.
3 29. In fact, Vision never built the promised twenty-four trucks. Instead,
4 Schuermann used the money to pay himself a salary of more than $300,000 per
5 year, to pay off debts owed to other investors, and/or to settle lawsuits. Of course
6 Schuermann never told Plaintiffs that Schuermann and Vision did not actually
7 intend to use the money invested by Plaintiffs to build the promised twenty-four
8 Tyrano trucks.
9 30. In addition to the above-described false and misleading statements,
10 Schuermann also individually met at various times (in-person, telephonically, and
11 via e-mail) with Plaintiffs representatives, where additional false and misleading
12 statements were made. In those meetings with Plaintiffs representatives,
13 Schuermann made many false representations to induce further investment in
14 Vision. For example, on one occasion Schuermann affirmed to Plaintiffs that
15 although there was a joint venture between Vision and TTSI, Vision remained the
16 owner of the two prototype Tyrano trucks Vision had built. As stated in recent
17 bankruptcy filings, however, that affirmation was false and, in fact, TTSI owned
18 the prototype trucks.
19 PLAINTIFFS RELY ON SCHUERMANN AND VISIONS
20 MISREPRESENTATIONS AND INVEST MILLIONS OF DOLLARS
21 31. Unaware that Visions critical intellectual property was worthless, that
22 TTSI had not actually committed to purchasing a minimum of $27 million worth of
23 Tyrano trucks, or that Vision had transferred its only prototype trucks and all of its
24 purported intellectual property to TTSI, Plaintiffs entered into a series of loan and
25 convertible note agreements with Vision.
26 32. On or about February 19, 2010, Plaintiffs invested $300,000 in Vision
27 through a private placement.
28
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1 49. For its part in the scheme, TTSI obtained all of Visions assets.
2 Despite never bearing any real risk on behalf of the TTSI-Vision joint venture,
3 TTSI walked away with Visions prototype Tyrano trucks, the intellectual
4 property, and whatever other assets Vision had, while Visions investors were left
5 with losses totaling in the millions.
6 FIRST CLAIM FOR RELIEF
7 Violations of Cal. Corp. Code 25401, 25501, 25504, & 25504.1
8 (Against Schuermann and Vision)
9 50. Plaintiffs incorporate by reference the allegations in paragraphs 1-49.
10 51. California Corporations Code section 25401 provides that [i]t is
11 unlawful for any person to offer to sell a security in this state . . . by means of any
12 written or oral communication which includes an untrue statement of a material
13 fact or omits to state a material fact necessary in order to make the statements
14 made, in light of the circumstances under which they were made, not misleading.
15 52. California Corporations Code section 25401 does not require any
16 fraudulent misrepresentation or intent to deceive; rather it is the making of untrue
17 statements or omissions of material facts that is unlawful.
18 53. California Corporations Code section 25501 is a remedial statute
19 which allows private plaintiffs to bring an action for violations of California
20 Corporations Code 25401. Section 25501 provides that [a]ny person who
21 violates Section 25401 shall be liable to the person who purchases a security from
22 him . . . who may sue either for rescission or damages.
23 54. California Corporations Code section 25504 provides that [e]very
24 person who directly or indirectly controls a person liable under Section 25501 or
25 25503, . . . every principal executive officer or director of a corporation so liable, .
26 . . are also liable jointly and severally with and to the same extent as such person,
27 unless the other person who is so liable had no knowledge of or reasonable
28
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1 grounds to believe in the existence of the facts by reason of which the liability is
2 alleged to exist.
3 55. California Corporations Code section 25504.1 provides that [a]ny
4 person who materially assists in any violation of Section . . . 25401 . . . with the
5 intent to deceive or defraud, is jointly and severally liable with any other person
6 liable under this chapter for such violation.
7 56. Defendants sold securities to Plaintiffs. Securities are defined in
8 California Corporations Code section 25019 to mean any note; stock; . . .
9 evidence of indebtedness; . . . transferable share; investment contract; . . . or, in
10 general, any interest or instrument commonly known as a security . . . .
11 57. Defendants sold Plaintiffs numerous securities within the State of
12 California by means of both oral and written communications by Schuermann and
13 Vision. Schuermann and Visions statements contained misrepresentations of
14 material facts or omitted to state facts necessary to make the statements not
15 misleading. Defendants misrepresentations or omissions include but are not
16 limited to the following examples:
17 a. Defendants represented to Plaintiffs that TTSI had entered into
18 definitive purchase order for at least 100 Tyrano trucks. In reality, however, the
19 supposed purchase order was a sham, and TTSI was not committed to purchasing
20 even a single Tyrano truck. Defendants knew that TTSI was not committed to
21 purchasing a single Tyrano truck. Despite this, Defendants assured Plaintiffs
22 during a meeting with Plaintiffs representative that the purchase order was real
23 and not a sham.
24 b. In an October 24, 2013 e-mail, Defendants represented to
25 Plaintiffs that Vision owned the two prototype Tyrano trucks and that TTSI was a
26 mere lessee. Defendants knew this was false. As stated in bankruptcy filings,
27 prior to October 24, 2013, on or about February 29, 2012, Vision agreed to transfer
28 the two prototype Tyrano trucks to TTSI. See In re Vision Industries Corp., Case
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1 Corporate Securities Law of 1968 were enacted to protect the public from fraud
2 and deception in transactions involving securities, like the investments at issue
3 here.
4 82. The conduct of Defendants caused substantial injury to Plaintiffs.
5 Plaintiffs have suffered injury in fact and have lost money as a result of
6 Defendants unlawful, fraudulent, and unfair conduct.
7 83. Plaintiffs are entitled to restitution in the amount of their investment
8 in Vision because that investment was obtained through unlawful, fraudulent, and
9 unfair business practices.
10 PRAYER FOR RELIEF
11 WHEREFORE, Plaintiffs pray for judgment against Defendants follows:
12 1. On the First Claim:
13 a. Compensatory damages in an amount to be proven at trial but
14 which is not less than $3,700,000.00; and
15 b. Pre- and post-judgment interest at the maximum allowable rate;
16 2. On the Second Claim:
17 a. Compensatory damages in an amount to be proven at trial but
18 which is not less than $3,700,000.00;
19 b. Punitive damages according to proof at trial; and
20 c. Pre- and post-judgment interest at the maximum allowable rate;
21 3. On the Third Claim:
22 a. Compensatory damages in an amount to be proven at trial but
23 which is not less than $3,700,000.00; and
24 b. Pre- and post-judgment interest at the maximum allowable rate;
25 4. On the Fourth Claim:
26 a. Compensatory damages in an amount to be proven at trial but
27 which is not less than $3,700,000.00;
28
24
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