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Case 2:13-cv-01967-GMS Document 1 Filed 09/26/13 Page 1 of 32

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Philip J. Nathanson Arizona State Bar #013624 THE NATHANSON LAW FIRM 8326 E. Hartford Dr. Suite 101 Scottsdale, AZ 85255 (480) 419-2578 (480) 419-4136 philipj@nathansonlawfirm.com Attorney for Plaintiffs IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA NET VEST FINANCIAL, LLC, and and JOHN CARTOLANO, Plaintiffs, vs. AMERIPRISE FINANCIAL SERVICES, INC., Defendant. Plaintiffs, NET VEST FINANCIAL, LLC and JOHN CARTOLANO, for their Complaint against Defendant, AMERIPRISE FINANCIAL SERVICES, INC., allege as follows: Parties, Jurisdiction and Venue 1. Plaintiff, NET VEST FINANCIAL, LLC, is an Arizona limited COMPLAINT FOR TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNCTION, DAMAGES AND OTHER RELIEF. No.

liability company organized and formed under the law of Arizona, with its home office and principal place of business located in Scottsdale, Arizona. 2. Plaintiff, JOHN CARTOLANO, is an independent financial advisor.

Plaintiff is a citizen of Arizona.


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3.

Defendant, AMERIPRISE FINANCIAL SERVICES, INC., is a

Delaware corporation with its home office and principal place of business located in Minneapolis, Minnesota (hereinafter sometimes referred to as Ameriprise or Ameriprise Financial). 4. The jurisdiction of this court is invoked pursuant to the diversity

jurisdiction provisions of 28 U.S.C. 1332. Venue is proper in this District. General Allegations 5. Plaintiff CARTOLANO had a long-standing business relationship

with LPL Financial as his broker/dealer. Plaintiff NETVEST FINANCIAL, LLC, was the entity that performed the marketing and managed the operations and independent relationship with LPL Financial. Plaintiff CARTOLANO was with LPL for 18! years. Plaintiff NET VEST FINANCIAL, LLC, was formed and operating since 1996, and with NETVEST FINANCIAL, LLC, Plaintiffs marketed securities offered through LPL Financial. For the past 17 years, CARTOLANO

has owned and operated NetVest Financial, which provides comprehensive estate and trust planning services, as well as financial planning involving securities and insurance products to clients to meet their financial goals. Integral to the operations of NetVest Financial, CARTOLANO hosts approximately 4-8 seminars per month entitled Trusts and Beyond where he discusses estate planning, establishes trusts (both revocable and irrevocable) and provides related asset titling services to clients. Additionally, as a part of those seminars,

CARTOLANO represents himself as a financial advisor who also sells securities


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and various insurance products. As Defendant knew, it is (and has always been) critical to CARTOLANOs business that he have the ability to co-brand and comarket NetVest Financial LLC and his broker-dealer relationship in a comprehensive manner to provide asset and estate management. CARTOLANO and his team manage client assets of approximately $180 million and generate revenues of approximately $2 million per year. Prior to being fraudulently

induced to join Ameriprise, Plaintiff CARTOLANO and his team experienced revenue growth with their business model of approximately 12% per year. 6. Prior to being fraudulently induced to invest in and join the

Ameriprise franchise, CARTOLANO was an independent registered agent of LPL, where he was allowed to operate NetVest Financial. Having grown the business from the ground up, CARTOLANO employs a staff of 11 individuals, which include sales, administrative and operations personnel. While at LPL, CARTOLANO was able to cultivate approximately $2.8 million in new client assets per month. Approximately 40% of those assets were invested in variable annuities and the remaining 60% were allocated into fee-based accounts. Accordingly, each month, CARTOLANO was able to grow his business and generate approximately $165,000 in sales commission as a direct result of his Trusts and Beyond seminars. 7. In and about July 2012, Ameriprise Financial approached Plaintiff

CARTOLANO and offered him an opportunity to get capital and to provide Plaintiff CARTOLANO with the same services that he had had at LPL, but with

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further attention paid to Plaintiff in terms of providing capital and succession planning at the firm. In order to induce Plaintiff CARTOLANO to enter into an agreement, Ameriprise Financial specifically offered to provide the same services that Plaintiff CARTOLANO had at LPL, and assured said Plaintiff that he would be able to operate under the Ameriprise Financial relationship in the same fashion that he operated for 18 ! years with LPL. These promises and

assurances were a condition precedent to Plaintiff CARTOLANO entering into any relationship with Ameriprise Financial. Based upon those promises and assurances, Plaintiff CARTOLANO was willing to enter into the $1.1 million seven-year forgivable note arrangement that Ameriprise Financial proposed. Additionally, Ameriprise Financial offered and provided $600,000 in a loan, through Ameriprise's banking department, at a 6+ percent interest rate for the next seven years. Ameriprise Financial Services, Inc. is a national broker-dealer

and FINRA member firm that is a subsidiary of Ameriprise Financial. A large percentage of Ameriprises registered representatives are independent contractor franchisees like Mr. Cartolano who are not employees of Ameriprise, but rather are independent financial advisors with their own unique business models (the Ameriprise Franchise Group, or the Independent Channel). On its website, the Ameriprise Franchise Group purports to allow experienced financial advisors to develop their practice the way they have always envisioned with flexibility and support. That flexibility and support were not experienced by Mr. Cartolano, as detailed below.

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8.

The promises made by Ameriprise Financial to induce Plaintiff

CARTOLANO to enter into a relationship with Ameriprise Financial were made repeatedly, both before and after the execution of agreements between the parties. Plaintiff CARTOLANO would not have entered into those agreements had he not been assured that everything would continue, in terms of the operations of his business, as it was prior to his relationship with Ameriprise Financial. Plaintiff CARTOLANO explicitly discussed with Ameripirse

Financial, and made it a condition of entering into a relationship with Ameriprise Financial, that the marketing strategies that Plaintiff had in place were in fact going to work the same way as before because Plaintiffs business was on a growth track due to the kind of marketing Plaintiff was doing prior to the Ameriprise Financial transaction. 9. Ameriprise agents stated that that they were impressed by

CARTOLANO 's business model and specifically stated that Ameriprise would provide additional resources to expand and grow the business exponentially. CARTOLANO emphasized that he would need to operate NetVest Financial exactly the way he had at LPL and that it was necessary that he be able to comarket and co-brand NetVest Financial and Ameriprise for purposes of conducting his Trusts and Beyond Seminars, just as LPL had allowed him to do. Ameriprise agents assured CARTOLANO that he could continue with his business and marketing model whereby CARTOLANO would be allowed to continue to co-brand and comarket NetVest Financial and Ameriprise.

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Additionally, Ameriprise agreed to provide recruiting services to recruit additional financial advisors to join CARTOLANO 's Ameriprise branch. Moreover, Ameriprise agents further promised CARTOLANO that he would have services and support focused on achieving the aforementioned goals, which was purportedly more than LPL could offer. Moreover, Ameriprise agents

represented that CARTOLANO would have access to similar products that he had utilized at LPL including, but not limited to, real estate investment trusts, insurance and variable annuities. Additionally, Ameriprise agents represented that Ameriprise's technology was superior to LPL and that they also had training programs for CARTOLANO 's staff to become accustomed to the new systems. 10. As an incentive to induce CARTOLANO to invest in the

Ameriprise Franchise, agents of Ameriprise initially extended CARTOLANO a promissory note in the amount of $1.1 million which was to be forgiven over a period of seven years. Additionally, Ameriprise extended a working capital loan of $675,000.00 for CARTOLANO to invest in his practice, as well as additional production bonuses. Respondent's agents represented that these loans were for CARTOLANO to grow his business by increasing his staff, his licensed sales personnel and the number and frequency of the Trusts and Beyond seminars, which was a proven way to increase revenues. 11. As a result of the foregoing, on or about August 17, 2012, Plaintiff

CARTOLANO signed and entered into the AMERIPRISE FINANCIAL SERVICES, INC. INDEPENDENT ADVISOR BUSINESS FRANCHISE

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AGREEMENT, a copy of which is attached hereto as Exhibit #1 and is incorporated herein by this reference (hereinafter referred to as the franchise agreement). 12. Transferring Plaintiff CARTOLANOs business from LPL to

Ameriprise entailed a movement of over 350 clients maintaining more than 2,200 accounts. There were substantial costs associated with the transfer as a result of the downtime in terms of future production. transfer would take 60 to 90 days. months, not 90 days. 13. Thirty days prior to the contractual date of August 12, 2012, which Ameriprise told Plaintiff the

But Ameriprise knew it would take six

is the date of the franchise agreement, was required, under the circumstances, to not take in any new business thirty days prior to August 12, 2012. When Plaintiff CARTOLANO committed to a thirty-day date of August 12th, on or about July 10-12, 2012, CARTOLANO took all appropriate steps to move forward with the Ameriprise Financial transaction. 14. Ameriprise promised to send a special team to draft the necessary

business paperwork, to help Plaintiff CARTOLANO design buy/sell agreements; help design the new structure so Plaintiff could move forward with the necessary documents, sign the necessary contracts to effectuate the Ameriprise Financial transaction. Ameriprise sent a team headed by Tom Titus. It was his firm called Smart Concepts that was the lead firm. Ameriprise promised to pay Smart Concepts for its services, and to help Plaintiff put together the necessary

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structure both legally and structurally to marry everything together to create a healthy relationship with Ameriprise. 15. Smart Concepts, via Tom Titus, informed Plaintiff how great

Ameriprise was going to make everything for Plaintiff from that point forward. At the end of the series of meetings, it became more and more apparent that there was really not a group at Smart Concepts to help Plaintiff design a way of morphing what Plaintiffs current structure was into structures or a structure or multiple structures that would make things work with Ameriprise. 16. As this series of meetings with Smart Concepts went on, Plaintiff

notified the responsible people at Ameriprise that the amount of time that was going by to get this done was, in fact, a downtime for Plaintiff. So they were willing to advance us $100,000 of the $1.1 million in advance, and which they did, to help offset the downtime because of how long it was taking. 17. Plaintiff was induced to sign the franchise agreement, Exhibit #1,

by promises and assurances from Ameriprise that it would be made to include ancillary amendments, which were promised to include certain provisions that would allow Plaintiff to maintain his existing customer base as well as Plaintiffs future customer base, and that those clients would be, in fact, always be Plaintiff CARTOLANOS clients by definition. Since that time Ameriprise has proclaimed that those amendments and addenda to the franchise agreement would be issued after the fact to that effect, but Ameriprise has yet to deliver such amendments and addenda.

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18.

Smart Concepts and Ameriprise, all of the way up to August 12th,

had plenty of time to do the really necessary research and to provide the necessary personnel to do a complete and comprehensive analysis as to how why Plaintiff operated the way it did. Instead Ameriprise and Smart Concepts

focused most of their time on Plaintiffs revenues. But they never once did a comprehensive investigation of the breakdown of Plaintiffs business, the business expenses, and why Plaintiff operated the way it did structurally, legally, financially, et cetera. Ameriprise and Smart Concepts wanted to impose on

Plaintiff contracts that jeopardized Plaintiffs revenue stream because the chosen representatives of Ameriprise Financial did not take the time to completely analyze and structure the transaction around the manner in which that revenue stream was generated. Ameriprise had not familiarized Mr. Titus with

CARTOLANO's business model. Initially, CARTOLANO was told that Smart Concepts would structure a deal whereby CARTOLANO's senior registered representatives would assign their clients over to CARTOLANO in order to comport with the Ameriprise Franchise model and, pursuant to new agreements, CARTOLANO personally would share in only a very small percentage of the revenues generated from those accounts. Thereafter, for the first time, Mr. Titus informed CARTOLANO that Ameriprise would not allow CARTOLANO to use the entity NetVest Financial, LLC. Instead, Mr. Titus informed him that he would have to function under a "team name" called NVO Financial (which was not a legal structure) in order to comply with the rules of the Ameriprise franchise.

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Furthermore, Mr. Titus told CARTOLANO that he was instructed by "higher-ups" at Ameriprise not to discuss this issue any further with CARTOLANO. Accordingly, Ameriprise did not view or treat NetVest as an integral part of the franchise and effectively wanted the entity out of the relationship, despite Ameriprises prior representations and promises. 19. Worst of all, with regard to the Trusts and Beyond seminars,

Ameriprise management initially represented that CARTOLANO could comarket and co-brand the names NetVest Financial alongside Ameriprise. However, several months into his tenure with the firm, Ameriprise's Compliance Department told CARTOLANO that he could not co-market the Ameriprise brand, and that he would be required to remove the Ameriprise name from all brochures and seminar materials. That decision, which was contrary to all prior representations, emasculated CARTOLANO 's entire business model, because he no longer could hold himself out as an Ameriprise financial advisor at his Trusts and Beyond seminars. 20. Plaintiff CARTOLANO was the registered principal branch

manager of his own branch when he was with LPL. But when Plaintiff joined Ameriprise as a franchisee, Ameriprise enforced an outside Office of Supervisory Jurisdiction, OSJ, which is a registered principal that existed outside of Plaintiffs branch. Ameriprise nevertheless assured Plaintiff that there would be proper compliance and proper systems in place. Ameriprise assured Plaintiff that the liability issues and the compliance issues that are enforced by FINRA would be

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handled professionally by Ameriprise.

But Ameriprise knew that it had no

intent of fulfilling that promise because it knew that it did not have the personnel and expertise and make assurances regarding liability and compliance issues. 21. Plaintiff later learned, long after signing the franchise agreement,

about Ameriprises lack of expertise in supervising a branch office. Their lack of supervision was and is fraught with the probability of creating liability, and their systems are just not capable of really uncovering or discovering any kinds of problems that exist in a branch office. Ameriprise knew this, yet represented to Plaintiff just the opposite as the truth. 22. A representative of Ameriprises trust deparment came out and

met with Plaintiff. The Ameriprise trust department wasn't very advanced. Plaintiff needed to know what language Plaintiff needed to have and requirements we needed to have in customer documents since Plaintiff is in the revocable trust preparation business -- which they knew we were. That is part of Plaintiffs marketing structure -- that Plaintiff needed to have documentation from the trust department so Plaintiff could name, if Plaintiff needed to, that trust company as a potential successor trustee for Plaintiffs clients' documents. Plaintiff clarification on fees that apply to the franchise owner and individual advisors. Plaintiff needed to have suggestions on how not to interrupt systematic ACH instructions on our client accounts that are currently set up -- that were currently set up in the LPL accounts during this transitional process. Anything that related to being operational, from the transfer of securities and monies in

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accounts to ACH transactions, in or out journal transactions, in or out, at the level in which we were operating. 23. But when Plaintiff arrived at Ameriprise, Plaintiff was assigned

untrained and unskilled personnel from Ameriprise to allegedly assist Plaintiff. These were inexperienced people that basically had less experience than Plaintiffs receptionist. Plaintiff fought day after day, hour after hour, with these Ameriprise employees. Plaintiffs staff had to beg and do whatever they could to get information from these inexperienced staff members at Ameriprise. Plaintiffs employees participated in more than 850 telephone calls with these Ameriprise employees. And when brought to the attention of the senior VP at Ameriprise, no one at Ameriprise took those telephone calls seriously. 24. In an attempt on an ongoing basis to fulfill Plaintiffs fiduciary

responsibility to his business, and Ameriprise, Plaintiff CARTOLANO repeatedly tried to demonstrate to Ameriprise that damage had been occurring during this entire process, and that it is still occurring to this day. Plaintiff provided Ameriprise with a document entitled "Three- Month Review -Ameriprise." It started off with training, and Plantiff went on to explain that if Plaintiff had the proper training regarding the Ameriprise processes, the technology, and the systems to begin with, approximately 200 hours of Plaintiffs time could have been spared. There was very little hands-on support beyond the superficial overview of Advisor Compass and Thompson One, which are the two technology platforms.

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25.

Plaintiff received a call from Gary Gassmann, an Ameriprise

executive, wherein he proceeded to tell Plaintiff that he was sending his IT tech support team to redo Plaintiffs computer system. One year earlier Plaintiff had installed a state of the art computer network system in Plaintiffs facility which addressed the computer stations at each desk, security cameras, AV equipment, telephony integration, etc. This cost us approximately 150k, was well displayed in an air conditioned and climate controlled room and was Windows based, etc. Because their systems were VPN/DOS based, they would have interfered with Plaintiffs computer system. Plaintiff accordingly said that So

"under no circumstances" would they be allowed to touch our systems.

Ameriprise came up with an alleged temporary arrangement by sending Plaintiff 15 laptops. Those laptops currently sit at every station to access their AMPF systems. Ameriprise disclosed 7 months thereafter that it did have a Windows based system available at the time. 26. If Plaintiff wanted to sell a bond in a client portfolio, Ameriprise

had not instructed Plaintiffs employees how to effectuate such a sale, 90 days into the relationship. As a broker, one needs to know instantly how to execute a stock or a bond trade. After many conversations with the front-end inept service individuals that didn't even know what an equity desk or bond desk was, it made it extremely difficult to do trades. Plaintiff was also used to having tools that compare client portfolios. So when asked to provide us with those kinds of tools at Ameriprise, Josh Cohen and others told Plaintiff that they were not

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available. However, Plaintiff later discovered that was not true, and that such tools were available. 27. Plaintiff was led to believe by Ameriprise that Plaintiff would be

improving proposals and deliverables for Plaintiffs prospective clients to help Plaintiff gather new business in the world of financial plans and investment proposals, platform proposals. However, at that point, Plaintiff had seen none of those tools. Thanks to Ameriprise, Plaintiff took a giant step in the wrong

direction with regard to Plaintiffs ability to deliver portfolio analysis, investment proposals, recommendations, and solutions to Plaintiffs prospective clients. That severely hindered and hinders Plaintiffs ability to do business. 28. As to commissions and money tracking regarding revenues coming

into Plaintiffs branch, Plaintiff did not at the 90-day time frame obtain the information from Ameriprise to understand the commission systems and tracking. Ameriprises systems themselves were archaic, confusing, and cumbersome. It took nearly ten months to get Ameriprise to provide to Plaintiff their web-based commission system that had been there the entire time, that was much more proficient, easier to read, and that had the ability to track client data, client commissions, et cetera, on a one-screen basis, because it was web-based. Plaintiff actually was not allowed to even use that until well into the 10th month of operations. Plaintiff was then forced to use their VPN-based system for With that

commission tracking, which is worse than a DOS-based system.

Plaintiff could not track the revenue coming into the firm, who got paid for what,

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what was paid for what came in, what wasn't paid for yet. Plaintiff could not manage his financial practice without that kind of data. Plaintiff was forced to use a payroll system that was and is inept. When Plaintiff was told several different scenarios were going on as to the working of the commission system, such as the overrides and the rep. adjustments, it caused several accounting strategies to be started and then abandoned, therefore wasting additional time and effort when productivity could have been spent elsewhere. 29. Ameriprise did not provide assistance and help in response to

Plaintiffs questions and needs. Where Plaintiff found that there had been multiple ACAT and non-ACAT rejections -- this is a system that -- ACAT stands for automatic account transfer systems, some accounts can be moved via the ACAT system; other accounts, because of the type of securities within the account itself, cannot be ACAT transferred. It falls into the non-ACAT category. But when either one of those systems rejected a transfer of an account, there was no communication by the home office. Yet this is the most important process in the move. When Plaintiff requested a transfer of an account from a firm, and it got rejected, Plaintiff did not know what to tell the client, when to tell the client, how to resolve the problem with the client, because no one from the Ameriprise home office even bothered to let Plaintiff know. This was and is inefficiency at its highest order. When an account was not anything that needed further

requirements, it wasn't until Plaintiffs employees looked into the account to find the status that Plaintiff discovered it was rejected. Ameriprise never told

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Plaintiff to expect this lack of service and ineptitude. 30. Journaling at Ameriprise, which is moving securities or money

from one account to the other, was poorly designed, and it didn't recognize relationships via the Social Security number or tax ID number. If a registration was off by one letter or by an ampersand instead of "and," the system at Ameriprise not recognize what is being said, forcing Plaintiffs employees to spend 15 to 20 minutes on the phone just to get a periodic journal created, or journals created for Plaintiffs clients. 31. Ameriprise executives at the highest level represented to Plaintiff,

on numerous occasions, that Plaintiff would still be an independent franchise capable of marketing Plaintiffs brand, which brand was NetVest Financial LLC. But Ameriprise actually intended to restrict Plaintiffs brand, without disclosing that fact to Plaintiff, and instead representing just the opposite to Plaintiff to induce Plaintiff to become a franchisee of Ameriprise. 32. At the time those representations were made, Ameriprise did not

intend to live up to those representations to Plaintiff that Plaintiff would still be an independent franchise capable of marketing Plaintiffs brand, which brand was NetVest Financial LLC. The intent of Ameriprise was and is evidenced by the insistence of Ameriprise that Plaintiff remove the NetVest Financial LLC from the logo; that the logo be removed from Plaintiffs building; and also that the bull and bear image from the logo be removed. Ameriprise further insisted on the removal of Plaintiffs current website after one year. These were and are

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major issues that were expressed to be unacceptable from the start. Amerprise rejected Plaintiff portraying himself and NetVest Financial LLC as independent, which Plaintiff was promised. Plaintiff was not even allowed by Ameriprise to use the word independent anymore. Accordingly, as more fully alleged herein, Ameriprise, through its various agents, fraudulently induced Mr. Cartolano to leave his former broker-dealer of 18 years, LPL Financial, LLC (LPL) and join Ameriprise by falsely promising Mr. Cartolano that his independent practice, NetVest Financial, LLC would be able to operate at Ameriprise exactly the way it had at LPL, and that Ameriprise was willing to invest in Mr. Cartolano so that he could expand NetVest Financials operations, thereby increasing its revenues, both for Mr. Cartolano and for Ameriprise. Instead, the promises and

representations made by Ameriprise were not true and have caused CARTOLANO to suffer significant damages. Ameriprises misconduct is clearly evidenced by the fact that CARTOLANO was forced to resign just over one year into his tenure with Ameriprise and to move his entire practice and staff of 11 individuals back to LPL in order to mitigate his damages. 33. It thus became apparent, after the relationship was formed and had

moved into operations, that Ameriprise was insisting that Plaintiff operate his business Ameriprises way. It became apparent after the relationship was

formed that these were the systems and structures that Ameriprise knew, from day one, that Ameriprise would use, and that Ameriprise therefore had no intention of adapting their organization to allow for what it was Plaintiff was

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doing to generate the revenues Plaintiff was generating.

Ameriprise clearly

lacked the intent to implement and approve what Plaintiffs structure was, and to permit the Plaintiffs current structure that had been in place for a very long period of time. 34. It was all about an agenda that became more evident as time went

on. Ameriprise, over time, made it apparent that they wanted to dismantle Plaintiffs existing structure, and to insert structure(s) that were more suitable to AMPF's way of doing things and their means of controlling Plaintiffs manner of doing business. No effort was made by AMPF to understand the complexity of Plaintiffs existing LLC structure, registered trade name, years of doing business, nor the kinds of business that Plaintiff was doing. Ameriprise was pushing hard to have Plaintiff end up using an entity or, in their terms, a marketing name, NetVEST Financial that wasn't in fact a legal entity at all. Ameriprise refused, contrary to prior representations, to permit Plaintiff to use NetVest Financial LLC as an operating and marketing arm of the enterprise. 35. Whether it was stationery, or pictures on Plaintiffs website, it all

became relevant as to the control mechanisms that Plaintiff was not told about that were put into force starting at about the 90th day moving forward. The cost of transition as of that date had been approximately $400,000. Plaintiff also wanted to know what the platinum partnership was, what it did. Ameriprise never said. 36. Plaintiff repeatedly informed Ameriprise of Plaintiffs concerns that

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surrounded the representations and promises that were made to Plaintiff to induce Plaintiff to enter into the franchise agreement, and its related agreements, especially from the Tom Titus group and other Ameriprise personnel, to the effect that the continuation of NetVest Financial, LLC, as a very successful independent financial advisory firm, would occur. And eight months into the franchisor-frachisee relationship, Ameriprise had literally destroyed Plaintiffs business, which Plaintiff informed Ameriprise about in writing. And this was one of many attempts by Plaintiff to explain to Ameriprise that something needed to be done. 37. There were many nonqualified accounts that weren't transferred

even after 120 days; 60 accounts of outside mutual funds that were transferred after 120 days of delay; 30 retirement accounts, which held REITS, which were not transferred after 90 days. And the fact that there was a 42 percent error ratio in how the ACAT process had been processed by Ameriprise's back office. A 42% error ratio is a very high number in any business. And there have been numerous ACAT/non-ACAT rejections with no communication, as alleged above. 38. Plaintiff reiterated to Ameriprise that Plaintiff needed the

definitions and contractual agreements designed and made for NetVest Financial, LLC, and written agreements for Plaintiff to keep Plaintiffs existing client book of business. This was yet another request for attention to be paid to Plaintiff regarding issues that Plaintiff felt were very critical. Plaintiff reiterated

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that it wanted the written agreement previously discussed and promised for full approval of NetVest, LLC's, "Trusts and Beyond" seminar series, which is Plaintiffs OBA. Plaintiff did not receive any answer from Ameriprise. 39. Plaintiff calculated the damages suffered by NetVest Financial LLC,

as in excess of $869,000. 40. Contrary to Ameriprises prior representations, assurances and

promises, Ameriprise completely ignored Plaintiffs issues, problems and concerns, further evidening Ameriprises fraudulent and unreasonable conduct. 41. As a direct and proximate result of the foregoing, the cost of

transferring to Ameriprise and the financial consequences from the false promises and misrepresentations made to Plaintiff far exceed the amount of any loans or promissory notes extended to Plaintiff by Ameriprise. The cost of

transferring to Ameriprise and the fallout from the false promises and misrepresentations have damaged CARTOLANO's business and far exceed the amount of the promissory notes extended to him by Ameriprise. The costs related to the transfer of customers both to and away from Ameriprise have cost CARTOLANO and his practice over $900,000.00. Additionally, the NetVest Financial fiasco has affected CARTOLANO's ability to attract new clients through his Trusts and Beyond seminars, and has caused (and continues to cause) damages in excess of $2,600,000.00 in lost revenue and reputational damage. As alleged herein, the limited products which were available to Plaintiffs existing clients, as well as the sub-par support, services and technology

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at Ameriprise, also translated into additional loss of revenue as Plaintiff and his staff were forced to spend additional time and resources compensating for Ameriprises inadequacies and unreasonable conduct, as opposed to generating revenue. Plaintiff has continued to sustain damages, and will continue to sustain damages into the future, in connection with lost growth as a result of Ameriprises conduct. In total, Mr. Cartolano estimates his damages to be in excess of $4,000,000, as of this point in time. There were also

commissions/receivables through 8/30/2013 of approximately $170,000. There was an additional bonus due of 125,000 on 11/20/2013, together with other payments and damages that are due and owing to Plaintiff. 42. Ameriprise visited Plaintiffs office on 8/13/2013, which visit was Ameriprise sent Plaintiff an

supposed to last until 8/15/2013, but did not.

agenda about 30 days prior to the meeting, which showed that Ameriprise wanted to review risk mitigation. At that meeting it became apparent that the only mitigation of risk Ameriprise was concerned with was risk that related to Ameriprise, and not anyone else. That was not reasonable or good faith conduct. 43. As a result, Plaintiff CARTOLANO must terminate his relationship

with Ameriprise, in line with paragraph 17(A) of the franchise agreement, and the applicable law. 44. The franchise agreement contains various arbitration provisions as

to Plaintiff CARTOLANO. Plaintiff NET VEST FINANCIAL, LLC is not a party to that franchise agreement, and is not a party to any arbitration agreement. As

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to Plaintiff CARTOLANO, the franchise agreement, in paragraph 27(E), provides in relevant part that: either Independent Advisor or Ameriprise Financial may apply to a court of law for immediate injunctive relief, or other temporary or emergency relief, as allowed by FINRA rules Consistent with that contractual provision, FINRA Rule 13804, provides in relevant part that: (a) Temporary Injunctive Orders (1) In industry or clearing disputes required to be submitted to arbitration under the Code, parties may seek a temporary injunctive order from a court of competent jurisdiction. Parties to a pending arbitration may seek a temporary injunctive order from a court of competent jurisdiction even if another party has already filed a claim arising from the same dispute in arbitration pursuant to this paragraph, provided that an arbitration hearing on a request for permanent injunctive relief pursuant to paragraph (b) of this rule has not yet begun. (2) A party seeking a temporary injunctive order from a court with respect to an industry or clearing dispute required to be submitted to arbitration under the Code must, at the same time, file with the Director a statement of claim requesting permanent injunctive and all other relief with respect to the same dispute in the manner specified under the Code. 45. In line with the foregoing FINRA Rule 13804, Plaintiff

CARTOLANO is filing a FINRA statement of claim on the same date as the filing of this Complaint. No arbitration hearing has begun or is about to begin. This Court therefore has the jurisdiction and power to enter temporary or preliminary injunction orders as to Plaintiff CARTOLANO. 46. Plaintiff NET VEST FINANCIAL, LLC seeks injunctive relief and

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damages from this Court, since it is not required to arbitrate any aspect of its claims. Defendant took the position with Plaintiff CARTOLANO that NET VEST FINANCIAL, LLC was not and should not be part of his business with Ameriprise. 47. Defendant has in the past refused to transfer all customer accounts Defendant should be

when a customer submits a written transfer request.

required to transfer all customer accounts upon written demand of the customer. 48. As a direct and proximate result of one or more of the aforesaid

improper acts of defendant, Plaintiffs contractual and property rights in and to the Plaintiffs business will be injured and destroyed. If not enjoined from

pursuing its illegal and unreasonable conduct, Defendant will damage or destroy Plaintiffs extensive business efforts to create and operate its business, as well as Plaintiffs valuable investment in and to its business. 49. Absent the issuance of an injunction by this Court prohibiting the

defendant from interfering with Plaintiffs conducting their business away from Ameriprise, and from damaging the assets and business of Plaintiff, Plaintiff's investment in its field will be dissipated or extinguished, causing Plaintiff to suffer irreparable harm and damage. 50. Without injunctive relief, Plaintiff will suffer irreparable harm

because its business and investments will be destroyed by the conduct of the Defendant, should that conduct be permitted to continue. Defendant will be unable to compensate the plaintiff for the ensuing irreparable harm if not

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enjoined. 51. Plaintiff is likely to succeed on the merits given the foregoing

conduct of Ameriprise, or alternatively, there are serious questions going to the merits and the balance of hardship tips sharply toward the Plaintiff. 52. The balance of equities is decidedly in Plaintiffs favor, for the

reasons set forth herein. 53. It is in the public interest that Plaintiffs customers receive the

service and investment assistance that should be furnished, and that Plaintiffs remain in business to do so. 54. Plaintiff should be absolved from posting any bond because the

injunctive relief sought herein prevents continuing damage, and protects the integrity of stock ownership, rather than creating any damage. COUNT I - MINNESOTA FRANCHISE ACT 1. Plaintiffs incorporate paragraphs 1- 54 of the General Allegations as

though fully alleged herein. 55. The Ameriprise Financial Services, Inc. Independent Advisor

Business Franchise Agreement entered into by Plaintiff Cartolano and Defendant, and the related agreements signed in connection with that agreement, created a franchise under M.S.A. 80C.01(4)(a)(1)(i-iii), in that: (a) the parties entered into a written express contract or

agreement for a definite period of time, pursuant to which Cartolano, as the franchisee, was granted the right to offer his services using the franchisors trade

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name, trademark, service mark or other commercial symbols; (b) Cartolano and Defendant had a community of interest in the

marketing of the services by agreement; and (c) Cartolano, as the franchisee paid, directly or indirectly, a

franchise fee under M.S.A. 80C.01(9). Said franchise fee constituted the 10% of the gross revenue received by Ameriprise, together with the fees and other charges that the Plaintiff franchisee was and is required to pay under the franchise agreement, and has agreed to pay, for the right to enter into business and to continue the business under the franchise agreement, including, but not limited to, the payment either in lump sum or by installments of any fee or charges based upon a percentage of gross or net sales whether or not referred to as royalty fees, any payment for goods or services, or any training fees or training school fees or charges. 56. Defendant engaged in unfair and inequitable practices under

M.S.A. 80C.14 and M.S.A. 80C.13, and the rules promulgated thereunder, by the Minnesota Commissioner of Commerce, Minn. R. 2860.4400(G) which rules prohibited Defendant from imposing on the Plaintiff franchisee by contract or rule, whether written or oral, any standard of conduct that is unreasonable. Defendants violations of that statute, and the administrative rule promulgated thereunder, based upon the allegations herein, included, but are not limited to: (a) Representing and promising Plaintiff that it could operate its business as it had done prior to becoming a franchisee of Ameriprise, when in fact Amerprise had no intention of permitting Plaintiff to do so;
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(b) (c) (d) 57.

Requesting Plaintiff to make representations to regulatory bodies that were untrue; Subjecting Plaintiff and his business to slipshod and substandard work procedures and systems; Assuring Plaintiff that all the problems would be alleviated, and then doing nothing about those problems.

Defendant additionally engaged in unfair and inequitable practices

under M.S.A. 80C.14, and the rules promulgated thereunder, by the Minnesota Commissioner of Commerce, Minn. R. 2860.4400(J), in that: (a) (b) Defendant required Plaintiff Cartolano to waive a jury trial in the franchise agreement; Defendant required Plaintiff Cartolano to waive the right to recover damages, under the foregoing statute, rule and under M.S.A. 80C.17(1) and M.S.A. 80C.17(3).

58.

Defendant violated M.S.A. 80C.14, and Plaintiff Cartolano has the

right to pursue this action under M.S.A. 80C.17. WHEREFORE, Plaintiffs, NET VEST FINANCIAL, LLC and JOHN CARTOLANO, pray for the relief set forth below against the Defendant, AMERIPRISE FINANCIAL SERVICES, INC., its officers, agents and employees, and therefore requests the following relief from this Court in this Count I of the Complaint: A. That this Court issue a temporary restraining order pursuant to

F.R.Civ.P. 65, or, as the case may be, a preliminary injunction pursuant F.R.Civ.P. 65, by its clerk and under its seal, enjoining the Defendant, AMERIPRISE FINANCIAL SERVICES, INC., its officers, agents and employees,
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attorneys, agents, servants and all other persons acting under its direction and control: (i) From interfering with Plaintiffs termination of Defendant, and from interfering with Plaintiffs future operation of the Plaintiffs business separate and apart from Ameriprise; From attempting to enforce any alleged monetary obligation of repayment from Plaintiff to Ameriprise until the entire controversy is resolved in this Court and in any FINRA arbitration, including, but not limited to, any promissory note or repayment obligation alleged to be owed to Ameriprise, until the entire controversy is resolved in this Court and in any FINRA arbitration, and the damages owed to Plaintiff are adjudicated; From taking any action which would prevent the change of brokerdealer and/or registered agent from Ameriprise (or any of its subsidiaries, affiliates or agents) to LPL Financial, LLC (or any of its subsidiaries, affiliates or agents); From taking any action which would prevent the change of brokerdealer and/or registered agent from Ameriprise (or any of its subsidiaries, affiliates or agents) to LPL Financial, LLC (or any of its subsidiaries, affiliates or agents) on any customer insurance policy, annuity contract or other investment or insurance product currently held outside of Ameriprise; To pay all commissions/receivables and bonuses that are due and owing; To pay all fee based revenue that is due and owing; To transfer all clients to Plaintiff, whether the clients are in Plaintiffs name, Jayson Walkers name, James P. Norris name and any joint business of the above or team associated with said persons;

(ii)

(iii)

(iv)

(v) (vi) (vii)

(viii) To transfer all client accounts upon the written direction of the client, without imposing any additional transfer requirements; (ix) To prohibit Defendant from contacting Plaintiffs clients;

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(x)

To permit the NetVest name, phone and website to be used by Plaintiff so that Plaintiff may continue to present Trusts and Beyond; To transfer all customer accounts and securities to LPL Financial, LLC, serviced by Cartolano and any of his team members; To transfer Cartolano's personal and retirement accounts and securities to LPL Financial, LLC;

(xi) (xii)

(xiii) To require Ameriprise to honor all written requests by customers serviced by Cartolano to liquidate any securities positions in proprietary Ameriprise products and to transfer those funds to LPL Financial, LLC; (xiv) That Ameriprise be prohibited from taking any action which would interfere with the transfer of customer accounts and securities to LPL Financial, LLC; and (xv) B. That Ameriprise be prohibited from interfering in any way with the operation of NetVest Financial, LLC. That said temporary restraining order may be issued immediately

(with or without previous notice to the Defendant), or said preliminary injunction may be issued with previous notice to the Defendant; that the Plaintiff be excused from giving bond; but if required by this Court, Plaintiff be ordered to give bond upon such condition and with such security as the Court prescribes. C. That upon final hearing and determination of this cause a

permanent injunction be issued enjoining the Defendant and any successor, attorney, agent, servant or other person acting under his direction or control from committing any of the aforesaid wrongful acts; and D. That this Court grant accelerated discovery so that plaintiff may

ascertain, on an accelerated basis, in time periods substantially shorter than the

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time periods provided for discovery in the Federal Rules of Civil Procedure, the nature and extent of the information in Defendants possession regarding the forgoing allegations. E. F. Declare that the Ameriprise franchise with Plaintiff is terminated. Declare that the jury trial and damages provisions in the franchise

agreement are violative of the Minnesota Franchise Act and unenforceable. G. That Plaintiff recover the damages authorized by the foregoing

statutory provisions, and that judgment be entered thereon against Defendant. COUNT II - FRAUD 1. Plaintiffs incorporate paragraphs 1- 54 of the General Allegations as

though fully alleged herein. 55. Upon information and belief, Ameriprises agents were fully aware

at the time they made the aforementioned promises to Plaintiff regarding operating NetVest Financial LLC, that Plaintiff would not be allowed to continue to operate and co-brand his business in the way he had at LPL. Ameriprise had no intention of performing its promise. Mr. Cartolano has suffered significant damages as a direct and proximate result of Respondents misconduct. 56. As alleged herein, all of the misrepresentations by Ameriprises

agents regarding the Ameriprise franchise, as well as the manner in which Plaintiff CARTOLANO would be allowed to conduct business at Ameriprise, were made to Plaintiff CARTOLANO to induce him to invest in and operate an Ameriprise franchise, and to transfer all of his customer assets to Ameriprise.

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Mr. Cartolano justifiably relied upon those misrepresentations and was severely damaged in doing so. WHEREFORE, Plaintiffs NET VEST FINANCIAL, LLC and

JOHN CARTOLANO, pray that the Court grant them the requested relief against Defendant, AMERIPRISE FINANCIAL SERVICES, INC., as follows: A. B. C. D. E. Such compensatory and punitive damages that are established by the evidence; Pre-Judgment and Post-Judgment Interest; Reasonable Attorney Fees; Costs and other fees. Such other and further relief as this Court deems appropriate.

COUNT III INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE

1.

Plaintiff NET VEST FINANCIAL, LLC incorporates paragraphs 1-

54 of the General Allegations as though fully alleged herein. 55. Plaintiff NET VEST FINANCIAL, LLCs expectancy of continuing

its relationship with CARTOLANO, as an operations and marketing company, and the future businesses and business arrangements that it enjoyed with CARTOLANO prior to Ameriprises interfernence, constituted valid business expectancies. 56. Defendant knew about those relationships and expectancies, which

knowledge led them to engage in the foregoing conduct. 57. In approaching third parties and making the representations and

statements Defendant chose to make, Defendant intentionally interfered with the


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foregoing expectancies, which interference caused Plaintiff NET VEST FINANCIAL, LLC to lose such relationships or expectancies. 58. As a direct and proximate result of Defendants statements and acts

of interference, Plaintiff suffered monetary damage to its relationships and its expectancies were disrupted and extinguished. WHEREFORE, Plaintiff NET VEST FINANCIAL, LLC prays that the Court grant them the requested relief against Defendant, AMERIPRISE FINANCIAL SERVICES, INC., as follows: A. B. C. Such compensatory and punitive damages that are established by the evidence; Costs and other fees. Such other and further relief as this Court deems appropriate. COUNT IV BREACH OF CONTRACT 1. Plaintiff CARTOLANO incorporates paragraphs 1-54 of the

General Allegations as though fully alleged herein. 55. As more fully described above, Ameriprise breached the franchise

agreement regarding the Ameriprise franchise. 56. Plaintiff performed all conditions precedent required to be

performed under the franchise agreement. 57. contract. WHEREFORE, Plaintiff JOHN CARTOLANO, prays that the Court grant him the requested relief against Defendant, AMERIPRISE FINANCIAL
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Plaintiff CARTOLANO is entitled to damages for breach of

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SERVICES, INC., as follows: A. B. C. D. E. Such compensatory damages that are established by the evidence; Pre-Judgment and Post-Judgment Interest; Reasonable Attorney Fees; Costs and other fees. Such other and further relief as this Court deems appropriate. NET VEST FINANCIAL, LLC and JOHN CARTOLANO By: /s/ Philip J. Nathanson Plaintiffs Attorney

Philip J. Nathanson Arizona State Bar #013624 THE NATHANSON LAW FIRM 8326 E. Hartford Dr. Suite 101 Scottsdale, AZ 85255 (480) 419-2578 (480) 419-4136 philipj@nathansonlawfirm.com

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