ORIGINAL IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE Inre: CHAPTER 11 PITT PENN HOLDING CO,, INC., ef al.', Case No. 09-11475 (BLS) (Jointly Administered) Debtors. ) Industrial Enterprises of America, Inc., on behalf ) of itself its estate, and as assignee of its shareholders, ) Plaintiff, ) Adv. Proc. No. 11-51876 (BLS) ) v. ) ) Ardent Advisors, LLC, Brian Corbman, Eric L. Krogius, Kathleen Krogius, Amy L. Almsteier (Peterson), and )—_—Re: Adversary Docket No.1 Derek A. Peterson, ) ) Defendant ) a) AMENDED COMPLAINT Plaintiff Industrial Enterprises of America, Inc., f/k/a Advanced Bio/Chem, Inc. “IEAM” or “Plaintif?”), for itself and as assignee of certain of its shareholders and creditors, alleges upon information and belief for its complaint against Defendants Ardent Advisors, LLC (“Ardent”), Brian Corbman (“Corbman”), Eric L. Krogius (“Krogius”), Kathleen Krogius, Amy L. Almsteier (now Peterson) and Derek A. Peterson (“Peterson”) as follows: JURISDICTION AND VENUE 1. On May 1, 2009 (“Petition Date”) IEAM filed a voluntary petition pursuant to Chapter 11 of the Bankruptcy Code. * The debtors are: Pitt Penn Holding Co. (Case No. 09-1475), Pitt Penn Oil Co, LLC (Case No. 09-1476), Plaintiff Industrial Enterprises of America, Inc. (Case No. 09-11508), EMC Packaging, Ine. (Case No. 09-11524), ‘Today's Way Manufacturing LLC (Case No. 09-1586), and Unifide Industries LLC (Case No. 09-11587), all of which have been jointly administered. 02, Amended Complain (Ardent sverary) DOC \o \\ | \\2. Since the Petition Date, IEAM has continued in possession and the management of its business as debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. 3. This Court has jurisdiction over these proceedings pursuant to 28 U.S.C. §§ 157 and 1334, 4, This proceeding constitutes a core proceeding pursuant to 28 U.S.C. § 157. 5. Venue is proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1409. INTRODUCTION 6. This adversary proceeding arises out of a large-scale scheme to loot the IEAM, a fraud that required not only the malfeasance of miscreant corporate officers, but the willful participation of the Defendants, who accepted illegally-issued, unrestricted IEAM securities to which they were not entitled, and which, upon information and belief, they resold for full market value to the detriment of IEAM and its shareholders. ‘The Mazzuto Scheme 7. Asis further detailed below, the affairs of IEAM became corrupted through the illegal conduct of a conspiracy led by John Mazzuto (“Mazzuto”) and James Margulies Margulies”). For ease of reference, this conspiratorial effort shall be collectively referred to as ‘the “Mazzuto Scheme.” The Mazzuto Scheme was a complex and deliberate association-in-fact conceived for, and dedicated to, the commission of fraud in the operations and securities of IEAM. The Defendants were members of the Mazzuto Scheme in that they portrayed themselves as “consultants” to IEAM, which they were not, and for which they received illegally-issued, unrestricted stock or cash in remuneration. IEAM, through an investigation conducted by its new management after the appointment of Robert Renck as CEO in April 30, Amended Complain (Ardent adversary} DOC 22009, has identified at least a dozen other persons and entities of the Mazzuto Scheme that acted in concert to defraud IEAM. 8. From 2004 to 2009, the Mazzuto Scheme, through its members including the Defendants, set out and accomplished its basic illegal aim: to insinuate itself into the governance and operation of a publicly-traded corporation; to undermine the business affairs of that public corporation by falsely reporting its operations as wholly successful to increase its market value and share price; to manipulate further the price of the public host’s stock higher through false operations and transactions (including, but not limited to, false stock offerings; fraudulent stock transfers and issuances, and fraudulent public statements and filings); and to “cash in” on the fruits of illicit labors through illegal transfer and sale of IEAM’s securities. 9. In furtherance of this illegal Scheme, Defendants accepted almost 300,000 shares of fieely traded IEAM stock, which was illegally issued and should have been restricted, for which Defendants either paid nothing or purchased the stock at a substantially discounted rate. In total, the stock they received was worth $1,202,539.60. Defendants knew or should have known that their receipt of this unrestricted stock was done pursuant to the illegal Scheme as they were not entitled to receive the stock-particularly unrestricted stock—under the terms of IEAM’s stock plan, 10. The Scheme perpetrated by these co-conspirators caused direct and proximate harm to IEAM, including monetary losses and liabilities, in excess of $1,202,539.60. Moreover, IEAM’s shareholders lost hundreds of millions more dollars as a direct and intended result of the Scheme, in which Defendants participated, ‘Amended Complaint (Ardent adversary) DOC 3THE PARTIES 1. Plaintiff IEAM is a corporation with an office at 651 Holiday Drive, Suite 300, Pittsburgh, Pennsylvania 15220. Former officers Margulies and Mazzuto were arrested and indicted for their roles in the fraud perpetrated on IEAM, its creditors and its investors, and the fifty-seven count indictment (“Indictment”), which names ten additional co-conspirators, is attached as Exhibit “A”, Meanwhile, on or about April 30, 2009, Robert L. Renck, Jr. was appointed its CEO and President. IEAM is the assignee of its shareholders’ claims pursuant to the settlement agreement reached between the parties and approved by the Southern District of New York on May 31, 2011. 12, Upon information and belief, Ardent Advisors, LLC is a limited liability corporation with offices in the State of New York. Ardent Advisors, LLC purporis to offer services to companies attempting to grow and enter public markets, including financial analysis, market research, and trading (by partnering with broker dealers). Brian Corbman is listed as the “Founder and Principal.” 13. Upon information and belief, Defendant Brian Corbman is a resident of the State of Pennsylvania. Corbman purports to be the “Founder and Principal” of Ardent Advisors, LLC and holds several NASD licenses. Upon information and belief, Corbman and/or Ardent Advisors, LLC, which he controls, had a bogus “consulting agreement” with IEAM. Corbman and Ardent were, in reality, providing investment banking services and promoting IEAM’s stock to raise capital. Under the terms of IEAM’s stock option plan, IEAM is not allowed to issue stock-even properly restricted stock-to pay for such services. Transaction records indicate, however, that more than 125,000 unrestricted shares valued at almost $600,000 were issued to Amended Complaint (Ardent sdversary} DOC 4Corbman and Ardent at a substantially discounted rate and, upon information and belief, were immediately sold by Corbman and Ardent for full market value. 14, In addition to receiving improper IEAM securities under the false guise of a “consultant”, Corbman received $275,000 for “consulting” services to IEAM that were not, in fact, rendered. 15, Upon information and belief, defendant Derek A. Peterson is a resident of the State of California, According to Petersen, he and Krogius confronted Margulies with what they believed to be indicia of fraud, and Margulies stated he was aware of it and was trying to clean up the company. Margulies then offered Petersen and Krogius “consulting agreements” whereby they improperly received stock in “return” for providing Margulies with information about his own illegal activity. Pursuant to these agreements, Petersen and Krogius were improperly paid with 125,000 shares of unrestricted stock valued at more than $500,000 (which they received for free) and 20,000 unrestricted shares valued at more than $100,000 (which they received at a discounted rate). In some instances, they had these stocks delivered to the stock accounts of their respective spouses. 16. Upon information and belief, Defendant Eric L. Krogius is a resident of the State of California. He is a partner of Crowell Weedon & Co., a registered broker dealer and investment adviser with multiple offices in Southern California. Upon information and belief, he also has several NASD licenses. 17. Upon information and belief, defendant Amy L. Almsteier (now Peterson) is a resident of the State of California, 18. Upon information and belief, defendant Kathleen Krogius is a resident of the State of California and the spouse of Eric Krogius. Amended Complaint (Ardent adversary). DOC 5Non-Defendants & Bad Actors 19. Mazzuto is, upon information and belief, currently a resident of the State of Florida, having recently been released on bail from incarceration of the New York City Department of Corrections. Mazzuto was in jail after being indicted by the New York County Grand Jury and prosecuted by the District Attomey for New York County (the “Manhattan D.A.” or “DANY”). In his case, entitled People of the State of New York against W. Margulies, Ind. ‘No. 2503/2010, Mazzuto is charged with two counts of Grand Larceny in the First Degree (NY Penal Law § 155.42), Scheme to Defraud in the First Degree (NY Penal Law 190.65 (1)(b)), Scheme to Defraud through Securities Fraud (NY General Business Law of 352-c(5)), 51 counts of Falsifying Business Records in the First Degree (NY Penal Law §175.10)), Conspiracy in the Fourth Degree (NY Penal Law §105.10(1)) and Securities Fraud (NY General Business Law §352-c(6)). Mazzuto, with whom the Defendants conspired, was indicted arising out of his role leading the Mazzuto Scheme, for undermining IEAM, manipulating its stock price higher through false and fraudulent business operations, and illegally cashing in on this criminality through the perversion of the stock option plan, Mazzuto personally gained in excess of $15 Million as a result of the Scheme against IEAM. Mazzutto pleaded guilty to the Scheme for which he was indicted and is scheduled to be sentenced in November 2011. A copy of the Indictment of Mazzuto (and James W. Margulies) is attached hereto as Exhibit “A”. Mazzutto also testified at the trial of Margulies on behalf of the prosecution pursuant to a cooperation/plea agreement. 20. — Margulies is, upon information and belief, incarcerated in the State of New York. Margulies was indicted along with Mazzuto by the New York County Grand Jury. In August 2011, he was convicted at trial and was subsequently sentenced to 7-21 years in prison upon “Amended Complaint (Ardent avers). DOC 6multiple counts including Grand Larceny in the First Degree (NY Penal Law § 155.42), Scheme to Defraud in the First Degree, Scheme to Defraud through Securities Fraud (NY General Business Law §352-c), Falsifying Business Records in the First Degree (NY Penal Law §175.10) and Conspiracy in the Fourth Degree (NY Penal Law 105.10). Margulies’ criminal conduct is alleged to have personally awarded him at least $7 Million. Margulies” Indictment is attached as Exhibit “A” 21. “Unindicted Co-Conspirators 1-10” are persons named as such in the DANY indictment of Mazzuto and Margulies for having participated in the Scheme against IEAM. Insofar as the Defendants illegally received shares of IEAM stock in retum for bogus services pursuant to false agreements, they are either included in the Unindicted Co-Conspirators or are similarly situated. 22. Others Known and Unknown to the Grand Jury, all referred to as “the schemers” in the DANY indictment of Mazzuto and Margulies, are others who, like the Defendants here, engaged in the conspiracy to defraud IEAM, participated in the Mazzuto Scheme, and profited therefrom at the expense of IEAM and its shareholders, FACTUAL BACKGROUND, 23. As relevant here, IEAM (then known as Advanced BioChem, Inc.) began its life in 2004 as a publicly-traded shell company holding a single asset: 15 million shares of restricted stock in Power3 Medical Products (“Power3”). Although thinly-traded, those shares were valued at $45 million. On August 1, 2004, Mazzuto was appointed a director of IEAM and set out to determine how best to use that value. ‘Amended Complain (Ardent adversary) DOC 724. On October 7, 2004, IEAM purchased all outstanding stock in EMC Packaging, Inc. (“EMC”), a New Jersey-based packaging facility. In consideration for that purchase, IEAM paid 2.2 million of its shares to EMC shareholders. 25. In connection with that combination, on October 15, 2004, Mazzuto was named Vice Chairman of the Board of IEAM. A little more than a year later, in a December 15, 2005 Form 10-QSB, IEAM announced that its Board had elected Mazzuto as IEAM’s Chief Executive Officer and President, ousting former president Crawford Shaw. Mazzuto would remain IEAM’s Chief Executive Officer for the next two years. 26. Prior to its acquisition of EMC, IEAM’s value was not in operations—there were none of any material impact. Instead, IEAM was expected to be a clean shell with no liabilities and ownership of $45 million in assets that would attract investors in a public company. Although IEAM’s Power3 stock did not prove to have that value, the asset was sufficient to meet one of the goals: attracting investors. The Stock Option Plan 27. In November 2004, shortly after its acquisition of EMC, IEAM promulgated its 2004 Stock Option Plan (“the Plan”) 28. On or about January 25, 2005, IEAM filed with the United States Securities and Exchange Commission a Form S-8 registration statement for the Plan pursuant to the Securities Act of 1933. The original Form S-8 authorized the issuance of up to 15 million shares of stock However, a reverse 1 for 10 stock split on May 31, 2006 should have reduced the amount of shares that could be issued to 1.5 million, 29. The Plan stated that it was intended to advance the interests of the company and its stockholders “by providing long-term incentives to those persons who are largely responsible Amended Complaint (Ardent adversary). DOC 8for the management and growth of the business of the Company through granting equity incentives to Employees, Outside Directors, and Consultants. To that end, the Company may, from time to time, award to Employees, Outside Directors or Consultants selected in the manner provided below, one or more Incentive Stock Options, Non-Qualified Options, Stock Appreciation Rights (“SARs”), or Shares of Restricted Stock subject to the conditions hereinafter set forth.” 30. Pursuant to the Stock Option Plan, therefore, IEAM was only permitted to issue shares to employees and directors of IEAM or bona fide consultants for IEAM. In other words, only natural persons who provided some actual, allowable service to IEAM were eligible to receive restricted stock under the Stock Option Plan. Any issuance of shares outside of the terms of the Plan would be—and, indeed, was—a violation of the securities law. 31. The “S- shares, pursuant to the Plan, should have been issued with a legend indicating that they were restricted. 32, Notwithstanding the various restrictions on the issuance of “S: * shares, Mazzuto and Margulies directed that IEAM shares be issued to various entities and individuals who did not meet the requirements of the “S-8” (individuals and entities that were not consultants and never performed viable services for IEAM). In addition, Mazzuto and Margulies also caused IEAM shares to be issued without any restrictions. Finally, upon information and belief, most, if not all, of the unrestricted IEAM shares that were issued pursuant to the Stock Option Plan were sold immediately. 33. Between August 2006 and August 2007 Mazzuto and Margulies caused IEAM to issue to the Defendants almost 300,000 shares of unrestricted stock either for nothing or at a 20% discount, as follows: Amended Complaint (Ardent adversary. DOC 9Amy L. Almsteier | Date ___| Shares | Price | Value 2007/07/30____| 62,500 4.02 $251,250.00? TOTAL 62,500 $251,250.00 Derek A. Peterson Date Shares Price Value _ 2007/03/26 4,000 ___|5.90 $23,600.00 | 2007/03/26 6,000 5.90 $35,400.00 | TOTAL 10,000 $59,000.00 | Eric L. and Kathleen Krogius Date Shares Price | Value 2007/03/23 10,000 59 $59,000.00 2007/07/27 62,500 408 $255,000.00? TOTAL 72,500 $314,000.00 Brian Corbman Date | Shares Price Value | 2007/04/10 | 6.06 $242,400.00 2007/02/09 | 2.40 $132,489.60 TOTAL ___ $374,889.60 Ardent Advisors, LLC ? There was no payment for these shares, ° There was no payment for these shares. Amended Complaint (Ardent adversary, DOC 10Date Shares Price | Value | 2006/09/19 20,000 7.14 | $142,800.00 2007/04/09 | 10,000 6.06, $60,600.00 TOTAL | 30,000 | $203,400.00 Total for All Defendants Total Shares Issued Total Value At Time Of Issuance | 270,204 $1,202,539.60 34. In each case, the Defendants were not entitled to receive such shares because the Defendants did not provide any bona fide services to IEAM to warrant the distribution of even properly restricted stock, 35. In addition, Defendant Ardent Advisors, LLC is not a natural person and, therefore, is ineligible to receive any IEAM stock under the terms of the Stock Option Plan. 36. Also, each Defendant received freely tradeable shares of IEAM in violation of the S-8 Plan, which authorized only the issuance of restricted shares, 37. Upon information and belief, each Defendant also sold the shares in the marketplace shortly after receipt at a discounted price and received full value for the sales. 38. Such sales were in violation of the securities laws because the shares issued were to be restricted. ‘The Collapse of IEAM 39. On April 30, 2009, IEAM declared bankruptcy, at which time Robert L. Renck, Jr. was appointed as President and Chief Executive Officer. During Mazzuto’s tenure as CEO, some 133 million shares of IEAM were traded with a market value—based on the last sale—of Amended Complaint (Ardent adversary) DOC i$450 million. By April 30, 2009, the market value of those shares was $0, representing a cumulative loss to public shareholders of $450 million 40. At all relevant times, IEAM’s full Board of Directors was not apprised of the unlawful activities of the Mazzuto Scheme. 41. In particular, Jerome Davis, IEAM’s sole, wholly independent Board Member, ‘was appointed in July 2005. He was unaware of the unlawful issuances of stock under the Stock Option Plan. Moreover, Mr. Davis is a victim of records fraud himself, As reflected in the charges against Mazzutto and Margulies for falsifying IEAM Board meeting minutes, Mr. Davis's alleged participation in Board meetings was entirely fabricated by Mazzutto and ‘Margulies to support the Scheme. In fact, he never participated in or was aware of any meeting in which unlawful activity such as the issuance of these illegal shares was contemplated or agreed upon. The Class Action 42. On or about November 14, 2007, a shareholder of IEAM brought a class action against IEAM, and others, entitled Mallozzi v. Industrial Enterprises of America, et al., Case No. 07-CV-10321 (S.D.N-Y,, filed Nov. 14, 2007) (the “Class Action”), In the Class Action, plaintiffs alleged that they suffered damages as a result of the actions perpetrated by Mazzuto, Margulies and others relating to issues other than the issuance of stock under the Stock Option Plan. 43, On December 12, 2010, IEAM agreed to terms to settle the class action by making a payment to the class of $3.8 million. That settlement received preliminary approval of the U.S. District Court for the Southem District of New York on January 12, 2011 and final approval by Order dated May 31, 2011. Amended Complaint (Ardent adversary) DOC 1244, As part of the Class Action settlement, IEAM received an assignment of all claims belonging to individual class members against all third-parties. 45. Included among this assignment were any claims against Defendants for the claims alleged herein. CAUSES OF ACTION FIRST CAUSE OF ACTION (FRAUD) 46. IEAM incorporates paragraphs 1 through 45 as if fully set forth herein, 47. Asset forth above, a Stock Option Plan instituted by IEAM and detailed in an 8-8 Filing with the SEC was illegally converted into the means by which unrestricted stock could be issued to, and sold by, members of the Mazzuto Scheme, such as Defendants. 48. As set forth above, the Defendants knowingly engaged in the following consistent pattern of fraudulent conduct designed to defraud IEAM (including the innocent director of IEAM) and its investors and divert funds from IEAM: a. Defendants accepted IEAM securities pursuant to the S-8 Plan to which they were not entitled due to their status; b. Defendants accepted freely traded IEAM securities pursuant to the $-8 Plan which should have been restricted under the Plan’s terms; c. Defendants Krogius, Krogius, Petersen and Petersen (Almsteier) accepted the majority of their shares for free and paid only 80% of the market value for the rest; 4. Defendants Ardent and Corbman paid IEAM only 80% of the market value of these securities; and Amended Complaint (Ardent adversary) DOC 1B€. Upon information and belief, Defendants resold the securities for 100% of their value. 49. In receiving these illegal securities, the Defendants each falsely represented to IEAM that they were bona fide consultants or otherwise had status entitling them to receive what should have been restricted stock under the Plan. Moreover, Defendants materially misrepresented to IEAM that they performed bona fide services to IEAM. Defendants materially omitted to disclose that they were not entitled to the stock and/or that they had not provided services to IEAM. IEAM reasonably relied upon these materially false statements and omissions, as the Defendants intended. 50. Asa direct and proximate result of Defendants fraudulent conduct, which diverted equity from IEAM, IEAM and its shareholders suffered monetary losses and liability in excess of $1,202,539.60. Additionally, Defendant Corbman accepted $275,000 in cash under the false guise of having rendered services to IEAM. Corbman must also retum all monies fraudulently paid to him. SECOND CAUSE OF ACTION (UNJUST ENRICHMENT) 51. _ IEAM incorporates paragraphs 1 through 50 as if fully set forth herein. 52. By the facts set forth above, Defendants have each been unjustly enriched by receiving approximately 300,000 illicitly issued, unrestricted IEAM shares. Defendants knew the shares they received were illegal as they did not provide IEAM with any services that would have made them eligible to receive stock under the S-8 Plan, nonetheless unrestricted shares, which were not allowed under the S-8 Plan. For this stock, Defendants either paid nothing or, at most, 80% of the value of the shares. Amended Complaint (Ardent adversary) DOC 1453. At the same time, IEAM suffered an impoverishment by the value of the shares as sold by Defendants. 54. By accepting the shares and the proceeds from the sale of those shares, Defendants were unjustly enriched at the expense of IEAM and its investors and creditors. 55. There is no justification for Defendants enjoying such unjust enrichment while IEAM suffers such impoverishment, and in equity and good conscience, the acceptance and reselling of illegally issued stock from IEAM to Defendants, Moreover, Defendant Corbman has been unjustly enriched, and IEAM correspondingly impoverished, due to the $275,000 in cash that Corbman accepted under the false guise of having rendered services to IEAM. Corbman must also return all monies fraudulently paid to him, THIRD CAUSE OF ACTION (CIVIL CONSPIRACY) 56. IEAM incorporates paragraphs 1 through 55 as if fully set forth herein. 57. By accepting illicitly issued, freely traded IEAM securities and reselling the securities, or accepting cash, Defendants knowingly and purposefully committed acts that advanced the Mazzuto Scheme and benefited them. 58. The goal of the conspiracy was to steal and possess property in the form of shares of IEAM stock and money generated from the sale thereof, which was achieved through the overt acts described above. 59. Defendants conduct harmed IEAM in the amount of the value of the illegally issued shares and value gained from their sale as well as the cash received directly from IEAM. FOURTH CAUSE OF ACTION (CONVERSION) 60. IEAM incorporates paragraphs | through 59 as if fully set forth herein. Amended Complaint (Ardent adversary). DOC 1561. Plaintiff was the owner of the equity represented by the shares wrongfully issued to Defendants as well as the cash conveyed for services. 62. Defendants wrongfully diminished Plaintiff's equity by accepting cash and/or illicitly issued, freely traded IEAM shares and reselling the securities for value. 63. Plaintiff has suffered a diminution of its equity and, therefore, a detriment from the Defendants’ actions. Defendants must remit the value of the cash and shares they illegally received, calculated as at the time the Defendants sold the shares. FIFTH CAUSE OF ACTION (AVOIDANCE OF FRAUDULENT CONVEYANCES UNDER NEW YORK LAW) 64, _ IEAM incorporates paragraphs 1 through 63 inclusive of the Complaint as fully as if they had been set forth at length herein. 65. At the time of each transfer by the conveyance of cash or issuance of stock to Defendants, IEAM was insolvent under section 271 of the New York Debtor and Creditor Law and otherwise and each transfer was part of the ongoing Scheme to defraud IEAM. 66. Defendants participated in the Scheme to defraud IEAM and its investors. 67. Defendants knew there was no basis for IEAM to convey the cash and/or issue the approximately 300,000 shares of IEAM stock they received, and that the issuance of these shares under the S-8 was a violation of securities laws. The issuance of stock to Defendants constituted transfers of that stock to Defendants and were “conveyances” within the meaning of meaning of section 270 of the New York Debtor and Creditor Law. 68. Those shares were illegally issued in violation of the securities laws and illegally diluted the value of IEAM stock. 69. Knowing of the illegality of the shares, Defendants nonetheless accepted the cash and shares for free or at a 20% discount, Amended Complain (Ardent adversary) DOC 1670. _ Knowing of the illegality of the shares, upon information and belief, Defendants sold the shares for 100% of the value. By these acts, Defendants defrauded IEAM and its creditors. 71. The issuance of stock to Defendants was made with actual intent to hinder, delay and to defraud IEAM's creditors, under section 276 of the New York Debtor and Creditor Law and otherwise, because it was fraudulently issued stock. 72. IEAM received nothing or, at most, only 80% of the face value of the stocks issued to Defendants. 73. The stock received by Defendants had value because, upon information and belief, it was sold on the open market. 74. When stock was issued to Defendants, IEAM was engaged in business or a transaction, or was about to engage in business or a transaction (including the perpetration of the stock fraud Scheme) for which any property remaining with IEAM was an unreasonably small capital within the meaning of section 274 of the New York Debtor and Creditor Law and otherwise, 75. At the times the stock was issued, IEAM intended or believed that it would incur debts beyond its ability to pay as they mature, as IEAM generally had no intent to repay creditors, within the meaning of section 275 of the New York Debtor and Creditor Law. 76, Pursuant to 11 U.S.C. § 544(b), such transfers are avoidable by creditors holding unsecured claims that are allowable under 11 U.S.C. § 502 77. TEAM demands return of the fraudulent transfers, including the proceeds of any sales of stock. Amended Complain (Ardent adversary) DOC 7FOURTH CAUSE OF ACTION (AVOIDANCE OF FRAUDULENT TRANSFERS UNDER 11 U.S.C. § 548) 78. IEAM incorporates paragraphs 1 through 77 inclusive of the Complaint as fully as. if they had been set forth at length herein, 79. The conveyance of cash and issuance of stock to Defendants constituted transfers of interests of property of IEAM within the meaning of 11 U.S.C. § 548(a)(1). 80. Such transfers were made with actual intent to hinder, delay or defraud creditors of IEAM. 81. At the time of each transfer of cash or transfer by the issuance of stock to Defendants, IEAM (1) was insolvent, under 11 U.S.C. § 548(a)(1)(B)(i)(); (II) was engaged in business or a transaction, or was about to engage in business or a transaction (including the perpetration of the stock fraud), for which any property remaining with IEAM was an unreasonably small capital pursuant to. 11 U.S.C. § 548(a)(1)(B)(i)(I); and (Il) intended to incur, or believed that it would incur, debts that would be beyond IEAM’s ability to pay as such debts matured (as IEAM generally had no intention of paying its debts) pursuant to 11 U.S.C. § 548(@)(I)B)GaD, 82. Given the insolvency of IEAM when such transfers occurred and the unreasonably small capital that remained as a result of such transfers, Defendants payment of 80% of the face value of the shares was not fair consideration nor did it constitute reasonably equivalent value in exchange for the stock. 83. The stock transfers are avoidable fraudulent transfers and should be avoided under 11 U.S.C. § 548(a). ‘Amended Complain (Ardent adversary) DOC 18FIRTH CAUSE OF ACTION (LO RECOVER AVOIDED TRANSFERS AND THE VALUE THEREOF FROM DEFENDANTS AND PRESERVE SUCH AVOIDED TRANSFERS AND THE VALUE. ‘THEREOF FOR THE BENEFIT OF THE ESTATE) 84. _ IEAM incorporates paragraphs 1 through 83 inclusive of the Complaint as fully as if they had been set forth at length herein. 85. The unlawful cash and stock conveyances are avoidable transfers under sections 544 and 548, Title 11 of the United States Code. 86. Defendants were initial transferees of such transfers under 11 U.S.C. § 550(a)(1). 87. Defendants were entities for whose benefit such transfers were made under 11 USC. § 550(@X(1). 88. IBAM is entitled to recover from Defendants the value of such property transferred pursuant to 11 U.S.C. § 550. 89. Such transfers, to the extent avoided, are automatically avoided for the benefit of the estate under 11 U.S.C. § 551. 90. Pursuant to 11 U.S.C. § $02(4), any claims of Defendants should be disallowed pending the return of the value of the transfers WHEREFORE, Plaintiff IEAM requests that this Court award it the following relief: A. Judgment on its claims against each defendant; B. _ Pre- and post-judgment interes C. Compensatory and consequential damages; D. Punitive damages as allowed by law; E. _ Restitution for the full value of the improperly issued shares; Amended Complint (Ardent adversan) BOC 19F. Plaintiff's costs and disbursements in this action including reasonable attorneys fees; and G. Such other and further relief as the Court deems just and proper. DATED: October 11, 2011 Amended Complain (Ardent adversary,DOC 20 LOIZIDES Pe 1225 King Street, Suite 800 Wilmington, DE 19801 Telephone: (302) 654-0248 Facsimile: (302) 654-0728 E-mail: loizides@loizides.com ~and- ‘Thomas J. Curran Peckar & Abramson, P.C. 41 Madison Avenue New York, NY 10010 Telephone: (212) 382-0909 Facsimile: (212) 382-3456 Email: tourran@pecklaw.com Counsel for PlaintiffEXHIBIT A Amended Complaint (Ardent sdverssry) DOCSUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ‘THE PEOPLE OF THE STATE OF NEW YORK, -against- | Indictment No. 2503/2010 JOHN D. MAZZUTO and JAMES W. MARGULIES, ‘THE GRAND JURY OF THE COUNTY OF NEW YORK, by this indictment, accuses the defendants of the crime of GRAND LARCENY IN THE FIRST DEGREE, in violation of Penal Law §155.42, committed as follows: ‘The defendants, in the County of New York and elsewhere, during the period from on or about July 1, 2004 to in or about 2008, stole property from Industrial Enterprises of America, Tne. and the value of the property exceeded one million dollars. SECOND COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of GRAND LARCENY IN THE FIRST DEGREE, in violation of Penal Law §155.42, committed as follows: The defendants, in the County of New York and elsewhere, during the pe from on or about July 1, 2006 to on or about July 1, 2007, stole property from an individual known to the Grand Jury and the value of the property exceeded one million dollars.‘THIRD COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of SCHEME TO DEFRAUD IN THE FIRST DEGREE, in violation of Penal Law §190.65(1)(b), committed as follows: ‘The defendants, in the County of New York and elsewhere, during the period from on or about July 1, 2004 to in or about 2008, acting with others known and unknown to the Grand Jury, all hereinafter referred to as “the schemers,” engaged in a scheme constituting a systematic ongoing course of conduct with intent to defraud more than one person, including investors, shareholders, regulators, securities markets and exchanges, and auditors, and to obtain property from more than one person by false and fraudulent pretenses, representations and promises, and 0 obtained property, to wit, money, with a value in excess of one thousand dollars from one or ‘more such persons, in that the schemers acquired a public shell company and used it as a vehicle for larceny and fraud by illegitimately issuing millions of shares of stock and engaging in ‘fraudulent activity to inflate the value of the stock and deceive investors, as follows: THE PLAYERS * Industrial Enterprises of America, Inc. (“IEAM”). During the period of the scheme, IEAM (formerly known as Advanced Bio/Chem, Inc.) was a public shell company incorporated in Nevada and headquartered in New York County. IEAM acquired three principal operating subsidiaries between 2004 and 2006, two of which manufactured and distributed automotive after-market products (e.g., antifreeze, windshield cleaner and oil-based lubricants), and one of which manufactured and sold aerosol gas products (¢.g., computer cleaners). During the period of the scheme, IEAM"s stock variously was listed on the over-the-counter market (“OTC Market” or “Pink Sheets”), the OTC Bulletin Board (“OTCBB”) and the NASDAQ Stock Market (“NASDAQ”),© John D, Mazzuto, Defendant John Mazzuto spent approximately 20 years at a prominent New York bank, where he served as Managing Director of corporate finance. In the decade prior to the scheme, Mazzuto acted as an entrepreneur, investor and private investment consultant and advisor based in New York County. During the period of the scheme, Mazzuto was the Chief Executive Officer (“CEO”), President, Assistant Secretary, and a member of the board of directors of IEAM. Additionally, for significant periods he also acted as Chief Financial Officer (“CFO”) of IEAM. Mazzuto filed a personal bankruptcy petition in the United States Bankruptcy Court for the Southern District of New York in November 2002 and was discharged from bankruptcy on May 15, 2009 —a period encompassing the entire period of the scheme, from which he personally obtained in excess of $15 million. «James W. Margulies, Defendant James Margulies is a Cleveland, Ohio-based attorney with a background in business and securities who, during the period of the scheme, was a member of the law firm of Margulies and Levinson, LLP. He also formed and utilized a business entity called the Margulies Law Group. During the period of the scheme, ‘Margulies held various positions with IEAM, including outside counsel, CFO, General Counsel, CEO, and member of the board of directors. Margulies obtained in excess of ‘$6 million from the scheme.THE SCHEME Origins In 2002 John Mazzuto acquired a controlling interest in a private New Jersey-based company called EMC Packaging, Inc. (“EMC”). He then turned his attention to merging EMC. into a publicly listed shell corporation. In July 2004, Mazzuto, with others, accomplished his goal by gaining control over a dormant public shell corporation called Advanced Bio/Chem, Inc. (CAVBC”) ~ a Texas-based company with no operations. At the time, AVBC’s stock traded on the Pink Sheets (an over-the-counter market for penny stocks). In October 2004 Mazzuto used AVBC to acquire EMC. Shortly after the transaction, AVBC changed its name to Industrial Enterprises of ‘America, Inc. EMC was IEAM’s sole operating business at that time. Later, in 2005 and 2006, TEAM acquired other subsidiaries, including Unifide Industries, LLC and Pitt Penn Oil Company. Registration of IEAM stock with the U.S. Securities and Exchange Commission Once in control of a publicly listed corporation with an operational business, the schemers filed a Form S-8 registration (“S-8") with the United States Securities and Exchange ‘Commission (“SEC”) on January 24, 2005, along with an employee stock option plan (the “Plan”), registering 15 million shares of IEAM stock. An S-8 is a public filing by which companies register shares with the SEC to be issued exclusively for compensatory or incentive purposes pursuant to an employee benefits plan. Issuing or selling shares to the public for capital-raising purposes requires separate filings and registrations.The IEAM Plan authorized the IEAM board of directors to issue securities to: (1) employees; (2) outside members of the board of directors; and (3) consultants. Further, the Plan authorized the board to issue three types of securities: (1) stock options; (2) restricted shares; and (3) stock appreciation rights (SARs). Defendant James Margulies, whom Mazzuto had met and hired in 2004 in the course of seeking to acquire a public shell, was responsible for filing the IEAM S-8 registration and Plan, Stock issuances Between January 24, 2005 and March 31, 2008, Mazzuto and Margulies invoked the $-8 and Plan, but subverted them, to issue millions of shares of IEAM stock worth tens of millions of dollars to friends, family members, alma maters, and to shell companies, entities and ‘accounts the schemers controlled, instead of to employees, outside members of the board of directors or bona fide consultants. A significant number of the shares were issued illicitly for capital-raising purposes and as gifts, instead of for compensatory or incentive purposes, as required by the Plan. ‘The share recipients sold the stock immediately, converting the shares to cash. The recipients then either kept the money for their own benefit or wired it directly back to IEAM, where it was booked fraudulently as, among other things, revenue, or to various entities or accounts controlled by the schemers. The single largest recipient of IEAM shares was an attorney trust account opened and controlled by James Margulies, which received more than 3.5 million shares of stock, which defendant Margulies sold in the open market for approximately $17.7 million, directing more than $13 million back to IEAM, and the remainder to accounts in the name of or controlled by the schemers.Reverse stock split In June 2006 the schemers implemented a reverse 10-for-I stock split, whereby every ten shares of outstanding IEAM stock were converted to one share, and the value of every share outstanding was increased ten-fold. This had the immediate effect of increasing by a factor of ten the value of the shares the schemers issued pursuant to the S-8 registration and Plan, The “pump” To fraudulently inflate the market value of IEAM stock, and to solicit and encourage public investment in IEAM, Mazzuto and other schemers also routinely made false or ‘misleading representations about the company in a series of press releases, investor meetings and calls, and investor conferences held in New York County and elsewhere, and in various public filings, including false and misleading information about IEAM’s financial condition, capital structure, earnings guidance and projections, and about the number of shares outstanding. The cover-up In order to conceal the unauthorized stock issuances, and the flow of proceeds back into the corporation, the schemers engaged in a variety of fraudulent practices, including: * Describing share recipients who performed little or no bona fide services for IEAM as “consultants” to the company’s auditors, and creating false consulting agreements to convey the pretense that these were legitimate recipients of shares.© Arranging bogus private stock transactions, whereby the schemers solicited professional investors to purchase stock directly from purported IEAM shareholders, when in fact there were no actual sellers in these transactions. Rather, while the schemers instructed the investors to wire money into a Margulies-controlled attorney trust account to be directed to the ostensible seller, defendant Margulies instead wired the funds directly to an IEAM account (whereupon, the true origin of the money was concealed). And instead of delivering to the buyer pre-existing shares, Mazzuto and Margulies instructed the transfer agent to issue new shares of IEAM stock to buyers pursuant to the S-8 registration and Plan. ‘© Disguising on the books and records of IEAM the flow of money back into the company from the sale of S- sued shares as: (1) loans from various entities; (2) revenue from the exercise of stock options; (3) reimbursement of legal and other professional fees; and (4) revenue from “bulk sales” of inventory. © Providing falsified books and records to outside auditors that contained false information about the issuance of IEAM shares under the S-8 registration and Plan, and false information about the source of money flowing back into the company from the sale of such shares. ‘+ Making misrepresentations in public filings with the SEC, or omitting material information from public filings. FOURTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of a violation of General Business Law §352-c(5) (“MARTIN ACT”), committed as follows:‘The defendants, in the County of New York and elsewhere, during the period from on or about July 1, 2004 to in or about 2008, intentionally engaged in a scheme constituting an ongoing course of conduct with intent to defraud ten and more persons and to obtain property from ten and more persons by false and fraudulent pretenses, representations and promises and so obtained property from one and more of such persons while engaged in, inducing and promoting the issuance, distribution, exchange, sale, negotiation and purchase of securities of Industrial Enterprises of America, Inc. FIFTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of a violation of General Business Law §352-c(6) (“MARTIN ACT”), committed as follows: ‘The defendants, in the County of New York and elsewhere, during the period from on or about July 1, 2004 to in or about 2008, intentionally engaged in fraud, deception, concealment, suppression, false pretense and fictitious and pretended purchase and sale, and with intent to deceive and defraud, made material false representations and statements, while engaged in inducing and promoting the issuance, distribution, exchange, sale, negotiation and purchase wit and from New York of a security, and thereby wrongfully obtained property with a value in excess of $250.00. SIXTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of CONSPIRACY IN THE FOURTH DEGREE, in violation of Penal Law §105.10(1), committed as follows:‘The defendants, in the County of New York and elsewhere, during the period from on or about July 1, 2004 to in or about 2008, with intent that conduct constituting the felonies of Grand Larceny in the First and Second Degree and Criminal Possession of Stolen Property in the First and Second Degree be performed, did agree with one and more persons to engage in and cause the performance of such conduct in that defendants and others agreed to issue, report and record the issuance of shares of stock illicitly, direct the flows of proceeds from the sale of such shares of stock, falsify documents and use nominees and nominee accounts to disguise the flow of proceeds and avoid detection, and enlist and corrupt others to gain assistance, and thereby sought to steal and possess millions of dollars in fraudulent stock proceeds. The goal of the conspiracy was to steal and possess property in the form of shares of IEAM stock and money generated from the sale thereof. To effectuate their goal, the conspirators agreed to issue millions of shares of stock to family members, close associates, and to shell companies and entities they controlled, and to disguise the distribution of the proceeds back to the company and to themselves by creating ‘numerous false documents and records and making numerous false and misleading statements to regulators and to the investing public. In so doing, the conspirators sought to defraud stock transfer agents, regulators, auditors, investors and IEAM shareholders by fraudulently conveying shares of stock and disguising the distribution of the proceeds from the sale of stock. To further their plan, the conspirators agreed to engage in conduct designed to inflate the value of IEAM stock and to influence investors and shareholders to purchase shares of IEAM stock. The conspirators agreed to make false and misleading public filings and to issue false and misleading press releases. They also agreed to make false and misleading presentations to investors and shareholders at investor conferences, investor meetings, and on investor calls.‘The ultimate goal of these conspirators’ efforts was to issue, inflate and convert IEAM stock into as much money as possible, using complicit nominees and nominee accounts for channeling the stolen proceeds back into the company and into accounts they controlled. OVERT ACTS In the course of and in furtherance of the conspiracy, the conspirators committed and caused to be committed the following overt acts: 1. On or about November 12, 2004, defendant John Mazzuto caused to be created a consulting agreement between IEAM and Regal Partners, LLC, an entity Mazzuto controlled. 2. On or about January 6, 2005, defendant John Mazzuto caused to be created and signed a consulting agreement between IEAM and Regal Partners, LLC, an entity Mazzuto controlled. 3. On or about January 24, 2005, defendants John Mazzuto and James Margulies filed with the SEC a Form S-8 Registration Statement and Advanced Bio/Chem, Inc. 2004 Stock Option Plan (“Plan”), registering 15 mi mn shares of stock to be issued pursuant to the terms of the registration and Plan. 4. On or about January 24, 2005, John Mazzuto signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 500,000 shares to Regal Partners, LLC, an entity controlled by John Mazzuto. 5. On or about January 24, 2005, John Mazzuto signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 450,000 shares to Co-Conspirator #1, a friend and cohort of defendant James Margulies. 6. Onor about January 24, 2005, John Mazzuto signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 750,000 shares to Co-Conspirator #2, John Mazzuto’s girlftiend. 107. On or about January 25, 2005, John Mazzuto signed and caused to be sent three 425,000 shares to members of his family. On or about January 25, 2005, John Mazzuto signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 500,000 shares to an investment entity located in Ohio and controlled by Co-Conspirator #3, a business associate of John Mazzuto’s. On or about January 25, 2005, John Mazzuto signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 150,000 shares to Co-Conspirator #4, John Mazzuto’s attorney. 10. On or about January 25, 2005, John Mazzuto signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 150,000 shares to his university alma mater. 11. On or about January 25, 2005, John Mazzuto signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 150,000 shares to his high school alma mater. 12. On or about January 25, 2005, John Mazzuto signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 500,000 shares to Co-Conspirator #5, a business associate of John Mazzuto’s. 13. On or about January 25, 2005, John Mazzuto signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 500,000 shares to Co-Conspirator #6, a business associate of John Mazzuto’s. 14. On or about February 16, 2005, defendant John Mazzuto caused to be created and signed a consulting agreement between IEAM and an investment entity located in Texas and controlled by Co-Conspirator #7, a business associate of John Mazzuto’s. n15, On or about April 13, 2005, John Mazzuto signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 1,000,000 shares to an entity controlled by Co-Conspirator #8, IEAM’s investor relations representative. 16. During the period from November 1, 2005 to October 30, 2007, James Margulies wired approximately $2.6 million of IEAM stock proceeds from an attomey trust account he controlled to a checking account he controlled with his wife. 17. On or about January 31, 2006, John Mazzuto and James Margulies caused to be created falsified minutes of the meeting of the board of directors of IEAM. 18. On or about February 28, 2006, John Mazzuto caused to be created and signed a consulting agreement between IEAM and Co-Conspirator #9, a stock promoter who arranged sham private stock sales for IEAM. 19. On or about May 26, 2006, John Mazzuto signed and caused to be sent a letter to the IEAM stock transfer agent invoking the $-8 and Plan and directing the issuance of 400,000 shares to M4 Capital, LLC, an entity controlled by John Mazzuto. 20. On or about May 26, 2006, James Margulies signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 600,000 shares to Co-Conspirator #1, a friend and cohort of defendant James Margulies. 21. On or about August 1, 2006, John Mazzuto and James Margulies caused to be created and signed a consulting agreement between IEAM and Sapphire Associates, LLC, an entity Mazzuto controlled. 22. On or about August 25, 2006, James Margulies wired $169,800 of IEAM share proceeds from an attorney trust account he controlled to a title company as part of a down payment on a condominium for John Mazzuto located in Florida. 223. On or about September 7, 2006, John Mazzuto appeared and made a presentation on behalf of IEAM at an investor conference in New York County, in which he made representations about the company, including projected earnings guidance for IEAM and the number of shares of IEAM stock outstanding. 24. On or about September 11, 2006, James Margulies wired $2.7 million of IEAM share proceeds from an attomey trust account he controlled to an account in the name of Co- Conspirator #4, John Mazzuto’s attorney, for the purchase of a home in Southampton, New York for John Mazzuto, 25. During the period from October 1, 2006 to May 30, 2007, James Margulies wired approximately $1 million of IEAM share proceeds from an attorney trust account he controlled to an account controlled by John Mazzuto. 26. On or about October 2, 2006, John Mazzuto caused to be created and signed a consulting agreement between IEAM and an individual who had participated in a private stock transaction arranged by Mazzuto, 27. On or about October 4, 2006, John Mazzuto and James Margulies caused to be created @ falsified incentive stock option agreement between IEAM and Co-Conspirator #1, a friend and cohort of defendant James Margulies. 28. On or about October 5, 2006, John Mazzuto and James Margulies caused to be created a falsified promissory note between IEAM and Margulies and Levinson, LLP. 29. On or about October 20, 2006, John Mazzuto and James Margulies caused to be created a falsified incentive stock option agreement between IEAM and Co-Conspirator #10, an accountant located in Ohio. 30. On or about November 3, 2006, John Mazzzuto caused to be created and signed a consulting agreement between IEAM and an entity controlled by Co-Conspirator #3, a business associate of John Mazzuto’s. 1B31. On or about November 17, 2006, John Mazzuto caused to be created a falsified promissory note between IEAM and Sapphire Associates, LLC, an entity he controlled. 32. On or about December 27, 2006, John Mazzuto and James Margulies caused to be created a falsified incentive stock option agreement between IEAM and Co-Conspirator #1, a friend and cohort of defendant James Margulies. 33. On or about December 27, 2006, John Mazzuto signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of, 407,850 shares to an attorney trust account controlled by James Margulies. 34. On or about December 31, 2006, John Mazzuto caused to be created two falsified purchase orders, 35. During the period from December 29, 2006 to September 30, 2007 James Margulies wired approximately $17.8 million of IEAM share proceeds from an attomey trust, account he controlled to an account in the name of IEAM. 36. On or about January 1, 2007, John Mazzuto caused to be created a falsified promissory note between IEAM and an entity controlled by Co-Conspirator #1, a friend and cohort of defendant James Margulies. 37. On or about January 5, 2007, John Mazzuto and James Margulies caused to be created falsified minutes of the meeting of the board of directors of IEAM 38. On February 16, 2007, IEAM issued a press release announcing results for the fiscal quarter ending December 31, 2006, which included false and misleading revenue figures. 39. On or about February 13, 2007, John Mazzuto and James Margulies caused to be created three falsified sales summaries for IEAM’s subsidiaries. 40. On or about February 28, 2007, John Mazzuto caused to be created two falsified purchase orders. 441. On or about March 21, 2007, James Margulies signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 99,100 shares to an attorney trust account he controlled. 42, On or about March 27, 2007, James Margulies wired approximately $900,000 of IEAM share proceeds from an attomey trust account he controlled to a title company for the purchase of a house for John Mazzuto located in Texas. 43. On or about March 29, 2007, James Margulies signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 100,000 shares to an attorney trust account he controlled, 44. On or about March 31, 2007, John Mazzuto caused to be created a falsified purchase order. 45. On or about April 9, 2007, James Margulies signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 40,000 shares to Co-Conspirator #9, a stock promoter who arranged sham private stock sales for BAM, 46. On or about April 23, 2007, John Mazzuto signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 100,000 shares to the wife of James Margulies. 47. On or about April 24, 2007, John Mazzuto and James Margulies caused to be created a falsified spreadsheet detailing bank account activity of IEAM. 48. On or about April 26, 2007, James Margulies signed and caused to be sent a letter to the IEAM stock transfer agent invoking the S-8 and Plan and directing the issuance of 800,000 shares to an entity controlled by Co-Conspirator #1, a friend and cohort of defendant James Margulies. 49. On or about May 14, 2007, John Mazzuto and James Margulies caused to be created falsified consolidating workbooks for IEAM. 1550. On or about May 22, 2007, IEAM issued a press release announcing results for ‘the fiscal quarter ending March 31, 2006, which included false and misleading revenue figures, 51. On or about July 9, 2007, John Mazzuto and James Margulies caused to be created falsified minutes of the meeting of the board of directors of IEAM 52. On or about July 12, 2007, IEAM issued a press release which included false and misleading information about earnings projections and the number of shares of IEAM stock outstanding. 53. On or about July 24, 2007, John Mazzuto and James Margulies caused to be created falsified minutes of the meeting of the board of directors of IEAM. 54. On or about August 6, 2007, John Mazzuto caused to be created falsified minutes of the meeting of the board of directors of IEAM. 5. On or about August 20, 2007, John Mazzuto caused to be created falsified minutes of the meeting of the board of directors of IEAM. 56. On or about August 29, 2007, James Margulies wired approximately $1.85 million in $-8 share proceeds from an attorney trust account he controlled to a title company for the purchase of a home for John Mazzuto located in Florida. 57. On or about September 6, 2007, John Mazzuto led an investor call in which he made false and misleading representations about the number of IEAM shares outstanding and ‘earings guidance for the company. 58. On or about September 7, 2007, John Mazzuto caused to be created falsified minutes of the meeting of the board of directors of IEAM. 59. On or about September 27, 2007, IEAM issued a press release which included false and misleading information about annualized savings figures for the company. 16FALSIFIED BOARD OF DIRECTORS MEETING MINUTES SEVENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendant, in the County of New York and elsewhere, on or about January 31, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, minutes of the meeting of the board of directors of IEAM. EIGHTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about January 5, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, minutes of the meeting of the board of directors of IEAM. ‘NINTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: 7The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about February 5, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, minutes of the meeting of the board of directors of IEAM. TENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further acouses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendants, in the County of New York and elsewhere, on or about February 21, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, minutes of the meeting of the board of directors of IEAM. ELEVENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about March 15, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, minutes of the meeting of the board of directors of IEAM. 18TWELFTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about June 28, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, minutes of the meeting of the board of directors of IEAM. THIRTEENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about June 29, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, minutes of the meeting of the board of directors of IEAM. FOURTEENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows:The defendants, in the County of New York and elsewhere, on or about July 9, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, minutes of the meeting of the board of directors of IEAM. FIFTEENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendants, in the County of New York and elsewhere, on or about July 17, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, minutes of the meeting of the board of directors of IEAM. SIXTEENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about July 24, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, minutes of the meeting of the board of directors of IEAM. 20SEVENTEENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about August 6, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, minutes of the meeting of the board of directors of IEAM. EIGHTEENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about August 20, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, minutes of the meeting of the board of directors of IEAM. NINETEENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE, FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: aThe defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about September 7, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, minutes of the meeting of the board of directors of TEAM. FALSIFIED CONSULTING AGREEMENTS TWENTIETH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about November 11, 2005, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a consulting agreement between IEAM and an investment advisor located in Texas, TWENTY-FIRST COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: 2‘The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about February 28, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a consulting agreement between IEAM and a stock promoter who arranged sham private stock sales for IEAM. TWENTY-SECOND COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about August 1, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a consulting agreement between IEAM and Sapphire Associates, LLC, TWENTY-THIRD COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about October 2, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a consulting agreement between IEAM and Sapy Associates, LLC. 23TWENTY-FOURTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about October 2, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a consulting agreement between IEAM and an individual ‘who participated in a private stock transaction arranged by Mazzuto. TWENTY-FIFTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about November 3, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a consulting agreement between IEAM and an investment entity located in Ohio. TWENTY-SIXTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: 4The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about December 18, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a consulting agreement between IEAM and an accountant located in Texas. EALSIFIED IEAM BOOKS AND RECORDS TWENTY-SEVENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about February 13, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a sales summary. TWENTY-EIGHTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about February 13, 2007, with intent to defraud and to commit another crime and to aid and conceal the com thereof, made and caused to be made a false entry into the business records of an enterprise, TEAM, to wit, a sales summary. 25TWENTY-NINTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendants, in the County of New York and elsewhere, on or about February 13, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a sales summary. ‘THIRTIETH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendants, in the County of New York and elsewhere, on or about February 15, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, cash flow and balance sheet worksheets, THIRTY-FIRST COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: 6The defendants, in the County of New York and elsewhere, on or about February 15, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, schedules of options and warrants. THIRTY-SECOND COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows ‘The defendants, in the County of New York and elsewhere, on or about April 24, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a spreadsheet detailing bank account activity of IEAM. ‘THIRTY-THIRD COUN AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about May 14, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, consolidating workbooks. 7‘THIRTY-FOURTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about May 14, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, consolidating workbooks. ‘THIRTY-FIFTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendants, in the County of New York and elsewhere, on or about June 11, 2008, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a quarterly report. ‘THIRTY-SIXTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in jon of Penal Law §175.10, committed as follows: 28‘The defendants, in the County of New York and elsewhere, on or about June 18, 2008, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, TEAM, to wit, a quarterly cash report. ‘THIRTY-SEVENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, farther accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about June 18, 2008, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a quarterly cash report. FALSIFIED DEBT INSTRUMENTS THIRTY-EIGHTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about October 5, 2006, With intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a promissory note between IEAM and Margulies and Levinson, LLP. 29THIRTY-NINTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about October 26, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a promissory note between IEAM and Sapphire Associates, LLC. FORTIETH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about November 17, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a promissory note between IEAM and Sapphire Associates, LLC. FORTY-FIRST COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: 30‘The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about January 1, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a revolving credit grid note between IEAM and an entity located in Ohio controlled by a friend and cohort of James Margulies, FALSIFIED INCENTIVE STOCK OPTION AGREEMENTS AND LETTERS FORTY-SECOND COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendants, in the County of New York and elsewhere, on or about October 4, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, an incentive stock option agreement between IEAM and a friend and cohort of James Margulies. FORTY-THIRD COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: 31‘The defendants, in the County of New York and elsewhere, on or about November 1, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, an option exercise letter. FORTY-FOURTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about October 20, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, an incentive stock option agreement between IEAM and an account located in Ohio. FORTY-FIFTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants, of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendants, in the County of New York and elsewhere, on or about February 4, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, an option exercise letter. 32FORTY-SIXTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about December 27, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, an incentive stock option agreement between IEAM and an account located in Ohio. FORTY-SEVENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendants, in the County of New York and elsewhere, on or about February 4, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, an option exercise letter. FORTY-EIGHTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: 33The defendants, in the County of New York and elsewhere, on or about December 27, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, an incentive stock option agreement between IEAM and an attomey located in Ohio. FORTY-NINTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendants, in the County of New York and elsewhere, on or about December 29, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, an option exercise letter. FIFTIETH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendants, in the County of New York and elsewhere, on or about December 27, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, an incentive stock option agreement between IEAM and a friend and cohort of James Margulies. 34FIFTY-FIRST COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendants, in the County of New York and elsewhere, on or about December 29, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, an option exercise letter. FALSIFIED PURCHASE ORDERS FIFTY-SECOND COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about December 31, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a purchase order. FIFTY-THIRD COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further acouses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: 35‘The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about December 31, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a purchase order. PIFTY-FOURTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE. FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about February 28, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a purchase order. FIFTY-FIFTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about February 28, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a purchase order, 36FIFTY-SIXTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendant JOHN MAZZUTO of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: ‘The defendant JOHN MAZZUTO, in the County of New York and elsewhere, on or about March 31, 2007, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a purchase order, FALSIFIED STOCK PURCHASE AGREEMENT FIFTY-SEVENTH COUNT: AND THE GRAND JURY AFORESAID, by this indictment, further accuses the defendants of the crime of FALSIFYING BUSINESS RECORDS IN THE FIRST DEGREE, in violation of Penal Law §175.10, committed as follows: The defendants, in the County of New York and elsewhere, on or about September 1, 2006, with intent to defraud and to commit another crime and to aid and conceal the commission thereof, made and caused to be made a false entry into the business records of an enterprise, IEAM, to wit, a stock purchase agreement. CYRUS R. VANCE, IR. District Attorney 37Be omy nuaung sours apwouoag sofa, ‘UOSTEAN PIOUH VOY uuosiadarog pal yawey vay Aousony 91NSIa "Ue FONVA "A SAAAD (sunoo ¢¢ ‘saynBsey juepuajap ‘sj [¢ ‘omnzz¥W UYor kWeptazep) OT'SLIS “Td “AAWOAC LSULA AHL NI SCUOITA SSANISA ONIAAISTVA (suepuoyop thog) (DOT'SOIS “Td “ANADAT HLANOA FHL NI AQVULASNOD (Suepuasop tog) (@(Ds9'0618 “Td “AMADAM SWI AHL NI GAVYAIA OL TWAROS (squepuagap trog) (9)9-2se8 “T'S AO NOLLV'IOIA (squepuayap roa) (s)2-zs¢8 “T''D AO NOLLVIOIA. (siuepuajop i909) “819 z *Zp'SS1§ “Td “AMIDA ISM AAL NI ANIOUV'T GNVAD, INSWIOIGNT “symepuayoq, ‘SaYTODUVW'M SaWVE puv OLNZZVIN ‘a NHOF sous. DRIOA MN AO ALVIS AHL AO A140 TAL Cs vN Pola 8HIntemal CM/ECF Live Database Page | of 2 Complaint/Summons: 11-51876-BL$ Industrial Enterprises of America, Inc. v. Ardent Advisors LLC et al Type: ap Office: 1 (Delaware) Judge: BLS Lead Case: 1-09-bk-11475 Case Flag: NONPREF U.S. Bankruptey Court District of Delaware Notice of Electronic Filing ‘The following transaction was received from Christopher Dean Loizides entered on 10/11/2011 at 8:03 PM EDT and filed on 10/11/2011 Case Name: Industrial Enterprises of America, Inc. v. Ardent Advisors LLC et al Case Number: —_11-51876-BLS Document Number: 23 Docket Text: First Amended Complaint to Add Count Filed by Industrial Enterprises of America, Inc. (related document(s)[1]) AP Summons Served due date: 02/8/2012. (Attachments: # (1) Exhibit A) (Loizides, Christopher) The following document(s) are associated with this transaction: Document description:Main Document Original filename:F:\TMW8E\DATA\files\Pitt Penn Holding Company, Inc\101111 Amended Complaint (Ardent adv).pdf Electronic document Stamp: {STAMP bkecfStamp_ID=983460418 [Date=10/11/2011} [FileNumber=10134895- 0} [803453103 f9d08cf¥320c74df5959379d5137¢89924aalad391cb65117478b1b47 28ad2e45b2b1085890d9e77123 1 8d4ebe7171.282a8 1ba225485 1bbfT080297]] iption:Exhibit A :F:\TMW8E\DATA\files\Pitt Penn Holding Company, Inc\101111 Amended Complaint Ex A (Ardent adv).pdf Electronic document Stamy [STAMP bkecfStamp_ID=983460418 [Date=10/11/2011} [FileNumber=10134895- 1] [8de7beb9677d129e95ffe2"1 063a433ab06d012175390d0998b58485488f192a70 aadecac3a84ba594167d3303910333def91 17578572921 86079ecade7084c1]] 11-51876-BLS Notice will be electronically mailed to: Theodore Allan Kittila on behalf of Defendant Ardent Advisors LLC tak@elliottgreenleaf.com Christopher Dean Loizides on behalf of Plaintiff Industrial Enterprises of America, Inc. loizides@loizides.com hittps://ecf.deb.uscourts.gov/egi-bin/Dispatch.pI?595214154877359 10/11/2011