*INVESTIGATIVE SERIES: Ubiquity Shareholders Accuse the Company of Fraud in a Lawsuit. And Ubiquity is Reportedly Under Multiple Federal Investigations…
About l8 months ago, Ubiquity Inc. was trumpeting its restructuring plan after being delisted by the SEC.
The delisting was prompted by investor complaints that the company, with HQ in Irvine, had not filed quarterly financials in years and had not conducted a shareholder meeting to address investor concerns.
The company – what’s left of it – is under investigation by the DOJ, FBI and SEC, according to investors familiar with these cases.
And one of the shareholders, Rory Frueh, has filed a lawsuit accusing Ubiquity of fraud and negligence, among other things.
But where is the company now? How is it operating after being evicted in late 2017? Where are its patents and other IP? Will it ever report years of missing financials? Will it declare BK? Or has it resisted doing that because that would involve a financial audit? Did the CFO ever have a valid CPA license?
Shareholders would like to know.
Ubiquity, formerly known as Ubiquity Broadcasting, began in 2007 as a film and video production, post- production and graphics company with its own studios. In recent years, it had been trying to transition from traditional media services to VR and AR, touting its “innovative” patents and tech.
It touts its “unique cloud-based technology,” as a combo of multiscreen-as-a-service, (also known as MaaS), and software-as-a-service, (commonly known as SaaS).
One of Ubiquity’s co-founders, Chris Carmichael, passed away on January 1 at age 65.
Things Look Fishy
Ubiquity vacated its corporate HQ after being evicted, according to court documents. A Google search lists the company’s HQ at 9801 Research Drive as “Permanently Closed.”
Yet this is the exact address the company shows as its current HQ on its website, which it recently republished.
In fact, look closely and Ubiquity currently has two different websites. One is for Ubiquity Inc. and one is for Ubiquity Corp. Both bring you to the same home page.
The copyright on the home page is from 2012.
On both site’s contact pages, the phone number listed, (949-489-7600), plays a recording saying the number has been disconnected.
Both websites also have a patents page, in which the company purports to have several patents and pending patents. One of these is for something called the “Sprocket,” which the website claims “is an easy to use navigation tool that simplifys the management of your digital lifestyle.”
This patents page has certain elements missing, like a video the text refers to. And, the links to the images do not work.
The most recent press release under “Ubiquity News” is from 2015. And, the link to that release is broken.
C Level Execs Can’t Seem to Keep Their Timeline Straight
The other Ubiquity co-founder is Chris’ wife, who used to be known as Connie Carmichael. She now lists her name on the Ubiquity websites as Connie Jordan. Same for her LinkedIn page.
She’s modified her tenure with Ubiquity on her LinkedIn page and has started a new company, C Media. There’s no description of this company, nor address, nor phone number.
This is the company that Freueh and the two anonymous investors allege that Jordan is using as a vehicle to sell Ubiquity’s IP. She’s “in the process of taking company assets illegally transferred to Chris Carmichael and… attempting to sell them on the open market without investor consent,” one of them said.
Jordan is now touting herself as a “visionary, inventor, (and) consultant at C Media.”
Jordan’s time at Ubiquity on LinkedIn (as of today, June 11), is listed as April 2000-Jan 2016.
Yet this is in direct contrast to a Ubiquity press release from July 2017, which refers to her as SVEP of intellectual property.
OCSN reached out to Jordan on May 19 for comments on the shareholder lawsuit and the general status of Ubiquity. She directed inquiries to Brenden Garrison.
Garrison, Ubiquity’s former CFO, has also apparently modified his LinkedIn profile regarding his time with Ubiquity.
On his LinkedIn page, he’s listed as the CFO of Ubiquity from Jan 2006 – Dec 2017 (as of today, June 11).
There is no mention at all of him as president. However, a May 2018 press release issued by Ubiquity says he was named president and CEO in December 2017.
On his LinkedIn page, it says he has a Bachelor’s degree in accounting.
It also says that, “while developing his own company, Brenden started the process to become a Certified Public Accountant and is in the final stages of obtaining his CPA license.”
It gives no indication, or date, as to whether he ever officially obtained that license.
Regarding the company itself, on Ubiquity’s LinkedIn page, the About section in May said it’s a privately held company with 0-1 employees. It now says it has 11-50 employees, and also lists the address it was evicted from as its HQ. Who all those employees are is not easily discerned.
OCSN reached out to Garrison a few times for comment. He did not respond.
And, OCSN also reached out to Bob Fernander. On his LinkedIn page, (as of mid-May), he’s listed as the chairman of Ubiquity from September 2017-present, as well as an independent consultant with Ubiquity from March 2017-present.
He did not respond either.
Since August 2017, Ubiquity has been sending out press releases with positive news regarding the company. Case in point: this July 2018 release crowing about settling multiple lawsuits. https://www.newswire.com/news/ubiquity-inc-reaches-settlement-in-multiple-lawsuits-20557017
Where is the IP Now?
Ubiquity was evicted in 2017 because it allegedly did not honor part of an amendment to the company’s lease. The original lawsuit to evict the company – filed by Ubiquity’s landlord, Avante Garde Properties — stated that the rental value of Ubiquity’s portion of the building – (they occupied 60%) – was about $1,900 per day. The landlord sought damages at this rate beginning Sept. 1, 2017.
The Carmichaels filed their own lawsuit against Avant Garde in April 2018 in an attempt to retrieve office furniture, IP and other assets from their office.
Their lawsuit is significant because documents attached to it show that in mid-2016, Chris Carmichael, as an individual, obtained ownership of a variety of patents and IP that were previously owned by the company.
Frueh, and the two anonymous shareholders, told OC Startups Now that those transfers occurred without their knowledge, with no shareholder vote, with no formal notice from Ubiquity’s board and with no press release.
They maintain that this was critical info for Ubiquity investors to be informed of, as these were reportedly the only remaining assets the company possessed.
In the legal documents, Chris Carmichael claimed that he was owed more than $2 million by Ubiquity and that he agreed to cancel this secured debt in exchange for receiving Ubiquity’s IP, as well as assets like office furniture and computers. Garrison, the CFO at the time, gave his imprimatur to this agreement, which was dated Nov. 1, 2017.
Avant Garde said in the court filings that it gave Ubiquity the opportunity to claim its property “without charge” but that was not successful. So it set a public sale date in early 2018. Around the same time, the Carmichaels filed an application for a temporary restraining order, which was denied. The sale of some of Ubiquity’s assets took place on Feb. 5, 2018, according to court documents.
The Carmichael’s lawsuit against its landlord was dismissed in June 2018, at their request. So, it is likely that they were able to retrieve some of the IP. And, since Chris Carmichael passed away earlier this year, it’s likely that his wife, Connie Jordan, now has ownership of those patents.
None of the parties in these two lawsuits – including Jordan, Avant Garde, Martin Eramo (the landlord’s attorney), nor Brian Andrews, the attorney who represented Ubiquity in this case – responded to requests for comment.
Shareholders accuse Company and Top Execs of Fraud
This shareholder lawsuit was filed by Rory Frueh in February. It’s against Ubiquity, Christopher Carmichael, Connie Jordan, Brenden Garrison, Webb Blessley, Nicholas Mitsakos and Shelby Solomon.
It’s scheduled to go to trial on October 21.
Frueh is suing Ubiquity and several top executives personally. And, he’s suing them on behalf of all shareholders. There are reportedly thousands of Ubiquity shareholders.
Of the six co-defendants, one is deceased (Chris Carmichael). Solomon has settled with Frueh.
Mitsakos is in prison. He was the former interim Ubiquity CEO, who was sentenced in late 2017 to 30 months in prison on charges of conspiring to commit securities fraud and wire fraud, according to news reports. The case did not involve Ubiquity. It stemmed from his operation of an alleged hedge fund, Matrix Capital, with HQ in San Francisco.
The remaining defendant, Blessley, is a former Ubiquity board member.
Frueh’s lawsuit accuses the defendants as being the masterminds of the fraud.
He said they did this by “concocting” a plan of going public, and proceeding to rent “the most beautiful office building you can imagine in Irvine, furnished it with incredible artwork, furniture, just a dazzling place.”
That provided the “facade” that they were running a legitimate business, he said.
Frueh alleges that the Carmichaels found a “willing participant” in Garrison to be the CFO, even though he reportedly did not have a CPA license when hired.
And Freuh alleges that the Carmichaels hired all their children – Brittany, Cameron, Shane, and Devon – to work for the company as part of “the scam.”
Once Ubiquity started raising capital, the company reportedly told potential investors that within six months, they would be able to sell their stock, Freuh said.
“But they had no intention of ever letting anyone sell stock,” he said. “Because after they go public, there are certain reporting requirements with the SEC that they must complete. Within one or two months after they went public, they did not process any necessary paperwork.”
So, it was inevitable that the SEC would eventually delist Ubiquity, Frueh said.
But the company has yet to declare bankruptcy. It just “disappeared,” Frueh said.
“Without question, they are attempting to avoid a backruptcy court from (doing) an independent audit.”
Frueh — who invested $650,000 in Ubiquity — said he’s spending the money to initiate this lawsuit, instead of just accepting his losses as an investor who took a risk, because he was such an active investor.
He kept close tabs on Ubiquity throughout the years, visiting its office — frequently and unannounced — to see how the Carmichaels were managing the office day-to-day.
“Very rarely did I ever encounter a programmer or someone with any technology experience in the building full-time, (nor for) months at a time,” he said. “How can you develop technology on the level Carmichael, Garrison, and Jordan were (claiming) when you do not have programmers on full-time staff?”
The anonymous investors allege that Carmichael would buy tech that others had developed and pay for it with Ubiquity shares. They allege he then would proceed to restrict the selling of those shares and pass off the tech as if Ubiquity had developed it, itself.
Frueh accuses Chris Carmichael of selling “millions and millions and millions of shares” over the counter, starting at $14/share, and then “driving it all the way down to six cents.”
For example, in December 2016, Ubiquity showed a dollar volume of approximately $971 million, a share volume of $6.2 billion and more than 125,000 trades having been made.
Who made all those trades? Investors would like to know.
Frueh also accusees the Carmichaels and Mitsakos of “controlling” Ubiquity’s board and “awarding themselves super shares” of the stock.
“Without the consent of the shareholders, this newfound power enabled themselves to outvote all existing shareholders on every issue,” Frueh said.
The two anonymours investors both said they were also restricted from selling their stock. One, along with a family member, invested $150,000. The other invested $500,000. He said he first thought there was something fishy going on when Ubiquity stopped filings its financials. He said he was told by other investors that Ubiquity’s former transfer agent, VStock Transfer, was getting instructions on who to restrict and who to permit the sale of the stock.
A processing supervisor with VStock Transfer, (in Woodmere, NY), told OC Startups Now that VStock has not worked with Ubiquity since March 2017. She declined to comment on VStock’s protocol regarding Ubiquity’s stock during the time it did work with the company.
The next transfer agent was Transfer Online Inc, (with HQ in Portland, OR.) according to VStock. A representative of this company told OC Startups Now that it has been the transfer agent of record since March 2017. He declined to disclose any further information.
Stock Being Delisted
Once Ubiquity went public in 2013, it only filed its first three periodic reports on time, according to SEC documents.
Ubiquity’s penny stock was delisted in August 2017.
Prior to that, the company was the subject of several Seeking Alpha articles, which concluded that it was “being touted by various penny stock promoters in classic ‘pump and dump’ fashion,’” rendering the shares “essentially worthless.”
See the Seeking Alpha articles here.
When Ubiquity and the SEC jointly agreed to revoke Ubiquity’s stock, Chris Carmichael said in a press release, “As we have publicly stated and have advised the SEC, we will do everything reasonably necessary to become compliant and to relist the company.”
That has yet to happen.
(Others who also did not respond for requests for comment are Nannina Angioni, who currently represents Ubiquity; Kimberly Manning, who represents Frueh in the shareholder lawsuit; and
Hall and Company, Ubiquity’s accounting firm in Irvine.
An SEC public affairs spokeswoman declined comment “beyond the trading suspension and revocation of the registration of Ubiquity’s securities.”
As per its usual protocol, an FBI spokesperson said, “By DOJ policy the FBI neither confirms or denies the existence of investigations.”)