This story has been updated on May 10, reflecting the dismissal of the case.
On Monday, Genesis Media LLC filed a complaint in the Central District of California against entertainment technology company OwnZones Media Network Inc. and several individuals, asserting that the defendants violated the Racketeer Influenced and Corrupt Organizations (RICO) Act in connection with OwnZones’ solicitation of investment in the 420TV app, ” a free TV and movie entertainment platform for cannabis enthusiasts.”
According to the complaint, the “case emanates from the defendants(’) systematic pattern to defraud plaintiff out of the money plaintiff placed with defendants as part of a business proposition.” Reportedly, the defendants’ racketeering activities include “criminal violations of the wire fraud and mail fraud statutes” and violations of Section 20 and 22 of the Securities Act of 1933 and various sections of the Securities Exchange Act of 1934. The plaintiff claimed that the defendants made false and misleading statements that “inflat(ed) revenue projections to induce parties to enter into contracts with Own(Z)ones.”
Specifically, Genesis Media alleged that it was provided with OwnZones’ purportedly inflated revenue projections, which induced it to invest $3.1 million with OwnZones to fund and launch the 420TV app. According to the complaint, Genesis Media originally was supposed to invest $4.1 million but deferred the last million to see how the project was going; however, the plaintiff learned that the defendant “wanted this last $1 million, that was supposed to go into the 420TV project, to put on Own(Z)ones’ financial statements to create the false impression that Own(Z)ones appeared to be stronger financially that its accurate financials showed” in order to defraud investors.
OwnZones allegedly continued its racketeering scheme “by submitting over-inflated expense summaries, and embezzling money from Genesis Media by sending fraudulent bank wire transfers to Own(Z)ones’ branch office in Romania.” The plaintiff noted that the Securities and Exchange Commission (SEC) sued the defendants “for fraud in connection with the sale of securities in violation of federal securities laws,” specifically for raising $45 million in illicit securities offerings. The complaint added that the SEC complaint revealed that OwnZones was never profitable. Genesis Media contended that the defendants’ racketeering conduct began in approximately 2011 until the SEC lawsuit in April 2020. The complaint detailed the transactions and communications between the parties as well as the defendants’ allegedly fraudulent statements and conduct.
The causes of action are RICO Act violations, breach of implied contract, restitution, and unjust enrichment.
The plaintiff seeks compensatory damages in excess of $14 million, plus treble damages for the RICO claims, as well as interest, cost, fees, an injunction, and other relief; in sum, the plaintiff seeks to recover more than $56 million.
Genesis Media is represented by the Law Office of Robert G. Klein.
A spokesperson for OwnZones said in a statement provided to Law Street Media that “Less than three weeks after filing a complaint in federal court against Ownzones Media Network, Inc. alleging violations of the RICO statute, Genesis Media, LLC dismissed its complaint in its entirety. It is Ownzones’ position that the complaint was meritless from the start and represented nothing more than Genesis’ attempt to misuse the federal court for no reason other than to generate unfavorable press for Ownzones and distract from Genesis’ own business dealings. Ownzones fully expects that it will prevail in the similarly baseless state court action filed by Genesis, and looks forward to its day in court.”