Share Elimination Conspiracy#expandContractAll updated: 20 Feb 2020

Chronology relevant to this claim
In late 1996, the Plaintiff founded K2000 with the mission to build a Web-based eLearning technology (later named Efficient Learning Platform (ELP)) to enable the design of software products that provide to a customer an "efficient study" framework within which he/she is empowered with an "efficient learning" process that enables them to efficiently master the study materials.  The first goal of the technology was to make passing professional certification exams easier, in particular the national CPA exam.
The Plaintiff raised $1,500,000 for K2000 from 40+ individual investors.
Relevant History
The following is the Plaintiff`s account of events that are relevant to this claim...EXPAND CONTRACT
Division of Corporate Roles...EXPAND CONTRACT
Operationally, K2000 corporate roles were divided into 1) business management and marketing, and 2) technology and product development/support. The Plaintiff focused on technology and product development, while Ted Foley managed the business side of the company and marketing. Ted Foley and the Plaintiff were friends who had collaborated on several of Ted Foley`s Arizona education projects.
The Plaintiff had complete confidence in Ted Foley, because he had been very professional in setting up the company`s financial structure and relationships [e.g., he hired and interfaced with top accounting firm, PWC], managing relations with the investors, and managing bookkeeping, payroll, payroll taxes.
The Plaintiff was very grateful for Ted Foley`s services because the Plaintiff did not have the time to take on all of those roles, nor did the Plaintiff have Ted Foley`s expertise and experience.
The company would have had to have taken on the additional expense of hiring a business professional to perform Ted Foley`s roles. With Ted Foley performing those roles without pay, it meant that the Company could conserve investment capital, an important goal for a startup.
eLearning Technology, First Product & Authors...EXPAND CONTRACT
Early in 1997, the Plaintiff hired a team of software engineers, developed the initial version of K2000`s eLearning technology, later named Efficient Learning Platform (ELP). They used it to create CPAexcel, a software product for the CPA Exam Review market.
In mid 1997, the Plaintiff approached a team of professors from the University of Texas Accounting department and secured their commitment to author the learning content of CPAexcel. At the time, the UT accounting department was rated at #1 in the nation.
This was a major coup for the Company.
CPAexcel was an Effective Product...EXPAND CONTRACT
In its first foray into the market in 1998, CPAexcel produced exceptionally good pass rates (one student scored the highest score in the CPA Exam). Once he saw that CPAexcel was a potential winning product, Ted Foley increased his time commitment to K2000.
Poor Marketing, Sales Disappointing...EXPAND CONTRACT
1998: Marketing Failure
Spending big with traditional marketing strategies, Ted Foley`s marketing campaigns failed to reach "first-time" CPA Exam candidates. Basically, CPAexcel was unknown in the market to first time CPA Exam candidates. Initial sales were disappointing.
First Marketing Campaign Illconceived
Consistent with his "big business" mindset, Ted Foley had insisted that K2000`s first marketing campaign should be a big splash. His mantra at the time was "You have to spend money to make money".
  • Two Channels -- His campaign was two-pronged...EXPAND CONTRACT
    • "New Accountant" Magazine -- He negotiated a deal with the New Accountant magazine, a campus distributed publication, to have CPAexcel featured on the front page and an article about the product, and the learning amplification delivered by K2000`s eLearning technology, and a full-page ad;
    • Bulk Mailing -- He obtained a mailing list of previous CPA Exam sitters, printed up a glossy package, and mailed it out to the people on the list;
  • Results -- The marketing campaign was a dismal failure. K2000`s sales covered less than 10% of marketing costs...EXPAND CONTRACT
    • Magazine issue`s distribution was too late -- By the time the magazine was distributed, most potential CPA candidates had already left campus;
    • Mailing List Out of Date -- The mailing list was comprised of a restricted set of previous CPA exam sitters. Potential sales could only have come from repeat candidates, most of whom had previously purchased a competitor`s CPA Exam Review product. The mailing failed to target "first-time" candidates, by far the largest group of CPA exam sitters.
K2000 Scales Down...EXPAND CONTRACT
To remain financially viable during 1999-2001, K2000 pared back staff to two full-time people (an office manager and the Plaintiff) with some part-time fulfillment people. The Company contracted two of K2000`s software engineers as needed. The Plaintiff deferred most of his salary. Monthly costs were kept below sales income.
Ted Foley created several investment offerings during this period and targeted the existing pool of 40+ investors. The first offer managed to raise about $150,000. This proved to be a wasted effort as most of these investors were already "topped out".
Marketing Campaigns Continue to be Ineffective...EXPAND CONTRACT
Ted Foley`s subsequent marketing campaigns again failed to reach "first-time" CPA Exam candidates.
Two Visions Emerge: 2000...EXPAND CONTRACT
In 2000, Ted Foley and the Plaintiff had competing visions as to how to go forward. Ted Foley wanted to focus everything on marketing CPAexcel by scaling up his marketing campaigns with new investment capital. The Plaintiff wanted 1) to focus on Internet marketing to boost the awareness of CPAexcel to "first time" CPA Exam candidates, and 2) to diversify business risk by creating a separate company ("Efficient Learning Systems") for marketing CPAexcel (and all future ELP-based products) and by using K2000 to license ELP.
  • Ted Foley`s Vision...EXPAND CONTRACT
    Consistent with his TRW "big business" experience, his vision was to scale up by putting a lot of capital behind his traditional-style marketing campaigns. He indicated that he was willing to personally fund the scale-up, but only if he received a significant proportion of the company for his investment.
  • The Plaintiff`s Vision...EXPAND CONTRACT
    "Efficient Learning Systems" Concept -- The Plaintiff`s vision was to move CPAexcel into a separate company ("Efficient Learning Systems") with a "CPA Exam market"-oriented culture, and to take advantage of the separate business opportunity of licensing ELP to education content developers/publishers across the world from within K2000.
    This would open up a greatly expanded business universe from which K2000 shareholders would profit. 
    Ted Foley would run the business side of both companies and the Plaintiff would manage the technical side of both companies. Within K2000, the Plaintiff would manage the partnerships with Education Publishers.

    Internet marketing master plan -- In addition, a critical part of the Plaintiff`s vision was firstly to solve the Company`s lack of market exposure to first-time CPA Exam candidates by implementing an Internet marketing master plan to significantly raise the CPAexcel website`s visibility in the Internet search engines.
Company Status: 2001...EXPAND CONTRACT
  • Excellent Product -- CPAexcel was an excellent product with a clear competitive advantage. The financial success of CPAexcel rode almost entirely on solving K2000`s marketing "invisibility" problem, (i.e., an inability to reach first-time CPA Exam candidates).
  • Ineffective Marketing -- CPAexcel was virtually unknown to first time CPA Exam candidates. Marketing efforts had been misdirected and ineffective.
  • Breakthrough Technology -- ELP was a proven breakthrough technology with significant business potential.
  • Stable Financially -- The Company was a "going concern".
    • Expenses below Income -- The Company was meeting payroll, rent, and operational expenses.
    • Manageable Debt -- The Company debt was small and manageable.
  • Growth -- There were three clear avenues for growth
    • Grow CPAexcel Sales -- Grow the sales of CPAexcel by reaching first-time CPA Exam candidates.
    • Licensing ELP -- Produce the design modifications for the second generation of ELP.
    • CPAexcel Sibling Products -- There was the potential to leverage K2000`s CPAexcel author`s content by producing products for other accounting certification markets.
  • Govenance -- The Company needed Ted Foley`s skills. The Plaintiff felt that by solving the marketing problem with his Internet marketing master plan, he could change the governance dynamics and come to a "meeting of the minds" with Ted Foley. CPAexcel sales would be growing and the Company`s options would open up by the formation of ELSco.
Ted Foley`s New Focus...EXPAND CONTRACT
Because the company`s current revenues would not support Ted Foley`s scaled up marketing vision, he turned his attention to raising the needed capital, producing a business plan with his scaled up marketing as its centerpiece.
Prostate Cancer!!!...EXPAND CONTRACT
Also in 2001, the Plaintiff was struck down with prostate cancer with a poor prognosis. It changed everything. After a radical prostatectomy at Cottonwood Hospital on 31st January 2001, the Plaintiff realized that in the next year the Plaintiff would have to leave K2000, and to return to his native Australia to get support from his family during his declining health. It also meant that Ted Foley was even more important for the future of the company. There was no-one else to take the Company forward.
Transition Plan...EXPAND CONTRACT
The Plaintiff kept his health condition to himself for the time being, to buy time to finish his Internet marketing master plan, and to draw up the design modifications for the second version of ELP. The Plaintiff`s goal was to get the Company into a state for a smooth transition.
Transition Goals -- The Plaintiff resolved that before he left the company, he would put the company on a strong footing 1) by establishing an upward trend in CPAexcel sales, and 2) by bolstering CPAexcel`s competitive advantage in the marketplace...EXPAND CONTRACT
Upward Trend In CPAexcel Sales -- The Plaintiff strongly believed that his Internet marketing master plan was the key to reaching first time CPA Exam candidates who would discover, download, and evaluate CPAexcel during their product comparison process.
Future Competitive Advantage -- The Plaintiff also believed that the key to providing CPAexcel with a future competitive advantage in the marketplace was embodied in the design of the next version of ELP.

Plan -- The Plaintiff plan was to concentrate on those aspects that would have the greatest impact on increasing CPAexcel sales and on maximizing its learning effectiveness. The Plaintiff split his time between progressing on two fronts: Internet Marketing and the Second Version of ELP...EXPAND CONTRACT
  • Internet Marketing -- The Plaintiff decided to establish the technical foundation for supporting a permanent presence of K2000`s website in the Internet search engines. He reengineered CPAexcel`s website so that it could be discovered from a broad range of search requests that potential customers might possibly use in researching CPA Exam review products. By mid 2002, everything was operational to capture sales for the November 2002 CPA Exam.
  • Second Version of ELP -- The Plaintiff set himself to the task of producing a comprehensive design document for the second version of ELP that would incorporate the lessons that had been learned from the first version, and that when implemented
    • would provide a competitive advantage for future versions of CPAexcel, and
    • could potentially become the business foundation for licensing the technology.
    By November 2002, the design modifications for the second generation of ELP were complete, along with working prototypes that the software engineers could use during the final upgrade of ELP.
Sales Surge...EXPAND CONTRACT
In the second half of 2002, CPAexcel`s website traffic went up dramatically, downloads increased, and sales surged.
The Plaintiff`s Internet marketing effort had paid off by permanently establishing CPAexcel in all the major Internet search engines. From that time forward CPAexcel would be known in the CPA Exam Review market, and because of that, and the effectiveness of CPAexcel as a product, the Plaintiff believed that sales would continue on an upward trajectory for years to come.
Transition Preparation...EXPAND CONTRACT
Starting at the beginning of October, 2002, the Plaintiff took the following actions to support the transition that would follow his departure from the Company.
  • Transition Knowledge Transfer -- For a smooth transition, the Plaintiff prepared a set of three CDs containing important continuity information...EXPAND CONTRACT
    • "CPAexcel Update" CD -- This CD contained an update to both ELP and CPAexcel that would enable the creation of new product configurations and media forms (e.g., printed booklets), and that would enable a steady product evolution without any perceived discontinuity from the customer`s viewpoint.
    • "ELP Update Design Documents" CD -- This CD contained the complete set of update design documents and prototypes for the next version of ELP that the Plaintiff had worked on during the previous 18 months.
    • "Internet Marketing" CD -- This CD contained instructions on how to manage CPAexcel marketing through the Internet Search engines, and how to raise its visibility higher in the established search string results, and how to add new search strings for each of the targeted search engines.
  • Share Transfer Order sheets -- With the goal of getting his personal affairs in order with respect to the disposition of his K2000 shares, the Plaintiff prepared 1) the following transfer orders to be executed and filed in the Company`s records, and 2) each order`s share certificate...EXPAND CONTRACT
    • TRANSFER ONE MILLION K2000 SHARES TO ANTHONY WALKER TRUST...EXPAND CONTRACT
      Associated Share Certificate...EXPAND CONTRACT
    • TRANSFER ONE MILLION K2000 SHARES TO MATHEW WALKER TRUST...EXPAND CONTRACT
      Associated Share Certificate...EXPAND CONTRACT
    • TRANSFER 250,000 K2000 SHARES TO ANTHONY WALKER RETIREMENT TRUST...EXPAND CONTRACT
      Associated Share Certificate...EXPAND CONTRACT
    • TRANSFER 250,000 K2000 SHARES TO MATHEW WALKER RETIREMENT TRUST...EXPAND CONTRACT
      Associated Share Certificate...EXPAND CONTRACT
  • Reservation of 50,000 K2000 Shares for Child Support Obligation -- The Plaintiff prepared the following order sheet for the reservation of 50,000 K2000 Shares in the name of Wendy Heald....EXPAND CONTRACT
  • Mailings to Defendant
    On the 29th October, 2002, the Plaintiff sent the following email to the Defendant concerning child support issues. In that email, the Plaintiff informed her to expect a mailing containing an unsigned stock certificate for 50,000 shares as collateral on his child support obligation. In addition, in that email the Plaintiff informed the Defendant that the Plaintiff was "in the process of transferring 1 million shares of K2000 stock into the names of Anthony and Mathew (their sons)"...EXPAND CONTRACT


    With respect to these two matters, the Plaintiff prepared the following two mailing envelopes to be sent to the Defendant, one concerning K2000 shares reserved in her name related to child support, and the other concerning K2000 shares transferred to their sons...EXPAND CONTRACT
    • "Child Support Collateral" Mailing-- This mailing was sent by the Plaintiff shortly after the email, and contained an unsigned K2000 share certificate for 50,000 K2000 shares reserved in her name. The backside of the certificate contained the conditions for consummating ownership of the shares...EXPAND CONTRACT
      OBTAINED IN AUGUST, 2017 BY THE PLAINTIFF`S ELDER SON FROM THE DEFENDANT`s COMPUTER
      [scroll down to view Usage Mandates]
    • "Share Transfer" Mailing-- The Plaintiff prepared four signed K2000 share certificates. For each of his sons, two certificates were drawn up in each son`s name transferring 1 million and 250,000 respectively of his K2000 shares with the Defendant as trustee. The Plaintiff retained voting rights of all shares. This mailing was to be sent by Ted Foley as per instructions (see Share Registration Instructions below) after he had performed the appropriate K2000 share registrations. This mailing contained
      • Cover Letter...EXPAND CONTRACT
      • Share Certificates-- Four share certificates, two for Anthony Walker, and two for Mathew Walker.
        • Anthony Walker Trust Certificate...EXPAND CONTRACT
        • Anthony Walker Retirement Trust Certificate...EXPAND CONTRACT
        • Mathew Walker Trust Certificate...EXPAND CONTRACT
        • Mathew Walker Retirement Trust Certificate...EXPAND CONTRACT
Transition Meeting...EXPAND CONTRACT
Around the first week of November 2002, the Plaintiff met with Ted Foley to resign from K2000. At that meeting, the following topics were covered.
  • Prostate Cancer Disclosure -- At the meeting, the Plaintiff informed Ted Foley that he had been battling prostate cancer since early 2001, and that he was going to have to leave the Company, and return to Australia where he had family support. Ted Foley`s surprising response was "We're all going to die soon" [He was in his mid-70s]
  • Resignation Letter -- At the meeting, the Plaintiff delivered a letter of resignation to Ted Foley addressed to the K2000 board...EXPAND CONTRACT
  • Transition Knowledge Transfer CDs -- At the meeting, the Plaintiff provided Ted Foley with the three prepared Transition Knowledge Transfer CDs.
  • Efficient Learning Systems
    At the meeting, Ted Foley and the Plaintiff discussed the merits of creating Efficient Learning Systems (ELSco) to develop and market products based on ELP, while K2000 concentrated on the future development and marketing of ELP...EXPAND CONTRACT
    The Plaintiff emphasized that because the original investors had financed the development of ELP, it was the K2000 board`s fiduciary duty to make every effort to ensure that they realized a return on that development investment. He solemnly promised that the K2000 board would meet their fiduciary duty with respect to ELP.
    The Plaintiff reminded him of the letter that K2000 counsel had previously sent to all of K2000 board members on the matter of fiduciary responsibilities of corporate officers, when the Plaintiff had originally proposed the idea about a year or so before.
    At the end of the meeting, he gave the Plaintiff his verbal guarantee that the fiduciary responsibilities of all of the K2000 board members would be scrupulously observed in this matter.
    With that guarantee, the Plaintiff was totally satisfied that Ted Foley`s extensive knowledge of business matters would enable a restructuring that would protect the interests of all K2000 shareholders.
  • Share Registry Instructions -- With respect to adjustments required to the K2000 Share Registry, the Plaintiff provided Ted Foley with the following...EXPAND CONTRACT
    • Instructions Sheet -- The Plaintiff provided the following instructions sheet to Ted Foley...EXPAND CONTRACT
    • Four Share Transfer Order Sheets -- The Plaintiff provided Ted Foley with four Share Transfer order sheets related to the transfer of his K2000 shares to his sons (see Share Transfer Order sheets above). An associated signed share certificate was paper-clipped to each transfer order sheet.
    • Child-Support Collateral Share Reservation Order Sheet -- In addition, the Plaintiff provided Ted Foley with an order sheet for the reservation of 50,000 of his K2000 Shares in the name of Wendy Heald (see Reservation Order).

Transfer of Business Assets...EXPAND CONTRACT
When he left K2000 in November 2002, the Plaintiff fully expected that Ted Foley and his newly hired son-in-law would pick up the reins and guide K2000 forward to increase the established CPAexcel sales momentum, armed with the Transition Knowledge Transfer CDs that the Plaintiff had prepared to facilitate continuity.
Insolvency Declaration
A couple of months later, the Plaintiff called the office and was surprised to learn that Ted Foley had declared K2000 "insolvent", and was preparing to transfer business assets into a newly-incorporated company, Efficient Learning Systems (ELSco) that he and the Plaintiff had discussed during their last meeting for marketing CPAexcel and future ELP-based products.
At first the Plaintiff was alarmed because in his mind the concept of "insolvency" could not be applied appropriately to a company experiencing a strong upturn in sales.
Impulsively, the Plaintiff threatened to fire the board and bring everything to a halt.
However, in a phone call, Ted Foley responded that there was really nothing to be concerned about, and that the Plaintiff should trust Ted Foley`s CPA and Strategic Planning expertise to formulate the best way to realise the Plaintiff`s "Efficient Learning Systems" Concept. Central to his plan was an auction at which ELSco would acquire CPAexcel business assets using ~$300,000 of his own money. This money would be used by K2000 to update ELP and to start generating revenues for K2000 by licensing it.

He explained that after the auction, he would meet with the Plaintiff and explain his plan more fully.
About a week later, the Plaintiff went to the auction and observed that Ted Foley was indeed good to his word. He did in fact put up ~$300,000 to secure the assets for ELSco.
New Business Framework
After the auction, Ted Foley reassuringly explained that everything that he was doing was just as the Plaintiff and he had discussed. CPAexcel would be moved into ELSco and ELP would remain in K2000. The new business structure was the appropriate framework for pursuing the Plaintiff`s future vision.
  • Business Assets Ownership Separation
    Ted Foley explained that his approach offered a clean separation of assets ownership with the price paid for the assets governed by an incontrovertible auction process.
    Thus there would be no intertwining of ownership of business assets. CPAexcel business assets would be wholly owned by ELSco and ELP business assets would be wholly owned by K2000. ELSco would have a licensing agreement with K2000 to use ELP as the foundation of its products.
  • Independent Shareholder Stakes
    Ted Foley explained that his approach enabled K2000 shareholders to have two equal stakes, their original stake in K2000 and an equal stake in ELSco.
Flexible Advantages
Ted Foley explained that the new business structure provided significant advantages:
  • Separate Cultures, Streamlined operations, & Independent Business Trajectories
    Ted Foley rationalized that because each company would be in completely different markets, each company would enjoy a culture tuned to its market focus, more streamlined operations, and independent business trajectories.
  • More Attractive Sale Appeal
    Ted Foley also postulated that each company would thus be able to present itself as a more attractive target for sale.
  • Greater Flexibility for Share Appreciation
    Ted Foley asserted that the new business structure provided each shareholder with greater flexibility in how they could realize share value appreciation and cash-out. For example, a shareholder could sell their stakes in each company at different times as cash-out opportunities presented themselves.


The Plaintiff was convinced by Ted Foley`s new business framework. Who was he to second-guess someone who was a professional CPA and whose career had risen to the height of becoming the VP of Strategic Planner at TRW. The Plaintiff apologized for having acted implusively.

Before departing Ted Foley encouraged the Plaintiff to "let it go" and to refocus his energies on his own health challenges. He asked the Plaintiff to promise that he would step back and give Ted Foley free reign. He didn`t want to be in the position of having his business decisions constantly "second-guessed" by the Plaintiff.

He was very persuasive, and the Plaintiff`s concerns abated. The Plaintiff`s confidence in him was restored in that because his judgment in business matters had always been right. The Plaintiff left believing that things were in good hands, he had passed on his shares to his sons under the control of the Defendant, and that he would keep his promise not to interfere.
K2000-ELSco Share Deal ("Conversion" of K2000 shares into ELSco shares)...EXPAND CONTRACT
Subsequently, Ted Foley offered to all K2000 shareholders a mechanism for them to acquire their ELSco shares with their K2000 shares. The Plaintiff was excluded from the offer.
The Plaintiff discovered some details of this deal from the 4th paragraph of Joe Richardson`s email to the defendant in 2017 (see Joe Richardson`s Reply to Defendant).
The Plaintiff Mindset at Departure ...EXPAND CONTRACT
When the Plaintiff boarded the airplane to Australia, his mindset was at peace despite his degraded health condition. The Plaintiff had succeeded in the two transition goals that he had focussed on during the previous 18 months (i.e., to establish an upward trend in sales, and to finalize the ELP update that would provide a competitive advantage to products based on it). The Plaintiff had also passed on his shares to his heirs. And the Plaintiff had confidence that the business was in competent hands.
Cancer Survival...EXPAND CONTRACT
In the years after returning to Australia, the Plaintiff resolved to put his attachment to the business aside so that he could focus squarely on his health challenges. To this day his quality of life has been degraded to varying degrees by persistent ailments resultant from surgery (e.g., chronic incontinence, pain bouts). Despite this, today the Plaintiff considers his cancer to be in remission.
Communication...EXPAND CONTRACT
During the ensuing years, the Plaintiff received no communication from any of the K2000 board or ELSco officers, nor did the Plaintiff expect to hear from them because the Plaintiff had redirected all communications to the Defendant. They knew that the Plaintiff`s prognosis was not good, and the Plaintiff thinks they may have assumed that he had passed away. Indeed, he expected the same.
Also, the Plaintiff had no communications with the Defendant. A fractious divorce had severed all direct channels of communications. In spite of this, the Plaintiff had still complete confidence in her to manage their sons' financial matters.
K2000 Disolution & ELSco Sale...EXPAND CONTRACT
In 2012, Ted Foley executed the dissolution of K2000, and ELSco was sold to John Wiley & Sons under a Stock Purchase Agreement.
Sale Discovery...EXPAND CONTRACT
In 2014, the Plaintiff discovered an article on the Internet about the sale of ELSco to John Wiley...EXPAND CONTRACT
Contact with Peter Trew...EXPAND CONTRACT
Shortly after reading the sale article, the Plaintiff managed to track down Peter Trew, who was one of the original Australian K2000 investors. The Plaintiff called him and asked about the sale. He was reticent to discuss the sale (much later the Plaintiff found out that all ELSco shareholders were under a gag order not to discuss the sale with anyone).

Email to Several K2000 Investors... EXPAND CONTRACT
May 2014: After speaking with Peter Trew, the Plaintiff contacted a Phoenix law firm and discussed his findings with a lawyer. The Plaintiff explored with him the wisdom of contacting K2000 counsel. But he felt that it was premature to contact K2000 counsel until the Plaintiff had firstly found out as much as the Plaintiff could from other K2000 shareholders.
Accordingly, the Plaintiff dug out the email addresses from an old list that the Plaintiff had kept and sent the following email to about 15 of them...EXPAND CONTRACT
Email Response...EXPAND CONTRACT
With the exception of Peter Trew, the Plaintiff received no response and was left with no answers to his email questions.
The Plaintiff concluded mid 2014 that all of these K2000 shareholders must have been satisfied with the sale, and therefore his suspicions were unfounded.
[The Plaintiff was unaware at that time that they were all under a "gag" order not to discuss the sale with anyone, and in addition, would have been reluctant to do anything that might jeopardise their second payout scheduled for the end of 2014].
Assumption of Unconsummated Child Support Obligation Shares...EXPAND CONTRACT
With respect to the reservation in the Defendant`s name of 50,000 K2000 shares for his child support obligation, the Plaintiff had expected the Defendant to have consummated those shares into her name in 2004. However, the Plaintiff never received any notification that that consummation had taken place. Furthermore, the Plaintiff was notified by the Australian Child Support agency in 2010 that his child support obligation to the Defendant had continued to accrue since 2003.
The important point is that, mid 2014, the Plaintiff never had any reason to suspect that the Defendant had acquired any ELSco shares.
Assumption that Payout was for his sons' shares...EXPAND CONTRACT
Therefore, when his eldest son reported to the Plaintiff that the Defendant had processed a payout from the sale of ELSco, the Plaintiff naturally assumed that the payout that the Defendant had processed was exclusively for his sons` ELSco shares. Furthermore, the Plaintiff assumed that she had deposited their payouts into the trusts that the Plaintiff had asked her to set up for them. The Plaintiff also concluded that the reason that she had not informed them was to honor his request to delay their access to those trusts until they were over 35yo (see Share Transfer Cover Letter above).
Gratitude...EXPAND CONTRACT
At this point in time (2014), the Plaintiff felt that the Plaintiff owed Ted Foley an enormous debt of gratitude. Starting with the initial sales momentum that his 2003 Internet marketing master plan had provided, he had grown CPAexcel into a product with significant market share. Through the sale of ELSco, the Plaintiff believed that
  • All K2000 investors had received a return on their investment equal to about four times their initial investment;
  • All contributors to its CPAexcel`s success had been well rewarded;
  • The Plaintiff sons' financial future was secure; and
  • Positive closure had been attained with respect to the Plaintiff`s obligations to the original investors.
DISCOVERY...EXPAND CONTRACT
Discovery from Documents & Emails
In August 2017 whilst working on his mother`s computer, the Plaintiff`s eldest son discovered documents and emails related to the sale of ELSco to John Wiley. These enabled his discovery of a set of findings critical to the lawsuit:
  • ELSco-John Wiley Stock Purchase Agreement...EXPAND CONTRACT
    Of particular relevance to this lawsuit, the Plaintiff acquired a copy of the ELSco-JohnWiley Stock Purchase Agreement. From the "ELSco Capitalization Table" on Page 50 of this document (Exhibit 3.2(a)(1)-Capitalization Table) and an old copy of the K2000 Share Registry from 2002 that he already had in his possession, the Plaintiff was able to determine the ELSco shares acquired by K2000 shareholders through the K2000-ELSco Share Deal in 2003.
    • ELSco Capitalization Table...EXPAND CONTRACT
    • K2000 Share Registry...EXPAND CONTRACT
    Discoveries
    From a comparison of these two documents, the Plaintiff identified the following findings from which the Plaintiff was able to draw some conclusions and formulate new questions:
    • No ELSco Share Entries for Either Anthony or Mathew Walker...EXPAND CONTRACT
      The ELSco Capitalization Table contains no entries for either of the Plaintiff`s sons, Anthony and Mathew Walker
      CONCLUSIONS
      • Neither Anthony or Mathew Walker participated in the ELSco sale payout.
      • Anthony or Mathew Walker K2000 shares must not have participated in K2000-ELSco Share Deal in 2003 which would have granted them shares in ELSco.
      NEW QUESTIONS:
      • How had their K2000 shares been excluded from the K2000-ELSco Share Deal in 2003?
      • What was the payout that the Defendant had processed in 2013, if it wasn't for their sons? (The next bullet point provides an answer to this question).
    • An ELSco Share Entry for the Defendant...EXPAND CONTRACT
      The Plaintiff was very surprised to see that the Defendant had received 23,500 ELSco shares.
      CONCLUSIONS
      • 2013 Payout was for defendant`s ELSco Shares, not for sons
        Given the conclusion above that the Plaintiff`s sons had not participated in the ELSco sale payout, the payout that the Defendant had processed in 2013 was for her ELSco shares, not for their sons as the Plaintiff had mistakenly assumed. (see Assumption that Payout was for their Sons` Shares)
      • Child-Support Shares Credited to Sons???
        The Plaintiff was sure that the Defendant had not consummated the 50,000 K2000 Child-Support Collateral shares, because he had been told in 2010 by the Australian Child-Support department that his child-support debt had been accumulating for years (see Assumption Of Unconsummated Child Support Obligation Share).
        However, failing consummation, those K2000 shares should have been credited to the Plaintiff`s sons in 2007 under the Disposal clause of the Share Reservation Sheet.
      NEW QUESTIONS:
      • How did she acquire ELSco shares?
      • Why did she receive only 23,500, not 50,000?
      • What was her role, either intentionally or unintentionally, in the elimination of their sons` participation in the K2000-ELSco Share Deal process?
    • K2000 Shareholders received ELSco Shares in varying Proportions...EXPAND CONTRACT
      Via the 2003 K2000-ELSco Share Deal, K2000 Shareholders had received ELSco shares in varying proportions:
      • Non-Favored K2000 Shareholders -- This largest set of K2000 shareholders received a significantly reduced ownership position in the K2000`s business assets. On average these shareholders had their ownership position in these assets reduced by two thirds.
        The set encompasses approximately 80% of the K2000 shareholders...EXPAND CONTRACT
        CONCLUSIONS
        • These K2000 shareholders were unfairly penalized by the K2000-ELSco Share Deal process.
        • This inequity exposes the other frauds relevant to the second lawsuit.
        NEW QUESTIONS:
        • This raises the critical question as to "how had K2000 shareholders been convinced to accept the K2000-ELSco Share Deal ?"
        • Had it been imposed on them, or had they agreed to it and, if so, what were they told to convince them to agree to it?
      • Favored K2000 Shareholders --This set of K2000 shareholders received an equivalent ownership position in the K2000`s business assets via the 2003 K2000-ELSco Share Deal.
        The set encompasses approximately 20% of the K2000 shareholders...EXPAND CONTRACT
        CONCLUSION
        • These K2000 shareholders were the only K2000 shareholders who were not penalized by the K2000-ELSco Share Deal process.
        NEW QUESTIONS:
        • Why were these K2000 shareholders favored?
      • Ted Foley -- Through his acquisition of ELSco shares, Ted Foley`s financial stake in K2000`s business assets went up by a multiple of around 30 times his K2000 stake...EXPAND CONTRACT
        CONCLUSION
        • Ted Foley must have hidden the fact that he had grabbed the lion`s share of the ELSco stock.
        • This exposes his renunciation of his K2000 fiduciary duty towards K2000 shareholders for personal gain.
        NEW QUESTIONS:
        • Who knew that he had taken the lion`s share of ELSco stock and why did they accept it?
      • K2000 Board Members -- The other members of the K2000 board also enjoyed significant gains in their ownership position of the K2000`s business assets from the K2000-ELSco Share Deal process...EXPAND CONTRACT
        CONCLUSION
        • They were complicit in wrongdoing relevant to the second lawsuit.
        • They also had renounced their fiduciary duty to K2000 shareholders for personal gain.
  • "Conversion Deal" Agreement...EXPAND CONTRACT
    As a significant breakthough in uncovering the Child-Support Fraud, the Plaintiff`s eldest son also discovered a copy of the agreement underpinning the Conversion Deal between the Defendant and Ted Foley.
  • Communications with the Defendant...EXPAND CONTRACT
    From emails between the Defendant and Ted Foley (see The Defendant`s Acknowledgement email), the Plaintiff realized that she had acquired the 23,500 ELSco shares using the 50,000 K2000 child support collateral shares.

    The Plaintiff now had something tangible to which the Defendant would need to respond.
    The Plaintiff`s exchanged a series of emails with the Defendant concerning those ELSco shares, starting on 20th August, 2017.

    During an exchange of emails, she made the claim that Ted Foley had "given" her those ELSco shares and that they had nothing to do with the 50,000 K2000 child support collateral shares. She claimed this in spite of having thanked Ted Foley for "allowing me to convert the shares" in the The Defendant`s Acknowledgement emails (September 2012)... "Thanks, Ted... and for allowing me to convert the shares".

    She contacted Joe Richardson (originally K2000`s lawyer) whom the Plaintiff discovered had transitioned from providing his legal services to K2000 to later providing them to ELSco.
    • Defendant`s Email to Joe Richardson... EXPAND CONTRACT

      From: wendy [mailto:wpheald@gmail.com]
      Sent: Tuesday, October 31, 2017 9:07 AM
      To: Joseph P. Richardson
      Subject: Knowledge 2000 and Efficient Learning Systems

      Dear Joe …

      My name is Wendy Heald and Jonathan F. Walker is my now ex-husband.

      I am hoping you and/or someone in your firm might be able to provide information concerning Knowledge 2000 shares of stock as well as Efficient Learning Systems shares of stock.

      John Walker gave to me a certificate of 50,000 shares of Knowledge 2000 stock in 2002. I am still in possession of that original share certificate. It is not numbered and I do not believe that I ever received notice from Efficient Learning Systems about the opportunity to exchange K2K shares for ELS shares. Can you tell me if it was ever registered on the books of Knowledge 2000? (Copy attached).

      Secondly, Would you please tell me if those shares were exchanged for the 23,500 shares that Ted Foley transferred to me in July-August 2006? (copy of cover letter, share certificate and Agreement attached).

      Thirdly, as I recall, because I missed the opportunity to exchange the K2K shares for ELS shares, I have a dim recollection that Ted Foley gave me the 23,500 shares out his own pocket, are you able to verify that?

      Many thanks for any assistance you might be able to provide in this matter.

      Sincerely,

      Wendy Heald
      282 El Camino Grande
      Sedona, AZ 86336
      (928) 300-1395 (cell phone)
      CONCLUSION
      • In this email, the Defendant confirms that she did received his Child Support Collateral Mailing, but never received notification of K2000-ELSco Share Deal. If she had not received the paperwork for the K2000-ELSco Share Deal, then this would be the first indication that Ted Foley had purposely not recorded the reservation of the 50,000 K2000 shares on the company books. This points to the materiality of the Share Elimination Fraud.
    • Joe Richardson Reply to the Defendant`s Email ... EXPAND CONTRACT

      From: Joseph P. Richardson <jrichardson@gblaw.com>
      Date: Tue, Oct 31, 2017 at 3:04 PM
      Subject: RE: Knowledge 2000 and Efficient Learning Systems (file # 7413-0)
      To: wendy <wpheald@gmail.com>


      Dear Wendy: As you know, all of the outstanding shares of Efficient Learning Systems, Inc. (ELS) were sold to John Wiley & Sons, Inc. by the shareholders in later 2012. The corporate books and records of ELS were maintained in the corporation’s offices in Sedona prior to the sale, and I do not have copies of those records, other than drafts of various documents that reside on our computers. I did look through those drafts in preparing this email to you, and I believe that following statements are accurate, but they are based on drafts and on memory. I have no information about what happened to the Knowledge 2000, Inc. books and records. With that caveat, the following is what I know or recall about Knowledge 2000, Inc. and ELS.


      1. Knowledge 2000, Inc. As far as I am aware, Jonathan Walker did not deliver to Knowledge 2000, Inc. or Ted Foley or anyone else a copy of the stock certificate for K2000 shares that accompanied your email. As of June or July 2012, the ownership of Knowledge 2000, Inc. as reported to me was that ELS owned 2,702,933 shares (54.42%), Jonathan Walker owned 2,350,000 shares (46.45%) and two other individuals owned an aggregate of 6,500 shares. The total shares outstanding was 5,059,433 shares. At a shareholders meeting on July 30, 2012, ELS voted the shares it held in favor of a proposal to dissolve Knowledge 2000, Inc., and Jonathan Walker voted his shares against the proposal. I recall, too, that Foley sent emails to Jonathan Walker at least twice prior to the shareholders meeting to ask whether he wanted to purchase ELS’s shares for a nominal price (I think the offer was $10.00 in total). He did not respond to the emails. According to the records of the Arizona Corporation Commission, the dissolution of Knowledge 2000, Inc. was completed on August 6, 2012.


      As far as I know, no funds were available to be distributed to creditors or shareholders at the time of the dissolution. According to documents in our files, Knowledge 2000, Inc. had, as of December 31, 2010 (the date of the most recently compiled financial statements (in draft form) of K2000), total assets of $55,149 (comprised of amounts owed to K2000 by its founder) and total liabilities of approximately $370,000, including payroll tax liabilities.


      Finally, I do not recall that Efficient Learning Systems ever offered an exchange of K2000 shares of shares of ELS. I remember that ELS offered to potential investors (including holders of K2000 shares) shares of ELS shares for some price per share (I do not recall that price, but let’s say $1.50 for discussion purposes). I recall the offer being that if a K2000 shareholder wanted to purchase ELS shares, he or she could pay the purchase price in cash and in K2000 shares, at a ratio of 2-to-1. So, a share of ELS stock could be purchased for $1.50, and payment could be made by tendering $1.00 of cash and assigning one share of K2000 stock to ELS. That is how I recall ELS becoming a holder of K2000 shares. That said, this transaction was probably 10 years ago, and I do not have even draft documents to refresh my memory on this issue. In any event, Jonathan Walker was not an investor in ELS (I doubt that ELS would have accepted him as an investor, given the history). So, I think the bottom line is that (1) Jonathan never placed his agreement with you concerning 50,000 shares of K2000 shares into the books and records of K2000, and he did not participate in the private offering of shares of ELS stock.


      2. Efficient Learning Systems, Inc. I am fairly certain that the 23,500 shares of ELS stock represented by Certificate #0127 were a direct transfer from Ted Foley (or one of the Foley trusts, of which Ted was the trustee) to you, and not an original issuance of the shares directly to you from ELS. If it had been the latter, the normal course would have been for Ted to ask me to draft up resolutions for the corporate transaction, which I have neither recollection of nor draft documents for. What I do not know is the reason(s) for this transaction between you and Ted Foley.


      I can verify that under the Stock Purchase Agreement dated October 25, 2012 by and among John Wiley & Sons, Inc., Ted Foley as the representative of the selling shareholders, and the all of the shareholders of ELS, you are among the shareholders and are identified as owning 23,500 shares of ELS common stock.


      I apologize for the length of this email. I had to try to piece together writings and memories from a number of years ago, and thought it would be best to record what I recalled, which is the main reason this got so long. I hope this is helpful to you.


      Regards,

      Joseph P. Richardson

      Gammage & Burnham | Profile
      602.256.4452 Direct | 602.319.1067 Mobile
      CONCLUSIONs
      There are two sets of conclusions that can be drawn from this email, the first set are relevant to the "Child-Support Fraud", and have already been described here.
      This second set is NOT relevant to the Child-Support Fraud (but are relevant to the Share Elimination Fraud underlying this claim). The conclusions are:
      • "Share Elimination Fraud" Discovery Confirmation...EXPAND CONTRACT
        Although the Plaintiff had already uncovered much of the Share Elimination Fraud described here, Joe Richardson`s email above was confirmation of these discoveries. The following two statements (in black) from his email support this discovery:

        "As of June or July 2012, the ownership of Knowledge 2000, Inc. as reported to me was that ELS owned 2,702,933 shares (54.42%), Jonathan Walker owned 2,350,000 shares (46.45%)"
        [Although I am sure that these numbers have been significantly adjusted by Ted Foley as is evident from the editing in his own handwriting on the Copy of the K2000 Share Registry, the following is of greater significance.]
        By asserting in this statement that "Jonathan Walker owned 2,350,000 shares (46.45%)", Joe Richardson exposes that, in 2002, Ted Foley must have deliberately been deliquent in registering in the K2000 share registry the transfers of the Plaintiff`s K2000 shares to his sons. (Remember that he controlled the K2000 share registry in his home office.)

        "So, I think the bottom line is that (1) Jonathan never placed his agreement with you concerning 50,000 shares of K2000 shares into the books and records of K2000"
        This statement confirms that the Reservation of 50,000 K2000 Shares for Child Support Obligation was also not performed by Ted Foley in 2002 despite his confirmation to the Plaintiff at the time that he had executed his Share Transfer Order sheets.
        The following points are relevant:
        • Joe Richardson would have known that Ted Foley managed all shareholder matters for K2000, and that it was not the Plaintiff, but Ted Foley who was the "gatekeeper" of the K2000 share registration process.
        • Joe Richardson own records will show that thoughout the entire history of K2000 (with the exception of the original incorporation process), ALL interaction on K2000 matters was through Ted Foley.
      • "Share Transfer" Fraud Discovery...EXPAND CONTRACT
        Joe Richardson`s email above indicates a compounding of the "Share Transfer" Fraud, which had already been discovered above for the Non-Favored K2000 Shareholders. The following statements (in black) from his email further compound and reinforce this discovery:
        "So, I think the bottom line is that.... he did not participate in the private offering of shares of ELS stock"
        This assertion in Joe Richardson`s email indicates that the Plaintiff`s K2000 shares were excluded entirely from the K2000-ELSco Share Deal. This means that not only had the "Non-Favored K2000 Shareholders", but also the Plaintiff (sons) were injured by the "Share Transfer" Fraud.
        share Exchange deal
        "Finally, I do not recall that Efficient Learning Systems ever offered an exchange of K2000 shares of shares of ELS. I remember that ELS offered to potential investors (including holders of K2000 shares) shares of ELS shares for some price per share (I do not recall that price, but let’s say $1.50 for discussion purposes). I recall the offer being that if a K2000 shareholder wanted to purchase ELS shares, he or she could pay the purchase price in cash and in K2000 shares, at a ratio of 2-to-1. So, a share of ELS stock could be purchased for $1.50, and payment could be made by tendering $1.00 of cash and assigning one share of K2000 stock to ELS"
        If Joe Richardson`s recollection above of the "Share Elimination share deal process" is correct, then it is clear that K2000 shareholders were all significantly diluted in the ownership of K2000`s business assets.
      • Significance of the "Given the History" Phrase...EXPAND CONTRACT
        "I doubt that ELS would have accepted him as an investor, given the history"

        The Plaintiff believes that Ted Foley would have needed to supply an explanation to Joe Richardson as to why the Plaintiff had been eliminated from the Share Exchange Deal. In the phrase "given the history", Joe Richardson indicates that Ted Foley must have provided him with an explanation that denigrated the Plaintiff, enough to warrant the elimination of a stake in the ELSco.
        The Plaintiff has not yet contacted Joe Richardson to find out what he understands by the phrase, but the Plaintiff suspects that Ted Foley`s duplicity went unchecked. There is certainly nothing in the history that would have justified his actions.
        The Plaintiff believes that Ted Foley must also have been duplicitous with K2000 shareholders in order for them to have accepted the severe dilution that they endured from the Share Exchange Deal.
  • Confirmation of NO receipt...EXPAND CONTRACT
    After the share elimination discoveries above, the Plaintiff suspected that the Defendant had never received the 2002 mailing containing sons` K2000 share certificates, the mailing that was supposed to have been made by Ted Foley after his registration of those share transfers in the K2000 share registry.
    In September 2017, the Plaintiff asked his youngest son, Mathew Walker, to contact and ask his mother about ever receiving the mailing of their sons' K2000 share certificates in 2002. She confirmed to him that she never received any K2000 share certificates in his name or his brother`s name at any time.
    She confirmed that she only received the "Child Support Collateral" Mailing in 2002.
    CONCLUSION:
    This was supplemental confirmation of the "Share Elimination Fraud"
"Summary and Description of the SPA"...EXPAND CONTRACT
Also from his mother`s computer, the Plaintiff`s eldest son discovered a copy of an email entitled Summary and Description of the SPA. This email contained a paragraph that contributed to the hiding of critical discovery information relevant to the ELSco sale from the Plaintiff and his sons.
This paragraph was a "gag order" on all ELSco shareholders, forbidding any of them from disclosing any information relevant to the ELSco sale.
  • Non-Disclosure Paragraph of the "Summary and Description of the SPA"
    The following is the text relevant to non-disclosure...EXPAND CONTRACT


CONCLUSIONS:
  • Communication Block -- The Plaintiff believes that this "gag order" was the primary reason
    • for the lack of response to his email to K2000 shareholders in May 2014 (see Email to Several K2000 Investors above) and
    • for the Defendant`s unwillingness to disclosure anything about the ELSco sale to her sons or the Plaintiff.
      • No Excuse -- However, the Plaintiff believes that this "gag order" cannot be used to justify the non-disclosure to the Plaintiff. This is because the text of this "gag order" specifically enabled the Defendant to seek legal advice, and as she was aware of that she had already failed in her obligation to report at the very least the Conversion Deal to the Plaintiff, then she should have consulted a lawyer on whether she could use this "gag order" to continue hiding her perfidious actions related to that deal and her knowledge of the "Share Elimination Fraud" from the Plaintiff.
Coverup...EXPAND CONTRACT
After identifying the infringements of the heart of this lawsuit, the Plaintiff embarged on clarifying the factors that prevented the discovery of these infringements for so long.
The Plaintiff identified the following factors:
  • Deliberate Concealment...EXPAND CONTRACT
    The delay in discovery was primarily due to the following deliberate concealments of information/evidence relevant to the injuries identified in this lawsuit:
    • Share Elimination Deception
      In 2002, by being deliberately delinquent in registering the transfer of the Plaintiff`s K2000 shares to his sons, Ted Foley set up a "false understanding" of the disposition of his K2000 shares. The Plaintiff believed that all of his K2000 shares had been transferred to his sons, and that the Defendant was the registered party for managing her sons' K2000 interests. The Defendant never received mailing containing the new K2000 share certificates in his sons' names.
      The Plaintiff had no reason to suspect that his K2000 shares had been completely eliminated from the K2000-ELSco Share Deal . [See"Share Elimination Fraud" for details].
      The Plaintiff now believes that Ted Foley was emboldened to commit this clever deception by the poor state of the Plaintiff health when he left K2000.

    • No Access to the "ELSco-JohnWiley Stock Purchase Agreement"
      The ELSco-JohnWiley Stock Purchase Agreement was only sent to ELSco shareholders.
      The Plaintiff never received copy of it.
      The Plaintiff oldest son found it by accident attached to an email to the Defendant and forwarded it onto the Plaintiff in August, 2017.

    • Non-Disclosure Requirement
      In addition, the Non-disclosure Requirement contained in the Summary and Description of the SPA letter (12th Oct, 2012) sent out to all ELSco shareholders prevented any of them from communicating the details of sale of ELSco to John Wiley to ANYONE. (That gagged all ELSco shareholders from communicating any information about the ELSco sale to the Plaintiff, including the Defendant).

    • Access Control of K2000`s Share Registry
      Ted Foley maintained the K2000 Share Registry in his home office and restricted access to it to himself alone. The Plaintiff came across a copy of it when, after a 2002 board meeting, Ted Foley accidentally left behind a printout of the spreadsheet he used to update it.
      Without that copy, it would have been impossible to accurately quantify the injuries in this lawsuit.

  • Control of Information Content & Flow...EXPAND CONTRACT
    The perpetrators controlled both sides of the plunder of K2000`s business assets, and were in the position to control what information was conveyed and to whom. With respect to information content and flow, the Plaintiff had identified by October, 2017 the following two pivotal elements that were critical to the success of the frauds.
    • Insolvency Treachery
      Although the Plaintiff do not have the details of the communications with the K2000 shareholders with respect to the Insolvency Treachery, the Plaintiff am sure that the condition of K2000 in 2003 as a "going concern" must have been misrepresented to K2000 shareholders in order to gain their acceptance for the liquidation of K2000`s business assets, and their acceptance of the loss of a significant part of their ownership in K2000`s business assets through the K2000-ELSco Share Deal.
    • Insulation of the Plunder Process from The Plaintiff Scrutiny
      Because the Plaintiff was the only person with the breadth of knowledge to recognize the frauds underlying the Plunder Process, the success of the Plunder Process was dependent on insulating it from his scrutiny.
      By October 2017, the Plaintiff had identified that this insulation was achieved by the following:
      • Transfer Outcome Deception -- The Transfer Outcome Deception was used to convince the Plaintiff not to fire the K2000 board, and to get his acquiensce to trust Ted Foley.
      • Share Elimination Deception -- The Share Elimination Deception was the masterstroke to close off future potential challenges from the Plaintiff. As long as the Plaintiff was deceived into believing that the Defendant was managing his sons' K2000 interests, details of the ELSco sale was hidden from the Plaintiff , and the Plaintiff was far removed in Australia, the perpertrators could be confident that the Plaintiff would not discover their perfidy. It worked very well and was only uncovered by accident.




The Plaintiff claims that the defendant conspired to assist Ted Foley to fraudulently eliminate the Plaintiff`s (sons') financial interest in K2000`s business assets. It is further claimed that this conspiracy was based on several Deceptive acts by the Defendant that meet the legally required elements of fraud.
Context
The focus of this claim is the Defendant`s intentional acts of protecting against the discovery of the Share Elimination Fraud, which was a fraud independently masterminded by Ted Foley to eliminate the financial interest of the Plaintiff/sons in K2000`s business assets...EXPAND CONTRACT
This claim does not accuse the Defendant of having a role in actually carrying out the Share Elimination Fraud, only of later conspiring to assist Ted Foley in shielding its discovery from the Plaintiff.
Defendant`s Cognizance Path...EXPAND CONTRACT
What the Defendant knew and when she knew it:
2001: Cognizant of K2000`s Future Prospects...EXPAND CONTRACT
From the 2001 onward, the Defendant knew that K2000 future prospects were good due to significant surge in sales generated from Plaintiff`s 18 month Internet marketing project starting in 2001 (see Preparing K2000 for Transition).
2002: Cognizant of Sons` Transfer...EXPAND CONTRACT
From the 29th October 2002 onward, the Defendant knew that the Plaintiff had transferred his K2000 shares into the names of their two sons, having been directly informed in an email on that date (see Notification Email).
2004: Most Likely Aware of Sons` non-Participation in Share Exchange Deal...EXPAND CONTRACT
As described in the Contact to Consummate 50,000 K2000 Child-Support shares section, the Defendant approached Ted Foley around the beginning of 2004 to consummate the 50,000 K2000 Child-Support Collateral shares. Because she was in possession of the relevant share certificate, she would have certainly been surprised when Ted Foley told her that there existed no reservation of those shares in her name, and that she had missed the opportunity to convert her shares under the 2003 Share Exchange Deal.
Having been directly informed in an email in November 2002 (see Notification Email), the Defendant knew that the Plaintiff had expressed in that email that he was transferring his K2000 shares into the names of their two sons.
In that context, it is highly likely that she would have asked Ted Foley about her sons' participation in the Share Exchange Deal.
Therefore, it is highly likely that the Defendant knew as early as 2004 that her sons had not participated in that deal and therefore owned no ELSco shares.
2004: Cognizant of K2000 Shareholders` dilution...EXPAND CONTRACT
When the Defendant was offered just 23,500 (not 50,000) ELSco shares in the Conversion Deal with Ted Foley, she would have immediately known that it was a significant dilution of ownership interest in K2000`s business assets. She also knew that K2000`s sales had surged and that therefore there could be no justification for that dilution.
Therefore, the Defendant would have had ample indication that something was very wrong; easily enough to warrant raising the alarm with the Plaintiff.
2012: Cognizant of Plaintiff and Sons Were NOT ELSco Shareholders...EXPAND CONTRACT

Nevertheless, from the November 2012 onward, the Defendant undeniably knew that neither her sons nor the Plaintiff owned shares in ELSco, and therefore had not participated in the Share Exchange Deal.
She knew this directly from the ELSco Capitalization Table that she had received before the sale of ELSco to John Wiley & Sons.

Even with direct knowledge, the Defendant chose not to raise the alarm to the Plaintiff.

2012: Explicit Acknowledgement of Defendant `s Complicity ...EXPAND CONTRACT
In the following email exchange on 29th September 2012 concerning the conversion of the Defendant`s 50,000 K2000 Child-Support Collateral shares, Ted Foley explicitly tells the Defendant>>> "Wendy: Thanks. You helped more than you might think. Ted"...EXPAND CONTRACT
Perpetrators` Discovery Risk...EXPAND CONTRACT
To minimize the risk of discovery, the perpetrators of this conspiracy required (and had) absolute control of all relevant information, including control over the various duplicitous misrepresentations targeted to deceive the various stakeholder groups and individuals. In addition, they required effective control over distribution avenues to each of these stakeholder groups.
Because all stakeholders depended exclusively on the perpetrators` fiduciary honesty for reliable information, they represented minimal risk to the perpetrators for exposure of the perpetrators` wrongdoings.
Except for the Plaintiff!
Defendant-Plaintiff Communication Avenue: Highest Risk of Discovery...EXPAND CONTRACT
Because he had the most comprehensive understanding of the relevant history and factual reality, the Plaintiff represented by far the greatest risk of discovery. Thus, the shoring up of all communication avenues with him would have certainly been a high priority for the perpetrators.
In particular, the Defendant`s communications with the Plaintiff represented the single communication avenue with the highest risk of fraud exposure and would therefore merited careful attention to eliminate information leakage.

Conspiracy Fraud
With respect to the Plaintiff, the deceptions underlying this fraud took the form of three actions by the Defendant to prevent discovery of the Child-Support Fraud and the Share Elimination Fraud.
The following exposition describes the key legal elements (**) of fraud in this conspiracy...EXPAND CONTRACT
Deceptions...EXPAND CONTRACT
Defendant`s Deceptive Actions -- With respect to the importance of the keeping the Plaintiff "in the dark", the Defendant`s role in this conspiracy was comprised of the following deceptive actions:
  • Hiding of the Conversion Deal from Plaintiff to Prevent Discovery... EXPAND CONTRACT
    Bound by the Usage Mandates associated with the 50,000 K2000 Child-Support shares, the Defendant had an obligation to report any action or decision that would materially deviate from those mandates. Instead, the Defendant chose to ignore those mandates, enter into the Conversion Deal with Ted Foley, and to collude with him to hide that deal from the Plaintiff (and the Division of Child-Support).
    Effective Blocking Strategy
    Knowing that the Defendant and Ted Foley knew that she would be using the shares contrary to the "Usage Mandates" stipulated on both the Child-Support Share Certificate & Usage Mandates and the Reservation Order, they both knew that she would be committing a fraud against the Plaintiff and therefore she would need to hide it from the Plaintiff.
    This also meant that it was imperative that she not engage the Plaintiff on any matters related to the conversion of their sons` K2000 shares, knowing that it would lead to her perfidy being exposed.

    This situation led to the effective blocking of the "Defendant-Plaintiff Communication Avenue" against the discovery of both the Child-Support Fraud and the Share Elimination Fraud.


  • Hiding the elimination of the Plaintiff`s (Sons') interest in K2000`s business assets... EXPAND CONTRACT
    As stated above (Cognizant Sons` Transfer), the Defendant knew that the Plaintiff had transferred his K2000 shares to their sons in 2003.
    So at the very latest by 2012 when the Defendant received the ELSco-JohnWiley Stock Purchase Agreement governing the sale of ELSco to John Wiley & Sons, she would have realized from the included Capitalization Table that the Plaintiff`s (sons') K2000 shares had never been "converted" to ELSco shares, and therefore their financial interest in K2000`s business assets had been eliminated.
    She also knew that the decade-long sales growth of K2000`s primary products had been triggered by the Plaintiff`s internet marketing project in 2002, well before the expropriation into ELSco of K2000`s business assets in 2003, and that therefore the fact that her own sons had no ELSco shares would have been highly suspicious, at least enough so as to warrant thorough enquiry with the Plaintiff as well as with Ted Foley.
    Nevertheless, she decided not to contact the Plaintiff to seek answers to how their sons had been cut out of ELSco entirely.

    This act directly protected against the discovery of the Share Elimination Fraud.


  • Nonfeasance with respect to the Initiation of a claim ...EXPAND CONTRACT
    Indemnity Claims -- Also, in the ELSco-JohnWiley Stock Purchase Agreement governing the sale of ELSco to John Wiley & Sons, there is a clear recognition in its Indemnity clause of potentially valid claims by those K2000 shareholders who had not participated in the 2003 Share Exchange Deal. [The only K2000 shares that had not been "converted" were the Plaintiff`s original K2000 shares (51%) that the Plaintiff had transferred to his sons]. $3.5M was set aside to cover such claims with payout delayed by two years until 2014, presumably to allow some time for such claims to emerge.
    Cognizant of Unconverted Shares -- From the ELSco CapitalizationTable contained in that agreement, the Defendant knew that none of the Plaintiff`s (sons') K2000 shares had been converted to ELSco shares. And therefore she knew that owners of those shares (the Plaintiff`s/sons`) were eligible to make a claim against that $3.5M held in escrow until 2014.
    Failure to Investigate or Take Action -- The Defendant failed to take any action to investigate why the Plaintiff`s (sons') K2000 shares had not been converted to ELSco shares, nor did she precipitate any claim for her sons against that escrowed $3.5M. Initiating such a claim successfully would have necessarily required contacting the Plaintiff to gather the exact details of the transfer of the Plaintiff`s K2000 shares to his sons.
    Reluctance to Risk Exposure -- Contacting the Plaintiff with such a request would ultimately have exposed the Share Elimination fraud when the Plaintiff discovered that his sons owned no ELSco shares (when they should have been the majority shareholders of ELSco).
    But at the same time it would also have exposed her perpetration of the Child-Support Fraud.
    Thus, the Plaintiff believes that to protect herself against being exposed, the Defendant chose to maintain her allegiance to Ted Foley`s goals to protect against discovery 1) of his perfidy with respect to the expropriation of K2000`s business assets, and 2) of the elimination of the Plaintiff`s (son`s) stock interest in those assets.

    This deliberate nonfeasance provides compelling evidence of the Defendant`s complicity in the conspiracy. It resulted in the Plaintiff being unaware of the availability of making a claim. Thus, the Plaintiff and her own sons were significantly injured by being denied a multi-million dollar inheritance while she was guaranteed of a second payout of ~$13K paid from that escrowed $3.5M in 2014.

    This shocking act of betrayal provides further evidence of her deliberate decision to block any information that could result in the Plaintiff`s discovery of the Share Elimination wrongdoings. it was more important to her to protect herself against potential discovery rather than enable her sons' to receive a multi-million dollar payout.

Reliance...EXPAND CONTRACT
The following is an explanation of the Plaintiff`s reliance with respect to the above deceptive actions committed by the Defendant.
  • Hiding of the Conversion Deal from Plaintiff to Prevent Discovery
    As specified in the Usage Mandates associated with the 50,000 K2000 Child-Support collateral shares, the Plaintiff relied on the Defendant`s good faith usage of those shares to mitigate his child-support debt to the Defendant.
  • Hiding the elimination of the Plaintiff`s (Sons') interest in K2000`s business assets & Nonfeasance with respect to the Initiation of a claim
    Given that he had informed the Defendant of his K2000 share transfers to their sons (see Notification email), and he had also assigned her as trustee of those transferred shares (see Share Transfer Order Sheets), the Plaintiff was relying on the Defendant to look after their sons` financial interests in this matter.

Ease of Ascertainment...EXPAND CONTRACT
The following is an assessment of the ease of ascertainment for each of the above deceptive actions.
  • Hiding of the Conversion Deal from Plaintiff to Prevent Discovery
    The ascertainment of this fraudulent act is clear and unambiguous. The ease of ascertainment is evident from the Discovery of Child-Support Collateral Fraud section of the "Child-Support Breach" webpage.
  • Hiding the elimination of the Plaintiff`s (Sons') interest in K2000`s business assets
    For all of the times when the Defendant had discovered that her sons had no ELSco shares, the Plaintiff never received any notification of that fact.
  • Nonfeasance with respect to the Initiation of a claim
    When the Defendant received the ELSco-JohnWiley Stock Purchase Agreement in 2012, the Defendant failed to take any action to investigate why the Plaintiff`s (sons') K2000 shares had not been converted to ELSco shares, nor did she precipitate any claim for her sons against that escrowed $3.5M.

Injuries...EXPAND CONTRACT
Financial Interest Loss -- An injury amounting to the complete loss of financial interest in K2000`s business assets was incurred by the Plaintiff/sons, and inflicted by the deceptive actions by the Defendant
  • Hiding of the Conversion Deal from Plaintiff to Prevent Discovery -- In 2004, the Defendant`s hiding of the Conversion Deal from the Plaintiff prevented the Plaintiff from discovering of the Share Elimination Fraud (resulting in the complete elimination of the financial interest of the Plaintiff/sons in K2000`s business assets).
  • Hiding the elimination of the Plaintiff`s (Sons') interest in K2000`s business assets -- As early as by 2004 and at the very latest by 2012, the Defendant knew that the Plaintiff`s (sons') K2000 shares had never been "converted" to ELSco shares, and therefore their interest in K2000`s business assets had been eliminated.
  • Nonfeasance with respect to the Initiation of a claim -- The Defendant made the intentional choice not to notify the Defendant that $3.5M had been set aside for K2000 shareholders that had not participated in the Share Exchange Deal.

Intent & Motivation...EXPAND CONTRACT
Legally-Savvy Defendant & Ability to Recognize Wrongdoing...EXPAND CONTRACT
The Defendant was a Legal Savvy person, having worked in Law Offices throughout her lifetime. In the 1990s without the aid of an attorney, she singlehandedly sued her own boss, an experienced lawyer, and obtained successful judgement. She was easily competent enough to evaluate a situation for potential illegality.
Accordingly, she would have certainly recognized that an explanation of how her sons had not participated in the Share Exchange Deal was begging, and that exposure of any wrongdoing would have required thorough investigation involving both Ted Foley and the Plaintiff.

Imperative of Consultation with the Plaintiff...EXPAND CONTRACT
Because the Plaintiff (/sons) were the injured parties and that Ted Foley had been in control of both K2000 and ELSco, the Defendant knew that Ted Foley would certainly be the source of any wrongdoing, and therefore that any explanations from him were to be vetted. Thus, consultation with the Plaintiff should have been a prime imperative.

Discovery Linkage between the frauds...EXPAND CONTRACT
If prior to entering the Conversion Deal, the Defendant had engaged with the Plaintiff over either 1) the issue of non-conversion of her 50,000 K2000 Child-Support Collateral shares or 2) the issue of non-conversion of the Plaintiff`s (sons`) K2000 shares, then the dialogue would have immediately led to the Plaintiff`s discovery of the Share Elimination Fraud (and other wrongdoings of the perpetrators). This is what should have happened!
However, if at any time after the Defendant had consummated the Conversion Deal, then dialogue with the Plaintiff about the issue of non-conversion of the Plaintiff`s (sons`) K2000 shares would have led to the Plaintiff discovering the Child-Support Fraud (which would of course have legally exposed her), and also have led to questions (see ELSco Share Questions) that would exposed the Share Elimination Fraud.
In fact, discovery of either fraud would have led to discovery of the other.

Intent...EXPAND CONTRACT
Defendant was Legal Savvy
Because the Defendant was a Legal Savvy person, she would have been well aware that her Deceptive Actions as part of this conspiracy were fraudulent.
The Defendant continued hiding her perfidy until the Plaintiff discovered the frauds in 2017.
Her intent in the conspiracy is exposed by the following with respect to each of the above deceptive actions:
  • Hiding of the Conversion Deal from Plaintiff to Prevent Discovery
    The Defendant`s misuse of the 50,000 K2000 Child-Support Collateral shares for partaking both willfully and knowingly in the Conversion Deal and then hiding it from the Plaintiff was an intentional transgression of their intended purpose and the couple`s child-support agreement.
  • Hiding the elimination of the Plaintiff`s (Sons') interest in K2000`s business assets & Nonfeasance with respect to the Initiation of a claim
    In both of these cases, the Defendant knew that she was committing an intentional act of perfidy towards her sons. Her intention was expressed to her son, Anthony, when he confronted her about his incriminating discoveries on her computer, and she accusingly responded to him that he was "spying on her for your father".
    Spying on What? This was an admission by the Defendant that something indeed existed that could be an object of potential spying.

Motivations...EXPAND CONTRACT
Negative Motivation
Because of the above discovery linkage, the Defendant was highly motivated to adopt all three actions of her role in the Share Elimination Conspiracy (see Defendant`s Role In Conspiracy above) for fear that the discovery of her Child-Support Fraud could result in civil penalties, but possibly even in criminal prosecution.
In addition, she would certainly have lost her ELSco payout if the conspiracy was exposed.

Positive Motivation
She was also motivated to "go along" with the conspiracy by the potential for a Double Financial Benefit of realizing the accrual of the Plaintiff`s child-support debt in addition to the appreciation of her ELSco shares.
The Plaintiff believes that the Perpetrators of this conspiracy had several motivating forces for resorting to deception and misrepresentation:
  • Only One Potential Challenger -- They knew that the only potential challenger would be the Plaintiff, but given the Plaintiff`s poor health they expected him to pass on.
  • Greed -- By participating in the Share Elimination Conspiracy, the Defendant stood to benefit from the Double Financial Benefit.


Discovery...EXPAND CONTRACT
In 2017, the Plaintiff`s eldest son was surprised to discover documents and emails on the Defendant`s computer that ultimately led to the Plaintiff uncovering of frauds associated with the expropriation of K2000`s business assets, including the Share Elimination Fraud that is central to this conspiracy, and resulted in the elimination of the Plaintiff`s financial interest (and his sons' financial interest) in those assets.