case 2:10-cv-01060-ds document 113 filed 04/16/12 page 2 of...

Case 2:10-cv-01060-DS Document 113 Filed 04/16/12 of 80

Perry J. Narancic, California Bar No. 206820 NARANCIC & KATZMAN, PC 325 Sharon Park Drive, #736 Menlo Park, CA 94025 www.nk-pc.com Tel: 650-814-7688 Fax: 650-814-7688 Email: [email protected]

Victor A. Sipos, Utah Bar No. 9211 UTAH LITIGATION CENTER 10421 South Jordan Gateway, Suite 600 South Jordan, UT 84095 Tel: 801-860-3444 Fax: 801-665-1266 Email: [email protected]

Attorneys for Plaintiffs, individually and on behalf of all other similarly-situated purchasers

IN THE UNITED STATES DISTRICT COURT DISTRICT OF UTAH

VISHAL SHARMA and WENDY KWONG, Individually and on behalf of all similarly situ purchasers,

Plaintiffs,

vs.

FREEDOM INVESTMENT CLUB, Ltd.,a British Columbia corporation, MOHAWK DIVERSIFIED LLC, a Utah limited liability company, GO INVEST WISELY, LLC, PRO FINANCIAL SERVICES, INC., a Utah corporation, FIC FORECLOSURE FUND, LTD., an entity of unknown origin, PEAK POTENTIALS TRAINING, an entity of unknown origin, DBO MANAGEMENT SERVICES, INC., a Utah corporation, BP PROPERTY MANAGEMENT, an entity of unknown origin, T. HARV EKER, MIKE LATHIGEE, BRAD HESS, JOHN HYLAND, TYRELL GRAY, MICHAEL G. OBORN, ROB OBORN, TODD EATON, EARLE PASQILL, GERALD ABRAMS, MIKE YOSHER, ALAN ANDRUS, JIMMY SLAGEL, and DOES 1-300,

Defendants.

Case No.: 2:10cv01060 Judge: Hon. David Sam

(Filed electronically)

SECOND AMENDED COMPLAINT

(PROPOSED CLASS ACTION)

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Plaintiffs VISHAL SHARMA and WENDY KWONG (together, the “Plaintiffs”),

complaining on behalf of themselves individually and all other similarly situated individuals

make the allegations set forth in this first amended complaint against the above-named

defendants (collectively “Defendants”).

NATURE OF THIS ACTION

This action concerns violations of federal and state securities laws in the sale, or

offer for sale, of unregistered securities related to foreclosed residential properties in the United

States to investors, including Plaintiffs. These securities were promoted, offered and sold in

high-pressure investor seminars run by self-proclaimed investment gurus, who took commission

for each sale they executed.

2. The residential properties underlying the securities were purchased by one or

more Defendants at wholesale for between $3,000 - $14,000 each. Defendants then sold, or

offered for sale, securities related to these foreclosed properties by promising huge returns for

those investors.

Defendants sold, or offered for sale, specific properties that were promised to be

deeded to Plaintiffs. These properties were offered or sold to Plaintiffs together with a “Bulk

Foreclosure Purchasing Agreement” for purchase of the house and a “Management Agreement”

whereby a separate company would provide additional services including finding a third-party

buyer for the property on a land installment contract. The Defendants promised that each

property would become “cash-flowing” within 6 months – Plaintiffs would hold a note against

the property, and receive monthly revenue from the new occupants’ monthly payments. The

bundle of the properties and the corresponding contracts are referred to herein as the “Property

Contracts”.

4. The Property Contracts were “securities” within the meaning of Federal,

California, Utah, and other states’ securities laws.

As set forth below, Defendants offered and sold the Property Contracts without

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registering them, or qualifying for an applicable exemption. Consequently, members of the

proposed class who purchased Property Contracts are entitled to rescission under federal and/or

state law.

6. Defendants also made material misstatements or omissions in connection with the

offering or sale of the Property Contracts, as a direct result of which the Plaintiffs suffered

financial loss. JURISDICTION AND VENUE

7. The claims asserted in this complaint arise under Sections 10(b) and 20(a) of the

Securities Exchange Act of 1934 (the “Exchange Act)[15 U.S.C. § 78j(b) and 79t(a)] Rule 10(b)-

5 promulgated thereunder [17 C.F.R. § 240.10b-5], and Sections 12 and 15 of the Securities Act

of 1933 (the “Securities Act”) [ 15 U.S.C. §§ 77l, 77o]. This action also arises under California

Corporations Code § 25501 and Utah Code Ann. § 61-1-22.

8. This court has jurisdiction over the subject matter of this action pursuant to

Section 27 of the Exchange Act [15 USC § 78aa], Section 22 of the Securities Act [15 U.S.C. §

77v], and 28 USC §§ 1331 and 1337. This court has supplemental jurisdiction over the state law

claims pursuant to 28 U.S.C. § 1367(a) since those claims are related and arise from the same

facts and circumstances as those claims asserted under federal law.

9. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b), as many of the

acts and practices complained of herein occurred in substantial part in this district. By order

dated October 15, 2010, the District Court for the Northern District of California ordered that

this case be transferred to the above-captioned court. Order Granting Utah Defendants’ Motion

To Transfer Venue To The District Of Utah , Case No. C 10-01172 JW (N.D. Cal. October 15,

2010).

PARTIES

10. Plaintiff Vishal Sharma (“Sharma”) is an individual residing in Fremont,

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California, who purchased Property Contracts from or through Mohawk in August 2008.

11. Plaintiff Wendy Kwong (“Kwong”) is an individual residing in San Francisco,

California, who purchased Property Contracts from or through Mohawk in August 2008.

12. Defendant Freedom Investment Club (“FIC”), is a British Columbia corporation

and has a principal place of business in Vancouver, British Columbia, Canada. It operates a

website at www.ficinvetsors.com and claims to be the “North America’s Largest Investment

Club”. FIC accepts membership fees to allow individuals to join its investment club and obtain

access to so-called investment opportunities and information. FIC encouraged participants of its

meetings to invest with Mohawk, and upon information and belief received compensation for

doing so. Mohawk sold at least 995 properties during FIC events.

13. Defendant Mohawk Diversified LLC (“Mohawk”) is a limited liability company

organized under the laws of the State of Nevada. Mohawk affiliated itself with GIW and FIC to

purchase properties in the United States and market such properties and related management

contracts to investors in the United States, Canada, and other nations.

14. Defendant Go Invest Wisely, LLC (“GIW”) is a limited liability company

organized under the laws of the State of Utah and has a principal place of business in North

Ogden, Utah.

15. Defendant Pro Financial Services, Inc. (“Pro Financial”) is a Utah corporation.

Upon information and belief it was initially incorporated as Pro Management Group, Inc. Pro

Financial was a joint venture between Mike Oborn, Rob Oborn and the principals of GIW. In or

about January 2009, Hess and Gray assumed complete ownership of Pro Financial.

16. Defendant FIC Foreclosure Fund, Ltd. (“FICFF”) is an entity of unknown

residency.

17. Defendant BP Property Management (“BP Management”) is an entity of

residency. BP managed properties related to investments sold by Mohawk.

18. Defendant DBO Management Services, Inc. (“DBO”) is a Utah corporation that

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acted as the manager of GIW.

19. Defendant Peak Potentials (“Peak”) is an entity of unknown residency. Upon

information and belief, it is the entity through which Eker operated.

20. Defendant T. Harv Eker (“Eker”) is a self-described multi-millionaire and

motivational speaker. Among other things, he is the author of a book titled “The Millionaire

Mind”. On information and belief, Eker is a resident of British Columbia, Canada. Eker

encouraged participants of his meetings to invest with Mohawk and received compensation for

doing so. Mohawk sold at least 135 properties during Eker events.

21. Defendant John Hyland (“Hyland”) is a citizen of the State of Virginia, and at all

times relevant to this Complaint, was the principal owner of Mohawk Diversified LLC. In early

2008, Hyland admitted to making materially false statements to investors during seminars and

has pleaded guilty to providing false information to the United States Securities and Exchange

Commission (“SEC”).

22. Defendant Mike Lathigee (“Lathigee”) is, and at all material times was, the CEO

of FIC. On information and belief, Lathigee is a resident of British Columbia, Canada. Lathigee

encouraged investors to invest with Mohawk.

23. Defendant Brad Hess (“Hess”) is an individual and citizen of Utah, and is, or was

at all relevant times, an owner, principal or agent of Defendants Mohawk, Pro Financial, GIW

and DBO.

24. Defendant Tyrell Gray (“Gray”) is an individual who, upon information and

belief, is a resident of Utah, and is, or was at relevant times a director and officer of Pro

Financial and an owner of GIW. Hyland hired Gray.

25. Defendant Todd Eaton (“Eaton”) is an individual who, upon information and

belief, is a resident of Utah, and is, or was at relevant times an officer of GIW.

26. Defendant Michael G. Oborn (“Mike Oborn”) is an individual who, upon

information and belief, is a resident of Utah, and is, or was at relevant times a director and

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officer of Pro Financial.

27. Defendant Rob Oborn (“Rob Oborn”) is an individual who, upon information and

belief, is a resident of Utah, and is, or was at relevant times a director, officer, and/or key

employee of Pro Financial.

28. Defendant Earle Pasqill (“Pasqill”) is an individual who upon information and

belief has been a director and officer of FIC at all relevant times, and who upon information and

belief is a resident of Canada.

29. Defendant Gerald Abrams (“Abrams”) is an individual who upon information and

belief has been a managing member of Mohawk at all relevant times. Upon information and

belief, Abrams is a resident of Nevada.

30. Defendant Mike Yosher (“Yosher”) is an individual who upon information and

belief has acted as a client services manager for Mohawk at relevant times. It is unknown where

Yosher resides. Hyland hired Yosher to be an employee of Mohawk.

31. Defendant Alan Andrus (“Andrus”) is an individual who upon information and

belief acted as an employee or agent of Mohawk at relevant times. Andrus was hired by Hyland.

Upon information and belief, Abrams is a resident of California.

32. Defendant Jimmy Slagel (“Slagel”) is an individual who upon information and

belief acted in a professional capacity for Mohawk at relevant times. It is unknown where Slagel

resides. Hyland hired Slagel.

33. Mohawk, Pro Financial, GIW, Hyland, and Andrus are referred to collectively as

“Seller Defendants”. Eker, Peak Potentials, FIC, Gray, Lathigee, Hess, GIW, Hyland, Slagel,

and Andrus are referred to collectively as the “Promoter Defendants”. FIC, Mohawk, GIW, Pro

Financial, DBO, and BP Management are referred to collectively as “Corporate Defendants”.

Abrams, Andrus, Eaton, Eker, Gray, Hess, Hyland, Lathigee, Mike Oborn, Rob Oborn, Pasqill,

Peak Potentials, and Slagel are referred to collectively as “Control Defendants.”

34. DOES 1-300, inclusive, are the fictitious names of those defendants whose true

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identities are unknown to Plaintiff and whose true capacities, whether as individuals,

corporations, partnerships, joint ventures and/or associations, are also unknown to Plaintiff.

Each fictitious defendant is in some manner responsible for the acts and occurrences hereinafter

set forth. Plaintiff will amend this complaint to allege their true names and capacities when

ascertained. GENERAL ALLEGATIONS

A. The Idea for “Lemonade from Lemons”

35. Early in 2008, Hyland, the owner of Mohawk, contacted the owners of GIW

(Gray and Hess) for the purpose of procuring foreclosed properties. Hyland consistently

represented himself as the owner of Mohawk and he acted on behalf of Mohawk. Hyland and

Mohawk purchased properties from GIW, arranged for the properties to be managed by BP

Management, and then sold the properties to investors together with management contracts

According to GIW, it eventually became largely a wholesale company the purchased propertie

and provided them to Hyland and Mohawk for resale to investors.

36. In the Official Statement From Go Invest Wisely, LLC and Pro Financia

Services Regarding the 2008 Mohawk Diversified Tour (“GIW Official Statement”) distributed

to Plaintiffs, and signed by Hess and Gray:

Hyland generated a lot of demand to purchase properties from GIW from his ability to get in front of large groups of individuals interested in real estate opportunities. Hyland worked with several individuals and/or groups who organized events to which individuals interested in real estate opportunities were invited to attend. These individuals and groups included Harv T Eker, Sunil Tulsiani of Toronto and Mike Lathigee (FIC) of British Columbia. During these events, Hyland and other speakers he employed, including Tyrell Gray, Allan Andrus, Jimmy Slagel, and several others, provided presentations on real estate trends, methods, and business models, including GIW’s business model which was to prepare homes for sale under a land contract to create a cash flowing property. At the end of the presentation, attendees were given the opportunity to purchase homes from Mohawk and Hyland, so they could implement the GIW process on their own.

37. Based on the GIW Official Statement, Plaintiffs allege on information and

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that:

a. Hyland was the owner of Mohawk and exercised control over Mohawk in all

aspects related to the Property Contracts,

b. Hyland personally generated demand to purchase properties from his ability

get in from large groups of individuals,

c. Hyland employed some of the Defendants named herein (including Gray,

Andrus, and Slagel) who actively sold the Property Contracts,

d. Andrus was an agent of Mohawk and Hyland and that Andrus acted within

scope of that agency when selling the Property Contracts,

e. Hyland was a substantial factor in soliciting sales of the Property Contracts,

and

f. As alleged further below, Hyland worked to market and promote the Property

Contracts through a series of speakers, including Eker and Lathigee (FIC).

38. Hyland met Yosher at a seminar in Toronto. Hyland later called Yosher,

explained that he represented Mohawk, and hired Yosher to prepare marketing materials for

Mohawk, including a website and brochures. When sales increased, Hyland asked Yosher to

help with customer service and fulfillment.

39. The Mohawk website contained information substantially similar to that in the

Lemonade from Lemons brochure. Upon information and belief, Hyland oversaw and directed

Yosher’s creation of the website, the creation of the Lemonade from Lemons brochure, and

authorized the content of each.

B. Promotion of the Property Contracts at Millionaire’s School

40. Defendant Eker provides investment advice through various seminars held

throughout North America. Among other things, Eker personally ran an investment advice

program called “Millionaires School”, in which he charged attendees over $1,000 in “tuition”.

41. Plaintiff Kwong attended Millionaires School in Los Angeles in 2007, where

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personally led the seminar. At that seminar, Eker introduced a large number of so-called

“investment opportunities”. Eker specifically told the attendees that he had personally conduct

“due diligence” on the investment opportunities that he was introducing.

42. At the 2007 Los Angeles Millionaires School event, Eker introduced Defendant

Lathigee from FIC as an extremely knowledgeable individual and told the attendees at

Millionaires School that investors could make a lot of money with Lathigee. Eker also said that

he trusted Lathigee, and that he personally had made a lot of money in investing with him. As a

result of these endorsements, Plaintiff Kwong became a member of FIC.

43. As a member, Plaintiff Kwong received solicitations and information about

investment opportunities from FIC. In the summer of 2008, she received a mailing that FIC

would conduct a seminar in San Francisco on August 5, 2008 at Marriott Courtyard San

Francisco downtown hotel (the “FIC San Francisco Sales Event”), which Plaintiff Kwong

attended.

44. Plaintiff Sharma also attended the FIC San Francisco Sale event, and he, like

Plaintiff Kwong, also became aware of FIC through Eker.

45. Plaintiff Sharma attended a wealth seminar called the “Millionaire Mind –

Intensive”, run by Eker and his company Peak Potentials Training, in May 2008. Eker gave a

personal presentation in San Francisco May 30 – June 1, 2008 which was attended by Plaintiff

Sharma. At that event, Eker announced that FIC would be conducting a meeting in San Francis

on June 23, 2008, and Eker strongly encouraged attendees to attend.

46. Eker gave free tickets to attendees to attend the FIC San Francisco meeting for

June 23, 2008. Eker also strongly endorsed Lathigee and said that he was a “whiz” on global

economics and financial investments, and that he (Eker) had made a lot of money with Lathigee.

Eker specifically stated that he trusted Lathigee’s investment decisions, and that Eker invested a

lot of money with Lathigee and that others should follow suit. Plaintiff Sharma attended the

June 23, 2008 FIC meeting in San Francisco, and signed up as a FIC member. Thereafter,

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Sharma received an invitation to attend the FIC San Francisco Sales Event, which Plaintiff

attended on August 5, 2008.

47. Mohawk sold at least 135 investments as a result of Eker’s promotional activities.

Eker promoted the FIC and/or Mohawk investments with the expectation of receiving a

commission for each resulting investment. Eker receives commissions for these investments.

48. Some, perhaps all, investors sent their investment funds related to Property

Contracts to a Utah corporation called Escrow Specialists, Inc. located in Ogden, Utah.

49. According to an investigation by the Superintendent of Real Estate of the

Province of British Columbia, checks for the investments were made payable to Mohawk or Pro

Financial. See, Exhibit D at page 2.

C. The FIC San Francisco Sales Event.

50. At the FIC San Francisco Sales Event, Lathigee gave a presentation on the

Property Contracts. Lathigee also introduced Andrus from Mohawk, who described the Property

Contracts, with Lathigee present at all times. Lathigee and Mohawk distributed the Lemons from

Lemonade information sheet that stated investors would “make INCREDIBLE RETURNS

within 12-18 months”. The information sheet is attached hereto as Exhibit A, and states the

following:

a. “INVEST FOR $18,500 and receive clean, clear, marketable title”

b. “we GUARANTEE property value to be at least $45,000”

c. “our CURRENT AVERAGE property value is $55,000”

d. “make INCREDIBLE RETURNS within a 12-18 month period or take

advantage of the option to keep passive cash flow of approximately $300 per

month”

e. “PASSIVE INVESTMENTS, managed by experienced property management

company”

f. “This great passive by lends itself to multiple purchases with little

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investment”

g. “INVEST NOW, SEE AMAZING RETURNS.”

51. Defendants FIC, Lathigee and Mohawk described in detail the offer as follows:

a. United States financial institutions sold foreclosed properties at reduced prices

in bulk in order to write them off their books and minimize incurring further

costs.

b. Mohawk purchased 400 to 500 foreclosed homes, sight -unseen at a time from

the foreclosing financial institutions.

c. The investor buys a home from Mohawk for $17,500 and receives clear title

on a home within 30 days.

d. The investor pays $1,000 to a management company, Pro Financial;

e. Pro Financial would inspect the home to determine if it is sellable for-profit,

or if it is suitable for a land installment contract.

f. If the house is suitable for a land installment contract, Pro Financial will find

buyer/occupant for the home. Pro Financial also qualifies the buyers.

g. The investor holds the note on the property and collects income from the new

occupants.

h. Mohawk guarantees that if the investor’s property is not sold within six

months, Mohawk will exchange it for property that is “cash flowing”.

52. Lathigee stated that he would not offer this investment opportunity unless “at the

end of the day the system will work to a point where the majority of the homes are resold and

there is a market for the notes”.

53. Defendants Lathigee and Mohawk provide a presentation on projected returns on

the $18,500 investment as follows:

a. the investors note develops a worth of $45,000 based on the calculations of

monthly payments of $300, and 30-year amortization at 10% interest.

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b. Once the note is “seasoned”, anywhere from 6 to 18 months, it can be offered

for sale-thereby generating a substantial return for the investor if the investor

chooses to sell it rather than hold the note.

54. Lathigee and Mohawk created a sense of urgency at the FIC San Francisco Sales

Event, stating that there were not enough properties for all of the attendees. Lathigee and

Mohawk encouraged the attendees to purchase their properties quickly on a first-come first-

served basis.

55. Based on the representations of Lathigee and Mohawk, Plaintiff Sharma

purchased two properties, and Plaintiff Kwong purchased one property. A total of 103 investors

purchased 146 homes at the FIC San Francisco Sales Event. More than 995 Property Contracts

were sold at this and other FIC events.

56. At the FIC San Francisco Sales Event, Plaintiffs Sharma and Kwong each entered

into two contracts; first, a “Bulk Foreclosure Purchasing Agreement” for purchase of the house,

and second, a “Management Agreement” with Pro Financial. The agreements were marketed as

part of one investment opportunity. Each agreement is a “security.”

57. An example of the Bulk Foreclosure Purchasing Agreement is attached hereto as

Exhibit B and provides as follows:

a. Investor to pay Mohawk $17,500.

b. Mohawk provides a foreclosed property and transfers clear and marketable

title to the investor.

c. Mohawk will exchange the property if an occupant cannot be contracted to

purchase the property within six months from the time of the markings on his

properties.

58. An example of the Management Agreement is attached hereto as Exhibit C and

provides as follows:

a. Investor to pay $1,000 to Pro Financial.

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b. Pro Financial to prepare the property for sale and display signs thereon,

c. Pro Financial to research local market occupant, and manage the collection of

all mortgage payments.

59. On August 6, 2008, the day after the FIC San Francisco Sales Event, Defendants

Lathigee and Mohawk gave substantially the same presentation in Vancouver, British Columbia.

An investigator from the Superintendent of Real Estate of the Province of British Columbia

attended that presentation and prepared the detailed report and order attached hereto as Exhibit

D. That order recites statements made by Defendants Lathigee and Mohawk in Vancouver that

were identical to those made the night before at the FIC San Francisco Sales Event.

60. In or about May 2008, Hyland, a principal of Mohawk, pleaded guilty to

knowingly and willfully providing false information to the SEC during an investigation. He also

admitted under oath that during seminars for investors, he made materially false representations

to those investors in order to induce them to purchase investment products. Such material

misrepresentations included statements about his trading profits, qualifications, history of

trading, and his return on investments. Such information about Mohawk and Hyland would have

been material information to Plaintiffs, but no information about Hyland was provided to

Plaintiffs prior to them investing with Defendants.

D. GIW and Mohawk

61. Contrary to the contractual promises and oral representations made by

Defendants, Plaintiffs Sharma and Kwong never received any income, nor even title to any

property, as promised under the Property Contracts.

62. In September 2008, GIW contacted Plaintiff Sharma and told him that GIW had

assumed the business of Mohawk. GIW advised Plaintiff Sharma that two foreclosed properties

had been allocated to him and that it would provide the deed of title when the properties were

income-producing.

63. On March 4, 2009, six months after Plaintiff Sharma purchased his properties, he

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contacted GIW to inquire about the status of his properties. At that time, GIW told him it had no

information on the properties that had been allocated to him. On March 24, 2009, GIW sent

photographs and inspection reports for one of Sharma’s properties. In April 2009, Sharma

followed up multiple times with GIW to find out details about the second property and to find

out why there was no “cash-flow” from his two Property Contracts as promised in the Bulk

Foreclosure Agreement. When Plaintiff Sharma asked for his properties to be exchanged for

properties which were income flowing (in accordance with the promises in the Bulk Foreclosure

Agreement), GIW said that they could not do so because such properties are all “taken”.

64. Starting in April 2009, Plaintiff Sharma asked GIW for a full refund. GIW

refused, claiming, among other things, that Defendants Eker, FIC and Mohawk had already taken

commissions from the purchase prices paid by Plaintiff Sharma. Moreover, GIW advised

Sharma that FIC had told GIW not to make any refunds.

65. Starting in the summer of 2009, Plaintiff Sharma contacted Lathigee and Hess by

electronic mail to seek a refund of his investment funds. During this correspondence, Hess and

Lathigee made a number of admissions concerning the Property Contacts - including the fact that

GIW was liquidating poor quality homes in order to purchase better homes, at higher prices. But

neither Lathigee nor Hess could explain how such purchases could be financed without reducing

the total number of homes that had been purchased on behalf of, and allocated to, individual

investors. At the same time, and throughout 2009, GIW continued promoting the sale of

Property Contracts through various seminars and through a website called

www.junkhouseriches.com .

66. Alarmed by the statements, Plaintiff Sharma started an online discussion group

for unhappy investors. In response to this discussion group, Defendants GIW and Hess posted

the GIW Official Statement.

67. The GIW Official Statement is attached hereto as Exhibit E. It provides a detailed

history concerning the involvement of FIC, GIW, Hess and Mohawk:

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a. GIW is owned by Gray and Hess and Eaton is an officer;

b. The Property Contracts were, in fact, conceived by GIW, and Mohawk was a

sales and marketing entity that presented the “GIW process” to large groups of

people.

c. Beginning in 2008, GIW purchased large numbers of foreclosed properties in

bulk sales in order to supply Mohawk.

d. Pro Financial was started in the summer of 2008 by, among others, the owners

of GIW (Gray and Hess);

e. GIW knew that there could be problems and delays in having a foreclosed

property occupied by a new owner due to the condition of these foreclosed

properties. For this reason, “GIW did not think that it would be fair to buyers

to deed a property and pass all the related liabilities of the property to the

buyer without the assurance that the property had an occupant placed in the

home creating cash flow.”

f. As of February 2009, Defendant Pro Financial was managing 1,267

properties. However, of these, only 112 had an occupant on the property.

g. Mohawk sold 135 properties during investors meetings sponsored by Eker.

h. FIC sold 995 properties during investor events sponsored by FIC.

68. The GIW Official Statement also admitted that the principal reason the

investments were not working was because many of the properties were “bad” properties. As a

result, “GIW is left to liquidate the bad properties to create capital in order to purchase

replacement properties”. In effect, this has created a pyramid scheme wherein money from later

investors is used to pay early investors.

E. Developments after August 2008

69. In early September 2008, Eker sent a note to his investors cautioning them to

exercise careful review over the Property Contracts that Eker had promoted to them (the

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“Disclaimer”), which is attached hereto as Exhibit F. Indeed, Eker had good reason to know

well before September 2008 that the Property Contracts he was promoting were risky.

70. In 2008, Eker took Mohawk on “road shows” promoting the Property Contracts.

As of August 2009, Mohawk had sold 135 Properties at these “road show” events – and collected

commissions on each sale. However, discontented investors started contacting Eker seeking

refunds of the money paid for Property Contracts in the summer of 2008. This prompted Eker to

issue the Disclaimer which contains many cautions that Eker knew – but failed to disclose – at

the time that he was promoting Property Contracts.

71. The Disclaimer contained the following cautions about the Property Contracts: -So, as you evaluate purchasing foreclosure properties from Mohawk, please keep in mind some additional information that we have learned: Not all the properties seem to have come directly from “banks. ” Some of these properties were available from other sources, such as the MLS, before Mohawk acquired them. Some seem to have been available at a lower “gross” price, however, according to Mohawk, the difference is due to getting “clean and clear” title and a home that is in “livable” condition. Mohawk also states that its “program” offers a “guarantee” that should your home not be sellable, they will replace it with one that is. As always, you need to determine whether the purchase price from Mohawk makes sense today given the prior pricing of these properties. Mohawk can advise you of any liens, debts or other expenses that were due on the property that increased its cost of acquisition.

-Some of these houses will be easily matched with tenant/buyers, others may not and there is no absolute time table to guarantee when you can expect cash flow from a property.

-The market for “notes” from tenant/buyers is relatively untested and the future cannot be predicted with any certainty. Mohawk appears to be confident the notes can be sold.

-Whether a buyer/tenant will be able or willing to maintain the property to your standards is not guaranteed and it is possible you may incur expenses for maintenance and repairs. You own this home .

-As you might expect, it is impossible to guess how and exactly when the local markets where these properties are located will rebound and values will increase .

-You might want to ask Mohawk for information about other investors who have used this program. Speak to these referrals to learn about their experiences.

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-Become an expert on “values” in the market place so that you have a real understanding about how the purchase price stacks up against market value and how much “equity” you are gaining. This is important given that Mohawk uses a popular web based appraisal system that may or may not be perfectly accurate in today’s ever-changing marketplace .

-Finally, always talk to your advisers – lawyer, accountant, financial planner. Ask for their advice and be certain that this type of investment fits in your personal financial plan and portfolio .

-If you need further information, go directly to the source and speak to the people at Mohawk . Be sure that all of your questions are answered.

72. Prior to September 2008, Eker never made any of the above cautions known to

any of the investors to whom he promoted the Property Contracts. Had either Plaintiff received

this email prior to the FIC San Francisco Sales Event on August 5, 2008, neither would have

purchased the Property Contracts.

73. Eker’s Disclosure also contained a misrepresentation by stating that Eker was not

affiliated with Mohawk. The Disclosure falsely states:

It is important, however, to be clear that Peak Potentials has no affiliation with any of our guest speakers’ private businesses and how they handle their own programs or the administration of those programs. If a student chooses to participate in a guest trainer’s additional offerings they should do so in the same way as we recommend they purchase anything else, by doing their own research and due diligence.

Also , please note that Peak Potentials and T. Harv Eker do not formally endorse any guest speaker or other company at our events. We simply provide a “forum” for learning

74. In fact, Eker took commissions on each Property Contract that was sold at his

events. And instead of simply providing a “forum”, Eker promoted the Property Contracts for

his own personal gain.

75. In February 2010, FIC (through a subsidiary FIC Foreclosure Fund, Ltd.

(“FICFF”) sued GIW. Mohawk, Pro Financial and their principals alleging that the Defendants

had failed to perform obligations under various contracts. FIC Foreclosure Fund, Ltd. v. Go

Invest Wisely, LLC (Case No. 10-00081, filed Feb. 3, 2010, C.D. Utah). In one contract, dated

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May 12, 2008 (3 months before Plaintiffs purchased their Property Contracts at the FIC San

Francisco Sales Event), FIC’s subsidiary paid $1,400,000 for 100 homes (the “FIC – Mohawk

Agreement”, which is attached hereto as Exhibit G). The agreement was signed on behalf of

Mohawk by Brad Hess (who also owns GIW and Pro Financial). Under the terms of the FIC-

Mohawk Agreement, Mohawk was to deliver “clear and marketable title” to these properties

within the same 30-day closing period that Lathigee had represented to Plaintiffs at the FIC San

Francisco Sales Event. But Mohawk had never delivered these properties to FICFF. Despite

knowing that Mohawk had breached its contracts, FIC and Lathigee actively promoted and sold

Property Contracts to Plaintiffs in August 2008.

F. GIW Refunds

76. As of November 11, 2010, GIW stated it was in the process of refunding

customers in the order the customers purchased their investments. According to GIW: “The

person who purchased their property first is at the top of the list, the person who purchased last is

at the bottom of the list. We feel this is the only fair way to issue the numbers.”

77. It is believed that more than 1,700 Property Contracts were sold. As of November

11, 2010 GIW had refunded 184 customers.

78. GIW’s refund policy is neither fair nor equitable for the thousand plus customers

who have not been refunded anything. There is no reason to believe that GIW received

reasonably equivalent value for the refunds it issued to select customers. Further, it is possible

that the earliest GIW customers were Defendants’ insiders or friends. At least one GIW refund

was paid to FIC. GIW’s notion of fairness is not an adequate basis on which to distribute limited

assets to numerous injured parties. The payments issued to 184 customers should be avoided and

distributed fairly.

79. It is possible that other Defendants have taken steps to refund select customers on

a preferential, unfair, and/or fraudulent basis. If so, such refunds should also be avoided.

80. Upon information and belief, none of defendants is properly licensed to sell

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securities by any state division of securities or by FINRA.

81. In the claims below, Hyland is liable both directly and through the doctrine o

respondeat superior for the actions of those he hired, including Andrus, Gray, Slagel,

Yosher, “and several others” and referenced in the GIW Official Statement. Hyland is also

liable as a control person of other defendants that are liable to Plaintiffs based on Hyland’s

role as one or more of the following: (a) a person who directly or indirectly controlled an

entity liable under the securities laws, (b) as an owner, officer, director, or manager of such

an entity, (c) as a person who performed functions similar to someone with such a title, (d)

as an employee who materially aided in the sale of securities, or (e) as a broker-dealer or

agent who materially aided in the sale of securities.

PLAINTIFF CLASS ACTION ALLEGATIONS

82. Plaintiffs bring this action on behalf of the following proposed class: all

purchasers of Property Contacts from or through any of the Defendants.

83. Excluded from the proposed class are Defendants; any entity in which Defendants

have a controlling interest; any of Defendants’ officers, directors, legal representatives or

successors; any Judge assigned to this action and his or her immediate family; and anyone who

timely requests exclusion from the class.

84. This action may be maintained on behalf of the class proposed above under the

criteria of the Federal Rules of Civil Procedure.

85. Numerosity . Based on FIC’s own documents, as of August 2008, FIC had sold

over 1,700 homes, with the average purchaser buying approximately 1.4 homes. On information

and belief, there at least 1,200 purchasers across the United States and Canada who have

purchased the Property Contracts. Such a large number of purchasers, dispersed over a large

geographic area, makes joinder impracticable.

86. Commonality and Predominance . Common questions of law and fact exist as to

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members of the proposed class and predominate over questions only affecting individual class

members. These common questions include:

a. Whether the Defendants were “sellers” within the meaning of Federal

securities laws;

b. Whether sellers were properly licensed and registered to sell securities.

c. Whether the securities were properly registered.

d. Whether the offering materials and other representations made to class

members by Defendants made false and misleading representations of

material facts, or omitted to disclose material facts necessary for the

statements that were made to be not misleading.

e. Whether, and when, the Defendants, and each of them, knew or ought to have

known that the foreclosed properties which were the subject of the Property

Contracts were “bad” properties;

87. Typicality . The claims of the Plaintiffs are typical of the claims of all members

the class since the representations and omissions of material facts were made to all class

members through the use of misleading offering materials and statements.

88. Adequacy. Plaintiffs adequately represent the members of the proposed class

because their interests do not conflict with those of the members of the class. Each Plaintiff has

been an organizing force in the grass-roots movement among members of the proposed class to

retain counsel and protect the interests of the proposed class.

89. Class-Wide Injunctive Relief . Defendants have acted or refused to act on

grounds generally applicable to the class, including, especially, refusing to transfer title to

purchased properties to each purchaser thereof, in accordance with the terms of the Property

Contracts. Therefore, it is appropriate to grant final and injunctive relief with respect to the

members of the class as a whole.

90. Deficiency of Assets . It is likely that there will be insufficient assets to satisfy

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any judgment against Defendants arising from this action. Accordingly, a class action is

appropriate because adjudications with respect to individual class actions could impair or impede

the ability of other class members to protect their respective interests.

91. Plaintiffs know of no difficulty which would be encountered with the

management of this litigation that would preclude its maintenance as a class action.

92. All claims below are asserted against all Defendants unless specified otherwise.

FIRST CLAIM FOR RELIEF Rescission for Sale of Unregistered Property Contracts

Against Seller Defendants and Promoter Defendants (Securities Act of 1933, Section 12(a)(1), 15 U.S.C.A. § 77l(a)(1))

93. Plaintiffs hereby incorporate by reference all the allegations set forth above as

though fully set forth herein.

94. This claim is brought pursuant to section 12(a)(1) of the Securities Act (15

U.S.C.A. § 77l), by Plaintiffs and on behalf of the proposed class.

95. Seller Defendants and Promoter Defendants were “sellers” of the Property

Contracts for purposes of Federal securities laws, and the Plaintiffs, and other members of the

proposed class, were purchasers thereof.

96. Seller Defendants and Promoter Defendants communicated offers to sell the

Property Contracts to the general public through a sophisticated marketing system that used the

means of United States interstate commerce, including the mails.

97. Many members of the proposed class, including Plaintiff Sharma, are not

“accredited”. Indeed, there was no attempt by Seller Defendants and Promoter Defendants to

determine if any of the attendees were “accredited” investors.

98. In total, the Seller Defendants and Promoter Defendants collected more than

million in Property Contract sales, from over 500 members of the public.

99. The Property Contracts were not exempt from the registration requirements of

Federal law.

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100. Plaintiffs do not assert this claim against Defendants FICFF or Pasqill, but

reserve the right to amend this claim to allege such claims against these defendants if a

factual basis for doing so is found during discovery.

101. As a result of the foregoing, Plaintiffs, and other members of the Proposed Class,

suffered damages. Plaintiffs, and the class they represent, are entitled to rescind the Property

Contracts and to recover from Seller Defendants and Promoter Defendants the consideration

paid for securities with interest thereon, less the amount of any income received thereon, tog

with costs and attorney fees.

SECOND CLAIM FOR RELIEF Rescission for Sale of Securities through Use of Untrue or Omitted Materially Facts

Against Seller Defendants and Promoter Defendants (Securities Act of 1933, Section 12(a)(2), 15 U.S.C.A. § 77l(a)(2))



103. This claim is brought pursuant to section 12(a)(2) of the Securities Act, 15

U.S.C.A. § 77l(a)(2), by Plaintiffs and on behalf of the proposed class.

104. Seller Defendants made the following material misstatements knowing them to

be untrue at the time they were made (the “Misrepresentations”):

a. INVEST FOR $18,500 and receive clean, clear, marketable title

b. make INCREDIBLE RETURNS within a 12-18 months. Or take advantage

the option to keep passive cash flow of approximately $300 per month.

c. PASSIVE INVESTMENTS, managed by experienced property management

company.

d. Mohawk will exchange any property that is not cash-flowing after 6 months,

for one that is.

e. That they had made money with certain investments as described.

105. At the time of their purchases, Plaintiffs were unaware of the falsity of the

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statements above.

106. Seller Defendants made the following material omissions (the “Omissions”):

a. That many of the properties that were the subject of the Property Contrac

were “bad” and unsellable.

b. That it would take many months after a property was purchased before a

“for sale” sign would go up, and that consequently, Mohawk’s obligation

to replace a property that could not be cash-flowing after six months

would only commence after a much longer period following the original

sale to the investors than investors were lead to believe.

c. That Defendants had failed to timely deliver deeds to properties related to

earlier-sold Property Contracts.

d. That Hyland had already admitted to providing false information to

investors during investment seminars.

e. That none of Defendant was properly licensed or registered to sell

securities and that none of the securities were registered.

f. That one or more Defendants had previously filed for bankruptcy.

107. In addition, FIC and Lathigee failed to disclose the material information that they

were the subject of an investigation by the British Columbia Superintendent of Real Estate and

received a cease and desist order for engaging in unlawful activities.

108. Seller Defendants made Misrepresentations and Omissions with knowledge, or

acted with reckless disregard in making them, in connection with the promotion of FIC and

Mohawk, and with the purchase and sale of the Property Contracts for the purpose of inducing

Plaintiffs, and other members of the proposed class, into purchasing the Property Contracts.

109. Each Promoter Defendant had knowledge of the Misrepresentations and

Omissions at the time they were made, and knew them to be material and misleading in

connection with the purchase and sale of the Property Contracts.

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110. Plaintiffs, and other members of the proposed class, reasonably relied on the

Misrepresentations because, among other things, Seller Defendants assured them that this

scheme would result in “incredible returns” in 12-18 months.

111. Plaintiffs do not assert this claim against Defendants FICFF or Pasqill, but

reserve the right to amend this claim to allege such claims against these defendants if a

factual basis for doing so is found during discovery.

112. As a result of the foregoing, Plaintiffs, and other members of the Proposed Class,

suffered damages. Plaintiffs, and the class they represent, are entitled to rescind the Property

Contracts and to recover from Seller Defendants and Promoter Defendants the consideration

paid for securities with interest thereon, less the amount of any income received thereon, tog

with costs and attorney fees.

THIRD CLAIM FOR RELIEF Liability of Controlling Persons

Against Control Defendants (Securities Act of 1933, Section 15, 15 U.S.C.A. § 77o)



114. This claim is brought pursuant to section 15 of the Securities Act, 15 U.S.C.A. §

77o, by Plaintiffs on behalf of themselves, and on behalf of all members of the proposed class.

115. Defendants are liable under Section 12(a)(1) and/or 12(a)(2) of the Securities Act

as set forth above.

116. Defendants Lathigee as Pasqill are control persons of FIC by virtue of their

position of operational control of FIC.

117. Defendants Hess, Gray, and Eaton are a control persons of GIW.

118. Defendants Hess, Gray, Eaton, Mike Oborn, Rob Oborn are or were control

persons of Pro Financial by virtue of their positions of operational control.

119. Defendants Abrams, Hyland, Hess, Gray, and Eaton are or were control persons

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of Mohawk by virtue of their positions of operational control.

120. Hyland represented himself as the owner of Mohawk and acted as its key

employee. Hyland hired and managed several key employees for Mohawk and managed the

presentation of marketing efforts for Mohawk.

121. The identities and relations between various defendants is not fully known at this

time. Other defendants, including unidentified Doe defendants, may be liable as control persons

of one or more Corporate Defendants.

122. At the time Plaintiffs and the other members of the proposed class purchased the

Property Contracts, Individual Defendants had the power and authority, and exercised the same,

to cause Corporate Defendants to engage in the wrongful conduct complained of herein.

123. Defendants FIC, GIW, Pro Financial and Mohawk issued, caused to be issued,

and participated in the issuance of materially false and misleading statements in connection with

the sale of Property Contracts.

124. Pursuant to section 15 of Securities Act, by reason of the foregoing, Control

Defendants are jointly and severally liable to Plaintiffs and the other members of the proposed

class for the violations of section 12 Securities Act as set forth herein.

125. By virtue of the foregoing, Plaintiffs are entitled to damages against Control

Defendants. Plaintiffs, and the class they represent, are entitled to recover from Defendants the

consideration they paid for securities with interest thereon, less the amount of any income

received thereon, together with costs and attorney fees.

FOURTH CLAIM FOR RELIEF Rescission for Sale of Securities through Use of Untrue or Omitted Materially Facts

Against Seller Defendants and Promoter Defendants (Exchange Act of 1934, Section 10(b), 15 U.S.C. § 78j, and 17 C.F.R. § 240.10b-5)



127. Seller Defendants and Promoter Defendants carried out a plan, scheme and course

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of conduct which was intended to, and did, deceive Plaintiffs and the other proposed class

members, as alleged herein and caused Plaintiffs and other class members to purchase the

Property Contracts. In furtherance of its unlawful scheme, plan and course of conduct,

Defendants, and each of them, took the action set forth in this complaint.

128. Seller Defendants and Promoter Defendants employed devices, schemes and

artifice to defraud, made untrue statements of material facts and/or omitted to state material facts

necessary to make these statements not misleading, and engaged in practices, acts and a course

of business which operated as a fraud upon Plaintiffs and the other members of the proposed

class, in an effort to enrich themselves.

129. Seller Defendants and Promoter Defendants, individually and in concert, directly

and indirectly, by the use, means or instrumentalities of interstate commerce and or of the mails,

engaged and participated in a continuous course of conduct to conceal adverse information about

the Property Contracts.

130. Seller Defendants and Promoter Defendants intended, by their Misrepresentations

and Omissions, to induce Plaintiffs and members of the proposed class to purchase Property

Contracts.

131. Seller Defendants and Promoter Defendants intended to make the

Misrepresentations and Omissions, or acted with reckless disregard in making them, and failed to

correct such misrepresentations or omissions.

132. As a result of the dissemination of the materially false and misleading information

and failure to disclose material facts, as set forth above, Plaintiffs purchased and continue to hold

the Property Contracts, relying directly or indirectly on the false and misleading statements made

by Seller Defendants and Promoter Defendants, and on the absence of material adverse

information that was known to or recklessly disregarded by Defendants but not disclosed in

public statements by Defendants.

133. At the time the Seller Defendants and Promoter Defendants made the

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misrepresentations and omissions, Plaintiffs and other members of the proposed class were

ignorant of the true state of affairs concerning the misrepresentations and omissions. Had

Plaintiffs and the other members of the proposed class known of the truth concerning the

Property Contracts, which were not disclosed by Seller Defendants and Promoter Defendants s,

Plaintiffs would not have purchased the Property Contracts.

134. By virtue of the foregoing, Seller Defendants and Promoter Defendants have

violated Section 10(b)(5) of the Exchange Act, 15 U.S.C. § 78j, and Rule(b)(5) promulgated

thereunder, 17 C.F.R. § 240.10b-5.

135. As a direct and proximate result of Seller Defendants’ and Promoter Defendants’

wrongful conduct, Plaintiffs and members of the proposed class suffered economic loss in

connection with the purchase of the Property Contracts. Plaintiffs, and the class they represent,

are entitled to recover from Defendants the consideration they paid for securities with interest

thereon, less the amount of any income received thereon, together with costs and attorney fees.

FIFTH CLAIM FOR RELIEF Sale of Securities without Required Registration

Against Promoter Defendants (Exchange Act of 1934, Section 15, 15 U.S.C. § 78o)



137. Upon information and belief, Promoter Defendants acted as brokers or dealers

within the meaning of 15 U.S.C., § 78c(a)(4) and (5), and that they made use of the mails for

transactions in the sale of securities without registering as brokers or dealers pursuant to 15

U.S.C., § 78o(a)(1).

138. Plaintiffs, and the class they represent, are entitled to recover from Promoter

Defendants the consideration they paid for securities with interest thereon, less the amount of

any income received thereon, together with costs and attorney fees.

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SIXTH CLAIM FOR RELIEF Control Person Liability

Against Control Defendants (Exchange Act of 1934, Section 20, 15 U.S.C.A. § 78t)



140. This claim is brought pursuant to section 20 of the Exchange Act, by Plaintiffs on

behalf of themselves, and on behalf of all members of the proposed class.

141. Some identities and relationships between various defendants are set forth above.

Others identities and relationships including unidentified Doe defendants, may be liable as

control persons of one or more Corporate Defendants.

142. Pursuant to section 20 of Exchange Act, by reason of the foregoing, Control

Defendants are liable to Plaintiffs and the other members of the proposed class for the violations

of the Fourth or Fifth Claims, and related federal regulations as set forth herein.

143. Plaintiffs, and the class they represent, are entitled to recover from Defendants the


received thereon, together with costs and attorney fees.

SEVENTH CLAIM FOR RELIEF Rescission/Damages for Sale of Unregistered Securities

Against Seller Defendants and Promoter Defendants (Cal. Corp. Code, § 25503)

144. Plaintiffs hereby incorporate by reference the allegation set forth above as though

fully set forth herein.

145. This claim is brought pursuant to Section 25503 of the California Corporation

Code, by Plaintiffs and on behalf all members of the proposed class who purchased the Property

Contracts from or within the State of California (the “Subclass”)


Contracts for purposes of California securities laws, and the Plaintiffs, and other members of the

Subclass, were purchasers thereof.

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147. Seller Defendants and Promoter Defendants communicated offers to sell the

Property Contracts to the general public through a sophisticated marketing system within the

State of California.

148. Many of the members of the Subclass, including Plaintiff Sharma, are not

“accredited”. Indeed, there was absolutely no attempt at the FIC San Francisco Sales Event to

even determine if any of the attendees were “accredited” investors.

149. The Property Contracts were not exempt from the registration requirements of

California law.

150. Plaintiffs, and the class they represent, are entitled to recover from Defendants the


received thereon, together with costs and attorney fees. All Seller Defendants and Promoter

Defendants are liable either for their direct actions or vicariously for positions they held with

Corporate Defendants.

EIGHTH CLAIM FOR RELIEF Sale of Securities through Use of Untrue or Omitted Materially Facts

Against Seller Defendants and Promoter Defendants (Cal. Corp. Code, § 25401)



152. This claim is brought pursuant to Section 25401 of the California Corporation



153. Seller Defendants and Promoter Defendants sold securities through the use of

false statements or material omissions of fact as described above.

154. Plaintiffs, and the class they represent, are entitled to recover from Seller

Defendants and Promoter Defendants the consideration they paid for securities with interest

thereon, less the amount of any income received thereon, together with costs and attorney fees.

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All Seller Defendants and Promoter Defendants are liable either for their direct actions or

vicariously for positions they held with Corporate Defendants.

NINTH CLAIM FOR RELIEF Rescission/Damages for Sale of Securities through Unlicensed Persons

Against Promoter Defendants (Cal. Corp. Code, §25501.5)



156. This claim is brought pursuant to Section 25501.5 of the California Corporation



157. Promoter Defendants unlawfully sold or solicited securities without the licenses

required to do so.

158. Plaintiffs, and the class they represent, are entitled to recover the consideration

they paid for securities with interest thereon, less the amount of any income received thereon,

together with costs and attorney fees. All Seller Defendants and Promoter Defendants are liable

either for their direct actions or vicariously for positions they held with Corporate Defendants.

TENTH CLAIM FOR RELIEF Rescission/Damages for Sale of Unregistered Securities

Against Seller Defendants and Promoter Defendants (Utah Code Ann. § 61-1-7, 61-1-15)



160. This claim is brought pursuant to Utah Code Ann. § 61-1-7, 61-1-15 by

Plaintiffs and on behalf all members of the proposed class who purchased the Property Contracts.

161. Under the Utah Securities Act “an offer to sell or to buy is made in this state

whether or not either party is then present in this state, when the offer ... originates from this

state.” Utah Code Ann. § 61-1-26(2).

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162. Defendants were statutory “sellers” of the securities under the Utah Act.

163. The securities were issued and sold by Mohawk and Pro Financial, which

employed Promoter Defendants to sell securities. Most, if not all, purchasers sent the funds to

purchase securities to a Utah company, Escrow Specialists, Inc. Although the purchasers of the

securities are located throughout the United States and other nations, a significant part of all the

security sales originated from the State of Utah.


Contracts for purposes of Utah securities laws, and the Plaintiffs, and other members of the

Subclass, were purchasers thereof. These defendants received funds from the sale of Property

Contracts in the State of Utah.

165. Plaintiffs, and the class they represent, are entitled to recover from these

Defendants the consideration they paid for securities with interest thereon, less the amount of

any income received thereon, together with costs and attorney fees. All Defendants are liable

either for their direct actions or vicariously for positions they held with Corporate Defendants.

ELEVENTH CLAIM FOR RELIEF Sale of Securities through Use of Untrue or Omitted Materially Facts

Against Seller Defendants and Promoter Defendants (Utah Code Ann. § 61-1-1(2))



167. This claim is brought pursuant to Utah Code Ann. § 61-1-1(2) by Plaintiffs and

on behalf all members of the proposed class who purchased the Property Contracts.

168. Defendants were “sellers” of the Property Contracts for purposes of Utah

securities laws, and the Plaintiffs, and other members of the Subclass, were purchasers thereof.

Defendants received funds from the sale of Property Contracts in the State of Utah.

169. Defendants sold securities through the use of false statements or material

omissions of fact as described above.

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170. Plaintiffs, and the class they represent, are entitled to recover from Defendants

the consideration they paid for securities with interest thereon, less the amount of any income

received thereon, together with costs and attorney fees. All Defendants are liable either for their

direct actions or vicariously for positions they held with Corporate Defendants.

TWELFTH CLAIM FOR RELIEF Rescission/Damages for Sale of Securities through Unlicensed Persons

Against Promoter Defendants (Utah Code Ann. § 61-1-3)



172. This claim is brought pursuant to Utah Code Ann. § 61-1-1(2) by Plaintiffs and

on behalf all members of the proposed class who purchased the Property Contracts.

173. Defendants were “sellers” of the Property Contracts for purposes of Utah

securities laws, and the Plaintiffs, and other members of the Subclass, were purchasers thereof.

Defendants received funds from the sale of Property Contracts in the State of Utah.

174. Defendants unlawfully sold securities as broker-dealers and or agents without

having the licenses required to do so.

175. Plaintiffs, and the class they represent, are entitled to recover from Defendants

the consideration they paid for securities with interest thereon, less the amount of any income

received thereon, together with costs and attorney fees. All Defendants are liable either for their

direct actions or vicariously for positions they held with Corporate Defendants.

THIRTEENTH CLAIM FOR RELIEF Common Law Fraud

Against Seller Defendants and Promoter Defendants



177. Seller Defendants and Promoter Defendants made knowingly false

of material facts (and/or concealed material facts) for the purpose of inducing Plaintiffs to act on

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those representations. Plaintiffs, in reasonable reliance on these statements, and in ignorance of

the falsity of those statements, were induced to purchase securities from Seller Defendants and

Promoter Defendants. Plaintiffs have been injured as a result.

178. The misrepresentations made by defendants are not part and parcel of the Propert

Contracts. For instance, defendants had a duty to Plaintiffs separate from the contract to provide

truthful information, and to not omit material facts, related to the securities they sold. Through

investment seminars, defendants presented themselves as investment experts that could guide the

less-sophisticated attendees, including Plaintiffs, how to make money. Defendants proposed,

advised, and pushed Plaintiffs to buy securities. Plaintiffs relied on Defendants self-proclaimed

expertise and advice. Plaintiffs relied on Defendants’ misrepresentations and had no opportunity

to discover the material facts that Defendants omitted.

179. Defendants have caused Plaintiffs damages in an amount to be shown hereafter,

plus interest, costs, and punitive damages.

FOURTEENTH CLAIM FOR RELIEF Negligent Misrepresentation

Against Seller Defendants and Promoter Defendants



181. Defendants negligently made untrue representations of materials facts for the

purpose of inducing Plaintiffs to act on those representations. Plaintiffs, in reasonable reliance

on Defendant’s statements, and in ignorance of the falsity of those statements, were induced to

purchase securities. Plaintiffs have been injured as a result.

182. Compared to Plaintiffs and other putative class members, Hyland had superior

knowledge about Mohawk, the Property Contracts, other defendants, and their principals.

Hyland certainly had more information about himself. That information Plaintiffs had about

these issues was limited to what was presented to them by Defendants, including

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misrepresentations and not including material information that was omitted.

183. Upon information and belief, based on the extensive role that Hyland played in

promoting securities, managing Mohawk, and hiring employees to do so, Hyland had a pecunia

interest related to Mohawk and the misrepresentations spread by Hyland and Mohawk

employees.

184. Defendants have caused Plaintiffs damages in an amount to be shown hereafter,

plus interest, costs, and punitive damages.

FIFTEENTH CLAIM FOR RELIEF Civil Conspiracy

Against All Defendants



186. In connection with the above-described incident, all Defendants acted as an

association of two or more persons with an unlawful objective and to perform an unlawful act.

The Defendants had an agreement or understanding with regard to the objective and the manner

in which their objectives would be achieved. Each Defendant engaged in an unlawful, overt act

in furtherance of the conspiracy. Each Defendant is jointly and severally liable for the damage

caused to Plaintiffs.

187. Among other things, overt acts include the presentation of false and misleading

information during investment seminars, the omission to provide material information in

connection with the sale of securities, the dissemination of unregistered securities, the use of

unlicensed agents to sell securities, and other wrongful conduct described above. These acts

were done for the purpose of Defendants making a profit by extracting money from Plaintiffs in

exchange for securities that did not have the value represented by Defendants.

188. Defendants caused Plaintiffs damages in an amount to be shown hereafter, but in

no event less than the consideration they paid for securities with interest thereon, less the amount

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of any income received thereon, together with costs, punitive damages, and attorney fees.

SIXTEENTH CLAIM FOR RELIEF Accounting


189. Plaintiffs hereby incorporate by reference the allegation set forth above as


190. Plaintiffs are entitled to accounting of what happened with their investment funds,

as well as Defendants’ efforts to refund some but not all investors. To the extent some investors

received preferential treatment, such transfers may need to be avoided so that refunds can be

equitably distributed among the injured class.

SEVENTEENTH CLAIM FOR RELIEF Uniform Fraudulent Transfer Act




192. When one or more Defendants were insolvent, such Defendants transferred assets

to select creditors with intent to hinder, delay, or defraud other creditors, and/or without

receiving reasonably equivalent value in exchange for the transfer. It is believed that at the time

of the transfers, such Defendants transferred assets to insiders, failed to properly disclose the

transfers, knew of lawsuits or threatened lawsuits, transferred substantially all of Defendants’

assets, and/or were insolvent or became insolvent as a result of the transfers.

193. Plaintiffs seek an avoidance of transfers and obligations and other appropriate

relieve under the Uniform Fraudulent Transfer Act to ensure that assets are fairly distributed

among injured parties.

EIGHTEENTH CLAIM FOR RELIEF Breach of Contract

Against Mohawk, Pro Financial and GIW


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195. The Bulk Foreclosure Purchasing Agreement was, and is, a valid and binding

contract between each member of the proposed class, and Mohawk.

196. The Plaintiffs, and the members of the Proposed Class, have performed their

obligations under these contracts.

197. Mohawk failed to deliver “clear and marketable title” to the Plaintiffs, and other

members of the proposed class, to the properties that were the subject of the Bulk Foreclosure

Purchasing Agreements. These breaches are not excused under the relevant contract.

198. Mohawk has also failed to exchange those non-cash-flowing properties purchased

by Plaintiffs, and other members of the proposed class, with other income-producing properties,

as required under the Bulk Foreclosure Purchasing Agreement.

199. As a result of the breaches set forth above, Plaintiffs, and other members of the

proposed class, have suffered proximately-caused damages.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs pray that judgment be rendered in their favor as follows:

A. A preliminary injunction against all Defendants enjoining them from further

violations of Sections 10(b) of the Exchange Act and Rule 10(b)-5 promulgated thereunder;

B. A permanent injunction against all the Defendants and their agents, servants,

employees, and all persons acting in concert with them, and each of them, from further

of Sections 10(b) of the Exchange Act and Rule 10(b)-5 promulgated thereunder;

C. A preliminary and permanent injunction enjoining all Defendants from selling, or

offering for sale, directly or indirectly, any Property Contracts;

D. An order that each Defendant be restrained and enjoined from destroying,

removing, mutilating, altering, concealing or disposing of, in any manner, any of books, records

and documents relating to the matters set forth in the complaint;

E. For an order certifying this case a class action and appointing Plaintiffs as class

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representatives;

F. For judgment stating that Defendants violated the 1933 Securities Act; the 1934

Exchange Act, and federal regulations promulgated thereunder; the California Securities Act;

and/or the Utah Uniform Securities Act, as alleged herein.

G. For judgment stating that Defendant engaged in fraud as alleged herein;

H. For judgment stating that each Defendant was a member of a civil conspiracy;

I. For rescission;

J. For money damages, in an amount to be proven at trial;

K. For pre-judgment and post-judgment interest on damages awarded hereunder;

L. For the cost of the proceedings and for Plaintiffs’ reasonable attorney’s fees;

M. For punitive damages in an amount to be determined at trial; and,

N. For all such other and further relief as the court deems just.

DATED: April 16, 2012 UTAH LITIGATION CENTER

/s/ Victor Sipos By Victor Sipos Attorney for Plaintiffs

-37-


EXHIBIT A

Lecent Properties 1ow are a sampling of recent properties within our system.

Market Value: $104,544 Cincinnati, OH 2 1/2 story $500 down, $325 month Note Price $59,000


When we get L an nii We make

I

Invest in this opportunity. Take advantage of the sub-prime lemon, without taking advantage of people. Invest now, see amazing returns,

mohawk diversifieds' opening doors is what we do

info@rnohawkreo. corn

Market Value: $50,399 Indianapolis, IN 1 story2bed, lbath, finished basement, 1 car detached garage $500 Down, $380 month Note Price $44,500

1-800-928-2713


EXHIBIT B


BULK FORECLOSURE PURCHASING AGREEMENT

THIS AGREEMENT (hereafter 'Agreement') is made between MOHAWK DIVERSIFIED, LLC. (hereafter "HAWK") and

/ - -

Client Name: Email - - / •

Address:' ,'1 •'city:- :' :.; ,Stàte: /

zip: -1

Phone: -. --•

, (hereafter "CLIENT"). HAWK and Client are referred collectively herein as the Parties."

Client referred by: Event Location/if Applicable:

RECITALS

A. WHEREAS, HAWK has established extensive relationships with wholesale foreclosure buyers, these buyers are willing to include HAWK in their bulk property purchasing.

B. WHEREAS, Client wishes to be given the opportunity to participate along with HAWK in their opportunity to purchase foreclosures at a discount.

C. WHEREAS, Client desires to purchase a property from HAWK, which property shall later be Identified and approved of by HAWK.

Client shall indicate how many properties are being purchased, as well as the total funds being remitted to HAWK.

IX $17,500.00 USD = I rtv Count Total funds to remit to Escrow

Terms of the agreement are as outlined on the back of this document and will become effective when executed by both parties and purchase funds have been released to HAWK.

Client Initials:

Client Initials:

Client initials:

Client initials:

Client confirms that Client has read the entirety of the contract located on the back side of this document.

Client confirms that Client understands that purchasing real estate comes with inherent risks.

Client understands that HAWK offers no guaranteed returns of investments.

Client understands that said property will be in a distressed condition and may have signs of neglect and damage to the property.

ESCROW INSTRUCTION: CLIENT will forward total amount of funds to Escrow Specialists of Ogden Utah. Escrow Specialists will function as a disinterested third party to hold funds until HAWK has delivered a property address to Escrow Specialists which will ultimately be the property which will be deeded to CLIENT. Escrow Specialists will also function as a third party to hold client funds until the end of the 7 day'cooling off" period. After the 7 day cooling off' period has expired and HAWK has delivered an address to Escrow Specialists, Escrow Specialists will release the total amount of funds to HAWK. HAWK will continue to fulfill its duties outlined within this agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year written below.

4 MOHAWK DIVERSIFIED, LLC

By: It's Manager / Date

CLIENT

Date

AGREEMENT-I


SERVICES AND RESPONSIBILITIES

HAWK 1. HAWK Will supply said property to Client for seventeen thousand five hundred dollars ($17,500.00). This purchase

price will cover the property and the following warrantees. a) HAWK shall provide Client with ownership to a property with a clear and marketable title. The property will

be purchased by HAWK from a wholesale foreclosure supplier and HAWK will have little information

regarding the property. b) The property provided to Client will be valued no less than forty live thousand ($45,000); said property value

will be determined by online evaluations of property values and (not) an appraisal. Once the property is identified by HAWK. Client will have the opportunity to obtain an appraisal at its own cost if desired.

c) HAWK will exchange said property from Client with a new property under the following circumstances, and ONLY if Client has employed the Management Services of Pro Financial Services. Following are the ONLY reasons why HAWK would exchange said property:

1. If said property is found to be un-saleable by the process developed by the Management Company, the Management Companies research crew, and or local ordinances at the time of inspection.

2. If six (6) months has expired from the time the marketing sign has been placed, and an Occupant cannot be contracted to purchase said property.

d) HAWK has established a relationship with a reputable Client Services Company whom can assist Client with the liquidation of said property if Client so desires. Client will be responsible for the costs associated with these services.

e) HAWK shall only hold title for a short period of time, will not reside in the property itself, and will therefore have little information upon which a Client may rely.

CLIENT 1. Client shall provide funding to HAWK for the purchase of said property in the amount of seventeen thousand five

hundred dollars ($17,500.00) per property.

CONTRACTUAL RELATIONSHIP Independent Relationship. This is document is a purchase contract Client is purchasing real property from HAWK. CLIENT is contracting separately with a client services company to perform the management duties needed to sell said property. This purchase agreement does not create any kind of business partnership between the Parties. HAWK will purchase the bulk foreclosure properties based on the demand generated from clients who enter into these Agreements. Federal, State and Local Taxes. Neither Federal, nor state, nor local tax nor payroll tax of any kind shall be withheld or paid by HAWK on behalf of Client. Notice of Tax Duties and Liabilities. Both parties understand that each party is responsible to pay, according to law, each party's tax responsibilities. Neither party will be responsible for any Federal, state or local taxes owed by the other party. Indemnity. Client agrees to indemnify and hold HAWK harmless from all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries, and deficiencies, including interest, penalties, costs, and attorneys' fees that HAWK may incur arising from or out of willful, or negligent misconduct of Client while providing services or acting under this Agreement.

THE TERMS OF THIS SECTION SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT. WARRANTIES

Confidentiality. In the performance of the service contemplated by this Agreement, Client agrees to hold in strict confidence all confidential or proprietary information that it receives relating to HAWK's business, and Client will not divulge or otherwise communicate such information to a third party without HAWK's prior written consent. Confidential or proprietary information shall include all information obtained by Client from HAWK, and which relates to HAWK's past, present, or future business activities, including client lists, technology and operational processes and manuals, except for previously obtained or publicly disclosed information. Confidentiality of Client Information. In the performance of the service contemplated by this Agreement, HAWK agrees to hold in strict confidence all personally identifiable or financial information that HAWK receives relating to Client, and HAWK will not divulge or otherwise communicate such information to a third party, except to needed Client Services Company, without the client's prior written consent. THE TERMS OF THIS SECTION SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT

GENERAL PROVISIONS Risk. Each party shall perform the work or services at its own risk. No Authority to Bind Other Party. Neither party has authority to enter into contracts or agreements on behalf of the other party. This agreement does not create a partnership between the parties. Choice of Law. Any dispute under this agreement or related to this agreement shall be decided in accordance with the laws of Utah. Arbitration. The parties to this Agreement agree to submit to binding arbitration under the rules of the American Arbitration Association any unresolved disputes between the parties and agree that the costs of such proceedings shall be reimbursed to the prevailing party. Entire Agreement. This Agreement (including any Exhibits attached hereto) represents the entire understanding and agreement between the Parties with respect to the subject matter hereof, and supersedes any prior understandings and agreements, written or oral, between such Parties with respect to such subject matter. Depending on the state where the Client's allocated property is located, Client and HAWK may be required to enter into a state approved real estate purchase contract and disclosures as required under that state's laws. The parties agree to enter into those Agreements and shall not unreasonably delay or reject such standard terms so long as they do not contradict terms or understandings under this Agreement. Severability. If any part of this Agreement is held unenforceable, the rest of the Agreement will nevertheless remain in full force and effect. Amendments. This Agreement may not be modified, amended or discharged except by an instrument in writing signed by the parties hereto. No waiver or consent may be enforced unless such waiver or consent shall be in writing and signed by the party against whom enforcement thereof is sought. Any handwritten modifications or amendments to this Agreement shall supersede any conflicting printed term or condition. Notices. All notices, demands, and requests required or permitted to be given under this Agreement shall be in writing and shall be delivered or mailed, if to HAWK. to: 2637 North Washington Blvd., Suite 131, North Ogden UT 84414.

AGREEMENT-2


EXHIBIT C


CLIENT AND CLIENT SERVICES COMPANY MANAGEMENT AGREEMENT

This Agreement is made and entered in this day of ,2O08,beteen hereinafter called "Client', and Pro Financial Services, hereinafter called "Manage?1.

Client hereby employs the services of the Manager to facilitate the dosing and resale of the property, and manage the collection of mortgage payments and escrow on the property purchased from Mohawk Diversified, LLC and will be determined and issued to Client from Manager.

Event Location:

Term of Agreement

The term of this Agreement shall commence on the day of i, 2008, and end upon sale of the note. This Agreement may also be terminated by mutual agreement of the parties at any time upon payment to Manager of all fees, commissions and expenses due Manager under terms of this Agreement.

Extent of Agreement This document represents the entire Agreement between the parties hereto.

Terms of the agreement are as outlined on the back of this document and will become effective when executed by both parties and purchase funds have been paid in full to Manager.

-- Client initials: Client confirms that Client has read the entirety of the contract located on the back side of this document

Number of Properties needing management Services: X $1,000 = $_______________

PAYMENT INSTRUCTIONS: Once Client has been assigned the property purchased from Mohawk Diversified, LLC, Manager will issue Client an invoice for the one thousand dollars ($1,000). Once the invoice is paid in full Manager will contact Client by way of phone and email and explain the process in which Manager will communicate the process explained with in the agreement.

IN WITNESS WHEREOF, the parties hereto hereby execute this Agreement on the date first above written.

PRO FINANCIAL SERVICES, LLC

By: Ws ltes Manager (

Date

CLIENT

Date


EXHIBIT D

Case 2:10-cv-01060-DS

It

BftrnsH COLIJMBU

Document 113 Filed 04/16/12 of 80

IN THE MATTER OF

THE REAL ESTATE SERVICES ACT, S.B.C. 2004 0.42

and

THE FREEDOM INVESTMENT CLUB GROUP OF COMPANIES,

FIG INVESTMENT LTD., WBIC CANADA LTD.,

MICHAEL LATHIGEE,

EARLE PASQUILL,

MOHAWK DIVERSIFIED, LLC,

ALAN ANDRUS AND GERALD ABRAMS, and

PRO FINANCIAL SERVICES, INC. (UTAH) dba

PRO FINANCIAL SERVICES, LLC (UTAH)

ORDERS UNDER SECTIONS 51 AND 49 OF THE REAL ESTATE SERVICES ACT

UPON REVIEWING the submissions and exhibits contained in the Investigation Report

prepared by the staff of the Superintendent of Real Estate and based on that information, I

make the following findings and orders:

1. On or about July 29, 2008 information was received by the Financial Institutions

Commission ('FICOM") from a British Columbia financial institution regarding the

account activities of an account holder, WBIC Canada Inc. ("WBIC")

Superintendent of Real Estate Mailing Address: Web Address: 1200 - 13450 102' Avenue www.ficombc.ca Surrey, BC V3T 5X3 Telephone: 604 953.5300 Facsimile: 604 953-5301


Page 2

2. On July 30, 2008 FICOM's Executive Director, Investigative Services attended at the

financial institution and spoke with an officer of the financial institution. As a result of this

conversation the following information was obtained:

(a) On July 10, 2008 and July 16, 2008 two deposits were made into WBIC's

account. The amount of the deposits were $3.6 million and $150,000

respectively.

(b) The financial institution is not aware at this time who made the deposits into the

WBIC account.

(c) A letter, written on the letterhead of Escrow Specialists, Inc. ("Escrow') signed by

a "JME Simpson" on behalf of Escrow accompanied the deposits. The letter

purportedly authorizes the credit union to allow the deposit of the cheques,

payable to Escrow, into the WBIC account.

(d) The deposits consisted of approximately 180 cheques in varying amounts.

However, it appears that all the cheques were in multiples of $17,500. The

cheques were made payable to Escrow, "Mohawk" and "Pro Financial".

(e) Where the cheque was initially made payable to Mohawk or Pro Financial these

names were crossed out and Escrow was inserted.

(f) The cheques showed different payors and were drawn on various British

Columbia and other Canadian financial institutions.

(g) Financial institution staff have determined through conversations with the

principals of the WBIC the following:

(a) Mohawk has a relationship with several United States banks whereby

Mohawk will purchase foreclosed on properties;

(b) Mohawk thorough its affiliation with the Freedom Investment Club runs

presentations in British Columbia and elsewhere in Canada called

"I nvestfests."

(c) The purpose of the Investfests is to solicit British Columbia and Canadian

residents to purchase these foreclosed properties in the USA.

(d) Potential purchasers are asked to pay $17,500. In addition, purchasers

are told that for an extra $1,000 they can enter into a property

management agreement with Pro Financial who will undertake to find

tenants for their property.


Page 3

(h) When the financial institution management staff became aware of the deposits, it

was determined that the deposits contravened credit union policy in that the

credit union does not allow the deposit of unendorsed third party cheques.

3. As a result, the financial institution decided to place an institutional hold on the deposits

pending its own review.

4. On August 4, 2008, the office of the Superintendent of Real Estate ('Superintendent")

began an investigation of a real estate 'investment" promotion in Vancouver advertised

on the Freedom Investment Club website www.ficinvestors.com (the TIC Website").

5. Section 1 of the Real Estate Services Act ('Act'9 provides the following definitions:

"real estate services" means

(a) rental property management services,

(b) strata management services, or

(c) trading services.

"real estate" means

(a) real property,

(b) regardless of whether it is or is not an interest in real property, a cooperative interest, shared interest in land or time share interest, as these are defined in the Real Estate Development Marketing Act, and

(c) a right in relation to real property that is defined by regulation to be real estate,

but does not include a right in relation to real property that is excluded by regulation.

"rental property management services" means any of the following services provided to or on behalf of an owner of rental real estate;

(a) trading services in relation to the rental of the real estate;

(b) collecting rents or security deposits for the use of the real estate;

(c) managing the real estate on behalf of the owner by

(i) making payments to third parties,

(ii) negotiating or entering into contracts,


Page 4

(iii) supervising employees or contractors hired or engaged by the owner, or

(iv) managing landlord and tenant matters

but does not include an activity excluded by regulation.

"trading services" means any of the following services provided to or on behalf of a party to a trade in real estate:

(a) advising on the appropriate price for the real estate;

(b) making representations about the real estate;

(c) finding the real estate for a party to acquire;

(d) finding a party to acquire the real estate,

(e) showing the real estate;

(I) negotiating the price of the real estate or the terms of the trade in real estate;

(g) presenting offers to dispose of or acquire the real estate;

(h) receiving deposit money paid in respect of the real estate

but does not include an activity excluded by regulation;

r oarty H,

(a) in relation to a trade in real estate, does not include a licensee acting solely as a licensee, and

(b) in relation to a prospective trade in real estate, includes a potential party;

'Providing", in relation to real estate services, includes

(a) offering to provide such senilces,

(b) holding oneself out as a person who provides such services, or

(c) soliciting for the purposes of the provision of such services;

6. Subsection 3(1) of the Act provides:

3(1) A person must not provide real estate services to or on behalf of another, for or in expectation of remuneration, unless the person is


Page 5

(a) licensed under this Part to provide those real estate services, or

(b) exempted by the regulations from the requirement to be licensed under this Part in relation to the provision of those real estate services.

7. Subection 48(1)(a) of the Act provides:

48(1) The superintendent may conduct an investigation to determine whether

(a) a person who does not hold a licence has engaged in any activity for which a licence under this Act is required.

8. The FIC Website is registered in the name of FIC Investment Ltd., with an address of

Suite 990, Box 12091, 555 West Hastings, Vancouver, British Columbia. The FIC

Website states that the mailing address for the Freedom Investment Club is Suite 990,

Box 12091, 555 West Hastings Street, Vancouver, BC V6B 4N5.

9. The FIC Website advertised a Vancouver FIC foreclosure event". An Investigator

reviewed the website and registered online to attend the presentation slated for August

6, 2008, at 7:00 PM at the Marriott Hotel, 1128 West Hastings Street, Vancouver,

British Columbia. The FIC Website advertised that a tour by the presenters was

scheduled during the period August 4 to August 12, 2008, and would include Los

Angeles, San Francisco, Edmonton, Calgary, New York, and Toronto.

10. The Investigator attended the meeting room on August 6, 2008 where the presentation

was to take place, checked in, and received a brochure showing some recent properties

listed by Mohawk Diversified, LLC ("Mohawk"). The brochure showed a website address

of www.mohawkreo.com , and a contact telephone number 1-800-928-2713. The

brochure, among other things, stated the following:

- INVEST FOR $18,500 & receive a clean, clear, marketable title

- we GUARANTEE property value to be at least $45,000

- our CURRENT AVERAGE property value is $55,000

- make INCREDIBLE RETURNS within a 12-18 month period or take

advantage of the option to keep passive cash flow of approximately $300

per month


Page 6

- PASSIVE INVESTMENT, managed by experienced property

management company

This great passive buy lends itself to multiple purchases with little investment.

Invest in this opportunity. Take advantage of the sub-prime lemon, without taking

advantage of people. Invest now, see amazing returns.

11. The brochure contained pictures of a number of properties including the following

information:

Market value: $104,544 Location: Cincinnati, Ohio Description: 2-1/2 storey building Terms: $500 down, $325 a month Note price: $59,000

Market value: $50,399 Location: Indianapolis, Indiana Description: 1 storey, 2 bed, 1 bath, finished basement, car detached

garage Terms: $500 down, $380 a month Note price: $44,500

12. Approximately 150 persons attended the presentation.

13. The first portion of the presentation was given by a person identifying himself as Mike

Lathigee ("Lathigee"), CEO of the HC Investment Club in Vancouver. Lathigee stated

that in San Francisco, the night before, 103 investors attended his presentation and 146

homes were purchased. San Francisco is the newest chapter of the Club.

14. Lathigee then made some general comments about the U.S. economy, the rate of

default by homeowners, and that current foreclosure laws in the U.S. could change, thus

creating problems for "the Club". He then provided the following information:

. The homes are handled by a property management company.

. The demand for these homes is overwhelming.

0 In the last 45 days the Club has sold over 1,700 homes.


Page 7

• 650 signs have gone up on homes purchased by investors in the last seven

days.

• There will be multiple opportunities to get involved. Other meetings are planned

in the fall.

• An average of one home per person is sold at Club meetings.

• 50 homes were allocated for the Vancouver meeting on a first come first served

basis.

• The home purchase will complete within 30 days.

• Other investors will go on a waiting list, but they will still get a home although it

will take longer - from 60 to 90 days.

• If no home is found, the investment is returned.

• The Club makes approximately $1,500 per home.

• Based on projections, 10,000 homes will be sold which will mean $15 million for

the FIC Group of Companies.

• All Club shareholders share in the proceeds.

• The caveat is that laws in the U.S. are changing, and there are pressures to

prevent foreclosures on lower end homes. Laws are likely to change early in the

new year.

• He will not allow money to just sit for months on end if a home cannot be offered.

• The Club cannot be both the property management company and be involved in

the ownership, as this would be considered a securities matter. The property

management firm and the actual ownership must be completely separate, which

is why there are two entities and a number of people involved in this process.

• This requirement is due to securities regulations.


Page 8

• Because of the high level of trust in the Club by the members, the process is very

well received.

• At the last meeting in Toronto, 120 persons attended and purchased more than

120 homes.

15. Lathigee then introduced Alan Andrus ("Andrus") as representing Mohawk, stating that

Andrus had extensive experience in real estate development. Lathigee explained that

Andrus was going to explain how the process actually works.

16. Andrus described the steps in the foreclosure process in the U.S. as follows:

* The homeowner gets behind in his mortgage payments.

• A Notice of Default ("NOD") to the homeowner is issued by the lender, which is

published in the newspaper.

• The property is sold at a foreclosure sale, or if no offers are made the lender

(financial institution) will sell them in bulk at reduced prices in order to write them

off their books, and minimize incurring further costs.

Andrus provided the following information about the bulk purchase system:

o Mohawk buys blocks of 400 to 500 foreclosed/distressed homes at a time

from the financial institutions.

o The homes are sight unseen, and typically are encumbered with tax liens

and other charges against the property.

o www.mohawkreo.com is the website for Mohawk.

o Mohawk is involved in the process of clearing the titres of the properties.

• For the investor the process is as follows:

o The investor buys a home from Mohawk.

o The investor receives a clear title on that home.


Page 9

o Mohawk takes the time to clear the title, and the investor receives that

title with a warranty.

o It is not a quit claim.

o Mohawk uses a management company, Pro Financial, who helps clear

the title. The property is inspected to determine whether it is sellable for a

profit.

o If an investor buys a home that is not sellable, Mohawk will exchange it.

o Pro Financial finds a buyer and occupant for the investor's home.

o Pro Financial will evaluate the neighbourhood and put up a sign on the

property indicating that it is for sale for $500 down and $400 a month.

o Pro Financial creates a mortgage between you and the new buyer with

100% financing. Pro Financial qualifies the buyers.

o The investor ultimately becomes "the bank".

17. Andrus then gave a PowerPoint presentation with time lines, and projected returns on

the $18,500 investment.

18. After finishing his presentation, Andrus re-introduced Lathigee, who provided the

following information regarding the mortgages in the form of Promissory Notes:

• The mortgages (Promissory Notes) are based on a 30-year amortization at 10%

interest.

• The Promissory Note becomes worth $45,000 based on the calculations of

monthly payments of $300.

• Once the Promissory Note is "seasoned", anywhere from 6 to 18 months, it is

offered for sale.

• Seasoned Promissory Notes are purchased typically at a fraction of the

calculated value.


Page 10

. There is an inherent risk in any investment.

Lathigee stated that some investors have found that the homes they purchased

were Listed on the MILS prior to foreclosure for less than the $18,500 they paid.

Lathigee explained that this is because the homes often have tax liens and other

charges placed against them which are not reflected on MILS and those charges

have to be removed.

. If the home is not sold within six months, Mohawk will exchange it.

. Lathigee stated that he would not engage in something of this magnitude unless

at the end of the day the system will work to a point where the majority of the

homes are resold and there is a market for the Promissory Notes.

• They are lobbying the U.S. Federal Housing Authority to buy the Promissory

Notes.

The investor pays $18,500 for an unspecified property, receives $300 per month,

and pays a 10% monthly property management fee which is deducted from the

$300 per month payments.

. As the owner of the home, the investor can either sell it himself, keep it, or have

Pro Financial sell it or maintain it on the investor's behalf.

• Other offerings of foreclosed properties are planned for the fall.

19. Lathigee then inquired of his staff and was told that so far at this meeting, 27 homes had

been purchased. He reiterated that 50 investors would receive homes immediately, and

any other investors wishing to purchase would go on a waiting list.

20. At that time, Lathigee instructed his assistants to hand out the following documents to

interested purchasers:

(a) Process and Wire Transfer Instructions. That document states in part:

Please read carefully, these are your step by step process and wire transfer

instructions for the purchase of your FIC foreclosure home(s) in The United

States.


Page 11

STEP 1. Complete BOTH:

- Bulk Foreclosure Purchasing Agreement and

- Client and Client Services Company Management

Agreement

STEP 2. Go to Sales TABLE to have BOTH of your Agreements

Signed

STEP 3. Arrange for TWO wire transfers using the Banking co-

ordinates below:

. Wire transfer #1 - amount: $1 7,500 USD (for EACH home

purchased)

FOR THE ACCOUNT OF: Escrow Specialists P.O. Box 3287, Ogden, Utah 84409 555 East 5300 South, Suite 3 Ogden, Utah 84405 (801) 627-6800 5330

South 900 East Suite 180 South Lake City, Utah 84117 (801) 538-0869. Other In-state areas 1-800-427-8698

BANK: Bank of Utah 2605 Washington Blvd. Ogden, UT, 84401 Phone: (801) 409-5165

Account Number: Redacted ABA Number: Redacted

Please reference: Mohawk Diversified LLC "Customer Name" Account Redac

• Wire transfer #2 - amount: $1,000 USD (for EACH home

Purchased)

TO: Pro Financial Services LLC 169 East Holly Brook Cove, Draper UT 84020 Phone 866-451-3381 Fax 801-203-3070

BANK: Washington Mutual 805 East Thunderbird RD Phoenix, AZ 85022


Page 12

Account number: Redacted

Routing number: Redacted

(b) Bulk Foreclosure Purchasing Agreement between Mohawk and the client,

which the client completes to indicate how many properties are to be purchased

at $17,500 USD each to be sent to Escrow Specialists.

(c) Client and Client Services Company Management Agreement between the

client and Pro Financial Services, LLC, listing the number of homes to be

purchased and the amount of $1,000 LJSD per home.

21. On the back of each of the above agreement documents are listed the services and

responsibilities of each party, limited liability of the manager, and the compensation of

the manager, and other rules related to the contract including terms and conditions.

22. The Bulk Foreclosure Purchasing Agreement provides the following terms:

. The consumer gives Mohawk Diversified, LLC $17,500 (held by an escrow agent

in Utah) in return for Mohawk's agreement to find a suitable property and

purchase it in Mohawk's name and then transfer clear title to that property to the

consumer.

. Mohawk warrants that the value of the property will be at least $45,000 however

this is not based on an appraisal but based on an online valuation. if the

consumer wants to have an appraisal, they must obtain it at their own cost.

• As soon as Mohawk notifies the escrow agent of the address of the property,

Mohawk receives the funds from the escrow agent. At a later date, Mohawk

transfers clear title of the identified property from Mohawk to the consumer.

. There is no definition of "property" in the agreement and there are no provisions

where the property is/will be located. However, the process and wire instructions

indicate that the property will be in the United States.

• Mohawk Diversifed, LLC is listed in the agreement with a contact address of

2637 North Washington Blvd., Suite 131, North Ogden, Utah 84414.


Page 13

23. The Client and Client Services Management Agreement provides the following terms:

. The consumer retains Pro Financial Services, LLC for $1 ,000 plus certain

commissions to act on the consumer's behalf to:

o facilitate the purchase of the closing and resale of the property purchased

from Mohawk Diversified, LLC by working with auction houses, title

companies, real estate agents, attorneys or other agents involved in the sale

of the property;

o facilitate selection of a buyer and the closing process with the buyer and

provide all appropriate documents for the consumer and subsequent buyer

for a commission of the greater of $1,000 or 3% for sale;

o engage local service providers to prepare the property for sale and display

signage;

o determine the local market rent and place marketing material for sale of the

property;

o qualify each potential subsequent buyer;

o manage the collection of mortgage payments due monthly to the consumer

providing receipts for payment to the borrower and monthly accounting to the

consumer for an additional 10% commission and collect late payment

charges which late fees are retained by Pro Financial Services, LLC;

a shop the note to multiple note buyers as well as lenders for potential

refinancing for a commission of the greater of $1,000 or 3% upon successful

sale or refinancing of the note;

a retain and manage local agents or attorneys to institute eviction if required;

a to transfer ownership from one consumer to another Pro Financial Services,

LLC client, the consumer will pay a fee of $125.

o No address or contact information is provided for Pro Financial Services,

LLC.


Page 14

24. During and after the presentation, the Investigator observed a number of people with

completed purchase and management contracts lining up at the front of the room to

submit them to persons at the desks in order to complete the agreements and purchase

homes.

25. The Mohawk website www.mohawkreo.com lists Mohawk's address as #131 - 2637

North Washington Boulevard, Ogden, Utah. This is the same address listed on the

website www.profinancialshop.com as the contact address for a company advertising

itself as Pro Financial (Professional Home Financing). This Pro Financial offers to find

affordable homes for prospective purchasers at the same prices as what rent payments

are and works with purchasers to make offers to the existing homeowners. The website

www.profinancialshop.com is registered under the name of The Marketing Guy, Owen

Wraxall, Upper 370 Ontario Street, Stratford, Ontario N5A 31-19.

26. There is no record of any real estate licence having been issued to either Mohawk

Diversified, LLC or Pro Financial Services, LLC or similar business names in Utah.

27. There is no company registered in Utah named Pro Financial Services, LLC. There is

one expired entry for Pro-Financial Service, Inc. There are also two entries for the entity

Pro Financial Services, Inc. One entry was registered to a

of Rancho Cucamonga, California, but that registration is now expired. The other Pro

Financial Services Inc. was registered on April 2, 2008. It is registered in good standing,

with an address of 169 East Holly Brook Cove, Draper, Utah, U.S.A. 84020. Its

registered agent is Hardway Enterprises. It is noted this is the same address as listed on

the Process and Wire Transfer Instructions for Pro Financial Services, LLC, although the

company name on the agreement is listed as Pro Financial Services, LI...C.

28. Hardway Enterprises is a registered entity in good standing in Utah. Its registered agent

is Michael Gordon Oborn with the same address as Pro Financial Services, Inc. on Holly

Brook Cove in Draper, Utah.

29. There is a Utah registered company called Escrow Specialists, Inc. which is in good

standing with its registered agent being J. Dennis Simpson at Suite 3, 555 East 5300

South, Ogden, Utah. This is the same address as indicated on the Process and Wire

Transfer Instructions for the escrow company.


Page 15

30. The website www.mohawkreo.com provides a number of documents, brochures, and a

section called "Frequently Asked Questions". The documents relate to the process

surrounding the purchase of bulk foreclosed properties, and are substantially the same

as those handed out during the Vancouver presentation.

31. There is no business registration in British Columbia for Mohawk Diversified, or Pro

Financial.

32. Some entities listed on the FIC Website as being part of the FIC Investment Club Group

of Companies with Lathigee as Chairman and CEO are: FIC Canada Ltd., FIG USA Ltd.,

F1C SE Asia Ltd, and WBIC Canada Ltd (aka: FIG RRSP). None of these, except WBIC

Canada Ltd., are registered to do business in British Columbia.

33. WBIC Canada Ltd. is registered to do business in British Columbia as an extraprovincial

company with its directors and officers being Lathigee and Earle Pasquill ("Pasquill")

WBIC Canada Ltd. was incorporated on June 27, 2003 under the Canada Business

Corporations Act.

34. A search of registry records did find that Lathigee and Pasquill are also registered as the

only directors and officers for the following companies registered to do business in

British Columbia: FIC Investment Ltd, FIC Foreclosure Fund Ltd. and FIC Real Estate

Fund Ltd., and are all incorporated in the Province of British Columbia with Lathigee and

Pasquill as its only directors and officers. Both Lathigee and Pasquill are listed with

British Columbia residences.

35. As noted above, FIC Investment Ltd. is the entity which owns the registration for the FIG

Website www.ficinvestors.com .

36. There is no licensing by the British Columbia Real Estate Council of Mohawk, Escrow

Specialists, Pro Financial, Lathigee, Andrus , Hardway Enterprises, Michael Oborn, Rob

Oborn or any FIG entity.

37. The address of 4131 —2637 North Washington Boulevard, Ogden, Utah, U.S.A. 84414,

and fax number 801 217-0285 is not only connected to Mohawk but is also connected to

the following entities:


Page 16

• A website entitled www.goinvestwisely.com which has similar contact and real

estate sales information as found on the www.mohawkreo.com website as it uses

almost identical bulk purchase and property management agreements.

• A website entitled www.profinancialshop.com for a company called

"Pro Financial" with the same address in Ogden, Utah.

• A website entitled www.iunkhomemillions.com related to

www.goinvestwisely.com .

• A website entitled www.botaqsintensiven.se which is a mirror site for

www.mohawkreo.com which is in the Swedish and Norwegian languages.

• A website entitled www.eliteinvestorsclub.com which offers investment

opportunities.

• A website entitled www.hesscapital.com which specializes in high risk, non

traditional corporate financing.

38. Pro Financial Services, LLC is a company registered in Nevada with -l-

as its managing member. He also is the sole officer and director of Pro Financial

Services, Inc. registered in Nevada. He is also the person listed in Utah under the

expired company name Pro Financial Services, Inc. in Utah. On August 13, 2008, the

Investigator called of Rancho Cucamonga, California, to enquire whether there

was any relationship between his companies and Mohawk or the Pro Financial Services

operating in Utah.

39. AIIIIII& stated to the Investigator that he is a real estate agent and a mortgage broker

in California and he has had Pro Financial Services, [[C registered as a company in the

State of Nevada for many years. He does not know Mohawk, nor does he currently do

business in Utah as Pro Financial Services LLC, or Pro Financial Services, Inc.

was concerned about any connection that may be advertised using his

com pa ny.QqjWW stated he is not associated to www.mohawkreo.com ,

www.profinancialshop.com , Lathigee, or Andrus.

40. On August 15, 2008, the Investigator received a telephone call from . , who

advised the following:


Page 17

• He had made enquiries on his own and determined the company Pro Financial

Services, LLC operating out of Utah, was doing business under the name Pro

Financial Services, LLC without his permission since he believes the name is

confusing and there is no LLC registered in Utah.

• He says he owns the rights to the company name Pro Financial Services, LLC.

• He had contacted Pro Financial Services operating in Utah and advised a person

by the name of Mike Yosher (Yosher") that he owns the rights to Pro Financial

Services, LLC. Yosher then asked _r - whether something could be worked

out.

41. Approximately five minutes later on the same date, the Investigator received a telephone

call from a male who identified himself as Rob Oborn, the brother of the owner of Pro

Financial Services, Inc. (doing business as Pro Financial Services, LLC) in Utah. The

owner was identified by Rob Oborn as Mike Oborn. Rob Oborn advised that:

• He works with Mohawk in finding buyers and fielding calls for buyers of

foreclosed homes.

. His office recently moved from the Draper, Utah address to the North

Washington Boulevard address and has since moved to an address in South

Jordan, Utah.

• His company is not a licensed property management company anywhere in the

United States or Canada, and their assistance to Mohawk is typically examining

the foreclosed properties for saleability. 1

. He is aware of a connection to Mohawk by Lathigee and Andrus.

• His contact at Mohawk is Mike Yosher at telephone number 801-879-3760.

42. Rob Oborn was advised that providing property management services requires a licence

in British Columbia.


Page 18

43. Approximately five minutes after the call from Rob Oborn, the Investigator received a call

from a male who identified himself as Mike Yosher, Client Services Manager for

Mohawk. Yosher advised that:

. Mohawk is a registered company in the State of Nevada and the owner of the

company is Gerald Abrams.

. He had not been in Vancouver for the presentation on August 6, 2008.

• He confirmed that Mohawk is not licensed to provide real estate trading services

in British Columbia.

• Yosher declined to provide information related to the volume of purchases of

foreclosed properties when asked.

44. Mohawk Diversified, LLC is registered as a Nevada limited liability company. it is not

registered to do business in Utah. Its managing member is Gerald Abrams whose

address is 9500 West Sahara Avenue, Las Vegas, Nevada 89117.

45. There appears to have been a prior offering by the Freedom investment Club and

Mohawk and Pro Financial of Mohawk real estate services and Pro Financial services in

Vancouver regarding foreclosed real estate in the US.A. in June 2008.

46. During the presentation in Vancouver on August 6, 2008, Lathigee told the audience that

there was no need to rush on the foreclosure opportunity as there would be other club

meetings in September and November, and specifically advertised that another meeting

was planned for October related to real estate.

The Freedom Investment Club Group of Companies, FIC Investment Ltd., WBIC Canada Ltd. and Michael Lathigee and Earle Pasquill

47. I find that the Freedom Investment Club Group of Companies through its lnvestfest

events, FIC Investments Ltd. through its website, and Michael Lathigee as the

representative of the Freedom Investment Club Group of Companies and FIG

Investment Ltd. are engaged in soliciting for the provision of trading services by Mohawk

Diversified, LLC for a fee, or are otherwise engaged in providing trading services since

they find buyers for Mohawk Diversified, LLC real estate for a fee, and do so in the


Page 19

Province of British Columbia, contrary to Section 3(1) of the Real Estate Services Act

('Act').

48. I find that WBIC Canada Ltd. and Michael Lathigee and Earle Pasquill conduct trading

services in British Columbia by receiving deposit money paid in respect of a trade in real

estate on behalf of British Columbia residents and/or Mohawk Diversified, LLC, for a fee

directly to WBIC Canada Ltd., or indirectly to WBIC Canada Ltd. through a related entity

within the Freedom Investment Club Group of Companies, with Michael Lathigee and

Earle Pasquill as WBIC's controlling minds, contrary to Section 3(1) of the Act.

Mohawk Diversified, LLC and Alan Andrus

49. I find that Mohawk Diversified, LLC and Alan Andrus as its representative are engaged

in trading services in British Columbia by offering in British Columbia to find property for

British Columbia residents to purchase, and taking deposits on real estate, for a fee, and

entering into such agreements in British Columbia, contrary to Section 3(1) of the Act.

Pro Financial Services, Inc. (Utah) dba Pro Financial Services, LLC (Utah)

50 I find that Pro Financial Inc. of Utah is doing business as Pro Financial, LLC in British

Columbia and is engaged in real estate services in British Columbia since it solicits for,

advertises, and enters into agreements in British Columbia to provide property

management and trading services to British Columbia residents, contrary to Section 3(1)

of the Act.

Orders

51. Section 49 of the Act provides in part:

49(1) This section applies if, after a hearing under section 48 (2) [superintendent hearings], the superintendent determines that the person subject to the hearing did not hold a licence under this Act at a time when the person engaged in any activity for which such a licence was required.

(2) The superintendent may, by order, do one or more of the following with respect to a person referred to in subsection (1):

(a) require the person to cease the activity;


Page 20

52. Section 51(l) of the Act provides:

51(1) The superintendent may act under this section if the superintendent considers that

(a) there has been conduct in respect of which the superintendent could make an order under section 49 [orders respecting unlicensed activity] or 50 [orders against licensees in the public interest], and

(b) the length of time that would be required to complete an investigation or hold a hearing, or both, in order to make such an order would be detrimental to the public interest.

53. Neither the Freedom Investment Club Group of Companies, FIC Investment Ltd., WBIC

Canada Ltd., Michael Lathigee, Earle PasquiH, Mohawk Diversified, LLC, Alan Andrus,

nor Pro Financial Services, Inc. (Utah) dba Pro Financial Services, LLC are licensed to

provide real estate services in British Columbia.

54. I find that, by engaging in the above noted activities, the Freedom Investment Club

Group of Companies, FIC Investment Ltd., WBIC Canada Ltd., Michael Lathigee, Earle

Pasquill, Mohawk Diversified, LLC, Alan Andrus, and Pro Financial Services, Inc. (Utah)

dba Pro Financial Services, LLC are actively engaged in providing real estate services to

or on behalf of others for or in expectation of remuneration in British Columbia in

contravention of the Act.

55. Neither the Freedom Investment Club Group of Companies, FIC Investment Ltd., WBIC

Canada Ltd., Michael Lathigee, Earle Pasquill, Mohawk Diversified, LLC, Alan Andrus,

nor Pro Financial Services, Inc. (Utah) dba Pro Financial Services are exempted from

the requirement to be licensed by subsection 3(3) of the Act, nor are they exempted from

the requirement to be licensed by the Regulation.

56. I agree with staff that a hearing would require approximately seven witnesses and would

take approximately five days to complete, and could not be held for at least five months

due to scheduling of parties, witnesses, counsel and the hearing officer.

57. I find that the length of time that would be required to hold a hearing would be

detrimental to the due administration of the Act given that it would likely result in further

non-compliance with the Act, especially given the fact that future offerings have been

announced to take place this fall. Continued non-compliance would harm the reputation


Page 21

of the British Columbia real estate industry and would be detrimental to the public

interest since the public would be dealing with unlicensed real estate service providers.

I THEREFORE CONSIDER that the Freedom Investment Club Group of Companies, FIC

Investment Ltd., WBIC Canada Ltd., Michael Lathigee, Earle Pasquill, Mohawk Diversified, LLC,

Alan Andrus, and Pro Financial Services, Inc. (Utah) dba Pro Financial Services, [[C (Utah) are

conducting themselves in a manner that would enable me to make an order under section 49 of

the Act.

I THEREFORE ORDER pursuant to sections 51(2) (a) and 49(2) (a) of the Act that the Freedom

Investment Club Group of Companies, FIC Investment Ltd., WBIC Canada Ltd., Michael

Lathigee, Earle Pasquill, Mohawk Diversified, LLC, Alan Andrus, and Pro Financial Services,

Inc. (Utah) dba Pro Financial Services, LLC (Utah):

Cease and desist conducting, directly or indirectly, unauthorized real estate services,

including trading services and property management services, in British Columbia,

effective immediately.

TAKE NOTICE that the Freedom Investment Club Group of Companies, FIC Investment Ltd.,

WBIC Canada Ltd., Michael Lathigee, Earle Pasquill, Mohawk Diversified, LLC, Alan Andrus,

and Pro Financial Services, Inc. (Utah) dba Pro Financial Services, LLC (Utah) may appeal this

Order to the Financial Services Tribunal under section 54(1)(e) of the Act, or require a hearing

before the Superintendent under sections 51(3) and 45(6) of the Act.

Dated at the City of Surrey, Province of British Columbia This 27 1h day of August, 2008.

W. Alan Clark Superintendent of Real Estate Province of British Columbia


Page 22

TO: Freedom Investment Club Group of Companies

Suite 990, Box 12091 555 West Hastings Street Vancouver, BC V6B 4N5

FIC Investment Ltd. do Paul Weir Law Corporation 2 nd Floor 147 West 16th Street North Vancouver, BC V7M 1T3

WBIC Canada Ltd. c/a Paul C. Weir Law Corporation 2nd Floor 147 West 16th Street North Vancouver, BC V7M 1T3

Michael Lathigee

1200 and L

Earle Pasquill db

VNWWM~ Mohawk Diversified, LLC 9500 West Sahara Avenue, Las Vegas,Nevada USA 89117

Alan Andrus I -- CA USA 95762

Pro Financial Services, Inc. 169 East Holly Brook Cove, Draper, Utah, USA 84020

Real Estate Council of British Columbia #900 - 750 West Pender Street Vancouver, British Columbia V6C 2T8


EXHIBIT E


Official Statement From Go Invest Wisely, LLC and Pro Financial Services Regarding The 2008 Mohawk Diversified Tour

August 7, 2009

Dear Valued Client:

Early in 2008 John Hyland (“Hyland”) contacted Tyrell Gray and Brad Hess the owners of Go Invest Wisely, LLC (“GIW”) as he was interested in purchasing several homes for his Clients. At that time, he represented himself as the owner of Mohawk Diversified, LLC (“Mohawk”). Over the next few weeks Hyland purchased several homes from GIW and chose to have these properties managed by a management company out of Gilbert, Arizona called BP Property Management (“BP”).

At that time GIW and its owners had purchased approximately 200 homes and were using BP to manage their properties as well. GIW’s goal with the homes it owned was to prepare those homes to sale to third-parties under a land installment sales contract and then to sell the cash flowing property to different third-party interested in owning such a property. As demand for additional home purchases increased and as Hyland demanded more and more properties for his clients, GIW’s role changed somewhat to a wholesale company whereby it simply provided properties to Hyland and Mohawk.

As time passed, it became apparent that BP was unable to properly manage GIW’s or Hyland’s client’s properties. As a result, GIW started working with Pro Financial Services, Inc (“Pro”), a joint venture between the principals of GIW and Rob and Mike Oborn who were to be the managers and operators of the new property management company. Pro was started in the summer of 2008 and the management team showed great promise. Additionally, the company was conveniently located within less than an hour’s drive from GIW’s office which made accountability and follow-up that much easier.

Hyland’s Sales Approach

Hyland generated a lot of demand to purchase properties from GIW from his ability to get in front of large groups of individuals interested in real estate opportunities. Hyland worked with several individuals and/or groups who organized events to which individuals interested in real estate opportunities were invited to attend. These individuals and groups included Harv T Eker, Sunil Tulsiani of Toronto and Mike Lathigee (FIC) of British Columbia. During these events, Hyland and other speakers he employed, including Tyrell Gray, Allan Andrus, Jimmy Slagel, and several others, provided presentations on real estate trends, methods, and business models, including GIW’s business model which was to prepare homes for sale under a land contract to create a cash flowing property. At the end of the presentation, attendees were given the opportunity to purchase homes from Mohawk and Hyland, so they could implement the GIW process on their own. Each home that an attendee wanted to purchase (each purchasing attendee being a “Buyer”), Mohawk would purchase from GIW and other wholesalers and then engage Pro to manage the properties if the purchaser chose not to manage the property themselves and not to use the services of a different property management company.

Deeds and property status


In anticipation of the events scheduled by Hyland/Mohawk in 2008, GIW started purchasing many homes to prepare for the demand that would be generated by these events. These homes GIW purchased were all done so, sight unseen and by way of a quit claim deed. Each property that Mohawk purchased from GIW and then resold to a Buyer was to be deeded into Mohawk’s name and then to the Buyer, however, this was not done initially. Mohawk would not allow GIW to deed the properties into Mohawk’s name for fear of the tax, insurance, and code/city liabilities it might incur. Since the real estate purchase contract signed by a Buyer was between Mohawk and the Buyer, and Mohawk received the purchase money from the Buyer. GIW did not have the ability to deed the properties directly into the Buyer’s name, but was reliant on Mohawk to accept the properties into its name and then convey title to the properties to the Buyers. It wasn’t until after a meeting in California between GIW and Mohawk’s attorney that Mohawk agreed to cooperate with having deeds transferred into its name. Accordingly, after that meeting GIW began deeding properties into Mohawk’s name which were in turn transferred into the Buyer’s name. Despite Mohawk’s agreement to accept the deed into its name, to date, it still takes Mohawk and its true owner, Gerry Abrams, an unnecessarily long time to move the deeding process along – sometimes taking a month or more to complete this simple deed transfer process.

As discussed above, when Buyer purchases a property from Mohawk a specific property is identified and assigned to a particular Buyer, however the deed to the specific property is not immediately assigned in the Buyer’s name. There are two reasons for this. 1. First, occasionally costly improvements and certain encumbrances prevent a property from

being sold under a land contract. Since the ultimate goal of most Buyer’s is to receive an occupied property that can produce monthly cash flow, if it becomes apparent that the assigned property cannot be immediately sold, instead having to go through the cumbersome and tedious process of re-deeding the property to Mohawk, the property can merely be exchanged for another property that is more likely to be saleable (this process is known as an “Exchange”).

2. Second, given the uncertainty of whether a property will be Exchanged (for any of the reasons mentioned above), GIW did not think it would be fair to Buyers to deed a property and pass all of the related liabilities (code violations, taxes, theft, vandalism) of the property to the Buyer without the assurance that the property had an occupant placed in the home creating cash flow.

As a result, the management team of GIW decided to retain the property and maintain the liability, taxes, code violations, etc. related to the property until it has been made cash flowing by Pro. Once the property has an Occupant located in the property, the deed work is started, the taxes are paid and the property is deeded to Mohawk and then to the Client/Buyer.

If at anytime the Buyer/Client wants the property deeded directly to them GIW will without hesitation deed the property to the Buyer/Client. GIW is in no way holding these properties as an asset; these properties represent an enormous liability and GIW only retains them in an effort to help the Buyer/Client get an asset rather then a liability.

This decision has also allowed GIW to liquidate properties that are found to be un-sellable by Pro without the extra deeding process and lag time between sell and deeding. Once the property has been liquidated GIW then has been able to buy replacement properties that do meet the criteria needed to deed the property to the Client/Buyer by way of Mohawk.


GIW and Pro are fighting two fronts:

1. Market each home and try to sell it to a local occupant by way of land contract.

2. Liquidate properties that are determined to be un-sellable by way of land contract and purchase replacement properties post inspection that are quality sell-able homes.

Property Management

During the fall of 2008 Pro was struggling to keep up with the demand placed on them from Mohawk. Due to Pro managing other GIW properties, GIW clients where also being affected; therefore GIW started to help Pro and the Oborn’s by lending manpower, technology, and funds. After having Todd Eaton the VP of operations for GIW spend nearly the entire month of November in the offices of Pro, GIW determined they needed a list of improvements. The management team at GIW presented these findings to the management of Pro and unfortunately they were meet with resistance at every turn. The battle continued until January 29

th 2009 when Brad Hess and Tyrell Gray successfully took over the complete ownership of

Pro.

When the take over was completed Pro had 5 full time employees, 4 part time employees and one independent contractor that did their books. All of these employees quit when the decision was made to move the Pro office into the GIW building. As of August 3, 2009 Pro has 27 full time employees and 4 part time employees, not to mention the 11 GIW employees that cross over on many activities. We feel we have come a long way, we understand we still have a long way to go, and we thank all of our Clients that are helping us get through this difficult time.

Status and updates

When Pro was moved into the GIW building in February 2009 of the 1,267 properties being managed by Pro there were 112 that had an occupant in the property. This meant at that time 9% of the properties had been completed. To date August 7, 2009 there are 557 properties with land contracts which represents 44% of the total properties and a 35% increase in six months. This 44% has come down slightly in the last month or so due to the clean up work that has been completed by the quality control in the land contract sales department.

Pro currently has T.V., radio, hundreds of internet ads posted per week, newspaper, and thousands of print ads all over the markets were the homes are located.

Between customer service calls and sales calls Pro fields between 600 to 750 inbound calls per day; outbound calls are also within the same range. Pro understands there is a long way to go to complete the task ahead of them; however they are dedicated to completing this and are here for the long haul.

Summary of Mohawk Events:

Harv T Eker events:


Mohawk sold 53 properties where Escrow Specialists received and distributed funds. Mohawk sold 70 properties where the funds where forwarded directly to Mohawk. Mohawk has collected funds on 12 Clients where GIW has never been given any information; therefore a property has never been assigned to the Client.

Mohawk has reported to GIW they sold a total of 135 properties during the Harv T Eker events. Mohawk has shorted GIW $243,050 thousand dollars for Harv T Eker Client sales. GIW is currently pursuing legal action to recover these funds. Other promoters such as Freedom Investment Club (FIC) where also shorted their compensation for the Harv T events and are also pursuing legal action for these funds.

Sunil events:

Mohawk Sold 149 properties and for the most part all payments where collected by Escrow Specialists, and for the most part funds where allocated correctly.

FIC events:

Mohawk sold 995 properties during FIC events and for the most part all funds where collected by Escrow Specialists. For the first 714 or so properties GIW received its compensation for the purchase of the properties directly from Escrow Specialists. The difference between the acquisition price forwarded to GIW and the retail purchase price was forwarded directly to Mohawk from Escrow Specialists. From these funds that where forwarded to Mohawk FIC was to be paid $3,500 and from this $3,500 there was to be $1,000 set aside for a contingency fund to protect the FIC clients and allow Mohawk by way of GIW to purchase additional properties in case the number of bad properties ended up being higher than anticipated.

The remaining 200 plus properties where paid out from Escrow Specialists a little differently. $2,500 was forwarded directly to FIC, $1,250 was forwarded to Mohawk and the balance was forwarded to GIW for property acquisitions and contingency property purchases.

Mohawk has shorted FIC, and in return the contingency fund, roughly an additional $1,000,000 million dollars. FIC and GIW independently are seeking legal action to recover these funds from Mohawk.

Contingency fund summary:

The Management of GIW insisted on keeping profits set aside, or the creation of a contingency fund, where funds could be earmarked to purchase additional properties in case the number of bad properties ended up being higher then anticipated. From each property purchased there was to be $1,000 set aside to purchase additional properties to draw from in the event the number of bad properties where too high.

GIW was partially paid on 123 Harv T property sales. Therefore there should have been $123,000 set aside for the contingency fund. For the Sunil events there should have been $149,000 set aside for the contingency fund. For the second tour of FIC events there should have been roughly $248,000 set aside for the contingency fund. These totals add up to a total of $520,000 that should have been set aside for additional property purchases.


GIW however purchased an additional 650 properties 341 of which to date they still have not received the deeds on, and therefore can not market the home for sell by way of land contract until the deed comes in. These property purchases represent over $4,000,000 GIW invested in properties to make sure there was enough properties to fulfill Mohawk clients. This represents a far greater number of property purchases than what was asked of them for the contingency.

Two things have happened:

1. A much higher number of bad properties where purchased, please remember the properties where purchased sight unseen and the odds where being played. This has hindered the efforts of Pro in acquiring land contracts.

2. When purchasing these properties in bulk the buyer must wait for the seller to provide the deed. Many deeds did not come in for months longer than ever anticipated. All the while these properties sat and deteriorated due to neglect and vandalism.

The contingency funds for the second tour of FIC have not been distributed to GIW. The contingency funds for for these events are currently being held by FIC and Mohawk. FIC holds $360,000 that has been earmarked for contingency funds and Mohawk holds another estimated $350,000+ that should be used for the contingency properties.

To date Mohawk and the other promoter’s have contributed nothing towards the contingency fund for replacement properties. GIW has been unable to purchase as many homes as they would have liked to replace properties for Mohawk Clients. Therefore GIW is left to liquidate the bad properties to create capital in order to purchase replacement properties.

When GIW purchases replacement properties it does so “post” inspection and only in markets that have shown a high level of land contract sales in the past.

GIW and Pro continue to work each and every day to provide a quality product to their Clients. We ask each of our Clients to come and visit our facility, see that there are people on the other side of the phones and emails working diligently each day on your behalf. We have implemented many great working systems and marketing efforts to secure quality land contracts. We welcome your constructive input and look forward to a long and synergistic relationship.

Sincerely,

Brad Hess

Tyrell Gray //}


EXHIBIT F


From: Peak Potentials Training [mailto:[email protected]] Sent: Tuesday, September 02, 2008 7:30 PM To: [email protected] Subject: Update Regarding Mohawk Diversified

Important Message From Customer Care:

UPDATE RE MOHAWK DIVERSIFIED

As you know, the real estate market in the United States is facing many challenges but also offers many opportunities.

At the recent Never Work Again, Mohawk Diversified shared their strategy for profiting from the foreclosure crisis and we wanted to provide you with some important updates about this offer and some real estate investing guidelines to consider.

For the foreseeable future, real estate opportunities in the United States, especially relating to foreclosures, will be very fluid and volatile. In addition to the traditional mantra of “location, location, location,” you should keep repeating “information, information, information.”

So, as you evaluate purchasing foreclosure properties from Mohawk, please keep in mind some additional information that we have learned: Not all the properties seem to have come directly from “banks. ” Some of these properties were available from other sources, such as the MLS, before Mohawk acquired them. Some seem to have been available at a lower “gross” price, however, according to Mohawk, the difference is due to getting “clean and clear” title and a home that is in “livable” condition. Mohawk also states that its “program” offers a “guarantee” that should your home not be sellable, they will replace it with one that is. As always, you need to determine whether the purchase price from Mohawk makes sense today given the prior pricing of these properties. Mohawk can advise you of any liens, debts or other expenses that were due on the property that increased its cost of acquisition.

• Some of these houses will be easily matched with tenant/buyers, others may not and there is no absolute time table to guarantee when you can expect cash flow from a property.

• The market for “notes” from tenant/buyers is relative y untested and the future cannot be predicted with any certainty. Mohawk appears to be confident the notes can be sold.

• Whether a buyer/tenant will be able or willing to maintain the property to your standards is not guaranteed and it is possible you may incur expenses for maintenance and repairs. You own this home .

• As you might expect, it is impossible to guess how and exactly when the local markets where these properties are located will rebound and values will increase .

• You might want to ask Mohawk for information about other investors who have used this program. Speak to these referrals to learn about their experiences.

• Become an expert on “values” in the market place so that you have a real understanding about how the


purchase price stacks up against market value and how much “equity” you are gaining. This is important given that Mohawk uses a popular web based appraisal system that may or may not be perfectly accurate in today’s ever-changing marketplace .

• Finally, always talk to your advisers – lawyer, accountant, financial planner. Ask for their advice and be certain that this type of investment fits in your personal financial plan and portfolio .

• If you need further information, go directly to the source and speak to the people at Mohawk . Be sure that all of your questions are answered.

At Peak Potentials, we always strive to bring you quality information at our events; be it with our own teachings or by inviting guest speakers and trainers. Students tell us that over the past 18 years we’ve been doing a tremendous job in bringing the best of the best (close to 200 different trainers) to our stage. We hope you agree.

It is important, however, to be clear that Peak Potentials has no affiliation with any of our guest speakers’ private businesses and how they handle their own programs or the administration of those programs. If a student chooses to participate in a guest trainer’s additional offerings they should do so in the same way as we recommend they purchase anything else, by doing their own research and due diligence.

Also , please note that Peak Potentials and T. Harv Eker do not formally endorse any guest speaker or other company at our events. We simply provide a “forum” for learning.

We urge you to always do your own research, ask questions, be proactive in your due diligence and then make appropriate adult decisions about participating in a program like Mohawk or any other . Should we receive any further updates on this investment we will forward them to you.

To reach Mohawk Diversified email [email protected] or call (434) 534-9213.

As always, it is our honor to serve you and we wish the best of success in all your endeavors.

Keith Jackson,

COO, Peak Potentials Training


EXHIBIT G

Case 2:10-cv-01060-DS Document 113 Filed 04/16/12 of 80 r— I

L tif, ,_

BULK FORECLOSURE PURCHASING

/TH15

AGREEMENT AEMEtifl (hereaflsr Agrearnenr) is rnride between MOHAWK DIVERSIFIED, LLC, thereetter HAWK") and

'rJ4J/, L72, (hereafter "CLIENT) HAWK and Client are referred Collectively herein as he Parlies

RECITALS

A. WHEREAS HAWK ties established extensive relationships will -i wholesale foreclosure buyers. these buyers are willing to include HAWK in their bulk properly purchasing

S. WHEREAS HAWK has helped create a system where the said properties can be liquidated relatively quickly lot a profit

C. WHEREAS, Client wishes to be given the opportunity to participate along With F-lAWN in their . opportunity to purtliase foreclosures at a discount

D. WHEREAS, Client desires 10 purchase a property from HAWK which property shall later be identIfied and approved of by HAWK arid Client

NOW THEREFORE, in consideration of the mutual covenants and promises contained herein and for other good and valuable consideration, tire receipt and sufficiency of which we hereby acknowledged the Parties hereby agree as lonorvis

TERM OF CONTRACT. This Agreement will tsecoirie effective when executed by haiti party

SERVICES AND RESPONSIBILITIES

HAWK

I, HAWK will complete the contracted services for a fee at _ 1 V00/ 00 0 '... This lure will cover the purchase price of the property from HAWK to Client snd'tlre services outlined in this Agreement

(I. HAWK shell provide Client with ownership to a properly with a clear and marlcobable kite. transferred with a Warrantee Deed The property will be purchased by HAWK front a wholesale foreclosure and HAWK will have little infoinralion regarding the properly HAWK shall only hold title (or a short period of litre, will not reside in the property itself, and will therefore have little information upon which a Client may rely

Ill. The properly provided to Client will be valued no less then (oily live thousand (45,000}, said property value will be determined by online evaluations of property values Once the property is identified by HAWK Client will have the opportunity to obtain an appralsal at its own coot if desired

lv. HAWK will exchange said properly treat Client with a new property it the said properly is found to be un-saleable by the piocesa developed by HAWK research crew of HAWK, cr a contracted company irs perform 11115 inspection service d(.

V. HAWK Shall provide Client with the coinpany)s), fools and information needed 10 help Client Irriviritila said properly

HAWK conuiects with a Client Services Company 10 complete the lolluveurg services and hoe developed a syslcrrr for iilanaging wholesale loreclosure propeiliox Client Shell enter into standard convect with Client Services Company 01 it may opt to renter into a contract with on alternative Client Services Company of Clierils choice but it Client chooses a company 01 its choice then Client shell be responsible Ion those properly nisiinigsmiunl costs and will not receive a drecuiiifl or reduclion in fees urirttl this Agreement The hollowing services are pall of the Fee paid to HAWN which will be provided by the said Client Services Cornpnrriy

a. Delermirre the local irlPrkel rent arid place riiarlcellrig materiel for sale of properly ti Keep property in compliance with local laws and ordinances c. Listing properly for potential quick sale ri Acquire Title Company and provide all closing documents 10 laCitilusle close with potential

buyei e, Maintain records for optimal sale of the rote r. Quality each potential buyer g. Shop the vote to multiple Role buyers

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TIM-i 10 C),c( 1- V Foe, , I?& Coil?r(// &aiV , AGREEMENT.1

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vi. HAWK has negotiated with Client Services Company tIre following services and assooaierf lees These lees only need to be paid out of potential profilt , and are not pert of lIre Fee paid to HAWK and are more hilly described in the Client Services separate contract will Client

I. Mortgage Payment Managerilent Fee. S12 00 par monthly Payment received These payments will be collected per month and dropertied to tIre appropriate parties each rrrocrlh

2. Sale of Note 3% of sale price, Mm $1,000 3. Property Insurance will be the responsibIlity of the Client once the properly is issued Client

Services Company has made contacts to assist Client with the needed Insurance The cost of the insurance can be deferred to the properly Occupant once the Occupant has been contracted

4. Properly Taxes will be the resporrsiblttty of the Client once the property is issued Client Services Company will manage the payments and notices in behalf of the Client The cost of the Properly faces can be deterred to the property Occupant once the Occupant t'ias been contracted.

vii,

it buyer should default. HAWK has negotiated with Client Services Cca'ripsny a $60000 DelaetlIJviction tee which lee shall be paid by Client separately from The terms and tees contained vi this Agreement

vhf.

HAWK shall make Its staff, employees, and resources available during reasonable hours to the Client for assistance in liquidating said property

IX . HAWK shall use its best efforts to assist Client in completing and pr'oting from the liquidating of said property

b. Client

I, Client sh011 provide funding to HAWK for the purchasing of properties and services outlined in this Agrexerent in the amount of the agreed upon Fee pal property

CONTRACTUAL RELATIONSHIP

a. Independent Relationship. Than is a irvctiiat conlrsclust besifl500 meish005iiip where Cacti parry is an airtepeedeul Patty And will be working together IC purchase twscloaqd properties at it bIrth pricing 11tcetiiil. HAWK "A pisaiisatl the truth foreclosure properties humerI Oil the decreed genrersteit train clients who ester site these Agreesreeta. Clients will have the option of appruririris at their properly tori rihcsld Cheat not entity t'tAWiI within three bicsimreos days (5) of its disapproval or the pieperty allocated to Client than such silence shall conslrtute aeseprance of the allocated properly , HAWK Shell ivility Client of its alloosleit property and Chieril sImsIl give its approval or lesepploval rots the nraalrs at carcimcuticoiroit in wInch Ike parlies cave 50511 Clostmnnio oonmmncirrrxatiorls scroll as entail niariclard trial neil other nretiiocis of eammuntcelloii umnirrirrerety used belweeui ihe parties or ilrelr rlositirigs OrioN be setticlrrl esllce under this paragraph viii the parties cilnirO not be eeqrried In tallow Silcirsil SI for rieliceS riinrler this moiagrspti. Chcirit irroy request rortditionol Irne Is ucppiove at As pieperry within renoir 121 buroinecis cloys far icigilinrnrnie piirpmes which Client irvcui cvirunrrimrccrmho to I IAWI< onset which HAWK vb5li jim imnueumeonatily daily

b. Pnderal, Stale and LecCI Taxes, Heulhiur Foetniisr nor Irvin lint IoLni Inc rita hlciyiiiil Ito it any html eriCH be wrrshumtil ire maUl hy HAWK on unroll 51 Clear

ci. Notice a! Too sicilIan and Ltabl lIlIes, Both parties usiteintoirri ihel each pirliy is resperisihln Is pay, aooutdsrtt in low Weim pectyn law renannitnli1tes Nomlmrer Sony will tin caspeirsible Ire any Federal. ritora or ioeul lAxes niwod try lire r,tlliei party

il Intionnatry. Ctivrin agrees is tericnrnnity and held HAWK liorirmiesi Ilom all Callus dom suds. tosses costs. eapsir505 olmiigontoiru ilmibtiltiss, domnages. Isciccuorioc, soil rteIieIitnon ttmciudiog irnietusi, penalties, ovals, and altsleeys' leisti (hat HAWK may icicle aIrship liver or 0111 of willful. or ireHliOennl irsyooiiihiucr of Cilsirl while providing services or noting limier Iltis Ac,treourreni

TFIII TERMS OF THIS SECTION SIll SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT.

TERMINATION OF AGREEMENT

cm. Ternileatlsa. Ghoul iCily icnirrorate tillS Aymoninletri rrrturr no hoC nuttids hdlrl5 ri5d Is plilcitibacO C ivoprt i ly I IAWIS Will icons ii IC'S, autritiiirrsirariec) fee upon iviricini metrOS to isnivit core Pitridd will be retuuerivml iv Gttttnmi wrrhme hO hriinmncmva etoys I liii Item hnn cmliii estelinue lv mmvi Willi each 011mw in peed ilirirll

WARRANTIES

a. Camrltdoatlstliy. In The psrinrmanrce oldie CCIV ICO cerltOulipimlieul by lOtS Abmotrinrouri, Cl 05111 e9101t5 In herd in 511101 cern titsncb At itsicdtdOcillol of pnapciocomy tnntetrri5iucce Ihiri iii Ociciivcis rlttcIhnl5 Is I iFiWK'n lsiSiuiuioe and CIiL'lil will 1101 llhCiilltC III ellrehwieo cmmiittntiinntcuiini each Itrrsmmntron is n snort potty soilnosil HAWK's pise sleillerl cement ClelitIdelihimIl of 11191nitgary rrtaimrirrliecr sliccit hriitliic.ls all i0irriciilthcefl ohilatimod by Creel heei HAWK and Which rololoti Is I lAWIC'S punt iresuirl, or tiiliird busyness achivlIiOti, vmlurItimg client luOla. lethmrriin)rty and riporerroiral pieccnssoo veil ciitcnrliolo eoCOill tie previously OtctslnGd or yeiulinhy hiioni icovit ImrteiIuisliysr ClIniC ekrmirwh.'cl5es that lsoatmli at this Ssr.Imeul Elel inn out cruIse HAk°,niil to nImttel uiletilmrtililil Inlimirt Is r ivitich lirconetery uIrmirmoIlan wiiotluf be cendlelitotu cimecnictiubeiiluour 01 jent oneness itmat HAVilI< will he onilmlictil lii all niptuicttaui iodtiiivnomg ,imry vr.thirl em ilnm!niitmtuiiccf tiiuicutIi at IIs.m hisi'Ineti trill of situcirie hnottrtceitner.im it shiliricolrls, vi mirritiloim fit amy sienirletp ilauiieQcn.'i

AGREEMENT .2


It. Confident IR MY of ClIntri Iirtormatiarr, lit liar 1w110016iloo Of lhoseivice colaplopInlod ty tIlts Agreement HAWK sprosa lit hold at 01101 orrIdonce all potserioly dOlt hIlottlIr on ttrtsi ill ililt%tll,Iliarl hut HAWK Icrolvos lbOI/IllJ In Client and IAWI11 will li/Il 101111(10 I/i

lhoiwls cola tiecolit Stich i1foonallon to it third party e000pI SI' ProprlIy MOIlaiJortiitrlt, urilbaitl lh(i crIrutsolerc pnoi triIlo0 rorratall HAWK o9lees to coitoply with all tederol and slola lows and teatolletttt 001rrr0 with t01s000lIy idaorlilruthrle its Inilutull l0rinludion

THE TERMS OF THIS SECTION 5 SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT

5 GENERAL PROVISIONS

a. Risk. Cacti petty oh/Ill paltolet lAir ItWIs 01 aervees at to own rISC

It, No Authority In Sled Other Party. Neither potty has enthrally to erlI11t into cetrlrecta Oz aEreonrisrits all hIrnll Of the stllslrI petty sos not creole a porinorhip behiviten the pnlhrrs

caofLw.y dispute usd01 this atiroettient on related to this 0poonrnl 00011 be Itedded Cl eccetdeoOe with the laws ol

II, Arbitration. The pattIes to this AgreeItortnt agree to notbenl to binding otto 11,05011 elidsA the rules of the Arnoucust Arbtttultiert Asonalatloo any urneselne<l dtspitulo$ bitIw000 the parties and agree that 100 roots 01 such pIacnedlns tOnIt bit retrtrhioantl to tho pr0000/ny party

o Elhlitat Conduct, Both parties etJIoe to canilujcl tttJnrnOSS o.illt IOU highest rlllica/ itlairdardst

I. Entire Agreement. This Aglesfltenrh liacluthuty any Eolrihrlo oltacrard Iterulo) represents the 01000 untO lslontllrr/J attn itgtrteniUIlt between the Parties instIl respeCt lathe 0001001 trailer hereof, Oral ottpIrOaedes any prior UrrrI0rnlirtldias and urOr000lonlls. WittIer) Or oral belwnn such Fortran with roapool to 60011 nebiorl inoller t)ependrng on the slate where the Clet'h to r4locutod Property IS boated. CIba! and HAWK inay bt Inqiteod to etItar into a stole approved root notate InWCI1000 0011(1001 itotI drbu005ioua 55 tOqIilItIOt Ill/del that stolen laws. The pushes epretr to enter Otto those A11roetrthlttt and 511511 rIot liirteneorretrlp Salty ra retool ourclr olarwlstd feints so long as lImp do not contradict ltntla or otIrJ005landrngo under this A5roitrlionl

rj. SeverabIlIty, It any part UI this Apleorololtl IS 50111 urtoltttrtceoblo the lest of 111 4.1 Aprewrretrt will itovotltritless 1011101110 tall utica and ettoCt

It. ArrioedmeflIs, The AOrtiOflhittli Illay 1)01 Ito rria/nliOd altreloled UI tllschotttIl cecoyl by an unIturrrettI in taiIlith) 5111110(1 by 1110 parties hereto We waiver 05 601100(1 may be enl06ed unless such Waiver Or COfleOnt shall halts wIlting mcI okjne(1 fly ilia party IrgalIrat wtiorn ontercltnbent Iheteot to setaltil Any handwritten motlllicitlleno or mwnendtnenln to this Agheeturent Oltoll sllpdt001to any conflicting printed total or condition

1. NotIons. All noloss dernuillia. and ropuesh required SI iterarIted 10 be given tinder tItle Apreeltresl shall be in wrhhr5 and SInai) Its doltnsAd 01 mailed if lo HAWK. to 11005 WOitI SitIhirts Ave. I on Vegon NV 11011711 In Qluerrl Is

Address "r kI 17v4/(s i. 5t'if '2 City.J ./

Slate cZtpVi_IAh( Entail

eA Phone ......, or any OUter 811115000 provided by the Partin

Please indicate how rrrarry properties you are purchasing along with a total of funds you are remitting to Mohawk

Diversified, ILC 11.1

Number of Properties Purchased K S - TofI funds 10 remit to Mohawk

Diversified, LLC

IN WITNESS WHEREOF the parties hereto have caused Ill/s Agreement to be doily executed and delivered as of the clay

and year written below

MOHAWK DIVERSIFIED, LLC

— y: f's Manage

CLIENT

p_( C Vc fc'4

AGREEMENT 3

/ Dote

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I

/!IL 24g Dale

case 2:10-cv-01060-ds document 113 filed 04/16/12 page 2 of...

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