20.  Apostelos solicited investors through his associated companies and in his  individual capacity.  He offered and sold investors promissory notes issued in his own name or in  the name of one of his associated companies. He also offered and sold membership units in  another of his associated companies.      Sale of Unregistered Offerings of Midwest Green Membership Units   21.  In September 2009, Apostelos, along with two other individuals, formed Midwest  Green Resources, LLC (“Midwest Green”).  Midwest Green purported to be in the business of  investment and real estate asset management.  Apostelos, through Midwest Green, marketed an  offering of $10 million in equity securities.    22.  Between July 2010 and August 2014, Apostelos raised money from investors by  offering and selling membership units in Midwest Green (hereinafter the “Midwest Green  Securities”). These Midwest Green Securities, which were purportedly equity interests in  Case: 3:16-cv-00009-TMR Doc #: 1 Filed: 01/07/16 Page: 5 of 21  PAGEID #: 5 6  2275711.4  Midwest Green, were securities as the term is defined in the Ohio Securities Act, O.R.C.  §1707.01.     23.  Between July 2010 and August 2014, Apostelos and Midwest Green conducted  two unregistered offerings of Midwest Green Securities, during which they raised approximately  $9.8 million from at least 60 investors. These offerings were not registered and were not eligible  for any exemption from registration.     24.  The investor funds raised through the sale of Midwest Green Securities were  initially deposited in Midwest Green bank accounts controlled by Apostelos.  Ultimately the  funds raised through the sale of Midwest Green Securities were funneled to other bank accounts  Apostelos controlled.  The investor funds were then used to pay earlier investors and promoters,  finance Apostelos’ and his wife’s other businesses, and pay for their personal expenses.  Sale of Unregistered Offerings of Promissory Notes   25.  On October 19, 2009, only a month after he formed Midwest Green, Apostelos  formed WMA Enterprises, LLC, an Ohio limited liability company purported to be in the  business of investment and real estate asset management.       26.  Between January 2010 and October 2014, Apostelos, through WMA, raised at  least $56.9 million from approximately 330 investors, primarily by issuing promissory notes  offering high, guaranteed rates of interest (hereinafter the “Promissory Note Securities”). These  Promissory Note Securities were securities as the term is defined in the Ohio Securities Act,  65.  Plaintiffs bring this action as a class action pursuant to Rules 23(B)(1) and (B)(3)  of the Federal Rules of Civil Procedure.  The proposed Class is described as and consists of:  All persons who, as of October 15, 2014, had self-directed IRAs for which Kingdom  Trust Company, Pensco Trust Company, and/or John Does, 1-25, served as the IRA  trustee or custodian and for which IRA funds were used by Kingdom Trust Company,  Pensco Trust Company, and/or John Does, 1-25, to purchase Unregistered Securities on  or after January 7, 2011.  Excluded from this Class are the Defendants, subsidiaries and  affiliates of the Defendants, the officers, directors and employees of Defendants,  members of their immediate family and their legal representatives, heirs, successors or  assigns and any entity in which any of the foregoing has a controlling interest.   66.  Numerosity.  The members of the proposed Class are so numerous that joinder of  all members is impracticable.  While the exact number of the proposed Class is unknown to  Plaintiffs at this time and can only be ascertained through appropriate discovery, Plaintiffs  believe there are more than 100 members of the proposed Class.  Members of the proposed Class  can be identified from records maintained by the Defendants and/or their agents and can be  Case: 3:16-cv-00009-TMR Doc #: 1 Filed: 01/07/16 Page: 15 of 21  PAGEID #: 15 16  2275711.4  notified of this action’s pendency by mail, using a form of notice customarily used in actions of  this kind.   67.  Common Questions of Law and Fact: Plaintiffs’ claims are typical of every  member of the proposed Class because all members of the proposed Class were similarly  affected by Apostelos’ Ponzi scheme in that Defendants, by, among other things, using the  proposed Class members’ IRA accounts to purchase one or more of the Unregistered Securities,  aided or otherwise participated in the sale of securities in violation of the Ohio Securities Act.   The common legal and factual questions include, but are not limited to:  a. Whether the Defendants aided or otherwise participated in the sale of securities in  violation of O.R.C. §1707.43 of the Ohio Securities Act;   b. Whether the members of the Class are entitled to void (rescind) the purchase of the  Unregistered Securities pursuant to O.R.C. §1707.43; and  c. Whether Defendants are liable for the full amount paid by the members of the Class  for the Unregistered Securities and for all taxable costs pursuant to O.R.C. §1707.43.          68.  Typicality.  Plaintiffs’ claims are typical of the claims of the members of the Class  as they and members of the Class sustained damages arising out of Defendants’ aiding or  otherwise participating in the sale of securities in violation of the Ohio Securities Act as  complained of herein.   69.  Adequacy of Representation. Plaintiffs will fairly and adequately protect the  interests of all members of the Class as Plaintiffs are not antagonistic to the claims of the Class  and there are no conflicts between Plaintiffs and the Class claims.  Plaintiffs have retained  counsel competent and experienced in class and complex litigation.   Case: 3:16-cv-00009-TMR Doc #: 1 Filed: 01/07/16 Page: 16 of 21  PAGEID #: 16 17  2275711.4   70.  Superiority.  A class action is superior to all other available means for the fair and  efficient adjudication of this controversy.  The damages or other financial detriment suffered by  individual Class members may be relatively small compared to the burden and expense that  would be incurred by individual litigation of claims against the Defendants.  Thus, it would be  impossible for each member of the Class, on an individual basis, to obtain effective redress.    71.  Class certification is also appropriate because prosecuting separate actions against  the Defendants would create a risk of inconsistent or varying adjudications with respect to  individual Class members.  Further adjudications with respect to individual members of the  putative class would be dispositive of other members not party to the adjudications or would  substantially impair or impede the ability to protect their interests.    72.  Plaintiffs reallege the foregoing paragraphs as if fully stated herein.   73.  The Unregistered Securities (Promissory Note Securities and Midwest Green  Securities) are securities as defined in O.R.C. §1707.01.  These securities were not registered and  were not subject to exemption of the registration requirements.     74.  The transactions by which Defendants purchased one or more of the Unregistered  Securities with assets from Plaintiffs’ and Putative Class Members’ IRA accounts constitutes a  sale as the term is defined in O.R.C. §1707.01(C).     75.  O.R.C. §1707.44 prohibits anyone from selling securities in Ohio without being  licensed by the state pursuant to O.R.C. §1707.16.  Furthermore, O.R.C. §1707.44 also prohibits  investment advisors from employing any scheme to defraud investors.   76.  Apostelos was not licensed by the State of Ohio to sell securities.   Case: 3:16-cv-00009-TMR Doc #: 1 Filed: 01/07/16 Page: 17 of 21  PAGEID #: 17 18  2275711.4   77.  Therefore, each sale by Apostelos of an Unregistered Security was the illegal sale  in violation of the Ohio Securities Act.   78.  Pursuant to O.R.C. §1707.43 (a), every sale or contract for sale made in violation  of Chapter 1707 of the Revised Code is voidable at the election of the purchaser, and the person  making such sale or contract for sale, and every person who has participated in or aided the  seller in any way in making such sale or contract for sale, are jointly and severally liable to  the purchaser.   79.  Pursuant to O.R.C. §1707.43, Plaintiffs and each member of the Proposed Class  are entitled to rescind the respective purchase of Unregistered Securities on behalf of their IRA  accounts and to recover the purchase price from “every person who has participated in or aided  the seller in any way in making such sale or contract for sale.”   80.  Defendant Kingdom Trust participated and aided Apostelos in selling the  Unregistered Securities to Ms. Boyd and other members of the proposed Class.  Indeed, the  purchases of Unregistered Securities by Kingdom Trust on behalf of Class Members (including  Ms. Boyd) who had IRA accounts with Kingdom Trust could never have materialized without  Kingdom Trust’s execution of the purchases with assets from those IRA accounts under  Kingdom Trust’s control.   81.  Defendant Pensco participated and aided Apostelos in selling the Unregistered  Securities to Mr. Flanders and other members of the proposed Class.  Indeed, the purchases of  Unregistered Securities by Pensco on behalf of Class Members (including Mr. Flanders) who had  IRA accounts with Pensco could never have materialized without Pensco’s execution of the  purchases with assets from those IRA accounts under Pensco’s control.  Case: 3:16-cv-00009-TMR Doc #: 1 Filed: 01/07/16 Page: 18 of 21  PAGEID #: 18 19  2275711.4   82.  Defendant John Does, 1-25, participated and aided Apostelos in selling the  Unregistered Securities to members of the proposed Class.  Indeed, the purchases of  Unregistered Securities by John Does, 1-25, on behalf of Class Members who had IRA accounts  with John Does, 1-25, could never have materialized without John Does’, 1-25, execution of the  purchases with assets from those IRA accounts under John Does’, 1-25, control.   83.  No Plaintiff knew or had reason to know Apostelos was operating a Ponzi scheme  until, at the earliest, when Apostelos was forced into bankruptcy in October 2014 and/or was  subsequently investigated and indicted for his fraudulent behavior.     84.  Pursuant to O.R.C. §1707.43, although the Unregistered Securities are already in  the Defendants’ possession, Plaintiffs hereby tender to Defendants, or will tender in open court,  their respective Unregistered Securities.     85.  Pursuant to O.R.C §1707.43, Defendants are liable to each of their respective  customers and former customers for the full amount paid by each for their respective purchases  of Unregistered Securities.    ILLEGAL SALE OF A SECURITY  