[Editor’s note: This story has been updated to include comment from Bosworth’s attorney]
A husband and wife have filed suit against Hartford’s Back9Network, alleging that the company was dishonest and unethical in selling them securities.
William and Janet Ghio, of Bristol, made four investments in Back9 between late 2012 and late 2014. They allege that the company’s officers and representatives did not disclose until after the fourth investment that the company was paying DirecTV “millions of dollars” to carry its golf lifestyle programming. Company officers also allegedly told the couple in December that reports of layoffs in the news were untruthful and that the company was not about to go out of business — which it did in February.
That knowledge would have been material to the couple’s investment decisions, the suit says.
The suit claims Back9 President Carlos Silva, Chief Operating Officer J. Reid Gorman, then CEO James Bosworth and Executive Vice President of Investor Relations Paul Pendergast were involved in the solicitation of the Ghios.
The Ghios hold 62,500 shares of series B preferred stock. Their December investment totaled $360,000. The value of the previous investments are not included in the complaint, which was served on March 17, and appeared on the state superior court’s website Tuesday.
The suit asks for the cancellation of the investment, damages, interest, legal fees and other relief.
Back9 released the following statement on the suit Wednesday morning:
“Despite obstacles such as an unsubstantiated investor lawsuit, the current management team of Back9Network will continue devoting 100 percent of its efforts, without pay, to pursuing the best deal possible for all of its valued investors. It is regrettable that Mr. & Mrs. Ghio have taken this action against Back9Network and certain current and past employees of the Company. Just like every accredited investor in Back9Network, The Ghio’s were informed both verbally and in writing of the inherent risk of their investment, and they signed investment agreements to that effect regardless of such warnings. The Ghio’s frequently attended Company events since their initial investment in 2012 and closely watched the business grow over the years. As recently as late 2014, the Ghio’s requested that a family member be given an internship at the Company based upon their investment history, which was agreed to.”
Bosworth’s attorney, Paul McConnell, said in an email Thursday that the allegations regarding misrepresentations by Pendergast occurred after Bosworth left the company.
“These allegations are consistent with the criticism that Mr. Bosworth privately made to company leaders weeks earlier and were later alleged to have been ‘disparaging remarks about the company’s financial outlook.’ Mr. Bosworth even offered to help raise money after he left Back9, but all of that was met with ridicule by [Back9 Chairman Sanford] Cloud, Cox, and Gorman. They instead filed a defamatory lawsuit that history is revealing to be subterfuge and political cover.”
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