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discriminately and fraudulently oppressed minority shareholder rights and diverted company funds for personal and other improper purposes to the detriment of the plaintiff. Finally,

defendants have abused their authority to the detriment of plaintiffs by breaching various contractual obligations and discriminately applying the provisions of their contracts with plaintiffs to plaintiffs detriment. 2. During the period when the relevant investment opportunity was solicited to

investors (Offering Period), defendants issued materially false and misleading statements regarding the defendant Sutols contemplated business practices. Specifically, defendants

represented that investors, including the plaintiffs, would be able to engage or possess an interest in other business ventures or commercial dealings of every kind and description, independently or with others even while retaining Membership Interests in Sutol. Specifically, defendants assured plaintiffs, during the Offering Period and afterwards, that plaintiffs would be allowed to own and operate other restaurant and nightlife venues. When plaintiffs made it clear, during the Offering Period and afterwards, that plaintiffs planned to one day own restaurant and nightlife venues, defendants informed plaintiffs that such activity would be allowed, notwithstanding plaintiffs investment. 3. As a result of defendants misstatements and false assurances, plaintiffs were

induced to purchase securities in the form of Membership Interests in Sutol - and to otherwise invest in defendants business. The foregoing and other related statements and representations made by defendants and that are detailed in this complaint turned out to be flatly false and defendants have precluded and punished plaintiffs for engaging in other business ventures and commercial dealings. In reality, when plaintiffs communicated their intent to launch a new restaurant and nightlife venue, defendants proceeded to divest plaintiffs of their interest in

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defendants venture, strip plaintiffs of their investment rights, subject plaintiffs to discriminatory application of the provisions of governing contracts between the parties and otherwise precluded plaintiffs from engaging in outside business activities. If not for the defendants material

misrepresentations, plaintiffs would not have invested in defendants business venture. Defendants conduct is even more egregious in light of the fact that the defendants themselves have already engaged in the very same conduct from which they now preclude plaintiffs from engaging. 4. The true facts, which were known by the defendants but concealed from the

plaintiffs during the Offering, were as follows: a. The plaintiffs would not be allowed to engage or possess an interest in

other business ventures of every kind and description; b. The plaintiffs would not be allowed to engage or possess an interest in

other commercial dealings, apart from the defendants business venture, of every kind and description independently or with others; c. The plaintiffs would not be allowed to own, manage, or operate other

business ventures separate and apart from defendants business venture. 5. Plaintiffs have now been injured to the extent that defendants have foreclosed

profits rightfully due plaintiffs from the investment in defendants venture, failed to return plaintiffs capital contribution and other distributions to plaintiff and thereby caused injury and economic loss to plaintiffs. 6. However, defendants misconduct does not end there. Defendants have also

abused their corporate authority as fiduciaries and have also breached various agreements with plaintiffs. On information and belief, defendants have funneled proceeds and other funds from

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the Sutol company and its Abe and Arthurs and SL venues - in which the plaintiffs invested, and used those funds to develop and launch other restaurant and nightlife venues that are totally unrelated to the Abe and Arthurs and SL establishments, namely Catch and Catch lounge. At the same time that defendants were misusing and misappropriating company funds, distributions to investors and other holders of Membership Interests in Sutol have decreased in amount and frequency. Defendants also have actively drawn on the customer base of Abe and Arthurs and SL in order to support the launch and growth of Catch, thereby causing economic damage and other injury to plaintiffs by affecting the profitability of the ventures in which the plaintiffs invested. JURISDICTION AND VENUE 7. This Court has subject matter jurisdiction over the federal law causes of action

under 27 of the 1934 Act. The federal claims asserted herein arise under 10(b) and 20(a) of the 1934 Act and SEC Rule 10b-5. 8. This Court has jurisdiction over the state law causes of action under 28 U.S.C.

1367 because they form part of the same case or controversy and arise from the same set of operative facts. 9. Venue is proper in this district pursuant to 27 of the 1934 Act. Many of the false

and misleading statements and the transactions and occurrences alleged to be a part of this Complaint occurred, to a substantial degree, in this district. 10. Defendant Sutol Associates LLC maintains its principal place of business in New

York, New York with an address at or near 413 West 14th Street, New York, New York 10014 in the County of New York.

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11.

Defendant Sutol Associates Management LLC maintains its principal place of

business in New York, New York with an address at or near 413 West 14th Street, New York, New York 10014 in the County of New York. 12. Defendant Sutol Operating Company LLC maintains a principal place of business

in New York, New York with an address at or near 413 West 14th Street, New York, New York 10014 in the County of New York. 13. Defendant EMM Group Holdings LLC maintains a principal place of business in

New York, New York with an address at 413 West 14th Street, Unit 301, New York, New York 10014 in the County of New York. 14. Defendant, Eugene Remm is a natural person, a resident of the County of New

York and State of New York, and a Manager, Officer, Director, Principal and member of a control group of Sutol I, Sutol II, Sutol III, and EMM Group. 15. Defendant Mark Birnbaum is a natural person, a resident of the County of New

York and State of New York, and a Manager, Officer, Director, Principal and member of a control group of Sutol I, Sutol II, Sutol III, and EMM Group. 16. Defendant, Michael Hirtenstein is a natural person, a resident of the County of

New York and State of New York, and a Manager, Officer, Director, Principal and member of a control group of Sutol I, Sutol II, Sutol III, and EMM Group. 17. Certain of the acts and conduct complained of herein, including the dissemination

of materially false and misleading information to the investors, occurred in this district. In connection with the acts and conduct alleged in this Complaint, defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including but not limited to, the mails and interstate wire and telephone communications.

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THE PARTIES 18. Plaintiff Concept Holdings, LLC (Concept) was and is a limited liability

company duly formed and organized and existing pursuant to the laws of the State of New York with an address at 225 East 34th Street, New York, New York 10016 in the County of New York. 19. Plaintiff, Mr. Gregory Struck (Struck) is a natural person, a resident of the

County of New York and State of New York, and a principal of plaintiff Concept. 20. Defendant Sutol Associates LLC (Sutol I) was and is a limited liability

company duly organized under the laws of the State of New York, with an address at 1854 Noyack Path, Noyack, New York 11963. Sutol Associates LLC has a principal place of business in New York, New York with an address at or near 413 West 14th Street, New York, New York 10014 in the County of New York. 21. Defendant Sutol Associates Management LLC (Sutol II) was and is a limited

liability company duly organized under the laws of the State of New York, with an address at 1854 Noyack Path, Noyack, New York 11963. Sutol Associates Management LLC has a

principal place of business in New York, New York with an address at or near 413 West 14th Street, New York, New York 10014 in the County of New York. 22. Defendant Sutol Operating Company LLC (Sutol III) was and is a limited

liability company duly organized under the laws of the State of New York, with an address at 26 Little West 12th Street, New York, New York 10014. Sutol Operating Company LLC has a principal place of business in New York, New York with an address at or near 413 West 14th Street, New York, New York 10014 in the County of New York. Collectively, Sutol I, Sutol II and Sutol III shall be referred to herein as Sutol.
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23.

Defendant EMM Group Holdings LLC (EMM Group) was and is a limited

liability company duly organized under the laws of the State of New York, with an address at 413 West 14th Street, Unit 301, New York, New York 10014 in the County of New York. 24. Defendant Eugene Remm (Remm) is a natural person, a resident of the County

of New York and State of New York, and a Manager, Officer, Director, Principal and member of a control group of Sutol I, Sutol II, Sutol III, and EMM Group. 25. Defendant Mark Birnbaum (Birnbaum) is a natural person, a resident of the

County of New York and State of New York, and a Manager, Officer, Director, Principal and member of a control group of Sutol I, Sutol II, Sutol III, and EMM Group. 26. Defendant, Michael Hirtenstein (Hirtenstein) is a natural person, a resident of

the County of New York and State of New York, and a Manager, Officer, Director, Principal and member of a control group of Sutol I, Sutol II, Sutol III, and EMM Group. 27. The defendants referenced above in 22-24 are referred to herein as the

Individual Defendants. 28. The Individual Defendants, because of their positions with the Company,

possessed the power and authority to control the contents of Sutols and EMM Groups reports, releases, presentations and offering documents to investors. They were provided with copies of the offering documents and other materials alleged herein to be misleading prior to or shortly after their issuance and had the ability and opportunity to prevent their issuance or cause them to be corrected. Because of their positions in Sutol and EMM Group, and their access to material non-public information available to them but not to the investors, the Individual Defendants knew that the true facts specified herein had not been disclosed to and were being concealed from plaintiffs and that the actual representations made to plaintiff were materially false and

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misleading. The Individual Defendants are liable for the false and misleading statements pleaded herein. 29. Concept has, at all times here relevant, been a stockholder or otherwise a

subscriber of an ownership interest in defendant Sutol Associates, LLC (Sutol I). Sutol III is a subsidiary of Sutol I, which owns 92% of Sutol III. The remaining 8% interest in Sutol III is owned by former members of the management team of Lulus LLC d/b/a Lotus, the owner of a now defunct nightlife venue that was located in the Meatpacking District of New York City. 30. Sutol II is the Manager of Sutol I and manages and controls Sutol I according to

the terms of the Operating Agreement of Sutol I. Sutol II is affiliated with EMM Group. Upon information and belief, Mr. Remm is a manager of Sutol II. Upon information and belief, Mr. Birnbaum is a manager of Sutol II. FACTUAL ALLEGATIONS 31. The causes of action complained of herein relate to securities in the form of

Membership Interests in a limited liability company that were sold to plaintiffs in connection with restaurant and nightlife establishments that are owned, operated and controlled by the defendants. In or around October of 2008, the defendants solicited the investment of capital from various investors, including the plaintiffs, through a private offering of securities that was not open to the public. 32. At the time of the initial offering, Mr. Struck, a principal of the plaintiff, was

active in the restaurant and nightlife industry. Mr. Struck had, for years, been involved in various restaurant establishments as part of a long term goal of one day owning and operating his own restaurant and nightlife venues. However, Mr. Struck endeavored to learn the ins and outs

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of the restaurant industry by engaging with restaurant and nightlife venues and managers of the same, as a means to learn the ropes. 33. Mr. Struck had always been clear about his long term interest in the ownership

and management of restaurant and nightlife projects. Upon information and belief, it was this interest that drew the defendants to Mr. Struck when the defendants were seeking investment into new restaurant and nightlife venues in the meatpacking district, that would ultimately be called Abe and Arthurs (Abes) and the Simyone Lounge (SL), respectively. The

investment would be made into Sutol, the company that would effectively own Abes and SL. From day one, Mr. Struck made it clear to the defendants, and the defendants acknowledged that Mr. Struck had aspirations about owning and operating his own restaurants and nightlife venues separate and apart from his interest in Abes and SL. 34. It was upon this understanding that the defendants continued to solicit and induce

the investment of capital from Mr. Struck and Concept into Abes and SL. The defendants did not object to Mr. Strucks representation that he would one day launch his own competing ventures. 35. Mr. Remm and Mr. Birnbaum continued to actively promote the investment

opportunity for Abes and SL to private investors. Abes and SL were to be a combination restaurant and lounge/nightclub to be located in the meatpacking district of Manhattan, New York. Upon information and belief, the location of the venue was planned to be located at 409 W. 14th Street, New York, New York (the Venue). 36. Mr. Remm and Mr. Birnbaum touted their extensive experience in the industry as

a recruitment tool for Sutols investors, including by publicizing the fact that they had been active participants in the nightlife industry for years. Mr. Remm outlined for Sutols investors

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the beginning of his career in the public relations and promotional events spaces as well as the fact that he oversaw promotions for the Midnight Oil bars that were affiliated with Rande Gerbers Midnight Oil Company. 37. Mr. Remm also represented to Sutols investors that after his departure from

Midnight Oil, he became the Director of Promotions for the BR Guest Restaurant Group. Furthermore, Mr. Remm touted his active role in the success of Level V, a now defunct nightlife venue that was situated below the now defunct Vento Trattoria in New Yorks Meatpacking District. 38. For his part, Mr. Birnbaum represented to Sutols investors that he got his start in

the industry when he was hired to launch and run a club in Ithaca, New York. Mr. Birnbaum informed Sutols investors that, after leaving college and after an intervening period of time in the financial consulting industry, he launched Lobby, a midtown Manhattan nightclub. Morevoer, Mr. Birnbaum represented that he was subsequently hired to open and oversee all aspects of the club AER, in New York Citys meatpacking district. 39. Upon information and belief, it was not until 2006 that Mr. Remm and Mr.

Birnbaum teamed up to launch the joint venture EMM Group. Mr. Remm and Mr. Birnbaum represented to Sutols investors that they were instrumental in the creation of the successful lounge/nightclub venue in New Yorks Meatpacking District known as Tenjune. 40. Tenjune opened its doors and enjoyed quick success, a fact that the defendants

touted to their benefit in order to induce investment into their new project. While Mr. Remm and Mr. Birnbaum were presented to the public as the faces of Tenjune, they were not substantial owners of Tenjune. In reality, Mr. Remm and Mr. Birnbaum ran the day to day operations with

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no effective control over major decisions outside of what was required to keep Tenjune functional on a day-to-day basis. 41. Although Mr. Remm and Mr. Birnbaum were not the real owners of the Tenjune

property, the success of the venue, and their association with its daily operations enhanced Mr. Remms and Mr. Birnbaums reputations as lounge/nightclub operators. Still, they wanted more. Mr. Remm and Mr. Birnbaum enjoyed Tenjunes success but sought a more lucrative business prospect. Mr. Remm and Mr. Birnbaum wanted to launch a venue that they could actually own and in which they could participate as principals. The Defendants Were Motivated to Make False Statements to Induce Investment from Plaintiffs and Other Investors 42. Defendants had the motive and opportunity to commit fraud and engaged in

conscious misbehavior and recklessness in order to induce investment into their venture. The Individual Defendants and EMM Group hatched the idea of their own restaurant and nightlife venues that they would control, own and manage. Upon information and belief, the Individual Defendants and EMM Group envisioned an empire that would one day own numerous restaurants and nightlife venues throughout the United States. They idolized similar entities, such as the One Group, that at the time had amassed a conglomerate of some of the most successful restaurant and nightlife venues in New York and around the United States. 43. Upon information and belief, the Individual Defendants and EMM Group

informed members of the community that their long term plan was to own numerous venues. Unfortunately, they did not have the committed resources with which to open even one nightlife venue and restaurant, let alone a conglomerate of the same. So they proceeded with their scheme on the backs of investors by recruiting capital for the projects externally.

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44.

It was at this stage that the Individual Defendants and EMM Group proceeded

with a plan for a new restaurant and nightlife venue that they would own. They created a business plan and other related start-up proposals and initiated the process of raising capital form private investment. At the time, the economy was in a severe recession with unemployment skyrocketing and corporate and individual balance sheets shrinking. The defendants were Upon

experiencing serious problems raising sufficient capital to fund the new prospects.

information and belief, the defendants were finding little to no interest from investors and numerous individuals balked at the prospect of investing in the defendants project. 45. The terms of the Offering were changed multiple times in order to reduce the

purchase price and to make the opportunity more attractive to the investing community. Yet, Mr. Remm and Mr. Birnbaum touted their extensive industry experience to investors, promising quick returns and representing that any capital contributions would be returned to investors in a small number of years. 46. The target capital raise for the Abes and SL venues during the early stage of the

investment offering, as represented to the plaintiffs, was approximately five million five hundred thousand dollars ($5,500,000.00) and investors were offered forty-four (44) Units in the aggregate in the investment vehicle in exchange for a capital investment of one hundred and twenty-five thousand ($125,000.00) per Unit. 47. In connection with the offering, the Individual Defendants circulated various

documents and made various representations regarding the investment to potential investors, including plaintiffs. The documents that were circulated included, without limitation, Term Sheets, Instruction Sheets for Investors, Investor Letters, Operating Agreements, Subscription

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Agreements, and Business Plans (Offering Documents) and the collective formed the basis for agreements between the plaintiffs and the defendants. 48. In fact, the Offering Documents make clear that they set forth the rights,

privileges and obligations of the plaintiffs, defendants and other investors. The Investor Letter provides, in relevant part, that: The terms and conditions of this Offering, the rights, preferences, privileges and restrictions with respect to the Units and the rights and obligations of the Company, the Manager and the Subscribers will be governed by the Companys Operating Agreement, as may be amended from time to time (the Operating Agreement), the form of which is attached hereto as Exhibit A and the Subscription Agreement (the Subscription Agreement), the form of which is attached hereto as Exhibit B between the Subscriber and the Company. 49. Due to the distressed economic climate, defendants were unable to raise sufficient

capital upon the foregoing terms. The defendants were desperate to recruit capital for their project and had the motive and determination to say anything and do anything to raise that capital. They made promises to investors, including to the plaintiffs that sought to and did assuage various concerns and that induced investment at any cost. Defendants were forced to readjust the offering price to the downside, ultimately offering shares at a steep discount. 50. Plaintiffs first learned of the investment opportunity on or about December 18,

2008. Mr. Gregory Struck, a principal of plaintiff Concept, would eventually become the first and single largest minority shareholder in the project. Struck, through Concept, ultimately invested one million two hundred and fifty thousand dollars ($1,250,000.00) in exchange for thirteen (13) Units in the proposed investment vehicle at a price of $96,153.85 per Unit. 51. Plaintiff Concepts investment increased the appeal of the overall investment

opportunity and other investors soon followed. It was clear that the capitalization of over one
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million dollars lended credibility to the venture that it did not have before Concepts investment. After plaintiffs initial investment, defendants were able to raise the remaining capital required to close the offering. 52. As a condition of making an investment in Sutol, the plaintiffs made it clear to the

defendants that Mr. Struck planned to one day launch his own restaurant and nightlife venue. The defendants acknowledged Mr. Strucks interest and aspirations and represented to plaintiffs that Mr. Struck and any Member of Sutol for that matter would be allowed to engage in business ventures of any kind whatsoever in the future. But for this representation, plaintiffs would not have invested any funds into Sutol. Furthermore, the same representations, i.e., that Members of Sutol would be able to engage in competing business ventures, were made an express provision of the Offering Documents. 53. Notwithstanding the fact that defendants had the long term goal and intent of

opening up other venues in the meatpacking district and also planned never actually to allow Mr. Struck to engage in competing establishments and businesses, defendants represented to Mr. Struck that he would be allowed to do so in order to extract investment from plaintiffs. The defendants enjoyed a clear personal benefit as a result of the material misstatements. Indeed, defendants would now be substantial owners instead of just faces and stood to reap substantial financial reward from the investment into Sutols Abes and SL ventures. And the defendants conduct demonstrated entire disregard for the standards of ordinary care. On the one hand, defendants secretly planned to foreclose other business opportunities from passive minority investors like the plaintiffs, while simultaneously planning to open up new and future venues in the same area and using funds dedicated to Sutols pool of investors. There was a clear

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divergence between internal and external statements made to plaintiffs, and it was because of this divergence that plaintiffs invested in defendants project. Defendants Falsely State that Plaintiffs Would Be Able to Engage Other Businesses of Any Kind As a Condition of Making an Investment 54. As a component of the Offering Documents, plaintiffs and other investors

received and ultimately signed an operating agreement for the proposed investment vehicle Sutol. All investors, including the plaintiffs as well as the defendants are Members of Sutol and are parties to the Sutol Operating Agreement. The Sutol Operating Agreement provides for, among other things, the Organization and Admission of Members, Management, Restrictions on Transfer of Interests and Admission of Additional Members, Capital, Dissolution and Liquidation, and Accounting, Valuations and Books and Records. 55. By its terms, Section 3.4(b) of the Sutol Operating Agreement provides, in

relevant part, that any Member (including Manager), or Affiliate of any of them, may engage or possess an interest in other business ventures or commercial dealings of every kind and description, independently or with others (emphasis added). 56. Plaintiffs relied upon defendants representation that Members of Sutol would be

allowed to engage or possess an interest in other business ventures or commercial dealings of every kind and description, independently or with others and plaintiffs invested on that basis and would not have invested but for that representation. Plaintiff invested in Sutol with the

understanding that the foregoing representation was true and correct in all material respects. 57. The misstatements and omissions were misleading because the true facts, which

were known by the defendants but concealed from the plaintiffs during the Offering, were as follows: (a) Investors in defendants venture would not be allowed to engage or possess an interest in other business ventures of every kind and description; (b) Investors in defendants
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venture would not be allowed to engage or possess an interest in other commercial dealings, apart from the defendants business venture, of every kind and description independently or with others; (c) Investors in defendants venture would not be allowed to own, manage, or operate other business ventures separate and apart from defendants business venture. 58. It was clear from the get go that defendants never planned on allowing plaintiffs

to act on their interest. Instead, defendants sought to take plaintiffs investment dollars to launch their enterprise while fully intending to invoke overreaching provisions of the Sutol Operating Agreement to try and claw back plaintiffs Membership Interests for conduct that was not only authorized, but that the defendants ultimately engaged in themselves. Defendants Falsely State that the Business Purpose of Sutol Would be Solely Related to Abes and SL 59. The defendants also make other misstatements concerning Sutols business

purpose and the scope of the control groups authority. Defendants represented, during the Offering Period, that the purpose of the Sutol Company was solely to develop and run the Abes and SL venues. Moreover, defendants expressly provided, in the Operating Agreement, that the scope of their authority, in running Sutol, would be limited to business and other purposes that directly affected Abes and SL. None of these representations turned out to be true. 60. The Offering Documents, and in particular the Sutol Operating Agreement,

provides, in relevant part, that the business purpose of Sutol, was to fund the construction and renovation of a restaurant/club/lounge business anticipated to be located at 409 W. 14th Street, New York, NY or such other similar business and/or other venue established by the Operating Company (emphasis added). The Sutol Operating Agreement also provides that the

management of the Company shall be vested exclusively in the Manager who is vested with the right, power and authority, on behalf of the Company and in its name, to exercise all rights,
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powers and authority of the Manager under the LLC Law and to do all things necessary and proper to carry out the objective and business of the Company (emphasis added). 61. Plaintiffs relied upon defendants representation that funds and proceeds from

investors would be used solely for the purposes of funding Sutol and the Abes/SL venues and plaintiffs invested on that basis and would not have invested but for that representation. Plaintiff invested in Sutol with the understanding that the foregoing representation was true and correct in all material respects. 62. The misstatements and omissions were misleading because the true facts, which

were known by the defendants but concealed from the plaintiffs during the Offering, were as follows: (a) Defendants would use the proceeds from Abes and SL to fund the construction, renovation and launch of a venue separate and apart from Sutol and that would be owned by an entirely different entity and (b) the Manager would divert resources from Sutol for purposes other than to carry out the objectives of Sutol, but instead to launch competing venues. 63. Defendants are liable for making false statements about the investment

opportunity. Defendants fraudulent scheme and course of business that operated as a fraud and deceit on purchasers of Membership Interests in Sutol was a success, as it: (i) deceived the plaintiff investors regarding their ability to engage in other business enterprises; (ii) caused plaintiffs to purchase Membership Interests in Sutol; (iii) permitted the defendants to divest plaintiffs of their Membership Interests; (iv) permitted the defendants to withhold proceeds rightfully due plaintiffs from the investment in Sutol; (v) permitted the defendants to undervalue plaintiffs Membership Interests; and (vi) permitted the defendants to recoup Membership Interest of plaintiffs for the defendants own personal gain.

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64.

Sutol eventually opened the Abe and Arthurs restaurant and the Simyone Lounge

or SL nightclub. Upon information and belief and at all times relevant hereto, defendant EMM Group was and is the operator of Abe and Arthurs and SL. 65. The EMM Group website represents that SL is a: 2,200-square-foot subterranean nightclub that is as exclusive as it is exhilarating. Between dinner and dawn, SL has become one of the most sought-after destinations for nightlife revelry with its unique energy that evolves and amplifies throughout the night. SL caters to a cultured crowd, showcasing an elevated selection of art and music that add depth and visual interest to the space. The front and back rooms at SL have their own character and appeal but together function cohesively to create a truly innovative nightlife experience. 66. The EMM Group website represents that Abe and Arthurs is: a contemporary American Brasserie located at 409 W 14th Street, in the heart of New York Citys Meatpacking District. Renowned executive chef Franklin Becker has infused the restaurants menu with over fifteen years worth [sic] of culinary experiences and influences. The result is a menu of refreshing takes on comforting classics, designed to provoke the pallet while evoking the familiar warmth of ones home kitchen. Signatures like the Tuna Tartare Tacos and Beths Meatballs, along with an impressive assortment of steaks and raw bar offerings, have earned the restaurant a healthy base of regulars who keep coming back for the classic but craveable fare. Abe & Arthurs is open for dinner service nightly. Defendants Begin to Delay and Decrease Distributions to Plaintiffs and Investors to Fund Catch 67. During the relevant time period, Sutol routinely and periodically made

distribution payments, using proceeds from Abes and SL, to investors and plaintiff Concept every quarter of each calendar year, beginning in the March or April of 2010 and continuing on the same frequency until about January 2011. The distributions were initially made as a matter of course and on a de facto schedule.

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68.

However, in or around January of 2011, defendants began to reduce significantly

the distributions that were made to plaintiff Concept and other investors. In fact, from January of 2011, no distributions were made from Sutol until July 22, 2011. That was a decrease in frequency from around each quarter of the calendar year to less than twice per calendar year. The next distribution payment was made January 2012 or nearly six (6) months later. Defendants offered no credible explanation for the drop in frequency of distributions and kept plaintiffs and other investors in the dark. Defendants asserted their unilateral authority to make distributions on their own schedule and at their own level and have denied any duty to investors or Members of Sutol. 69. As noted above, initially, the defendants made distributions from Sutol quarterly

or nearly quarterly during the calendar year. In fact, the first distribution from Sutol was made to Concept in February of 2010 for approximately $111,780.00. Then, three months later, a second distribution from Sutol was made to Concept in May of 2010 for approximately $220,217.00, representing a nearly one hundred (100) percent increase in distribution proceeds. Following

that, a third distribution from Sutol was made to Concept in October of 2010 for approximately $173,772.00. A fourth distribution from Sutol was made to Concept in January of 2011 for approximately $181,120.00. 70. It was in or around the fall to winter of 2010 that the distributions began to fall

precipitously. The fifth distribution from Sutol was made to Concept in July of 2011 for approximately $136,363.64. Not only did that payment come nearly seven months or over half of a year later, but the amount of the distribution was substantially reduced. Again, defendants offered no explanation for the decline in distributions. Upon information and belief, a sixth distribution from Sutol was made in January 2012. Defendants did not make any distribution to

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Concept after July of 2011 and Concept did not receive a distribution in connection with the January 2012 distribution date. 71. Coincidentally, the decline in distributions coincided with the Individual

Defendants and Defendant EMM Groups (Non-Sutol Defendants) development of a new restaurant and nightlife venue that is now located mere blocks away from Abes and SL. In fact, on or about April 2010, the Non-Sutol Defendants began soliciting investment for the new to be named Catch restaurant and lounge/club that would be situated in the Meatpacking District of New York City. The Non-Sutol Defendants are, and at all times here relevant have been, owners, managers, fiduciaries and operators of Catch. 72. Catch directly competes with Abes and SL, which, as noted above, is its

geographic neighbor, situated less than two blocks away from Abes and SL. The EMM Group website represents the following about Catch: EMM Group, led by partners Eugene Remm, Mark Birnbaum and Michael Hirtenstein, unveiled CATCH on October 1, 2011. The globally influenced seafood restaurant embraces a new model of city-style dining that is more fluid than formatted. Unlike the clear three-course model that defined traditional fine dining, CATCH fosters a more relaxed and social approach, where food prepared by Top Chef winner Hung Huynh food hits the table in a steady stream of shareable cuisine. At CATCH, EMM Group builds upon its strong culinary foundation, as Chefs Huynh and Becker and EMM Group shift the focus to seafood with dishes like Crispy Whole Red Snapper for two with Oyster Mushrooms, Peppers and Chili-Garlic Sauce, Dungeness Crab Tagliatelli with Flying Fish Roe & Scallion Tomato Sauce, Crab & Chorizo Stuffed Calamari with Chickpeas, Piquillo Peppers, Mint & Chili-Lime, and an array of cold carpaccios including Salmon Belly Crudo with Watercress, Sweet and Sour Onions, Yuzu & Garlic Crumble. 73. Catch opened for business on or about October 1, 2011 and enjoyed immediate

success. Catch has an address of 21 Ninth Ave., New York, New York and is mere blocks away from Abe & Arthurs and SL.
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74.

As further supported above and upon information and belief, it was right around

the fall of 2010 when construction and development of Catch began. And it was right around that same time that the distributions to Sutols Members from Abes and SLs activities, including the plaintiff, began to decline substantially. Defendants Competition with Abes and SL and the Diversion of Funds from Abes and SL into Catch

75.

Defendants have breached their respective fiduciary duties to plaintiffs by

competing directly with Abes and SL, committed fraud in using proceeds from the Abes and SL venues to fund outside projects for their own personal gain and breached the Sutol Operating Agreement between defendants and plaintiffs. 76. Catchs proximity to Abes and SL has affected and continues to affect the

business of Abe & Arthurs and SL in a negative manner. Upon information and belief, the revenues generated by Abes and SL began to decline when Catch was being developed and has continued to suffer since the opening of Catch. In fact, defendants have actively engaged in advertising of the Catch venues inside the Abes and SL venues. Upon information and belief, defendants have posted signage and other advertising that is intended to draw clientele away from Abes and SL to the Catch restaurant and the Catch lounge. Furthermore, defendants advertise and, upon information and belief continue to advertise, the Catch restaurant and Catch lounge to the same target markets and patrons that frequent Abes and SL. This has drawn headcount and clientele away from Abes and SL and into the Catch venues thereby affecting the profitability of Abes and SL and also affecting the distributions to Members and investors in Sutol, including the plaintiff Concept.

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77.

Upon information and belief, the development and launch of the Catch venues

absorbed a significant amount of time and resources of each of the Individual Defendants. Upon information and belief, the demands placed on the Individual Defendants in developing and launching the Catch venues interfered, and continue to interfere, with their ability to operate, manage and attend to the affairs of Sutol, and the Abes and SL venues. 78. Upon information and belief, defendants have been, from at least the fall to winter

of 2010 and into 2011, diverting and otherwise misappropriating funds from Sutol and Abes and SL and using those funds to finance the development, build out and construction of Catch. 79. Upon information and belief, Sutol has engaged, and does continue to engage, the

same accountant that is engaged by Lucky 13, the parent company of Catch, to manage Sutols accounting affairs. Upon information and belief, Sutols accountant who is Mr. Ron Aleto is privy to the financial arrangements and related dealings of both the Abes and SL venues and the Catch venues. Upon information and belief and in or around the last quarter of 2011, Mr. Aleto discussed the financial status of Sutol with Members of Sutol and in particular, responded to inquiries regarding the decline in distributions to investors. 80. Upon information and belief, Mr. Aleto represented that defendants had been

diverting or otherwise moving funds between the Lucky 13 (Catch) and Sutol (Abes and SL) projects. Upon information and belief, Mr. Aleto represented that defendants were actively funneling proceeds from Abes and SL to Catch in order to pay for employees and other costs associated with the development and launch of Catch. Significantly, the decline in distributions to the Sutol investors coincided with the planning and construction of the Catch project. 81. Upon information and belief, funds belonging to Sutol and generated by the Abes

and SL venues were used to pay compensation to employees that were performing services for

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Catch, including without limitation, Chefs Hung Huynh and Chef Franklin Becker. Chef Becker has been the head chef at Abes since its inception. Upon information and belief, Chef Becker informed a Member of Sutol that proceeds from Abes and SL were being used to compensate individuals and employees in connection with services provided solely for the development and launch of Catch. 82. In addition to being fraudulent, all of the foregoing conduct on the part of the

defendants is a breach of defendants fiduciary duties to Sutol and a breach of defendants obligations under the Sutol Operating Agreement. As noted in paragraph 60 of this complaint, the Sutol Operating Agreement limits the scope of Sutols business enterprise, the scope of authority of Sutols controlling Members, and the purposes for which proceeds from Abes and SL can be used. 83. In fact, the business purpose of Sutol, as stated in the Sutol Operating Agreement,

was to fund the construction and renovation of a restaurant/club/lounge business anticipated to be located at 409 W. 14th Street, New York, NY or such other similar business and/or other venue established by the Operating Company Defendants use of Abes and SLs proceeds to fund the construction, renovation and launch of Catch is clearly in breach of this provision of the Sutol Operating Agreement because Catch is not located at 409 W. 14th Street and is owned by an entirely different company namely Lucky 13. The plaintiffs, who are a party to that agreement, have been injured by defendants breach and been caused economic loss as a result of unfunded and decreased distributions and the undervaluation of plaintiffs Membership Interests. 84. The terms of the Sutol Operating Agreement provide that the management of the

Company shall be vested exclusively in the Manager who is vested with the right, power and authority, on behalf of the Company and in its name, to exercise all rights, powers and authority

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of the Manager under the LLC Law and to do all things necessary and proper to carry out the objective and business of the Company Defendants use of Abes and SLs proceeds to fund the construction, renovation and launch of Catch is clearly in breach of this provision of the Sutol Operating Agreement because the funds were used to carry out the business objections of an entirely different company, namely Lucky 13, as opposed to Sutol. The plaintiffs, who are a party to that agreement, have been injured by defendants breach and been caused economic loss as a result of unfunded and decreased distributions and the undervaluation of plaintiffs Membership Interests. 85. Upon information and belief, defendants never intended on living up to their

obligations under the Sutol Operating Agreements. Upon information and belief, the Individual Defendants operated and controlled Sutol and Abes and SL for that matter under the presumption and assumption that they could do whatever they wanted, whenever they wanted and however they wanted. Upon information and belief, Mr. Birnbaum informed Members of Sutol and other individuals, including the plaintiffs that the defendants did not have to seek approval from Sutols Members to use funds, make distributions and to otherwise operate the company. And it was under the dictatorship created by the defendants that plaintiffs and other Members of Sutol had their rights stripped away, beholden to owners and operators that decided unilaterally when to make distributions and the investor inquiries to which they would respond. 86. The defendants had motive to ignore their obligations under the Sutol Operating

Agreement. By representing to investors that they would limit the scope of their authority and the business purposes of the company, the defendants could assuage investor anxiety about the use of funds and the operation of the company by individuals that were relatively new and

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inexperienced owners. However, by ignoring those obligations, defendants could unilaterally divert funds and other resources to outside business projects and for their own personal gain. 87. In making their investment, the plaintiffs relied upon the defendants

representations that funds and proceeds from the Abes and SL projects would be solely used by Sutol in making its investment into Sutol. Plaintiffs also relied, as an inducement to their investment, upon the defendants representations that the Manger and operators of the businesses would be limited to functions that are necessary and proper to carry out the objectives and business of Sutol. 88. The plaintiffs reliance on defendants misstatements and misrepresentations

caused injury and economic loss in the form of unfunded and decreased distributions and the undervaluation of plaintiffs Membership Interests. 89. The defendants own, and at all times here relevant have owned, a majority of

shares issued and outstanding in Sutol. The Individual Defendants control, and at all times here relevant have controlled, EMM Group, either individually or collectively. 90. As officers, directors and managers of Sutol, the Individual Defendants are and

were at all times relevant to the allegations herein fiduciaries with respect to the affairs of Sutol and the interests of plaintiff in Sutol, and had the duty (a) to administer the affairs of Sutol skillfully, fairly, diligently, carefully and honestly; (b) to act solely in the interest of Sutol and its shareholders and not in their own personal interests; (c) to safeguard and protect Sutols assets and property; (d) not to waste or acquire for themselves any assets or property of Sutol; (e) not to favor their own interests illegally or improperly in the management of the affairs, property and assets of Sutol; (f) not to act deliberately in a manner which injures the plaintiff as a shareholder of Sutol; (g) not to acquire illegally for themselves any assets or property of Sutol; (h) to keep

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honest, accurate and correct accounts of all of Sutols affairs, business and transactions; and (i) to perform diligently and faithfully all of the duties devolving upon them as officers and directors of Sutol; and (ii) to perform diligently and faithfully all of the duties devolving upon them as officers and directors of Sutol; and the plaintiffs relied upon the Individual Defendants to conduct themselves in accordance with those duties. 91. As collective majority shareholders of Sutol, defendants owed a fiduciary duty to

plaintiffs, and any other shareholders of Sutol, as minority shareholders of Sutol. 92. Instead of observing their legally imposed fiduciary duty to Sutol, the Individual

Defendants engaged in direct competition with Sutol, diverted company resources and funds for external purposes and otherwise disenfranchised Sutols Members. The defendants breach of their fiduciary duties to Sutol and to the plaintiffs caused injury and economic loss in the form of unfunded and decreased distributions and the undervaluation of plaintiffs Membership Interests. Defendants Discriminatory Behavior and Wrongful Ejection of Plaintiffs from Sutol 93. The defendants also breached the Sutol Operating Agreement by wrongfully

ejecting plaintiffs from Sutol and divesting plaintiffs of their Membership Interests in the company while also unilaterally undervaluing plaintiffs interests. Defendants kicked plaintiffs out of the company when plaintiffs indicated their intent to open a restaurant and nightlife venture mere blocks away from Abes and SL. Significantly, defendants engaged in this

egregious conduct, notwithstanding the fact that the defendants, who are also party to the Sutol Operating Agreement and therefore subject to the same obligations as the plaintiffs, had already opened the Catch restaurant and the Catch lounge less than two blocks from Abes and SL. 94. On or about September 14, 2011, the officers, directors and managers of Sutol,

Mr. Eugene Remm and Mr. Mark Birnbaum, directed a letter to Mr. Gregory Struck, a principal
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of Concept. At its core, the letter took issue with Concepts allegedly having: (i) engaged in the process of establishing a competitive venue mere blocks from Abe & Arthurs and SL and (ii) improperly and knowingly solicited and recruited Eric Marx, a significant EMM Group employee, as your partner in your new venture. (emphasis added) 95. Agreement: As you are aware, Section 4.3 of the Operating Agreement provides as follows: The Company shall terminate the Interest of a Member if the Company determines that the continued participation of such Member in the Company would be detrimental to the Company, including without limitation, the failure of a Member to supply any requested information to the SLA. In the event of any such termination of the Interest of a Member, such Member (or successor) shall be paid an amount equal to its capital account balance as of the termination date or the fair market value as determined at the sole discretion of the Manager, within 90 days or as soon thereafter as the Company has available funds. (emphasis in original) 96. Plaintiffs are not subject to any agreement with defendants in which plaintiffs are The September 14, 2011 letter cited the following excerpt from Sutols Operating

under an obligation to not solicit an employee of Sutol or EMM Group. Furthermore, and upon information and belief, Mr. Marx is not subject to any agreement with defendants in which he is under an obligation to not compete. In fact, and upon information and belief, the defendants were in the process of terminating Mr. Marxs relationship with the Abes and SL venues before Mr. Marx joined the plaintiffs project. 97. Defendants have also breached other provisions of the Sutol Operating Agreement

during the ejectment process. Pursuant to Section 4.3 of Sutols Operating Agreement, the Company terminated Concepts interest in the Company, effective as of the date of the [September 14, 2011] letter. Defendants represented that plaintiffs capital account balance at the time was $383,085.64 and would be paid in accordance with the terms of the Operating
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Agreement. Finally, the letter concluded that [a]s a result, Concept (i) is no longer a Member of the Company; and (ii) will no longer be entitled to, among other things, any future distributions of the Company. A Side Letter was also terminated and declared null and void. 98. The defendants have failed to return any capital contribution pursuant to its letter

of the September 14, 2011 notwithstanding the fact that the defendants have made a subsequent distribution of capital to investors as of January 2012, of which plaintiffs are entitled to a ratable portion thereof. 99. The aforesaid conduct of the defendants divested plaintiff Concept of its interest

in Sutol, while defendants increased their interest in the Company, thereby causing injury and damage to plaintiffs. Defendants failure to make the required distribution to plaintiffs in January 2012 has caused injury and economic loss to plaintiffs. Such action of Sutol and its directors and officers was taken without a substantial business purpose and for the sole reason of divesting plaintiff Concept of its shares and increasing the proportionate ownership interests of defendants. 100. Plaintiff Concept, as a minority shareholder of Sutol, has been oppressed because

defendants have wrongfully breached its contract with Concept, wrongfully divested Concept of its interest in Sutol and wrongfully precluded plaintiffs from engaging in the same conduct in which defendants have engaged. Defendants, as fiduciaries of Sutol, have allowed themselves corporate opportunities to launch new projects while disallowing Sutols minority shareholder from doing the same. 101. Plaintiffs are entirely passive investors and cannot be considered a detriment or

threat to Sutol. In fact, the Sutol Operating Agreement expressly excludes Members from participation in the management and control of the Companys affairs. Section 3.1(c) provides,

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in relevant part, that Members (other than the Manager) shall have no right to participate in and shall take no part in the management or control of the Companys business and shall have no right, power or authority to act for or bind the Company. (emphasis added) The defendants have effectively taken the plaintiffs and other investors money and left the investors on a remote island with little to no lifeline or ability to seek recourse for the defendants wrongdoings. 102. The termination of plaintiff Concepts interest should be enjoined and Concept

should be restored to the position Concept would occupy had Concept not been divested of its Membership Interest in Sutol. Alternatively, plaintiffs interests should be valued at fair market value. Loss Causation 103. During the Offering, as detailed herein, the defendants made false and misleading

statements and engaged in a scheme to deceive the plaintiffs and a course of conduct that induced plaintiffs to invest in and purchase Membership Interests in the defendants business venture. Plaintiffs committed a substantial amount of capital to defendants business venture in reliance on defendants material misrepresentation. Later, when the defendants prior

misrepresentations and fraudulent conduct became apparent to the plaintiffs, plaintiffs Membership Interests were undervalued and were also subject to divestment of the same. As a result of their purchases and defendants misrepresentations, plaintiffs suffered economic loss, i.e., damages, under the federal securities laws. But for the defendants misrepresentations and omissions, plaintiffs would not have entered into the detrimental transaction in which plaintiffs acquired securities or Membership Interests in Sutol. 104. The defendants misstatements and omissions concealed the circumstances that

bear upon the damages suffered by plaintiffs. If the defendants had made truthful and accurate
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statements about plaintiffs ability to engage in other business ventures and if defendants had made truthful and accurate statements about defendants intent to use Sutol funds towards the Catch project, plaintiffs would not have invested in Sutol. Instead plaintiffs have been injured and suffered damage because plaintiffs have been stripped of their interests in the company. Defendants have also relied upon their own misstatements and misrepresentations in refusing to make required distributions to plaintiffs and in undervaluing plaintiffs interests. 105. Any alleged Safe Harbor warnings on the part of defendants and accompanying

its forward-looking statements (FLS) issued in connection with the Offering were ineffective to shield those statements from liability. The defendants are also liable for any false or misleading FLS pleaded because, at the time each FLS was made, the speaker knew the FLS was false or misleading and the FLS was authorized and/or approved by an executive officer of Sutol who knew that the FLS was false. None of the alleged false or misleading statements made by the defendants were assumptions underlying or relating to any plan, projection or statement of future economic performance, as they were not stated to be such assumptions underlying or relating to any projection of statement of future economic performance when made, nor were any of the projections or forecasts made by defendants expressly related to or stated to be dependent on any historic or present tense statements when made. COUNT I For Violation of 10(b) of the 1934 Act and Rule 10b-5 Against All Defendants 106. Plaintiff repeats and re-alleges the foregoing allegations contained in this

complaint, including 1-105, with the same force and effect as if fully set forth herein.

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107.

By the acts, practice, and omissions described above that occurred during the

Offering, defendants disseminated or approved the false statements specified above, which they knew or deliberately disregarded were misleading in that they contained material misrepresentations and failed to disclose material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. 108. Defendants violated 10(b) of the 1934 Act and Rule 10b-5 in that they: a. b. employed devices, schemes and artifices to defraud; made untrue statements of material facts or omitted to state material facts

necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or c. Plaintiffs have suffered damages in that, in reliance on the defendants

alleged misstatements, omissions, conduct and misrepresentations, they bought securities in the form of Membership Interests in Sutol. Plaintiffs would not have purchased the securities at the prices they paid, or not at all, if they had been aware of defendants falsely misleading statements. COUNT II For Violation of 20(a) of the 1934 Act Against All Defendants 109. Plaintiff repeats and re-alleges the foregoing allegations contained in this

complaint, including 1-108, with the same force and effect as if fully set forth herein. 110. The Individual Defendants acted as controlling persons of Sutol and EMM Group

within the meaning of 20(a) of the 1934 Act. By virtue of their positions with Sutol and EMM Group, and ownership of Sutol and EMM Group interests, the Individual Defendants had the

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power and authority to cause Sutol and EMM Group to engage in the wrongful conduct complained of herein. Sutol and EMM Group controlled the Individual Defendants and all of its employees. By reason of such conduct, defendants are liable pursuant to 20(a) of the 1934 Act. COUNT III For Breach of Contract Against All Defendants 111. Plaintiff repeats and re-alleges the foregoing allegations contained in this

complaint, including 1-110, with the same force and effect as if fully set forth herein. 112. By the acts, practices and events described above, defendants and plaintiffs

entered into contracts, the terms of which plaintiffs fully performed with respect to their own obligations thereunder. 113. By the acts, practices and omissions described above, defendants breached the

Sutol Operating Agreement to which plaintiff Concept is a party. 114. As a result of these contract breaches, plaintiffs were injured COUNT IV For Breach of Fiduciary Duty and Self-Dealing Against All Defendants 115. Plaintiff repeats and re-alleges the foregoing allegations contained in this

complaint, including 1-114, with the same force and effect as if fully set forth herein. 116. The foregoing constitutes self-dealing, the misuse of positions and authority

within a business entity, breach of trust and the breach of fiduciary duties owed by defendants to plaintiff and to Sutol, for which defendants are liable, in an amount to be determined.
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