Shareholders allege fraud in suit where this GOP official is named
Clark County Republican Party Chairman Jesse Law is embroiled in a lawsuit as a member of a company’s board of directors accused of defrauding shareholders and furthering their own self-interests.
Three shareholders of Vinco Ventures, a digital media, advertising and content technologies company, filed an initial lawsuit in April in the Clark County 8th Judicial District Court against the Vinco board of directors, the former chief executive officer and its secretary.
They allege the board of directors’ loyalty lies with its former CEO, Theodore Farnsworth, who faces federal fraud charges stemming from a separate business, and as a result have worked to further his interests rather than the shareholders’.
“We believe the board of directors intentionally failed their fiduciary responsibility and have colluded to execute harmful and self-dealing actions that have caused a 99 percent decrease in shareholder value,” Christopher Muntz, one of the shareholders named in the lawsuit, told the Las Vegas Review-Journal.
“We endeavor to protect the company from additional harm and want to ensure the over 2,000 shareholders we represent are compensated fairly and equitably,” he said.
Shareholders, who call themselves the “BBIG Family” after the company’s NASDAQ ticker symbol, formed a GoFundMe campaign where they raised funds to pay for the lawsuit. On June 22, the three shareholders filed court documents with affidavits from more than 900 other shareholders that show support for the plaintiffs’ claims.
The three shareholders made a variety of allegations against the members of the board of directors including breaching their fiduciary duty, committing fraud and negligence, and intentionally misrepresenting information to shareholders.
Law and his attorney declined to comment on the litigation and pointed the Review-Journal to court documents.
Vinco Ventures, founded in Nevada in 2017, promotes the “B.I.G Model,” which stands for buying, innovating and growing. It acquires other businesses, such as Lomotif, an app similar to TikTok, and in February announced an agreement to acquire the National Enquirer.
On July 8, 2022, the board of directors of Vinco appointed Theodore Farnsworth as co-chief executive officer. In November 2022, however, Farnsworth was indicted on federal charges in Florida for his alleged involvement in “a scheme to defraud investors through materially false and misleading representations” relating to businesses he acquired, according to the U.S. Department of Justice, and for his alleged involvement in operations to artificially inflate the price of stocks to “attract new investors.”
Farnsworth is no longer involved with the board of directors of Vinco, however people he brought over to serve on the board, including Law, are still there.
The shareholders claim that the current board of directors has previous working or personal relationships with Farnsworth and has “usurped control over the company,” and is involved in a scheme to defraud shareholders.
The shareholders also allege the board has loaned Vinco’s money to other businesses and increased the number of preferred stocks without their permission, as well as acquired businesses without the approval of the shareholders.
Upcoming election
Coming on the heels of the lawsuit is the July 18 election for Clark County Republican Party chair in which Law faces at least three challengers, including Jill Douglass, John Bruchhagen and Nephi “Khaliki” Oliva.
Jason Dick, vice president of NO RINO Nevada, a political action committee that says it is dedicated to exposing corruption and removing corrupt Republicans from office, told the Review-Journal his committee is endorsing Bruchhagen instead of Law because of the lawsuits.
“We believe that what has happened here is an example of someone becoming a politician to further themselves financially, instead of furthering the interests of the Republican Party,” Dick said.
Law gets paid about $10,000 per month to sit on the board of directors, and also works as a public affairs specialist and political campaign strategist.
“I’m a father of three, and I budget like the next family,” Law told the Review-Journal.
Response from defendants
But Law and the others named in the lawsuit are requesting the court to dismiss the case, which will be heard July 13. Their attorneys argue the claims made against them are “largely incomprehensible jumble comprised largely of vague assertions and innuendo.”
“Plaintiffs allege no conduct by or self-interest among any individual Defendants sufficient to allege waste, mismanagement, fraud, or other misconduct,” the defendants’ lawyer wrote in court records.
They argue the shareholders have made no allegations that focus on each individual director and fail to allege direct harm to the shareholders individually. They also argue that the three shareholders do not allege that a majority of the board members would be materially affected by a decision of the board in a manner not shared by the stockholders and the company.
Law’s and the board’s attorneys also assert the three shareholders failed to show how the board members breached their fiduciary duties and fail to show a financial interest on the part of individual board of director members.
Other lawsuits
Other parties also have filed lawsuits against Vinco Ventures, including Clark County Commissioner Ross Miller, who was appointed by Nevada Business Court Judge Timothy Williams to serve as interim CEO of Vinco as part of mediations for a previous lawsuit.
Miller alleges he hasn’t been paid after he parted ways from the company in December 2022.
“There’s been considerable red flags about how that company was operating,” Miller told the Review-Journal. “I think they’ll ultimately have to answer to shareholders or systemic courts that are reviewing this and perhaps some federal investigative bodies.”
Two former partners also filed a racketeering lawsuit against Vinco, Farnsworth and others, alleging they have not been paid for bringing forward deals with other businesses for the company to acquire. Their lawyer, Sigal Chattah, declined to comment, citing pending litigation.
This story has been updated to include an additional challenger that Law is facing in the upcoming election for Clark County Republican Party chair.
Contact Jessica Hill at jehill@reviewjournal.com. Follow @jess_hillyeah on Twitter.
