In Josh Crystal vs. Medbox, Inc. (MDBX), Medbox and several of its current and former officers and directors were sued in a class action lawsuit filed in the U.S. District Court for the Central District of California. Also named as a defendant in the lawsuit are Pejman Vincent Mehdizadeh, Bruce Bedrick, Thomas Iwanski, Guy Marsala and Douglas Mitchell. Here are some interesting allegations from the Complaint:
1. This is a securities class action on behalf of all purchasers of the common stock of Medbox between November 20, 2013 and December 29, 2014 . . . .
3. Medbox was founded in 2010 by Defendant Pejman Vincent Mehdizadeh (“Mehdizadeh”), a mid-30s aged Iranian immigrant with a checkered history of business failures and criminal conduct, including grand theft in 2013. At the start of the Class Period on November 20, 2013, Defendant Mehdizadeh was Medbox’s controlling shareholder, owning approximately 65% of its common stock, and served as the Company’s Chief Operating Officer(“COO”) and Chairman of its Board of Directors (“Board”). . . .
4. During the Class Period, Defendants issued materially false and misleading statements regarding the Company’s financial results for the fiscal year ended December 31, 2013 (“FY 2013”) and each of the interim financial periods ended September 30, 2013 (“3Q 2013”), December 31, 2013 (“4Q 2013”), March 30, 2014 (“1Q 2014”), June 30, 2014 (“2Q 2014”) and September 30, 2014 (“3Q 2014”). Specifically, Defendants overstated Medbox’s revenues . . . .
13. Thereafter, on October 31, 2014, the Company disclosed that it had appointed a special board committee to investigate a letter from a former Company employee to the SEC “alleging wrongdoing by a former officer of the Company who