1 George Sharp

3525 Del Mar Heights Road, Suite 620

2 San Diego, California 92130
(310) 498-4455
3
In Propria Persona
4

5 SUPERIOR COURT OF THE STATE OF CALIFORNIA

6 COUNTY OF ORANGE, CENTRAL JUSTICE CENTER

7 SCANWARE SOLUTIONS, INC., a Case No. 30-2016-00871796-CU-BT-CJC

Delaware corporation;
8 (Assigned for all purposes to Hon. John C.
Plaintiff, Gastelum)
9
GEORGE SHARP DRAFT FIRST AMENDED COMPLAINT
10 FOR:
Real Party In Interest
11 1. BREACH OF FIDUCIARY DUTY;
vs. 2. EMBEZZLEMENT/CONVERSION;
12 3. RESTITUTION FOR UNJUST ENRICHMENT;
MICHAEL OGBURN, an individual; 4. FRAUD - DECEIT;
13 DEBBIE OGBURN, an individual; STEVAN 5. VIOLATION OF PENAL CODE § 496(A);
NENADOV, an individual; JASON 6. ACCOUNTING; AND
14 NENADOV; an individual; BRIAN 7. DECLARATORY RELIEF
WERNER, an individual; and DOES 4
15 through 25, inclusive, [JURY TRIAL REQUESTED]
16 Defendants. Action Filed: August 26, 2016
Trial Date: None Set
17

18

19 Plaintiff SCANWARE SOLUTIONS, INC. through Real Party in Interest, GEORGE

20 SHARP alleges for its Complaint against Defendants MICHAEL LEE OGBURN, DEBBIE

21 OGBURN, STEVAN NENADOV, JASON NENADOV, BRIAN WERNER and DOES 4 through

22 25, inclusive, as follows:

23

24 INTRODUCTION

25 1. This is an action to recover damages for breach of fiduciary duty; embezzlement;

26 restitution for unjust enrichment, deceit, violation of Penal Code § 496(a); and for declaratory
27 relief and an accounting, in connection with the systematic corporate mismanagement and double

28 dealing by a corporate officer and his cohorts. As set forth herein, Defendants failed to manage

FIRST AMENDED COMPLAINT

 1 Scanware in a way that would maximize value for Scanware and its shareholders; repeatedly took

2 actions to enrich themselves at the expense of Scanware; intentionally mislead Scanware

3 shareholders, Board of Directors and regulators; and violated various federal and state securities

4 regulations. In doing so, Defendants harmed Scanware.

6 PARTIES

7 2. Plaintiff SCANWARE SOLUTIONS, INC. (“Scanware” or “Plaintiff”) is a

8 corporation duly organized and existing under the laws of the State of Delaware.

9 3. Assignee GEORGE SHARP (“Sharp”), was assigned by the plaintiff, all rights to

10 the claims in this case on April 23, 2018. On June 20, 2018, the court granted Sharp’s motion to

11 be deemed the Real Party of Interest in this case. Sharp is internationally recognized as a crusader

12 against stock fraud and has been loudly applauded for his efforts. There is no question that penny

13 stock fraud is a scourge of society, having replaced confidence games like “Three Card Monte”

14 and Ponzi-schemes and pyramid schemes as a way to relieve innocent victims most susceptible to

15 get-rich-quick schemes, such as seniors, students and single mothers, of their savings. To date, the

16 Plaintiff has been lauded on several reputable internet sites and has received hundreds of letters

17 from these victims, thanking him for his efforts to inhibit this fraud. The Plaintiff’s

18 whistleblowing efforts have contributed to the indictment and/or prosecution and/or incarceration

19 of several penny stock fraud perpetrators and the suspension of trading by the SEC of several

20 companies used as a vehicle for fraud. The Plaintiff is also well known for prosecuting civil

21 actions against penny stock fraud artists and small public companies whose schemes are designed

22 to enrich insiders, officers and financers of these companies through the marketing and sale of

23 artificially overpriced and often intrinsically worthless stock to an often unsuspecting public.

24 4. Plaintiff is informed and believes and, based thereon, alleges that Defendant

25 MICHAEL LEE OGBURN (“Mr. Ogburn”) is, and at all relevant times, was an individual

26 residing in the County of Orange, State of California.

27 5. Plaintiff is informed and believes and, based thereon, alleges that Defendant

28 DEBBIE OGBURN (“Ms. Ogburn”) is, and at all relevant times, was an individual residing in the

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FIRST AMENDED COMPLAINT
 1 County of Orange, State of California.

2 6. Plaintiff is informed and believes and, based thereon, alleges that Defendant

3 STEVAN NENADOV (“S. Nenadov”) is, and at all relevant times, was an individual residing in

4 the County of Orange, State of California.

5 7. Plaintiff is informed and believes and, based thereon, alleges that Defendant

6 JASON NENADOV (“J. Nenadov”) is, and at all relevant times, was an individual residing in the

7 County of Fresno, State of California.

8 8. Plaintiff is informed and believes and, based thereon, alleges that Defendant

9 BRIAN WERNER (“Werner”) is, and at all relevant times, was an individual residing in the

10 County of Orange, State of California.

11 9. The true names and capacities, whether individual, corporate, or otherwise of the

12 Defendants named herein as DOES 4 through 25, are unknown to Plaintiff, who therefore sues

13 said Defendants by such fictitious names. Plaintiff will amend this Complaint to state their true

14 names and capacities when the names are ascertained. Plaintiff is informed and believes and,

15 based thereon, alleges that each such fictitiously named Defendant is in some manner liable for the

16 acts hereafter alleged. Mr. Ogburn and the Defendants named herein as DOES 1 through 15 will

17 sometimes collectively be referred to as “Mr. Ogburn.” Ms. Ogburn and the Defendants named

18 herein as DOES 16 through 25 will sometimes collectively be referred to as “Ms. Ogburn.” And

19 Mr. Ogburn and Ms. Ogburn will sometimes collectively be referred to as “Defendants.”

20 10. Plaintiff is informed and believes and, based thereon, alleges that at all times herein

21 mentioned, Defendants, and each of them, were and are (for purposes of the law of tort, contract

22 and otherwise) agents, principals, representatives, servants, masters, partners, trustees, associates,

23 co-conspirators, employers and/or employees of each other, as well as predecessors-in-interest

24 and/or successors-in-interest to each other, all acting within the course and scope of such

25 capacities, within actual and/or apparent authority of such capacities, within the course and scope

26 of such conspiracies, and with actual and/or constructive notice of the knowledge of their
27 predecessors-in-interest and/or each other. Each of the Defendants conspired with one another

28 and/or aided and abetted the wrongdoing alleged herein.

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FIRST AMENDED COMPLAINT
 1 11. This Court has jurisdiction over each of the Defendants , and venue is proper in this

2 Court pursuant to Code of Civil Procedure section 394, because, at all relevant times, Defendants

3 conducted business in Orange County, California, and/or resided in Orange County, California,

4 and/or engaged in acts herein alleged in Orange County, California.

6
FACTUAL BACKGROUND
7

8 12. Scanware was organized in October 2014 for the purpose of taking the inventory

9 tracking software technology developed by Patricia Tzannakos (“Ms. Tzannakos”) into new

10 commercial markets. Ms. Tzannakos owned the inventory control software and the pending patent

11 application. Ms. Tzannakos also owns and operated Component Sourcing Group, a California

12 corporation (“CSG”) that has been using and selling the same technology in the government sector

13 since 2006.

14 13. When Scanware was organized, Mr. Ogburn was appointed as Chief Operating

15 Officer and subsequently the Chief Financial Officer. Mr. Ogburn was responsible for the day-to-

16 day operations of Scanware. Ms. Tzannakos was appointed as Chief Executive Officer and

17 Director, but the majority of her time and efforts was devoted to the operation of CSG.

18 14. In February 2015, just months after it was formed, Scanware filed to undertake a

19 public offering of securities by filing an S-1 registration statement with the Securities and

20 Exchange Commission. Commencing in about February 2015, Mr. Ogburn began selling

21 approximately 2,926,000 shares of Common Stock at a price of $0.10 per share, the price

22 proposed in the S-1, to approximately 31 persons. However, at time Mr. Ogburn began selling the

23 shares the SEC had not declared the S-1 effective and, as a result, sale of the shares of Common

24 Stock was not allowed. Mr. Ogburn was assisted in the sales of Common Stock by S. Nanadov, J.

25 Nenadov, and Werner, all of whom had known of Mr. Ogburn’s tendency to participate in

26 schemes designed to defraud and embezzle.

27 15. Scanware later learned in September 2015 that Mr. Ogburn knew that he should not

28 have sold the securities but did it anyway, that he did not have a list of all investors who purchased

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FIRST AMENDED COMPLAINT
 1 the stock, and that he paid or agreed to pay sales commission in cash or stock to persons for

2 selling certain shares of the Common Stock and the recipients of such commissions were not

3 registered broker dealers. Pursuant to federal and state laws, Scanware may not pay commissions

4 to unregistered broker dealers. At the time, the Board of Directors of Scanware and other officers

5 had no knowledge that the sale of stock was unlawful and had no knowledge of the unlawful

6 commissions.

7 16. Scanware also learned in September 2015 that it was paying Mr. Ogburn’s salary as

8 a 1099 payment to his company, Lightwave Capital, which was held in Ms. Ogburn’s name.

9 17. Scanware also later learned that Mr. Ogburn was selling his own restricted stock to

10 other purchasers, either directly or through his company, Lightwave Capital, at a price lower than

11 the price of the Company’s shares. Scanware is informed and believes that such sales did not

12 comply with federal and state securities laws.

13 18. After discovering the foregoing, on and around March 2, 2016, Scanware offered

14 rescission to each person who purchased shares of common stock from Scanware. Scanware sent

15 letters and disclosure statements to each of the affected purchasers. However, because Scanware

16 had no cash or assets with which to pay the rescission payments since the money received for the

17 stock sales had been misused and diverted by Defendants, it was forced to obtain a private loan of

18 more than $310,000 to cover the cost of the rescission payments. The loan was secured by all of

19 the assets of Scanware.

20 19. Among the recipients of rescission payments from Scanware, were defendants J.

21 Nenadov and Werner and entities entirely controlled by them as alter egos. J. Nenadov and

22 Werner were double dealing by both investing in the company and receiving or expecting to

23 receive commissions for their participation in the sale of Common Stock. At the time Scanware

24 made rescission payments to J. Nenadov and Werner, it was unware that these defendants were

25 also part and parcel to the scheme, and that J. Nenadov and Werner were familiar with Mr.

26 Ogburn’s tendency to engage in conduct designed to defraud and embezzle. Indeed, these
27 defendants have participated in subsequent schemes undertaken by Mr. Ogburn, even after the

28 scheme to defraud and embezzle from Scanware had been revealed and they received their

5
FIRST AMENDED COMPLAINT
 1 rescission payments.

3 FIRST CAUSE OF ACTION

4 (Breach of Fiduciary Duty Against Mr. Ogburn)

5 20. Plaintiff refers to and incorporates by reference the allegations of paragraphs 1

6 through 18 as though fully set forth herein.

7 21. As a corporate officer responsible for the management of the corporation, Mr.

8 Ogburn owed fiduciary duties of care, loyalty and good faith to Scanware. Mr. Ogburn’s fiduciary

9 duties include obligations to exercise good business judgment, to act prudently in the operation of

10 Scanware’s business, to discharge his duties in good faith, to act in the best interests of Company

11 and to avoid acting in his own self-interest, and to honestly disclose all material facts when

12 providing information about the business to its shareholders.

13 22. Plaintiff is informed and believes and on that basis alleges that within the past

14 year, Mr. Ogburn breached his fiduciary duties by, among other things:

15 //

16 a. Mismanaging Scanware and violating the terms of Scanware’s corporate

17 governance documents and applicable corporate laws;

18 b. Engaging in self-dealing by making decisions which enhanced his own

19 compensation to the detriment of Scanware, including misusing company funds by paying

20 himself a salary grossly disproportionate to the value of their services and selling his own

21 restricted stock to other purchasers at a price lower than the price of the Company’s shares;

22 c. Intentionally violating corporate securities regulations in the sale and offer

23 of Company stock; and

24 d. Diverting Company funds to entities controlled by Defendants.

25 23. By and through his conduct, Mr. Ogburn failed to exercise the degree of care

26 required of corporate officers, directors and fiduciaries. Mr. Ogburn’s conduct was not due to an
27 honest error in business judgment, but rather to his gross mismanagement, bad faith and/or

28 reckless disregard of the interests of Scanware and its shareholders.

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FIRST AMENDED COMPLAINT
 1 24. As a direct and proximate result of the above described breaches, Plaintiff has

2 suffered damages in an amount to be determined at trial, but not less than $310,000.

3 25. Plaintiff is entitled to recover from Mr. Ogburn the benefits and/or profits received

4 by him as a result of any breach of duty. Plaintiff is entitled to the imposition of a constructive

5 trust on the proceeds of any and all sales of Scanware’s stock by Mr. Ogburn, and/or on all

6 accounts in which such monies were commingled.

7 26. Plaintiff is entitled to prejudgment interest at the maximum rate permitted by law

8 and/or compounded in the maximum manner permitted by law in light of Mr. Ogburn’s breaches

9 of his fiduciary duties.

10 27. Plaintiff is informed and believes and on that basis alleges that in doing the acts

11 described above, Mr. Ogburn acted with malice and with specific intent to injure Plaintiff and its

12 shareholders. Plaintiff therefore seeks an award of exemplary or punitive damages on behalf of

13 Scanware pursuant to California Civil Code section 3294 in an appropriate amount to deter similar

14 conduct in the future.

15 ///

16 SECOND CAUSE OF ACTION

17 (Embezzlement/Conversion as Against all Defendants)

18 28. Plaintiff refers to and incorporates by reference the allegations of paragraphs 1

19 through 26 as though fully set forth herein.

20 29. Plaintiff is informed and believes and on that basis alleges that Defendants have

21 embezzled and converted Scanware’s funds by among other things, failing to use the corporate

22 funds to pay Scanware’s outstanding financial obligations, paying themselves exorbitant salaries

23 which are grossly disproportionate to the value of their services, using corporate funds to pay for

24 personal items, and converting Company checks for their own use and benefit.

25 30. Plaintiff has demanded from Defendants the return of all monies improperly

26 converted and diverted to Defendants, but Defendants have failed and refused, and continue to fail
27 and refuse, to do so.

28 31. As a direct and proximate result of the above described breaches, Scanware has

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FIRST AMENDED COMPLAINT
 1 been damaged in an amount to be determined at trial, but not less than the jurisdictional minimum

2 for this Court.

3 32. Plaintiff is informed and believes and on that basis alleges that in doing the acts

4 described above, Defendants acted with malice and with specific intent to injure Scanware and its

5 shareholders. Plaintiff therefore seeks an award of exemplary or punitive damages on behalf of

6 Scanware pursuant to California Civil Code section 3294 in an appropriate amount to deter similar

7 conduct in the future.

9 THIRD CAUSE OF ACTION

10 (Restitution/Unjust Enrichment as Against all Defendants)

11 33. Plaintiff refers to and incorporates by reference the allegations of paragraphs 1

12 through 31 as though fully set forth herein.

13 34. By reason of the wrongful conduct complained of herein, Defendants, and each of

14 them, have benefitted financially to the financial detriment of Scanware and its shareholders in

15 that Defendants have improperly sold their restricted corporate stock and wrongfully obtained and

16 used corporate funds.

17 35. In equity and good conscience, the shares of stock wrongfully issued and corporate

18 funds misappropriated by Defendants belong to Scanware. These benefits were accepted by

19 Defendants under such circumstances that it would be inequitable to be retained without payment.

20 36. It would be unjust to allow Defendants, and each of them, by such unlawful and

21 wrongful conduct, to profit at the expense of Scanware and its shareholders. Therefore, all stock

22 certificates improperly issued by and to Defendants should be cancelled and all sums unjustly

23 received by Defendants should be returned to Scanware.

24

25 FOURTH CAUSE OF ACTION

26 (Fraud - Deceit against J. Nenadov and Werner)

27 37. Plaintiff refers to and incorporates by reference the allegations of paragraphs 1

28 through 35 as though fully set forth herein.

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FIRST AMENDED COMPLAINT
 1 38. At the time that defendants accepted rescission payments from Scanware, the

2 plaintiff was unaware that the defendants were complicit with the scheme to embezzle from

3 Scanware and that they were willing participants in this conduct and that they knew that Mr.

4 Ogburn had a tendency to engage in schemes to defraud and embezzle. The defendants concealed

5 this material fact and knew or should have know that Scanware would be damaged by this

6 conduct.

7 39. By accepting the rescission payment, the defendants were double dealing by first

8 accepting or expecting commission for the Common Shares that they sold, and then accepting

9 compensation for being defrauded, in effect by themselves. They concealed their participation in

10 the conduct so that Scanware would rely on their representation that they had been personally

11 damaged by the scheme. As Scanware was unaware of the defendants’ scheme, it justifiably

12 relied on the representation that the defendants had been damaged by the scheme.

13 40. As a result of the deceitful conduct engaged by the defendants, Scanware has been

14 damaged in amount to be proved at trial, but no less than the amount received by the defendants in

15 rescission payments.

16

17 FIFTH CAUSE OF ACTION

18 (For Violation of Penal Code Section 496(a) as against All Defendants)

19 41. Plaintiff refers to and incorporates by reference the allegations of paragraphs 1

20 through 39 as though fully set forth herein.

21 42. Pursuant to Penal Code Section 496(a);

22

23 Every person who buys or receives any property that has been stolen or that has been

24 obtained in any manner constituting theft or extortion, knowing the property to be so stolen

25 or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or

26 withholding any property from the owner, knowing the property to be so stolen or
27 obtained, shall be punished by imprisonment in a county jail for not more than one year…

28 (Emphasis added.)

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FIRST AMENDED COMPLAINT
 1 Penal Code Section 484(a) describes acts of theft applicable in this case;  

3 Every person who shall feloniously steal, take, carry, lead, or drive away the personal

4 property of another, or who shall fraudulently appropriate property which has been

5 entrusted to him or her, or who shall knowingly and designedly, by any false or fraudulent

6 representation or pretense, defraud any other person of money, labor or real or personal

7 property…is guilty of theft.

9 Here, each of the defendants contributed to the theft of cash and the Common Stock of the

10 plaintiff either by improperly selling the Common Stock and pocketing proceeds through unearned

11 salaries, consulting fees or commissions; or, accepting rescission payments for their investments

12 in Scanware even though they it was they who executed the self-enrichment scheme through the

13 illegal sale of those investments.

14 43. Pursuant to Penal Code Section 496(c);

15

16 Any person who has been injured by a violation of subdivision (a)…may bring an action

17 for three times the amount of actual damages, if any, sustained by the plaintiff, costs of

18 suit, and reasonable attorney’s fees.

19

20 The defendants used Scanware as a scheme and artifice to fraudulently steal the plaintiff’s

21 Common Shares and cash for their own self-enrichment.

22 44. The defendants acts of theft constitute a violation of Penal Code Section 496(a).

23 Section 496(c) requires that the plaintiff be injured by a violation of subdivision (a).

24 45. As a direct, foreseeable, and proximate result of the violation of Penal Code

25 Section 496(a) by the defendants, plaintiff has suffered damages in amount to be proved at trial

26 but no less than the sum of the consulting fees, commissions and rescission payments made to the
27 defendants. Additionally, as a result of these acts, plaintiff was forced to bring this action and

28 incur costs. Pursuant to Penal Code Section 496(c), plaintiff seeks three times the amount of

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FIRST AMENDED COMPLAINT
 1 actual damages and costs.

3 SIXTH CAUSE OF ACTION

4 (Accounting as against All Defendants)

5 46. Plaintiff refers to and incorporates by reference the allegations of paragraphs 1

6 through 39 as though fully set forth herein.

7 47. As set forth above, Plaintiff is informed and believed that Defendants have

8 misappropriated and misused corporate funds by, among other things, failing to use the corporate

9 funds to pay Scanware’s outstanding financial obligations, paying themselves exorbitant salaries

10 which are grossly disproportionate to the value of their services, and using corporate funds to pay

11 for personal items and expenses.

12 48. An accounting of the monies received by Defendants is necessary to determine the

13 amount of misused and misappropriated funds.

14 49. To date, Defendants have failed and refused, and continue to fail and refuse, to

15 provide the requested accounting.

16 50. As a result, an accounting is necessary and appropriate regarding all corporate

17 funds paid to or improperly retained by Defendants.

18

19 SEVENTH CAUSE OF ACTION

20 (Declaratory Relief as Against all Defendants)

21 51. Plaintiff refers to and incorporates by reference the allegations of paragraphs 1

22 through 39 as though fully set forth herein.

23 52. An actual controversy has arisen and now exists between Plaintiff, on the one hand,

24 and Defendants, on the other hand, concerning the validity of certain stock transfers of Defendants

25 as detailed herein and the stock ownership percentages of the various shareholders of Scanware.

26 53. Plaintiff contends that the stock transfers from and to Defendants are void as
27 unlawful. Plaintiff is informed and believes and, based thereon, alleges that Defendants dispute

28 Plaintiff’s contention and assert that the stock transfers to and from Defendants are valid.

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FIRST AMENDED COMPLAINT
 1 54. As a result, a judicial determination is necessary and appropriate to ascertain the

2 respective ownership interests of the parties and remaining shareholders as detailed above.

4 PRAYER

5 WHEREFORE Plaintiff prays for judgment against Defendants, and each of them, jointly

6 and severally, as follows:

7 1. For general, special, compensatory and/or consequential damages according to

8 proof against Defendants, jointly and/or severally, for all losses and/or damages suffered as a

9 result of the acts and/or transactions complained of herein;

10 2. For all available equitable, legal and/or related remedies against Defendants, jointly

11 and/or severally;

12 3. For a complete verified accounting from Defendants of all monies received by

13 Scanware and an order directing the immediate payment to Scanware of all monies improperly

14 diverted;

15 4. For a complete verified accounting from Defendants of all funds paid to and/or by

16 Scanware, all stock sales by Defendants, and all dispositions of any kind of Scanware’s assets;

17 5. For disgorgement from each Defendant of all ill-gotten gains, profits, benefits,

18 and/or other compensation obtained by Defendants as a result of the acts and/or transactions

19 complained of herein;

20 6. For restitution from each Defendant of all assets taken from Scanware whether or

21 not pursuant to contract and/or whether or not received in exchange for consideration;

22 7. For treble damages and costs under Penal Code § 496(c);

23 8. For the recording and/or allowing the recording of an equitable lien and/or a

24 constructive trust on assets of Defendants;

25 9. For prejudgment interest on the foregoing sum at the highest legal rate from the

26 earliest legal date;

27 10. For attorney’s fees and/or expenses incurred herein as allowed by law;

28 11. For costs of suit incurred herein;

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FIRST AMENDED COMPLAINT
 1 12. For exemplary and punitive damages according to proof at the time of trial; and

2 13. For the Court’s referral to the California Attorney General towards the

3 contemplation of criminal charges against the defendants;

4 14. For such other and further relief as the Court may deem just and/or proper.

6 DATED: July 30, 2018 BY: GEORGE SHARP, REAL PARTY IN INTEREST

10 In Propria Persona
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FIRST AMENDED COMPLAINT