Katherine Jarozewski v. Julius Gamble et al. (2013)

MEMORANDUM OF DECISION

This action arises out of a $130,000 investment made by the plaintiff in the defendant, The Streat Group, LLC d/b/a GSM Communications, LLC (The Company) after various interactions with the individual defendants all of whom were principals of The Company at the time the plaintiff made her investment.

The plaintiff alleges that the various defendants made multiple misrepresentations to her leading up to the investment in violation of various common-law and statutory duties.   The individual defendants Julius Gamble (Julius) and Greg McFadden (Greg) have been defaulted for failure to appear.   The case was tried on March 5 and March 6, 2013 to the court.

I. FACTS

The defendant Darnell Streat (Darnell) holds a masters in business administration and has been employed full time by various public companies.   In June 2004 he organized The Streat Group, LLC, a limited liability company under the laws of the State of Texas.   He organized it for the purpose of taking advantage of various business opportunities as they arose.   In 2006 Darnell was approached by Greg who suggested that there was a business opportunity in a growing segment of the communications industry known as Voice Over Internet Protocol (VOIP).   The basic premise was that phone calls could be routed over the internet for a cheaper price than over traditional phone lines.   Darnell and Greg saw that there were various under served international markets and they envisioned a niche within those under served markets.

In 2006 Darnell caused The Streat Group, LLC to file an application with the Texas Secretary of State to do business under the assumed name of GSM Communications, LLC.¹ Darnell and Greg pursued this opportunity along with Julius and the defendant Keane Streat (Keane).   Darnell and Keane are brothers.

The business requires computer hardware and software necessary for the routing of the customer's calls.   Initially the company rented equipment from wholesalers but the principals came to the conclusion that it would be advantageous to The Company to own its own equipment and they eventually approached Nextone, a provider of such equipment.

The individual defendants each had specific roles in the company.   Julius was vice president of sales.   Julius was also a minister in a church located in Norwalk, CT. The plaintiff had moved to Norwalk and became involved in the church that Julius was associated with.   She became acquainted with Julius and he with her and her family.   As a result of this acquaintance Julius became aware that the plaintiff was expecting to receive some funds from the resolution of unrelated litigation.   He approached the plaintiff and told her about GSM Global Communications and asked her if he could send her some information relating to a potential investment in The Company.   The plaintiff had graduated from Northwestern University in 1986 and, after 5 years as a school teacher, went back to school and earned an MBA from the University of Chicago.   She had worked in the investment services field since the 1990s.   Most of the plaintiffs' work in that field was in an administrative capacity.

On September 4, 2007 Julius emailed the plaintiff a document entitled Investor Template GSM Global Communications and in mid-September the plaintiff and Julius met for about ninety minutes to discuss a possible investment in GSM Global Communications, LLC by the plaintiff.   At that meeting Julius delivered another document entitled “GSM Global Communications, LLC Investment Offering Letter.”   As a result of the meeting and her review of the documents describing GSM Global Communications, LLC the plaintiff became interested in making an investment and Julius set up a conference call which took place on October 16, 2007.   The participants in the conference call were the plaintiff, Julius, Darnell, Keane and Greg. On October 26, 2007 Keane emailed the plaintiff a 25–page document which he referred to as a “business plan” and which was entitled GSM Global Communications, LLC. The document named all of the individual defendants as equity owners and officers and also identified one Zina Robinson as a 10% equity owner.   After review of the documents and some additional discussions with some of the individual defendants the plaintiff became interested in participating not just as a passive investor but as a full-time working principal.   As the discussions moved forward the parties agreed that the plaintiff's investment would be in the amount of $130,000.   This amount was agreed upon because the plaintiff was told that this was the amount needed to purchase the Nextone equipment.   The negotiations in late December and early January centered around the percentage interest in the company that the plaintiff would acquire in exchange for her $130,000 investment as well as the role that the plaintiff would play in The Company's activities.

On January 13, 2008 Darnell by email offered the plaintiff a 10% interest in the “net profits” of the company and an ability to work with the vice president of finance (Keane).   The offer indicated that the plaintiff would acquire “no voting rights around the daily operations of the business” and that her liability would be limited to her $130,000 investment.

On January 14, the plaintiff responded by email to Darnell by stating that her percentage interest should be calculated based on the ratio of her $130,000 investment to the total amount of investment by the other principals and that her voting rights should be determined in the same way.   She also communicated that her working relationship with the company should be less narrow and based upon assignments received by the president (Darnell) as the needs of the business arose.   Later the same day Darnell wrote back explaining that the percentage interest that they had offered her was based upon “investment from the parties, skill set, business experience, business value built over the past 18 months, business control and partnership chemistry” he then essentially reiterated his prior offer.   During this time there was a phone call between the plaintiff and Darnell in which Darnell represented to the plaintiff that he had invested more than two times the amount of money that the plaintiff was seeking to invest in the company.   The plaintiff also had a conversation with Greg in which he said he had invested $180,000 in the company that he had received from his father's estate.   On January 15, 2008 Greg emailed the plaintiff a document entitled “GSM annual expenses.”   While the document is less than clear and not something a sophisticated investor would rely upon and seems to mix investments, expenses and assets interchangeably, the total of all the numbers listed is $993,379.   The document was compiled by Darnell, Keane and Greg (Julius was provided a copy).   It was the intent of the individual defendants in transmitting this document to persuade the plaintiff that a 10–15% interest in the company to the plaintiff was fair and equitable.   On January 18 Darnell emailed a document entitled “General Partnership Agreement” which was signed by the plaintiff and all the individual defendants and dated January 19, 2008.   The document, among other things, specified the percentage interest in GSM Global Communications of each of the principals which was 20% a piece to each of the individual defendants and 15% to the plaintiff.   Based upon the oral and written representations made to her, the plaintiff believed that at least two of the individual defendants had invested more money than she in GSM Global Communications, LLC and that in total all of the individual defendants had invested substantially more than she in the company.   The plaintiff signed the “General Partnership Agreement” and wired $130,000 to The Company as agreed.   Her money was received in The Company's account on January 22, 2008.

One of the areas that the plaintiff had expressed interest in being involved in was soliciting investors on behalf of GSM Global Communications, LLC. She emailed a document containing 20 questions that she thought a sophisticated investor would need to know prior to investing.   On December 6 Keane emailed to the plaintiff answers to four of the questions.   It was not until after the plaintiff wired the $130,000 that she became aware that she had invested in The Streat Group, LLC d/b/a GSM Communications as opposed to having invested in GSM Global Communications, LLC. In the middle of February 2008 the defendants had provided the plaintiff with The Company's banking password so that the plaintiff could review the bank account statements of The Company online.   In mid February the defendants also provided the plaintiff with spreadsheets that set forth the investors and the amount of their investments in the company.   The initial spreadsheet, itemizing the investments, did not include the plaintiff's investment but it included investments in the amount of $65,000 each for Nextone by Keane and Darnell.   The initial spreadsheet also indicated that Greg had been paid $13,000 on January 26, Darnell had been paid $10,100 on January 25 and Zina Robinson had been paid $10,000 on January 22.   Those dates correspond with the January 22 date on which the plaintiff's $130,000 investment was received.   The defendants shortly thereafter emailed a corrected spread sheet indicating that the $65,000 investments of Darnell and Keane were canceled and reflecting the $130,000 investment from the plaintiff.

On February 21, 2008 the plaintiff emailed the defendants expressing serious concern about the spreadsheet she had been sent.   Specifically she noted “as a perspective investor, I was verbally told that one partner invested more than double of my amount and that another partner invested more than my amount.   On that information, my acceptance of a lesser percentage of ownership was reasonable.   However your spreadsheet below shows that those two other partners actually put in less than I did.   That is misleading an investor.”   Notably, at no time in the subsequent emails or transmittals do any of the defendants rebut that statement.   Part of the plaintiff's concern as expressed in the email was not just that she was misled, but that she as well as the defendants would be subject to significant liability and various regulatory violations as a result of the inaccurate investment data that was posted upon The Company's website.   From that point forward the relationship of the parties deteriorated.   There was little communication between the plaintiff and the defendants during March 2007.   On April 3, 2008 the plaintiff sent an email to Darnell demanding return of her investment.   The defendants did not return her investments and this suit followed.

II. MATERIAL MISREPRESENTATIONS

The court finds that the defendants made multiple material misrepresentations to the plaintiff in an effort to persuade her to invest in The Company.

The court finds that Darnell expressly stated to the plaintiff that he invested more than twice the amount of $130,000 in The Company.   The court finds that this representation was both material and inaccurate.   The court also finds that Greg expressly stated to the plaintiff that he had invested more than $130,000 in the company and the court finds that this representation is also material and inaccurate.   While Darnell denies that he made the representation, the court finds the testimony of plaintiff to be more credible in this regard for the following reasons 1) on January 13, 2008 Darnell offered the plaintiff a 10% equity interest as a limited partner in exchange for her 130,000 investment.   On January 14 the plaintiff promptly responded as follows “in order to calculate the percentage, I/we need to know the total amount of money invested by the other partners thus far.   If 130,000 translates into approximately 10% then 10% is reasonable;  if $130,000 is very discrepant from 10% either a lower or higher than the proportion is not equitable to the other partners or to me respectively.”   So there is written documentation of the plaintiff's pursuit of this information and the information sought was a logical inquiry from prospective investor.   2) It appears from a review of the records produced by the parties that the record keeping of the defendants and their production of materials to be presented to prospective investors was quite sloppy.   They frequently characterized investments, short-term loans, unfunded commitments as one and the same or interchangeably used the terms depending upon what information they were seeking to convey.   The defendants' sloppiness in this regard undermines Darnell's credibility.   The plaintiff on the other hand was quite attentive to detail and appeared quite credible while testifying.   3) While Darnell's responsive email to the plaintiff on January 14 does not set forth the amount of his particular investment, on February 21, 2008, subsequent to her investment, the plaintiff sent the email stating “as a perspective investor, I was verbally told that one partner invested more than double of my amount, and that another partner invested more than my amount.   On that information my acceptance of a lesser percentage of ownership was reasonable.   However your spreadsheet below shows that the two other partners actually put in less than I did;  that is misleading an investor.”   At no time did Darnell or any of the other defendants deny this statement or address it in any way.

On October 26, 2007 Keane forwarded to the plaintiff a document he refers to as the “business plan” entitled “GSM Global Communications, LLC” business plan contains a “Beginning Balance Sheet For the year beginning November 2006” and lists the assets of GSM Global Communications, LLC as follows:  current assets:  cash $54,500;  and, fixed assets (net) $146,000.   A review of the bank records of The Company for the months prior to November 2006 evidence that at no time prior to November 2006 did The Company have anywhere near that amount of cash, and usually the balance was less than 10% of that amount.   In November 2006 the highest balance indicated by the bank records on any day during that month was $5,516.   The court finds that statement also material and inaccurate.   Moreover the balance sheet contained in the document also includes fixed assets of $146,000 but the tax returns filed by the defendants indicate no such assets.   This statement was also material and inaccurate.   The document transmitted on January 15, 2008 indicates investments of $292,512 (there is a note indicating that this number includes the Nextone equipment) but subsequently produced evidence contradicts the document.   This is particularly important because the document was prepared with the intent to respond to the plaintiff's request for information that would justify her investment in exchange for a particular percentage interest in the company.

The defendants also represented to the plaintiff that her $130,000 would be used to purchase the Nextone equipment.   However while her investment was used, in part, to purchase the Nextone equipment it was also used to pay other company operating expenses and to pay the defendants themselves and other lenders/investors whom the defendants wished to pay.   At no time was the plaintiff told that her funds would be used for these other purposes.

There were numerous other misrepresentations or omissions.   Indeed the business plan forwarded to the plaintiff by Keane indicates that GSM Global Communications, LLC is a limited liability corporation that was started in June 2006.   The actual name of the company is “The Streat Group, LLC” which was organized in June 2004.   The Streat Group, LLC chose to file for an assumed name of GSM Communications, LLC with the Secretary of State of Texas in July 2006.   The plaintiff was never told prior to her investment the actual status of GSM Global Communications, LLC. In one of the offering documents provided by the defendants Zina Robinson is described as a principal and investor;  by the time of the plaintiff's investment she appears to have been simply a lender and the evidence is clear that the plaintiff's investment was used in part to repay Zina Robinson her money.   The defendants never disclosed to the plaintiff that her money would be used for those purposes.   Similarly, the evidence shows that the plaintiff's money was in part used to repay loans to the estate of Greg's father, to pay expenses to Julius in the amount $2,500, to repay amounts loaned to the company by Darnell or more accurately to pay down Darnell's home equity credit line which Darnell used to assist the company with cash flow from time to time.   In summary the defendants misrepresented to the plaintiff the amount of the other partner's investments;  the amount of liquid assets and fixed assets available to the company;  the use and purpose to which the plaintiff's investment would be put;  the debts of the company to the other principals part of which would be repaid by the plaintiff's investment;  the name of the company and its date of organization.   The name and the date of the organization of the company may not have been material but the other matters certainly were.   As an indication of the lack of attention to detail practiced by Darnell and Keane, The Streat Group, LLC prepared its 2008 tax return which included the plaintiff as a principal but used a social security number that was not the plaintiff's.

III. DISCUSSION

The defendants Greg and Julius had previously been defaulted.   They did not appear at trial and they did not testify.  “A default admits the material facts that constitute a cause of action ․ an entry of default, when appropriately made, conclusively determines the liability of the defendant” (citations omitted internal quotation marks omitted).  Skyler Limited Partnership v. S.P. Douthett & Co., 18 Conn.App. 245, 253, cert. denied, 212 Conn. 802 (1989).   Since the allegations of the complaint are sufficient on their face to make out a valid claim for the relief requested the court will enter a judgment against the defaulted defendants will award damages consistent with the court's discussion of damages contained later herein.   The plaintiff seeks recovery in five counts, 1) negligent misrepresentation;  2) intentional misrepresentation;  3) violation of the Connecticut Unfair Trade Practices Act (CUTPA, Section 42–110 et seq.);   4) violation of CUTPA;  5) violation of the Connecticut Uniform Securities Act (CUSA C.G.S. section 36b–2 et seq.)

B. NEGLIGENT MISREPRESENTATION

“Traditionally an action for negligent misrepresentation requires the plaintiff to establish (1) that the defendant made a misrepresentation of fact (2) that the defendant knew or should have known was false, and (3) that the plaintiff reasonably relied on the misrepresentation, and (4) suffered pecuniary harm as a result.”  Centimark Corp. v. Village Manor Associates LTD., 113 Conn.App. 509, 518 (2009), cert. denied, 292 Conn. 907 (2009), quoting Johnnycake Mountain Associates v. Ochs, 104 Conn.App. 194, 201–02 cert. denied, 286 Conn. 906 (2008).   The findings of fact previously listed require a holding that the plaintiff has sustained her burden with regard to each of the elements of a claim for negligent misrepresentation.   The amount that the principals had invested and the assets both liquid and fixed owned by the company, were both material facts that were misrepresented by Darnell and Greg. Darnell certainly knew the amount he had actually invested and knew that he had not invested $260,000 into the company.   Keane was the vice president of finance.   He prepared the tax returns for the company on an annual basis and he knew or should have known that the statements concerning the assets of the company contained in the document which he forwarded to the plaintiff were inaccurate.   These statements were statements that the plaintiff testified she did rely on and it would have been reasonable for her to rely on those statements.   The plaintiff also testified and the court finds that the plaintiff would not have made the $130,000 investment if these misrepresentations had not been made.   Accordingly the court finds that the plaintiff has been damaged to the extent of $130,000 as a result of the negligent misrepresentation of facts conveyed by both Darnell and Keane.

Connecticut has “long recognized liability for negligent misrepresentation.   [Our courts have] held that even an innocent misrepresentation of fact may be actionable if the declarant has the means of knowing, ought to know or has the duty of knowing the truth ․ The governing principles are set forth in similar terms in section 552 of the Restatement (Second) of Torts [1977]:  one who in the course of his business, profession or employment ․ supplies false information for the guidance for other in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.”  Johnnycake Mountain Associates v. Ochs, 104 Conn.App. 194, 201 (2007), quoting D'Ulisse–Cupo v. Board of Directors of Notre Dame High School, 202 Conn. 206, 217–18 (1987).   Keane and Darnell had reason to know that their statements were false;  they both had the means of knowing and should have known the truth.   The plaintiff suffered a loss as a result.

C. INTENTIONAL MISREPRESENTATION

Pursuing an action or intentional misrepresentation or fraud the plaintiff cannot rely on presumption.  “Fraud is not to be presumed but must be proven by clear and satisfactory evidence.”  Miller v. Appleby, 183 Conn. 51, 55 (1981).   The elements of an action for fraud or intentional misrepresentation are as follows “(1) a false representation was made as a statement of fact;  (2) the statement was untrue and known to be so by [the defendant];  (3) the statement was made with the intent of inducing reliance thereon;  and (4) the other party relied on the statement to his detriment.”  Weinstein v. Weinstein, 275 Conn. 671, 685 (2005).   Accordingly the difference between a claim for intentional misrepresentation and negligent misrepresentation is that in order to sustain a claim for intentional misrepresentation or fraud the plaintiff must prove that the defendant had actual knowledge that the statement was false and that the statement was made with the intent of inducing reliance thereon.

Darnell knew how much he had invested and he knew he had not invested in excess of $260,000 in The Company.   None of the documents provided to the plaintiff by the defendants after she had made her investment support an investment of anywhere near the amount claimed by Darnell.   Moreover the tax returns which the plaintiff had acquired during the course of the litigation do not evidence an investment anywhere near the amount Darnell represented that he had made.

Keane was the vice president of financial affairs.   Keane prepared the tax returns for The Company.   Besides being an investor in The Company, Keane owned and worked in a business, the primary purpose of which was to prepare tax returns for its customers.   Keane was aware of the funds that the company had access to, as well as the assets that the company had access to and he knew what the assets both liquid and fixed of the company were.   He transmitted a document which was contrary to the true facts.   Indeed he prepared the tax returns which evidence that the statement contained in the November 2006 balance sheet were inaccurate.   Keane of course is the person who transmitted the 2006 balance sheet to the plaintiff in an effort to interest her in investing in the company.   The court finds that Keane and Darnell are both liable to the plaintiff for intentional misrepresentation of fact.

IV. THE VIOLATION OF THE CONNECTICUT UNIFORM SECURITIES ACT

Section 36b–4 of the Connecticut General Statutes states in pertinent part “(a) No person shall in connection with the offer, sale or purchase of any security, directly or indirectly:  (1) Employ any device, scheme or artifice to defraud;  (2) make any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made not misleading;  or (3) engage in any act, or practice or course of business which operates or would operate as a fraud or deceit upon any person.

(b) No person shall in connection with the offer, sale or purchase of any security directly or indirectly engage in any dishonest or unethical practice.”   Section 36b–29 entitled “Buyers remedies” states:

(a) Any person who:  ․ (2) offers or sells or materially assists any person who offers or sells a security by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statement made, in light of the circumstances under which they are made, not misleading, who knew or in the exercise of reasonable care should have known of the untruth or omission, the buyer not knowing of the untruth or omission and who does not sustain the burden of proof that he did not know and in the exercise of reasonable care could not have known of the untruth or omission is liable to the person buying the security, who may sue either at law or in equity to recover the consideration paid for the security, together with interest at 8% per year from the date of payment, cost and reasonable attorney fees, less the amount of any income received on the security upon the tender of the security or for damages if he no longer owns the security.

A threshold issue is whether or not the defendants were offering or selling a security.   Section 36b–3(19) defines a security as including “an interest in a limited liability company or limited liability partnership.”   Because the plaintiff signed a document entitled “General Partnership Agreement” and because the plaintiff negotiated an investment in which she would also participate in the operations of the company the defendant argues that the plaintiff did not purchase a “security.”   However it was clearly the intent of the defendants that the plaintiff would become an investor in the only company which the defendants owned and which operated the business that the defendants had provided the plaintiff with information about;  that company was The Streat Group, LLC doing business as GSM Communications, LLC. That company was a limited liability company organized and existing under the laws of the state of Texas.   The plaintiff was being offered and did purchase an interest in a limited liability company which is a security as defined by CUSA. Nothing in the definition of security excludes sales of limited liability company interests in which a purchaser is also going to be an active participant in the enterprise.   See Demiraj v. Uljaj, 137 Conn.App. 800 (2012).

The fact that the document that was signed by the parties was entitled “General Partnership Agreement” is simply evidence of a continuing lack of professional guidance that the defendants engaged in pursuing the operation of The Streat Group, LLC. The general partnership agreement by its terms expressly refers to GSM Global Communications.   GSM Global Communications is continually referred to as a limited liability company throughout the pre-investment correspondence between the plaintiff and the defendants.   The Streat Group, LLC was formed as a limited liability company and registered to do business under the assumed name of GSM Communications, LLC. The “General Partnership Agreement” can only relate to the limited liability company as that is the only company that existed.   That is the company that owned the bank accounts;  that is the company that purchased the Nextone equipment;  that is the company that billed its customers;  that is the company that paid its expenses and that is the company in which funds from investors were deposited.   Accordingly the general partnership agreement as it is titled can only be construed as an operating agreement for the limited liability company and not the initiation of some new company that was being formed.   Moreover the initial “offerings” of the defendants were for an investment on the part of the plaintiff on a limited and non-participatory role.   As CUSA applies not just to actual sales but to offering and solicitations the misrepresentations made by the defendants became violations of 36b–4 at the time of the offer.  Demiraj at 809.

In addition to the misrepresentations of fact, the failure to tell the plaintiff of the intent to utilize her money to pay amounts to the defendants and to other private lenders/investors was an omission of a material fact that was necessary in order to make other statements of the defendants not misleading.

Under 36b–29 it is the defendant's burden to prove that the defendant did not know and in the exercise of reasonable care could not have known about the untruth or omission.  Papic v. Burke, 113 Conn.App. 198 (2009).   The defendants have not sustained their burden in this regard.²

V. CONNECTICUT UNFAIR TRADE PRACTICES ACT

The plaintiff concedes as she must that if the transaction involved the offer and sale of a security that the Connecticut Unfair Trade Practices Act does not apply.  Russell v. Dean Witter Reynolds, Inc., 200 Conn. 172 (1986).   The court has found that the transaction involved the offer and sale of an interest in a limited liability company which in fact is an offer and sale of a security and that the applicable regulatory scheme is the Connecticut Uniform Securities Act not the Connecticut Unfair Trade Practices Act. The Connecticut Unfair Trade Practices Act does not apply to the conduct of the defendants as alleged in the complaint and proven at trial.   Accordingly the plaintiff cannot prevail on counts 3 and 4 of the complaint.

VI. VICARIOUS LIABILITY OF INDIVIDUAL AND LIMITED LIABILITY COMPANY DEFENDANTS

The court has previously found that both the defendants Darnell and Keane individually made statements that were material misrepresentations or transmitted documents that were material misrepresentations.   The court additionally finds that at all times both defendants Keane and the defendant Darnell were acting on behalf of the defendant Streat Group, LLC. The court finds that the individual defendants are both primary violators of the Connecticut Uniform Securities Act and aiders and abettors of Streat Group, LLC in violation of the Connecticut Uniform Securities Act for which they may be held liable.  Connecticut National Bank v. Giacomi, 242 Conn. 17, 37–46 (1997).   With regard to the first and second count the court finds that Darnell and Keane were acting in concert.   Both were acting as agents of the defendant Streat Group, LLC in pursuance of a common goal which was to convince the plaintiff to invest in the defendant Streat Group, LLC. Accordingly the court concludes that each is liable for the conduct of the other.   See e.g., Harp v. King, 266 Conn. 747 at footnote 38 (2003);  4 Restatement (Second) of Torts, Section 876.

VII. DAMAGES

Section 36b–29 sets forth the plaintiff's remedies under CUSA. Section 36b–29 states in pertinent part that the plaintiff may “recover the consideration paid for the security, together with interest at 8% per year from the date of the payment, cost and reasonable attorneys fees less the amount of any income received on the security upon the tender of the security or for damages if he no longer owns the security” accordingly the plaintiff is entitled to recover the consideration paid for the security, $130,000, together with interests at the rate of 8% per year from the date of payment (January 22, 2008) in the amount of $56,300 and reasonable attorneys fees (as per the stipulation of the parties to be determined in postjudgment proceedings);  less the amount of any income received on the security.   The court finds that the plaintiff has receive no income on the security and that the security has no value at the present time.³

With regard to the counts in common-law misrepresentation both negligent and intentional the court finds the plaintiff would not have made the investment but for the material misrepresentations of the defendants and that she lost $130,000 as the result of those misrepresentations.   The court finds that that loss was proximately caused by the misrepresentations of the defendants and awards damages in the amount of $130,000 plus prejudgment interest at the rate of 8% in the amount of $56,300.   Accordingly the court awards damages against all defendants on counts one, two and five in the amount of $130,000 plus prejudgment interest in the amount of $56,300 for a total of $186,300.   All defendants are jointly and severally liable for this amount and the issue of reasonable attorneys fees will be determined after appropriate postjudgment proceedings.

BY THE COURT

GENUARIO, J.

FOOTNOTES

FN1. While the application was to do business under the assumed name of GSM Communications, LLC, the various defendants frequently referred to the company both verbally and in writing as GSM Global Communications, LLC or GSM Global Communications..  FN1. While the application was to do business under the assumed name of GSM Communications, LLC, the various defendants frequently referred to the company both verbally and in writing as GSM Global Communications, LLC or GSM Global Communications.

FN2. CUSA is applicable to these transactions notwithstanding the fact that the Streat Group, LLC is a Texas Limited Liability Company, Dime Bank v. Merrill Lynch, Pierce, Fenner & Smith, Inc., Superior Court for the judicial district of Stamford/Norwalk (January, 15, 2010, Blawie, J.)..  FN2. CUSA is applicable to these transactions notwithstanding the fact that the Streat Group, LLC is a Texas Limited Liability Company, Dime Bank v. Merrill Lynch, Pierce, Fenner & Smith, Inc., Superior Court for the judicial district of Stamford/Norwalk (January, 15, 2010, Blawie, J.).

FN3. Darnell testified that shortly after the plaintiff's demand for return of her investment, the company stopped doing business..  FN3. Darnell testified that shortly after the plaintiff's demand for return of her investment, the company stopped doing business.

Genuario, Robert L., J.