The $17.2 Million Lawsuit

STATEMENT OF CLAIMS

The Plaintiff brings forth the following counts and allegations supporting Plaintiff’s cause of action:

Count 1: Theft by False Pretenses

1. Plaintiff alleges that the Defendants engaged in the merger of Centro Group, LLC and ProHCM to gain access to the ProHCM assets to pay for stolen client tax funds. The stolen funds preceded the merger as indicated in paragraphs 40 and 41 above.

2. The Defendants, as identified in the attached Centro Group, LLC Operating Agreement (Exhibit D), were responsible for “all management powers over the business and affairs of the Company”. The Board shall also “have full, exclusive, and complete discretion, power and authority to manage, control, administer, operate the business and affairs of the Company, and to make all decisions affecting such business and affairs.”

3. The Defendants had accumulated significant debt through the improper use of client tax funds as indicated in paragraphs 40 and 41. 

4. ProHCM cash and assets were targeted to be used to pay down the CENTRO GROUP, LLC tax debt. The asset sale represented in Paragraph 50, and the use of ProHCM funds by Chris Green, along with the bankruptcy plan referenced in paragraph 63, all contain information that shows use of ProHCM assets and Theft by False Pretenses. 

5. Juan Martinez indicated in email referenced in Paragraph 38, that he knew ProHCM funds were going to be used to pay down Centro debt but did not act. 

6. The Defendants initiated the sale through the Plaintiff and used fraud and deception to convince the Plaintiff to pursue the merger.

7. The Defendants were responsible for the Sale as identified in their operating agreement (Exhibit D) on page 37 – “each Member entitled to vote pursuant to the provisions of this Agreement shall vote for, consent to and raise no objections against such Approved Sale, and take all actions in connection with the consummation of the Approved Sale as may be requested by the Board, including, but not limited to, becoming party to a purchase and sale agreement, merger and/or other agreements related to the Approved Sale.” 

8. Mr. McAlone and Mr. Green acquired a greater portion of ProHCM through the purchase of the stock of Don Rowe. The Plaintiff alleges that this act was intended to build trust of the Plaintiff, while gaining more control of the ProHCM assets. 

9. All the Defendants participated in the fraud in some way. The Board signed the merger agreement, Abdel Karim participated in the due diligence, and Juan Martinez, as CFO, concealed the theft for personal gain.

10. As noted above and in their Operating Agreement the Board was responsible for this action. 

11. This action uniquely harmed the Plaintiff as the Plaintiff is now subject to a lawsuit that others are not (Paragraph 62), had lost his job, had damage to his reputation, lost significantly more stock value than all others, and had incurred legal fees defending himself. 

12. The Plaintiff alleges that this act has subjected the Plaintiff to other potential civil and criminal accusations that have yet to be determined. 

Count 2: Failure to Return Stolen Property

13. The Plaintiff alleges that the use of client tax funds for anything other than what the funds were intended is illegal. The Plaintiff was informed of this by the ProHCM Corporate attorneys. 

14. The Plaintiff alleges that all Defendants were aware of the Theft prior to the dispersion of ProHCM assets in January 2019 and had the opportunity to take action to prevent the additional harm.

15. Some of the Defendants were notified directly by the Plaintiff and all through the Bankruptcy filing.

16. The Defendants failed to act, and their inaction between the time they were informed of the theft and debt, and the sale of any asset, resulted in significant and irreversible damages to the Plaintiff.

17. The Defendants actions contributed to the losses by ProHCM for which the Plaintiff is being uniquely sued and held liable. 

Count 3: Fraudulent Misrepresentation and Fraud in the Inducement

18. The Plaintiff alleges that Defendants misrepresented the financial condition of Centro Group, LLC on numerous occasions for the purpose to induce the Plaintiff to engage in a merger to solve their client tax theft problem. Had they properly represented the financial condition, the merger and resulting damages would not have taken place. 

19. The Defendants initiated the sale of an asset, Centro Group, LLC, where criminal acts existed. The use of client tax funds for anything other than what Centro was contracted to use them for is the criminal act. The initiation of a sale of stolen property is an independent act of fraud. 

20. The Defendants also misrepresented financial statements in their disclosure documents as indicated in Paragraph 41. 

21. Defendant Giraldo Leyva, through his lawyer, at the mediation in January 2019, continued to misrepresent the stolen funds as “Operation Debt”.

22. The Plaintiff alleges that if the debt were in fact “Operating Debt” and not Theft as indicated by the ProHCM attorneys, all the subsequent actions including the bankruptcy may not have been necessary. ProHCM could have continued the practice which may have provided the time to resolve the problems. The difference between Operating Debt and Theft are significant to this claim.

23. The Defendants, through their signatures on the merger agreement, made promises that were fraudulent.  

24. Paragraphs 80-85 were “false representations of material fact with knowledge of its falsity for the purpose of inducing the plaintiff to act thereon, and the plaintiff reasonably relied upon the representation as true and acted upon it to his damage”.  Taylor v. AM Chemistry Council, 576 F.3d 16,31 (1st Cir 2009), quoting Russell v Cooley Dickinson Hosp., Inc., 437 Mass. 443,458 (200)

25. The Defendants actions contributed to the losses by ProHCM for which the Plaintiff is being uniquely sued and held liable.  

Count 3: Negligent Misrepresentation

26. The Plaintiff alleges that all Defendants failed to exercise reasonable competence and care to assure that the information provided was accurate. 

27. The Board of Directors had the responsibility to provide oversight to the operation of the Centro business and ensure that theft and fraud were not occurring.

28. The Board of Directors had access to financial information at any time. 

29. Mr. McAlone and Mr. Green, through the receipt of emails from their clients indicating client tax issues, should have taken action to understand the nature of these claims.

30. The defendants failed “to exercise reasonable care or competence in obtaining or communicating information” to the plaintiff.  Nota Contr. v. Keyes Assoc Inc., 45 Mass App. Ct.15,20 (1998).

31. The Defendants actions contributed to the losses by ProHCM for which the Plaintiff is being uniquely sued and held liable. 

Count 5: Tax Fraud

32. The Plaintiff alleges that the Defendants may have committed tax fraud. 

33. By committing Tax Fraud and transferring the assets and liabilities of Centro Group, LLC to ProHCM, it may leave the Board and members of ProHCM subject to criminal prosecution. 

34. The Plaintiff alleges that the use of client tax funds without authorization is an unauthorized loan and not operating debt, which Centro would have impacted the Centro tax filings. 

35. Mr. Leyva’s attorney, as referenced in Paragraph 52 referred to the tax debt as “operating debt”. 

36. The Plaintiff was personally harmed because of Count 5 as an accusation of Tax Fraud could still apply to the Managers of ProHCM who acquired all assets and liabilities of Centro Group, LLC. 

Count 6: Unjust Enrichment

37. The Plaintiff alleges that Mr. McAlone unjustly enriched himself and his business by abusing the relationship with the Plaintiff and taking advantage of the Plaintiffs trust.

38. The Plaintiff alleges that Mr. McAlone developed a relationship with the plaintiff to gain access to the ProHCM clients to enrich his business.

39. The Plaintiff alleges that Mr. McAlone gained trade secrets and knowledge through the Plaintiff because of the relationship.

40. The Plaintiff alleges that the consideration provided by Defendant McAlone in exchange for these benefits was fraudulent and deemed worthless.

41. The Plaintiff alleges Mr. McAlone’s business, Centro Benefits, benefitted from this transaction. 

42. The Plaintiff alleges Defendant Martinez unjustly enriched himself by abusing his relationship with the Plaintiff and taking advantage of the Plaintiff’s trust.

43. Defendant Martinez represented himself as an honest man to the Plaintiff on multiple occasions and emphasized his experience in finance as an asset. 

44. While doing so Defendant Martinez was participating in the cover-up of theft and fraud by failing to disclose his knowledge of the criminal activity. 

45. Defendant Martinez subsequently resigned his position within days after the merger and took ProHCM funds as a severance payment. 

46. The Defendant alleges this payment was made under duress by Mr. Green because Mr. Martinez threatened to expose Mr. Green’s activities related to the theft and fraud.

47. The Defendants actions contributed to the losses by ProHCM for which the Plaintiff is being uniquely sued. 

Count 7: Breach of Contract

48. The Plaintiff alleges that Mr. McAlone breached a verbal contract by promising on numerous occasions to make the Plaintiff whole.

49. The Plaintiff met with Mr. McAlone in September 2018 to discuss the situation and the harm to the Plaintiff. Mr. McAlone, at the lunch meeting repeated his promise to make the Plaintiff whole.

50. The Plaintiff alleges Mr. McAlone did not deliver on his promise. 

51. The Plaintiff suffered individual harm because of this promise. 

Count 8: Extortion by Juan Martinez

52. The Plaintiff alleges that Juan Martinez extorted money from the company by threatening to expose Chris Green and his activities related to the theft and fraud.
 

53. Defendant Martinez used his relationship with the Plaintiff to develop trust and entice the Plaintiff to execute on the merger.
 

54. Defendant Martinez demanded payments from Mr. Green.
 

55. Defendant Martinez accepted payments from the accounts of Centro and/or ProHCM

.

56. The Defendants actions contributed to the losses by ProHCM for which the Plaintiff is being uniquely sued.  

Count 9: Fraudulent Conveyance

57. The Plaintiff alleges that Chris Green withdrew $100,000 without authorization from the company and paid a debt to Don Rowe for the benefit of Defendants Green and McAlone.

58. Defendants Green and McAlone acquired the stock of Don Rowe in advance of the merger.

59. The parties agreed to a payment plan. 

60. Chris Green, in August 2018 withdrew $100,000 from the company account and made a payment of $100,000 to Mr. Rowe.

61.  This payment reduced the liability of Defendants Green and McAlone to Mr. Rowe.

62. The stolen funds resulted in the estate of Centro and ProHCM to have $100,000 less money than they otherwise would have had. 

63. Defendant McAlone settled the debt with Mr. Rowe, where the debt at the time of the settlement would have been $100,000 higher had it not been for the $100,000 payment.

64. Defendants Green and McAlone personally benefitted from the use of those funds by reducing their obligation to Mr. Rowe. 

65. The Plaintiff is being sued for those lost funds and has uniquely been harmed. 

Count 10: Conversion

66. The Plaintiff alleges that the Defendants participated in Conversion. The Defendants took possession of their client’s tax escrow funds without their authority for personal use and to run operations and grow their Company. 

67. The Conversion may have started as early as 2011 according to Mr. Green in his letter referenced in paragraph 1 above.

68. The assets built with the Converted Property were represented as “assets for sale”   by the Defendants.

69. The Defendants were aware of this practice but did not return the property. 

70. The Defendants failure to return the property resulted significant damages to ProHCM and the Plaintiff of which the Plaintiff is personally and uniquely being held liable. 

Count 11: Breach of Fiduciary Duty

71. Plaintiffs allege that the defendant breached their fiduciary duty. as outlined in their Operating Agreement (Exhibit D).

72. As Board Members and Executives there was an expectation that proper oversight of Centro Group, LLC was regularly conducted. Board meetings would have taken place. Financial audits were to be conducted periodically. 

73. The Board was responsible for removal of the Chief Executive Officer or President if the CEO, “misappropriated Company funds or committed acts of dishonesty with respect to the Company”. (Exhibit D)

74. The Plaintiff was told on a number of occasions that how qualified the Board and Investors were as business managers. There was reference that several of the Members were professional investors and investment advisors.

75. Juan Martinez specifically told the Plaintiff how he was a professional accountant and operated with the utmost integrity. 

76. Had they upheld their fiduciary duty they would have known about the ongoing misappropriation of client tax funds. 

77. If they had known, but still engaged in the sale of their company, then as fiduciaries they engaged in the sale of stolen assets. 

78. After they had known they still had a fiduciary duty to take action by returning the stolen assets that were taken under their watch. 

79. The Plaintiff relied on the Defendants to have done their fiduciary duty to engage in a contract that resulted in financial harm.

80.  The Plaintiff relied on the Defendants fiduciary duty to take action after the theft was known. 

The Plaintiff’s actions after bankruptcy filing was reflective of an expectation of the Defendants to act.

81. The Defendants failure to uphold their fiduciary duty resulted in significant damages which are unique to the Plaintiff. 

Relief

WHEREFORE, Plaintiff seeks compensatory and punitive damages in the amount of $17,023,455, plus all attorney fees and costs incurred by Plaintiff in connection with this action. 

This total includes the following:

- Compensatory damages equal to the amount of the losing stock the business value of $3,380,000 from the day before the merger. 

- Additional punitive damages totaling $6,760,000 equal to 2 times the business value for which the Plaintiff has potential liability. 

- $4,483,455 Creditors Claims against the Plaintiff for which the Plaintiff believes the Defendants are responsible.  

- $600,000 in lost income which is equal to 2 times the Plaintiff’s annual income. 

- $80,000 for legal fees to date.

- $1 million for damages to the Plaintiff’s reputation as he has had to have his name on the bankruptcy documents which has impacted his ability to get jobs and contracts. The lawsuit and bankruptcy have been referenced on a few occasions as a concern and has led to a loss of job opportunity in at least one instance. 

Request Trial by Jury

The Plaintiff requests a trial by jury.  

Respectfully submitted this 30th day of July, 2021

Certification and Closing

Under Federal Rule of Civil Procedure 11, by signing below, I certify to the best of my knowledge, information, and belief that this complaint: (1) is not being presented for an improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; (2) is supported by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law; (3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and (4) the complaint otherwise complies with the requirements of Rule 11.

I agree to provide the Clerk's Office with any changes to my address where case-related papers may be served. I understand that my failure to keep a current address on file with the Clerk's Office may result in the dismissal of my case.

Date: July, 30, 2021

Signature of Plaintiff – Pro Se

Name of Plaintiff 

Joseph D. Markland