T.I. AND KEVIN HART FEELING THE HEAT IN CASE BY INVESTORS IN A COIN OFFERING
On May 10, 2019, investors in an initial coin offering being backed by rapper T.I. (whose real name is Clifford Joseph Harris Jr.) filed a lawsuit in Georgia federal court alleging that the offering was a scam. A similar lawsuit was also filed against comedian actor Kevin Hart (“Hart”).
Investor Kenneth Fedance (“Fedance”) filed a proposed class action against T.I. alleging violations of federal securities laws with respect to tokens issued by a company called FLiK. According to the Fedance, T.I. promoted the tokens and promised major returns on investment, but the tokens are now worthless:
“In reality, FLiK is an empty shell that never developed any actual business…At best it was a grand idea that never materialized into anything; at worst it was a total fraud from the start designed to dupe mostly foreign investors into buying the defendants’ magic beans,” according to the complaint.
In a similar lawsuit filed by the same attorneys, a different set of investors filed a proposed amended complaint which names T.I, and for the first time includes Hart as a defendant.
According to the proposed amended complaint brought by investor Aurélien Beranger (“Beranger”) and more than 30 other investors, Hart served as a “celebrity endorser” for FLiK, and made promotional posts on social media in support of the company and the initial coin offering (“ICO”).
The May 10, 2019 complaints stem from a decision that was made in late April 2019 by U.S. District Judge Charles A. Pannell Jr., who decided to throw out a securities claim in the Beranger lawsuit, which was originally brought in November 2018. Judge Pannell said “the token buyers hadn’t adequately shown that their token purchases fell within the claim’s one-year statute of limitations”; but in this same ruling Judge Pannell found a parallel Georgia state securities law claim with a two-year time limit was allowed to go through.
Both lawsuits allege a scheme in which T.I. “hyped” the cryptocurrency using social media and celebrity endorsements from Hart and others.
According to the lawsuits, FLiK never registered the FLiK tokens as securities and was able to avoid regulatory checks because money was collected in bitcoin and other crypto-currencies.
The investors in both cases are represented by Alexander Loftus and Ryan Moore of Stoltmann Law Offices PC, Patrick Jones of PMJ PLLC, and Jason Doss of The Doss Firm LLC.
Felton is represented by Joshua Sabert Lowther of Lowther Walker LLC.
Counsel for defendants is not yet available.
The cases are Aurelien Beranger et al. v. Clifford “T.I.” Joseph Harris et al., case number 1:18-cv-05054, and Kenneth Fedance v. Clifford “T.I.” Joseph Harris et al., case number 1:2019cv02125, both in the U.S. District Court for the Northern District of Georgia.
* Lowe & Associates (“The Firm”) is a boutique entertainment and business litigation firm located in Beverly Hills, California. The Firm has extensive experience handling cases involving business, entertainment law and intellectual property, having provided top quality legal services to its clients since 1991. The Firm is recognized in multiple publications for its many achievements and high ethical standards, including Martindale-Hubbell and Super Lawyers.
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