Investor Says Toilet King Was Full of It

     KNOXVILLE (CN) - A toilet company claimed it had "exclusive contracts" on "20.1 percent of all portable toilets in the United States" - "302,000 potties" in "84 cities in 27 states" - but it was a load of crap, and it defrauded an investor of $500,000 in unregistered stock, the man claims in court.
     Blake Mathias sued Matt Tunstall, TunStall Communications, Stall Talk.Net, Inc. and, on Wednesday in Federal Court.
     Mathias seeks damages for selling unregistered stock, fraud, misrepresentation, use of false prospectuses and breach of fiduciary duty.
     Mathias claims Tunstall talked him into investing in TunStall Communications, which sells ad space on port-a-potties, by claiming that the company dominated the domestic port-a-potty market.
     "As an example, Page 7 of the prospectus represents that the company had 'multiyear, exclusive contracts to 20.1% of all portable toilets in the United States', representing at least '302,000 potties' in '84 cities in 27 states,'" the complaint states. "The clear implication of these statements is that the company already had these contracts in place and had the capability to service them.
     "The company, though, never had such contracts. Instead, its existing operations were, at best, minimal. Further, it did not even have the necessary capabilities and infrastructure to operate nationally on the scale represented."
     The prospectus didn't stop with flashy statistics, Mathias claims: "Page 7 of the prospectus further represents that the company had multi-year, exclusive contracts with NASCAR, the NFL, the PGA, Taste of Chicago, Lollapalooza, and the University of Tennessee, Knoxville."
     Relying on these misrepresentations, Mathias says, in February this year he paid $500,000 for 200,000 shares of TunStall Communications stock.
     But Tunstall lied about the exclusive contracts and sold him unregistered stock, Mathias claims.
     "Among other things, the company did not have adequate suppliers in place that could produce sufficient vinyl ads for the port-a-potties in a number that would have been necessary to operate on the represented scale contained in the prospectus," the complaint states. "In short, the company did not have contracts for, and could not have serviced 302,000 port-a-potties in 84 different cities."
     In fact, Mathias claims, "Defendants were prohibited from selling these securities unless the securities were registered under the Tennessee Securities Act.
     "On information and belief, defendants did not register these securities as required."
     Former TunStall executive Jake Kovalcik told him that the company would not turn a profit this year, Mathias says in the complaint.
     "Mr. Kovalcik cannot recall a single piece of revenue that came in during the entire time that he was the Chief Revenue Officer of the company, much less revenue significant enough to justify the financial statements in the prospectus," the complaint states.
     Mathias claims that Tunstall also funneled company money into side ventures, including a partnership that makes "pop-up, cardboard chairs that resemble a cardboard box," and spent money on lavish vacations.
     "In just the past few months, Matt Tunstall has made multiple trips to New York, two trips to Dubai, as well as trips to China, France, Italy, New York, Boston, Los Angeles, and Washington D.C.," according to the complaint. "These trips were not for the benefit of TunStall Communications, but and instead were personal vacations for Matt Tunstall or were for the promotion of Matt Tunstall's other business ventures."
     Mathias wants his stock purchase rescinded and punitive damages.
     He is represented by P. Edward Pratt of Baker, Donelson, Bearman, Caldwell & Berkowitz in Knoxville.