(CN) – The Delaware Chancery Court shot down an investor’s attempt to take control of biometric security firm Hawk Systems Inc. amid "chaos" and allegations that the company’s former managers engaged in "rampant fraud."
The 29-page ruling by Vice Chancellor Joseph R. Slights III hinges on earlier orders and findings of state courts in Florida involving petitioner Mark J. Spanakos. Slights did, however, leave the door open for Spanakos to bring his case back to the Florida courts for clarification and execution of those orders.
"Legend has it that if you ask a Mainer to give directions when he does not know the way, he will reply, 'You can’t get there from here,'" Slights' ruling begins.
Spanakos was an investor and former director of Florida-based Hawk Systems, which designed fingerprint authentication and identification technology. Spanakos’s involvement with Hawk Systems began in 2006 after making several investments and loans that were ultimately defaulted on leading Spanakos to file a series of lawsuit against the company and its managers between 2010 and 2013. Spanakos claimed Hawk Systems's managers engaged in a “pump and dump” scheme that garnered millions in investor funds, while the company reported sales of just $5,575 and booked expenses and losses of roughly $22 million.
Spanakos sought a declaration that he controls 68.7 million of approximately 75 million issued shares, a number he claims he proved through various means, “and that he is the validly elected, sole director and officer of Hawk Systems."
But the court found Spanakos came to that number due to the “mess” of the company’s stock ledger and because its stock-transfer agent resigned amid the controversy.
“This all has left a splintered trail of evidence regarding stock ownership that, in its present form, cannot be reconstituted,” the ruling states.
Acknowledging that Spanakos has “cause to be frustrated” since he invested “real money” that was proven to be wasted, Vice Chancellor Slights determined that Spanakos must obtain clarification from the Florida courts of the “meaning and scope” of the two orders before returning to the Chancery Court for relief.
Spanakos is represented by Carl D. Neff and Kasey H. DeSantis of Fox Rothschild LLP in Wilmington, Del., and Manuel A. Mesa and Matthew Carcano of Mesa & Pepin, LLC in Miami.
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