SAN FRANCISCO (CN) – A retired couple claim in Federal Court that a sneaky business executive took control of their small radio antenna company, secretly built their products in Chinese factories and sold them behind their back.
Vern and June Wright sued lead defendant Michael Bloom aka Hugh Turnbull in a 55-page complaint that alleges fraud, negligent misrepresentation and violation of state and federal securities laws.
The Wrights claim that Michael Bloom “for purposes of deceit and deception … [has] taken over the online identity of Hugh Turnbull, the well known late vice president of the American Radio Relay League. The real Hugh Turnbull died on September 14, 2010 in Silver Springs, Md., at the age of 93,” the complaint states. “The next day, September 15, 2010, an Internet user (on information and belief defendant Michael Bloom) logged on from an IP (Internet protocol) address registered to ‘Michael Bloom’ at the physical address of his Portland [Oregon] resident and established an online identity for ‘Hugh Turnbull’, now 39 years old, of Silver Springs, Md. Defendant Michael Bloom has since used this ‘Hugh Turnbull’ identity to mask and hide his real identity in multiple attempts to discover and discern Vern Wright’s confidential business plans and trade secrets.”
Also sued are Bloom’s wife, Jaimee Bloom, Kingsbridge Corp., Offshore Solutions Inc., Sinotech Corp., Sinotech International Trade (Tianjin) Co., Bullivant Houser Bailey PC, and Jerry Carleton.
Bullivant Houser is a Portland, Ore.-based law firm which organized Kingsbridge Corp., “and was legal counsel for a fraudulent securities offering conducted in February-April 2009 by Michael Bloom and Kingsbridge,” according to the complaint. Carleton at the time was an associate at Bullivant and was corporate counsel to Kingsbridge, but is no longer associated with Bullivant, according to the complaint.
The Wrights say they started their home-based company, Super Antennas, in 1999, selling handmade antennas for ham radio users. The couple retired in 2002 and began working for their antenna company full-time.
In 2004, Vern Wright says, he was approached by Michael Bloom, the owner of Portland, Ore.-based Offshore Solutions, which owned Chinese subsidiary Sinotech International.
Bloom told Wright he “loved” the antenna business, and offered to help Super Antennas increase profits by reducing the cost of manufacturing, according to the complaint.
Bloom “stressed the safety of working with Offshore Solutions on manufacturing high tech products in China, a well known hub for piracy of U.S. technology and products, pointing out that the Chinese subsidiary actually handling the Chinese manufacturers was ‘a wholly owned foreign subsidiary’ of Offshore Solutions,” according to the complaint.
Based on those assurances, Wright says, he gave Bloom a sample antenna and confidential drawings and specifications. The Wrights say that Super Antennas bought more than $165,000 in products from Offshore Solutions between 2004 and 2009.
The Wrights claim that they later discovered that “Michael Bloom and Offshore Solutions, realizing the huge profit potential for Super Antennas’ products worldwide, decided to secretly build Super Antenna products in their Chinese factories (Sinotech International) and then sell them directly into markets not yet served by Super Antennas, including but not limited to the Chinese market, the Hong Kong market and the Spanish market.”
Due to the cheaper costs of building in China, the Wrights say, Bloom was able to make wholesale profit margins of 438 percent, and retail profits of 662 percent on the Super Antennas he secretly had built in China.
The Wrights claim that Bloom, also behind their back, established a PayPal account using the “Super Antennas” name so that he and Offshore Solutions could accept online and distributor orders for the antennas.
Vern Wright claims that in 2007 he filed a patent for a high-performance professional antenna that Super Antennas began to sell in the United States, and that Bloom persuaded him to have the antennas made in China.
Both Super Antennas and Offshore Solutions suffered business downturns in 2008, during the worldwide economic crisis, according to the complaint.
However, “Unbeknownst to plaintiffs and Super Antennas at the time and despite plaintiffs’ direct orders to the contrary, defendants Michael Bloom and Offshore Solutions decided to accelerate production of antennas in the fall of 2008 instead of delaying production as directed by plaintiffs and Super Antennas,” the complaint states.
The Wrights claim that in the 4 months between late September 2008 and February 2009, Offshore Solutions shipped more than 3,000 antenna products to Super Antennas, which the Wrights could not afford to pay.
“In a little over a month, their [the Wrights’] indebtedness to defendants Michael Bloom and his company Offshore Solutions, had almost tripled,” the complaint states.
The Wrights say, “They were trying to be responsible and now they suddenly owed over $92,000 and had a huge amount of inventory they hadn’t ordered in the slowest sales months of the year and in the middle of a record recession.”
Bloom then asked Vern Wright to be a partner in his new company, Kingsbridge Corp,. to help him repay the money he owed for the antenna manufacturing and shipping, according to the complaint.
Bloom wrote in an email: “‘I would handle the manufacturing and financial tasks and you would handle the design and sales part as well as the packing and repairing tasks you now do,'” according to the complaint.
The Wrights say they rejected the offer, as they needed a minimum of $6,000 a month to stay in their home.
After a series of negotiations, Bloom and Kingsbridge came up with “an overly complex transaction whose real goal was to seize control of Super Antennas and operate it for their own personal benefit,” the complaint states.
“Despite the fact the plaintiffs were essentially giving defendants a 10-year-old profitable business, Super Antennas, with cash flow, customers, finished products and technology, they received nothing for their business except the privilege of paying 46 times the value for common stock in a developmental stage company (Kingsbridge) which, outside of $2,000 in its bank account, had no assets whatsoever, no products, no sales, no technology, no operating history, no offices and no future prospects outside of those provided by Super Antennas,” according to the complaint.
The Wrights seek at least $600,000 for the “fraudulent misappropriations of plaintiffs’ company, Super Antennas,” plus damages for securities violations, and attorney’s fees.
They are represented by Garry Cohen, with Grathwohl, Rauch & Cohen, of Redwood City.