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Carmel, Milazzo & DiChiara LLP Files Lawsuit Against Downing Partners, LLC, 3si Systems, LLC, David Wagner, Michael Shaut and Others Alleging an Employment and Investment Ponzi Scheme

New York, June 7, 2016 – The securities law firm of Carmel, Milazzo & DiChiara LLP announced today that it has filed a lawsuit against the venture capital firm of Downing Partners, LLC, Downing Investment Partners, LP, and its affiliated entities, including, 3si Systems, LLC, (collectively, “Downing”) and its principals David Wagner, Michael Shaut, Richard Buckingham, Brett Giffin, Jeff Rice and other officers/directors alleging an employment and investment Ponzi scheme.

The lawsuit alleges that David Wagner, Michael Shaut, Richard Buckingham, as well as other officers and directors on behalf of Downing committed fraud by making material misrepresentations and omissions, and engaged in a Ponzi scheme whereby they recruited new employees, entered into employment agreements which provided for a salary, commission, bonus, and expense reimbursement, and as condition of their employment, required the employees to make a minimum investment of $250,000 each via a private placement in a Downing entity.  The lawsuit alleges that at the time the new employees entered into their employment agreements, Downing had already ceased paying their current employees’ salaries, and used the new employees investments in the Downing private placement to pay past compensation due and re-ignite payroll.  The lawsuit also alleges that almost immediately after the new employees commenced their employment with Downing, Downing failed to meet payroll, and failed to pay the employees their contractually agreed to salaries, and other sums due under their respective employment agreements.

The lawsuit further alleges that the Downing private placement offering materials contained numerous material misrepresentations and omissions concerning Downing’s business lines, their proprietary products, prior rounds of funding, Downing’s financial condition, and vendors with whom Downing had contracts.

The action, Case No.: 16-CV-04040, was filed in the United States District Court, Southern District of New York.  Claims are asserted under the Fair Labor Standards Act, 29 U.S.C. § 206, Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j, common law and state law.

If you or someone you know failed to receive compensation as an employee of Downing and/or lost money investing in a Downing private placement, you may be entitled to recover your salary, expenses and investment losses.  Your time to file a claim may be limited, so contact us today at (212) 658-0458 or contact@cmdllp.com for a free and confidential case evaluation.

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