CLASS ACTION COMPLAINT JURY TRIAL DEMANDEDsecurities.stanford.edu/filings-documents/1042/...20 15...

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1 TIFFANY & BOSCO, P.A.Richard G. Himelrick, Arizona Bar #004738

2 J. James Christian, Arizona Bar #023614Third Floor Camelback Esplanade II

3 2525 East Camelback RoadPhoenix, Arizona 85016-4237

4 Telephone: (602) 255-6000Fax: (602) 255-0103

5 [email protected] ; [email protected]

6 THE ROSEN LAW FIRM P.A.Laurence Rosen

7 350 Fifth Avenue, Suite 5508New York, New York 10118

8 Telephone: (212) 686-1060Fax: (212) 202-3827

9 [email protected]

10 Counsel for Plaintiff

11UNITED STATES DISTRICT COURT

12DISTRICT OF ARIZONA

13

14 HARVEY PENSACK, INDIVIDUALLY AND Case No.ON BEHALF OF ALL OTHERS SIMILARLY

15 SITUATED,CLASS ACTION COMPLAINT

16 Plaintiff,

17 vs. JURY TRIAL DEMANDED

18 NUTRACEA, BRADLEY D. EDSON, TODD C.CROW, AND DAVID BENSOL,

19Defendants.

20

21 Plaintiff Harvey Pensack, individually and on behalf of all other persons similarly

22 situated, by her undersigned attorneys, for her complaint against defendants, alleges the

23 following based upon personal knowledge as to herself and her own acts, and information

24 and belief as to all other matters, based upon, inter alia, the investigation conducted by and

25 through her attorneys, which included, among other things, a review of defendants' public

26 documents, conference calls and announcements made by defendants, United States

27 Securities and Exchange Commission ("SEC") filings, wire and press releases published by

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1 and regarding NutraCea, or the "Company", securities analysts' reports and advisories about

2 the Company, and information readily obtainable on the Internet. Plaintiff believes that

3 substantial evidentiary support will exist for the allegations set forth herein after a reasonable

4 opportunity for discovery.

5 NATURE OF THE ACTION

6

1. This is a federal and Arizona state securities laws class action on behalf of a

7 class consisting of all persons other than defendants who purchased the common stock of

8NutraCea during the period from April 2, 2007 through and including February 23, 2009 (the

9 ,`Class Period") seeking to recover damages caused by Defendants' violations of federal

10securities laws and Arizona state securities laws.

11 JURISDICTION AND VENUE12

2. The federal claims asserted herein arise under and pursuant to Sections 10(b)13

and 20(a) of the Exchange Act, (15 U.S.C. §78j(b) and 78t(a)), and Rule 10b-5 promulgated14

thereunder (17 C.F.R. §240.10b-5). The state claims arise under A.R.S. § 44-1991(A)(3),15

§44-2003(A) and §44-1999.16

3. This Court has jurisdiction over the subject matter of this action pursuant to17

18 §27 of the Exchange Act (15 U.S.C. §78aa) and 28 U.S.C. § 1331.

19 4. Venue is proper in this Judicial District pursuant to §27 of the Exchange Act,

20 15 U.S.C. § 78aa and 28 U.S.C. § 1391(b), as a substantial part of the conduct complained

21of herein occurred in this District.

22

23 5. In connection with the acts, conduct and other wrongs alleged in this

24 Complaint, Defendants, directly or indirectly, used the means and instrumentalities of

25 interstate commerce, including but not limited to, the United States mails, interstate

26telephone communications and the facilities of the national securities exchange.

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1 PARTIES

2 6. Plaintiff Harvey Pensack, as set forth in the accompanying certification,

3 incorporated by reference herein, purchased NutraCea securities at artificially inflated prices

4 during the Class Period and has been damaged thereby.

5 7. Defendant NutraCea is a California Corporation with its principal executive

6 offices located at 5090 N. 40 th Street, Suite 400, Phoenix, Arizona. NutraCea operates in two

7 business segments: the NutraCea segment, which manufactures and distributes bulk

8 ingredients primarily derived from Stabilized Rice Bran ("SRB"), utilizing NutraCea's

9 unique and proprietary technology and the Irgovel segment, which consists of NutraCea's

10 rice-bran oil and fatted and de-fatted SRB manufacturing subsidiary in Pelotas, Brazil. At all

11 relevant times herein, the Company's common stock was traded on the OTC Bulletin Board

12 ("OTC.BB ") under ticker "NTRZ.OB."

13 8. Defendant Bradley D. Edson ("Edson") at all relevant times herein was the

14 Company's Chief Executive Officer, President and a member of the board of directors.

15 9. Defendant Todd C. Crow ("Crow") at all relevant times herein was the

16 Company's Chief Financial Officer.

17 10. Defendant David Bensol ("Benson at all relevant times herein was the

18 Company's chairman of the board.

19 11. Edson, Crow and Bensol are collectively referred to hereinafter as the

20 "Individual Defendants."

21 12. It is appropriate to treat the Individual Defendants as a group for pleading

22 purposes and to presume that dissemination of the false, misleading and incomplete

23 information conveyed in the Company's public filings, press releases and other publications

24 as alleged herein is the result of collective actions of the narrowly defined group of

25 defendants identified above. Each of the above officers and directors of NutraCea and its

26 subsidiaries and affiliates, by virtue of his position with the Company, directly participated

27 in the management of the Company, was directly involved in the day-to-day operations of

28 the Company at the highest levels, and was privy to confidential proprietary information

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1 concerning the Company and its business, operations, growth, financial statements, and

2 financial condition, as alleged herein. Said Defendants were involved in drafting, producing,

3 reviewing and/or disseminating the false and misleading statements and information alleged

4 herein, were aware, or recklessly disregarded, that the false and misleading statements

5 regarding the Company were being issued, and approved or ratified these statements, in

6 violation of the federal securities laws.

7 PLAINTIFF'S CLASS ACTION ALLEGATIONS

8 13. Plaintiff brings this action as a class action pursuant to Federal Rules of Civil

9 Procedure 23(a) and (b)(3) on behalf of a Class consisting of all persons who purchased the

10 common stock of NutraCea during the Class Period and who were damaged thereby.

11 Excluded from the Class are Defendants, the officers and directors of the Company at all

12 relevant times, members of their immediate families and their legal representatives, heirs,

13 successors or assigns and any entity in which defendants have or had a controlling interest.

14 14. The members of the Class are so numerous that joinder of all members is

15 impracticable. Throughout the Class Period, NutraCea's securities were actively traded on

16 the OTC.BB . While the exact number of Class members is unknown to Plaintiff at this time

17 and can only be ascertained through appropriate discovery, Plaintiff believes that there are at

18 least hundreds of members in the proposed Class. Members of the Class may be identified

19 from records maintained by NutraCea or its transfer agent and may be notified of the

20 pendency of this action by mail, using a form of notice customarily used in securities class

21 actions.

22 15. Plaintiffs claims are typical of the claims of the members of the Class, as all

23 members of the Class are similarly affected by Defendants' wrongful conduct in violation of

24 federal law that is complained of herein.

25 16. Plaintiff will fairly and adequately protect the interests of the members of the

26 Class and has retained counsel competent and experienced in class and securities litigation.

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1 17. Common questions of law and fact exist as to all members of the Class and

2 predominate over any questions solely affecting individual members of the Class. Among

3 the questions of law and fact common to the Class are:

4 (a) whether the federal securities laws and Arizona state securities laws

5 were violated by Defendants' acts as alleged herein;

6 (b) whether statements made by Defendants to the investing public during

7 the Class Period misrepresented material facts about the business, operations

8 and management of NutraCea; and

9 (c) to what extent the members of the Class have sustained damages and

10 the proper measure of damages.

11 18. A class action is superior to all other available methods for the fair and

12 efficient adjudication of this controversy since joinder of all members is impracticable.

13 Furthermore, as the damages suffered by individual Class members may be relatively small,

14 the expense and burden of individual litigation make it impossible for members of the Class

15 to redress individually the wrongs done to them. There will be no difficulty in the

16 management of this action as a class action

17 SUBSTANTIVE ALLEGATIONS

18 19. On April 2, 2007 the Company issued a materially false and misleading press

19 release and corresponding Form 10-K with the SEC, announcing the Company's fiscal year

20 2006 financial results. Of the $18.09 million in revenue recognized for the fiscal year ended

21 December 31, 2007, the 10-K recognized $1.6 million in revenue that should not have been

22 recognized from a sale that did not take place. The $1.6 million should not have been

23 recognized because it was derived from a sale in which the purchaser never paid NutraCea

24 the purchase price. Consequently net income for fiscal year 2006 was overstated by $1.4M

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1 and net income for fiscal year 2007 was understated by $1.4M during which time the sale did

2 take place.'

3 20. The 10-K was signed by Defendant Edson and Defendant Crow, and

4 individually certified by defendants Edson and Crow, pursuant to the Sarbanes-Oxley Act of

5 2002, attesting to the accuracy and completeness of the report.

6 21. On August 14, 2007 the Company issued a materially false and misleading

7 press release and corresponding Form 10-Q with the SEC, announcing the Company's

8 second quarter fiscal 2007 financial results. Of the $8.0 million in revenue recognized from

9 product sales for the three months ended June 30, 2007, the 10-Q recognized $2.6 million in

10 revenue that should not have been recognized. The $2.6 million should not have been

11 recognized because it was derived from a sale in which the purchaser never paid NutraCea

12 the purchase price.

13 22. Additionally the Form 10-Q for the quarter ended June 30, 2007 recognized

14 $5,000,000 in royalty and licensing fees, which it did not receive and which, under GAAP,

15 did not qualify as revenue.

16 23. The 10-Q was signed by Defendant Edson and Defendant Crow, and



19 24. On November 7, 2007 the Company filed a materially false and misleading

20 Form 10-Q with the SEC, stating the Company's third quarter fiscal 2007 financial results.

21 The 10-Q recognized $13.0 million in revenue for the nine months ended September 30,

22 2007. $2.6 million of the $13.0 million should not have been recognized because it was

23 derived from a sale in which the purchaser never paid NutraCea the purchase price.

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26 'On April 30, 2007 the Company issued a Form 10-K/A amending the 10-K it had issued on

27 April 2, 2007, but it did not amend the false and misleading recognition of the $1.6 million inrevenue that should not have been recognized.

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4 26. On March 17, 2008 the Company filed a materially false and misleading Form

5 10-K with the SEC, stating the Company's fiscal year 2007 financial results. The 10-K

6 recognized $22.2 million in revenue for the year ended December 31, 2007. $4.6 million of

7 the $22.2 million should not have been recognized because it was derived from a sale in

8 which the purchaser never paid NutraCea the purchase price. $2.6 million of the $22.2

9 million should not have been recognized because it was derived from a sale in which the

10 purchaser never paid NutraCea the purchase price. Additionally, in December 2007, $2.0

11 million of the $22.2 million should not have been recognized because a $2.0 million sale did

12 not meet accounting requirements for recognition of revenue in bill and hold transactions.

13 27. The 10-K was signed by Defendant Edson and Defendant Crow, and



16 28. On August 11, 2008 the Company filed a materially false and misleading Form

17 10-Q with the SEC, which stated that in March 2008, through the Company's wholly-owned

18 subsidiary, Medan, LLC, it acquired $10.675 million worth of stock in a company called PT

19 Panganmas Int Nusantara, an Indonesian company ("PIN"). At the time of the acquisition,

20 the valuation of the PIN stock was not $10,675 million. NutraCea's investment in PIN was

21 overstated by $5 million. The actual value of NutraCea's Pin stock was $5.675 million.




25 TRUTH EMERGES; DAMAGING INVESTORS

26 30. On February 20, 2009, the price of NutraCea stock closed at was $0.37/share.

27 31. In the morning of February 23, 2009, before market open, the Company issued

28 a press release admitting that the Company quarterly reports for the quarterly periods from

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1 2Q07 through 3Q08 and annual report for fiscal years 2007 and 2008 were materially

2 inaccurate and would have to be restated.

3 32. News of the restatement caused the market price of NutraCea securities to drop

4 substantially. The price of the stock closed on February 23, 2009 at $0.29, down 22% from

5 the prior trading day's closing price.

6 33. As the market more fully assimilated the negative news of the restatement, the

7 stock price fell further the next day. On February 24, 2009, NutraCea's stock price fell

8 further to $0.25/share or another 14%, as a result of the restatement. On February 25, 2009,

9 NutraCea's stock price fell further to $0.24/share as a result of the restatement.

10 34. In the afternoon of April 23, 2009, the Company issued a press release

11 admitting that the accounting fraud was much worse than previously thought.

12 35. The Company admitted that its annual report for fiscal year 2006 and the

13 quarterly report for first quarter of 2007 was materially inaccurate and would have to be

14 restated.

15 36. The April 23, 2009 press release also admitted that the previous announcement

16 on February 23, 2009 that the quarterly reports for the quarterly periods from 2Q07 through

17 3Q08 and annual report for fiscal years 2007 and 2008 were materially inaccurate and would

18 have to be restated actually underestimated the full extent to which the Company had

19 previously overstated its revenue and assets.

20 37. Had the Plaintiff and the Class been aware of the adverse information that the

21 Company failed to disclose they would not have purchased the Company's securities at all or

22 would not have purchased such securities at the artificially inflated prices at which they did.

23 Applicability of Presumption of Reliance:Fraud-on-the-Market Doctrine

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25 38. At all relevant times, the market for NutraCea's common stock was an efficient

26 market for the following reasons, among others:

27 (a) NutraCea's stock met the requirements for listing, and was listed and

28 actively traded on the OTC.BB, a highly efficient and automated market;

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1 (b) During the class period, on average, several hundreds of thousands of

2 shares of NutraC ea stock were traded on a weekly basis, demonstrating a very

3 active and broad market for NutraCea stock and permitting a very strong

4 presumption of an efficient market;

5 (c) As a regulated issuer, NutraCea filed with the SEC periodic public

6 reports during the Class Period;

7 (d) NutraCea regularly communicated with public investors via established

8 market communication mechanisms, including regular disseminations of press

9 releases on the national circuits of major newswire services and other wide-

10 ranging public disclosures, such as communications with the financial press

11 and other similar reporting services;

12 (e) NutraCea was followed by several securities analysts employed by

13 major brokerage firms who wrote reports that were distributed to the sales

14 force and certain customers of their respective brokerage firms during the

15 Class Period. Each of these reports was publicly available and entered the

16 public marketplace;

17 (0 Numerous NASD/FINRA member firms were active market-makers in

18 NutraCea stock at all times during the Class Period; and

19 (g) Unexpected material news about NutraCea was rapidly reflected in and

20 incorporated into the Company's stock price during the Class Period.

21 39. As a result of the foregoing, the market for NutraCea's common stock

22 promptly digested current information regarding NutraCea from all publicly available

23 sources and reflected such information in NutraCea's stock price. Under these

24 circumstances, all purchasers of NutraCea' s common stock during the Class Period suffered

25 similar injury through their purchase of NutraCea's common stock at artificially inflated

26 prices, and a presumption of reliance applies.

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1 NO SAFE HARBOR

2 40. The statutory safe harbor provided for forward-looking statements under

3 certain circumstances does not apply to any of the allegedly false statements pleaded in this

4 Complaint. Many of the specific statements pleaded herein were not identified as "forward-

5 looking statements" when made. To the extent there were any forward-looking statements,

6 there were no meaningful cautionary statements identifying important factors that could

7 cause actual results to differ materially from those in the purportedly forward-looking

8 statements. Alternatively, to the extent that the statutory safe harbor does apply to any

9 forward-looking statements pleaded herein, Defendants are liable for those false forward-

10 looking statements because at the time each of those forward-looking statements was made,

11 the particular speaker knew that the particular forward-looking statement was false, and/or

12 the forward-looking statement was authorized and/or approved by an executive officer of

13 NutraCea who knew that those statements were false when made.

14 FIRST CLAIM

15 Violation of Section 10(b) OfThe Exchange Act Against and Rule 10b-5

16 Promulgated Thereunder Against All Defendants

17 41. Plaintiff repeats and realleges each and every allegation contained above as if

18 fully set forth herein.

19

42. During the Class Period, Defendants carried out a plan, scheme and course of

20 conduct which was intended to and, throughout the Class Period, did: (1) deceive the

21 investing public, including Plaintiff and other Class members, as alleged herein; and (2)

22 cause Plaintiff and other members of the Class to purchase and sell NutraCea's securities at

23 artificially inflated and distorted prices. In furtherance of this unlawful scheme, plan and

24 course of conduct, Defendants, and each of them, took the actions set forth herein.

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43. Defendants (a) employed devices, schemes, and artifices to defraud; (b) made

26 untrue statements of material fact and/or omitted to state material facts necessary to make the

27 statements not misleading; and (c) engaged in acts, practices, and a course of business that

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1 operated as a fraud and deceit upon the purchasers of the Company's securities in an effort to

2 maintain artificially high market prices for NutraCea's securities in violation of Section

3 10(b) of the Exchange Act and Rule 10b-5 thereunder. All Defendants are sued either as

4 primary participants in the wrongful and illegal conduct charged herein or as controlling

5 persons as alleged below.

6 44. Defendants, individually and in concert, directly and indirectly, by the use,

7 means or instrumentalities of interstate commerce and/or of the mails, engaged and

8 participated in a continuous course of conduct to conceal adverse material information about

9 the business, operations and future prospects of NutraCea as specified herein.

10 45. These Defendants employed devices, schemes and artifices to defraud while in

11 possession of material adverse non-public information and engaged in acts, practices, and a

12 course of conduct as alleged herein in an effort to assure investors of NutraCea's value and

13 performance and continued substantial growth, which included the making of, or

14 participation in the making of, untrue statements of material facts and omitting to state

15 material facts necessary in order to make the statements made about NutraCea and its

16 business operations and future prospects in the light of the circumstances under which they

17 were made, not misleading, as set forth more particularly herein, and engaging in

18 transactions, practices and a course of business that operated as a fraud and deceit upon the

19 purchasers of NutraCea's securities during the Class Period.

20 46. Each of the Individual Defendants' primary liability, and controlling person

21 liability, arises from the following facts: (1) the Individual Defendants were high-level

22 executives, directors, and/or agents at the Company during the Class Period and members of

23 the Company's management team or had control thereof (2) each of these Defendants, by

24 virtue of his responsibilities and activities as a senior officer and/or director of the Company,

25 was privy to and participated in the creation, development and reporting of the Company's

26 financial condition; (3) each of these defendants enjoyed significant personal contact and

27 familiarity with the other Defendants and was advised of and had access to other members of

28 the Company's management team, internal reports and other data and information about the

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1 Company's finances, operations, and sales at all relevant times; and (4) each of these

2 Defendants was aware of the Company's dissemination to the investing public of

3 information that they knew or recklessly disregarded to be materially false and misleading.

4 47. Defendants had actual knowledge of the misrepresentations and omissions of

5 material facts set forth herein, or acted with reckless disregard for the truth in that they failed

6 to ascertain and to disclose such facts, even though such facts were available to them. Such

7 Defendants' material misrepresentations and/or omissions were done knowingly or

8 recklessly and for the purpose and effect of concealing from the investing public NutraCea's

9 operating condition and future business prospects and supporting the artificially inflated

10 price of its securities. As demonstrated by Defendants' overstatements and misstatements of

11 the Company's financial condition throughout the Class Period, Defendants, if they did not

12 have actual knowledge of the misrepresentations and omissions alleged, were reckless in

13 failing to obtain such knowledge by deliberately refraining from taking those steps necessary

14 to discover whether those statements were false or misleading.

15 48. As a result of the dissemination of the materially false and misleading

16 information and failure to disclose material facts, as set forth above, the market price of

17 NutraCea's securities was artificially inflated during the Class Period. In ignorance of the

18 fact that market prices of NutraCea's publicly-traded securities were artificially inflated, and

19 relying directly or indirectly on the false and misleading statements made by defendants, or

20 upon the integrity of the market in which the securities trade, and/or on the absence of

21 material adverse information that was known to or recklessly disregarded by Defendants but

22 not disclosed in public statements by Defendants during the Class Period, Plaintiff and the

23 other members of the Class acquired NutraCea securities during the Class Period at

24 artificially high prices and were or will be damaged thereby.

25 49. At the time of said misrepresentations and omissions, Plaintiff and other

26 members of the Class were ignorant of their falsity, and believed them to be true. Had

27 Plaintiff and the other members of the Class and the marketplace known the truth regarding

28 NutraCea's financial results, which were not disclosed by defendants, Plaintiff and other

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1 members of the Class would not have purchased or otherwise acquired their NutraCea

2 securities, or, if they had acquired such securities during the Class Period, they would not

3 have done so at the artificially inflated prices that they paid.

4 50. By virtue of the foregoing, Defendants have violated Section 10(b) of the

5 Exchange Act, and Rule 10b-5 promulgated thereunder.

6 51. As a direct and proximate result of Defendants' wrongful conduct, Plaintiff and

7 the other members of the Class suffered damages in connection with their respective

8 purchases and sales of the Company's securities during the Class Period.

9 52. This action was filed within two years of discovery of the fraud and within five

10 years of each plaintiffs purchases of securities giving rise to the cause of action.

11 SECOND CLAIMViolation of Section 20(a) Of

12 The Exchange Act Against the Individual Defendants13

53. Plaintiff repeats and realleges each and every allegation contained above as if14

fully set forth herein.15

54. The Individual Defendants acted as controlling persons of NutraCea within the16

meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-17

level positions, agency, and their ownership and contractual rights, participation in and/or18

awareness of the Company's operations and/or intimate knowledge of the false financial19

statements filed by the Company with the SEC and disseminated to the investing public, the20

Individual Defendants had the power to influence and control, and did influence and control,21

directly or indirectly, the decision-making of the Company, including the content and22

dissemination of the various statements that Plaintiff contends are false and misleading. The23

Individual Defendants were provided with or had unlimited access to copies of the24

Company's reports, press releases, public filings and other statements alleged by Plaintiff to25

have been misleading prior to and/or shortly after these statements were issued and had the26

ability to prevent the issuance of the statements or to cause the statements to be corrected.27

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ase 2:09-cv -00880-SR B Document 1 Filed 04/27/2009 o1 16

1 55. In particular, each of these Defendants had direct and supervisory involvement

2 in the day-to-day operations of the Company and, therefore, is presumed to have had the

3 power to control or influence the particular transactions giving rise to the securities

4 violations as alleged herein, and exercised the same.

5 56. As set forth above, NutraCea and the Individual Defendants each violated

6 Section 10(b) and Rule 10b-5 by their acts and omissions as alleged in this Complaint.

7 57. By virtue of their positions as controlling persons, the Individual Defendants

8 are liable pursuant to Section 20(a) of the Exchange Act. As a direct and proximate result of

9 Defendants' wrongful conduct, Plaintiff and other members of the Class suffered damages in

10 connection with their purchases of the Company's securities during the Class Period.

11 58. This action was filed within two years of discovery of the fraud and within five

12 years of each plaintiffs purchases of securities giving rise to the cause of action.

13 THIRD CLAIM

14Violation of A.R.S. § 44-1991(A)(3) & 44-2003(A)



17 60. Defendants, individually and in concert, directly and indirectly, engaged and

18 participated in a continuous course of business under which they hid adverse information

19 concerning NutraCea's actual revenue, net income, and assets. Defendants knew or

20 recklessly ignored that disclosure of NutraCea's fraud would reduce the value of NutraCea

21 stock.

22 61. The course of business through which Defendants disclosed information about

23 NutraCea and marketed NutraCea stock without disclosing the fraud that was occurring at

24 NutraCea (and the role of Defendants in the fraud) violated A.R.S. § 44-1991(A)(3).

25 62. Individual Defendants aided, abetted, and culpably made and participated in

26 NutraCea' s violations of A.R. S. § 44- 1991(A)(3 ). Under A.R. S. § 44-2003(A), Defendants

27 are liable for their own and for NutraCea's violations of § 44-1991(A)(3).

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1 63. Because of the securities violations described in this Claim, Plaintiff and the

2 Class are entitled to, and by this complaint demand, statutory rescission under A.R.S. § 44-

3 2001(A).

4 FOURT H C LA I M

5Violation of A.R.S. § 44-1999 against Individual Defendants



8 65. Individually or as a group, or both, Individual Defendants were statutory

9 control persons with the power to control NutraCea.

10 66. With respect to the securities violations described in the Third Claim,

11 Defendants are jointly and severally liable to Plaintiffs as controlling persons under A.R.S. §

12 44-1999.

13 67. Because of the securities violations described in this Claim, Plaintiff and the

14 Class are entitled to, and by this complaint demand, statutory rescission under A.R.S. § 44-

15 2001(A).

16 68. Plaintiff and the Class hereby tender to Defendants all stock purchased during

17 the Class Period and offer to do all acts necessary for rescission under A.R.S. § 44-2001(A).

18 WHEREFORE, Plaintiff prays for relief and judgment, as follows:

19 (a) Determining that this action is a proper class action, designating Plaintiff

20 as Lead Plaintiff and certifying Plaintiff as a class representative under Rule 23 of the

21 Federal Rules of Civil Procedure and Plaintiffs counsel as Lead Counsel;

22 (b) Awarding compensatory damages in favor of Plaintiff and the other Class

23 members against all Defendants, jointly and severally, for all damages sustained as a result

24 of Defendants' wrongdoing, in an amount to be proven at trial, including interest thereon;

25 (c) Awarding plaintiff and the Class their reasonable costs and expenses

26 incurred in this action, including counsel fees and expert fees; and

27 (d) Such other and further relief as the Court may deem just and proper.

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1 JURY TRIAL DEMANDED

2 Plaintiff hereby demands a trial by jury.

3

4

5 Dated: April 27, 2009.

6 TIFFANY & BOSCO, P.A.

7

8 By s/ Richard G. Himelrick Richard G. Himelrick

9 J. James ChristianThird Floor Camelback Esplanade II

10 2525 East Camelback RoadPhoenix, Arizona 85016-4237

11

12 THE ROSEN LAW FIRM P.A.Laurence Rosen

13 350 Fifth Avenue, Suite 5508New York, New York 10118

14Counsel for Plaintiff

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Case 2:09-cv-00880-SRB Document 1-2 Filed 04/27/2009 Page 1 of 3

li'XHIBIT A

Case 2 09-cv-00880-SRB Document 1-2 Filed 04/27/2009 Page 2 of 3

5. 1 have not, xvidtht tlw three years pecans the date of this cettiftcatico, sought to serve orserved as a representative party on behalf of a class in an action involving alleged violations of thefederal securities taws, except for the fthowhigcompanyeet*

6. 1 wili not accept any payment Sr saving as a repesandve patty beyond my cao rata that ofay recovery, except reasonable cads and expernes, =Ix as travel expenses and lest wages directlyraffled to the class representations as *Mead or approved by the covatputsuant to law. _se

I declare under penalty of perjury iha the fongobtg is true and correct. Executed this _L. :day of 2009.

ana 11-C/44eel Name. 140 le V /ow/fel(Adthess:

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PLEASE FAX CERTMCATMITOWDOTEN LAW MI at (212,202-3827 2OR MALI I'O:

, ,LAW FIRM rA350 Mal AN/WT.1'gs, 5508NEW YORLCNY 10118

Case 2:09-cv-00880-SRB Document 1-2 Filed 04/27/2009 Page 3 of 3;

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Case 2:09-cv-00880-SRB, Dioreovkl-r3, -.-F-Asid 04/27/2009 Page 1 of 2tIJS 44 (Rev. 12/07) C Wit n 1-it,t,The JS 44 civil cover sheet and the infommtion contained herein neither replace nor supplement the filing and service ofpleadings or other papers as required by law, except as providedby local rules of court. This fomi, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiatingthe civil docket sheet. (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.)

I. (a) PLAINTIFFS DEFENDANTSHARVEY PENSACK, INDIVIDUALLY AND ON BEHALF OF ALL NUTRACEA, BRADLEY D. EDSON, TODD C. CROW, andOTHERS SIMILARLY SITUATED DAVID BENSOL

(b) County of Residence of First Listed Plaintiff Manatee County, FL County of Residence of First Listed Defendant(EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THELAND INVOLVED.

(C) Attorney's (Firm Name, Address, and Telephone Number) Attorneys (If Known)

Richard G. Himelrick, Tiffany & Bosco, P.A., 2525 E. CamelbackRd., 3rd Fir, Phoenix, AZ 85016, (602) 255-6021; Laurence Rosen,

II. BASIS OF JURISDICTION (Place an "X" in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES(Place an "X" in One Box for PlaintiffFor Diversity Cases Only) and One Box for Defendant)

0 1 U.S. Government X 3 Federal Question PTF DEF PTF DEFPlaintiff (U.S. Govemment Not a Party) Citizen of This State 0 1 0 1 Incorporated or Principal Place 0 4 0 4

of Business In This State

0 2 U.S. Government 0 4 Diversity Citizen of Another State 0 2 0 2 Incorporated and Principal Place 0 5 0 5Defendantof Business In Another State

(Indicate Citizenship of Parties in Item DI)

Citizen or Subject of a 0 3 0 3 Foreign Nation 0 6 0 6Foreign Country

IV. NATURE OF SUIT (Place an "X" in One Box Only) I CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES I

110 Insurance PERSONAL INJURY PERSONAL INJURY 0 610 Agriculture 0 422 Appeal 28 USC 158 400 State Reapportimunent120 Marine 0 310 Airplane 0 362 Personal Injury - 0 620 Other Food & Drug 0 423 Withdrawal 410 Antitrust130 Miller Act 0 315 Airplane Product Med. Malpractice 0 625 Drug Related Seizure 28 USC 157 430 Banks and Banking140 Negotiable Instrument Liability 0 365 Personal Injury - of Property 21 USC 881 450 Commerce150 Recovery of Overpayment 0 320 Assault, Libel & Product Liability 0 630 Liquor Laws 1 PROPERTY RIGHTS 460 Deportation

&Enforcement ofJudgment Slander 0 368 Asbestos Personal 0 640 R.R. & Truck 0 820 Copyrights 470 Racketeer Influenced and151 Medicare Act 0 330 Federal Employers' Injury Product 0 650 Airline Regs. 0 830 Patent Conupt Organizations152 Recovery of Defaulted Liability Liability 0 660 Occupational 0 840 Trademark 480 Consumer Credit

Student Loans 0 340 Marine PERSONAL PROPERTY Safety/Health 490 Cable/Sat TV(Excl. Veterans) 0 345 Marine Product 0 370 Other Fraud 0 690 Other 810 Selective Service

0 153 Recovery of Overpayment Liability 0 371 Truth in Lending LABOR SOCIAL SECURITY 850 Securities/Commodities/of Veteran's Benefits 0 350 Motor Vehicle 0 380 Other Personal 0 710 Fair Labor Standards 0 861 HIA (1395ff) Exchange

0 160 Stockholders' Suits 0 355 Motor Vehicle Property Damage Act 0 862 Black Lung (923) 875 Customer Challenge0 190 Other Contract Product Liability 0 385 Property Damage 0 720 Labor/Mgmt. Relations 0 863 DDVC/DDVW (405(g)) 12 USC 34100 195 Contract Product Liability 0 360 Other Personal Product Liability 0 730 Labor/Mgmt.Reporting 0 864 SSID Title XVI 890 Other Statutory Actions0 196 Franchise Injury & Disclosure Act 0 865 RSI (405(g)) 891 Agricultural Acts

I REAL PROPERTY CIVIL RIGHTS PRISONERPETITIONS 0 740 Railway Labor Act FEDERAL TAX SUITS 892 Economic Stabilization Act0 210 Land Condemnation 0 441 Voting 0 510 Motions to Vacate 0 790 Other Labor Litigation 0 870 Taxes (U.S. Plaintiff 893 Environmental Matters0 220 Foreclosure 0 442 Employment Sentence 0 791 Empl. Ret. Inc. or Defendant) 894 Energy Allocation Act0 230 Rent Lease & Ejectment 0 443 Housing/ Habeas Corpus: Security Act 0 871 IRS—Third Party 895 Freedom of Information0 240 Torts to Land Accommodations 0 530 General 26 USC 7609 Act0 245 Tort Product Liability 0 444 Welfare 0 535 Death Penalty IMMIGILATION 900Appeal of Fee Detemilnation0 290 All Other Real Property 0 445 Amer. w/Disabilities - 0 540 Mandamus & Other 0 462 Naturalization Application Under Equal Access

Employment 0 550 Civil Rights 0 463 Habeas Corpus - to Justice0 446 Amer. w/Disabilities - 0 555 Prison Condition Alien Detainee 0 950 Constitutionality of

Other 0 465 Other Immigration State Statutes0 440 Other Civil Rights Actions

V. ORIGIN (Place n "X" in One Box Only) Appeal to DistrictJudgeX 1 Original 0 2 R moved from 0 3 Remanded from 0 4 Reinstated or Transf fled from

EP 5 anotherecify)

district 0 6 Multidistrict fromn 7—Proceeding State Court Appellate Court Reopened Litigation Magistrate

(sp Judgment Cjigthis k.g : SilAtgy giiidar wbich you are

-t. 4tiling LD14 notKit

ODe turiglictional statutes unless diversity):

t8t(a); i t U.1-1 §2u.i VI. CAUSE OF ACTION Brief description of cause:

Securities violations and related misconductVII. REQUESTED IN 211 CHECK IF THIS IS A CLASS ACTION DEMAND $ CHECK YES only if demanded in complaint:

COMPLAINT: UNDER F.R.C.P. 23 JURY DEMAND: 9'Yes 0 No

VIII. RELATED CASE(S)(See instructions):IF ANY JUDGE Frederick J. Martone DOCKET NUMBER 2:09-cv-00406-FJM

DATE SIGNATURE OF ATTORNEY OF RECORD

04/27/2009 s/Richard G. HimelrickFOR OFFICE USE ONLY

RECEIPT # AMOUNT APPLYING IF? JUDGE MAG. JUDGE

I Export as DF R tri veF FileI Print I Save As.- F I e e DF RI eset

Case 2:09-cv-00880-SRB Document 1-3 Filed 04/27/2009 Page 2 of 2JS 44 Reverse (Rev. 12/07)

INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44

Authority For Civil Cover Sheet

The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as requiredby law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the useof the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of Court for each civil complaintfiled. The attorney filing a case should complete the form as follows:

1. (a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use onlythe full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then the official, givingboth name and tifie.

(b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the timeof filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases,the county of residence of the "defendant" is the location of the tract of land involved.)

(c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, notingin this section "(see attachment)".

II. Jurisdiction. The basis of jtuisdiction is set forth under Rule 8(a), F.R.C.P., which requires that jurisdictions be shown in pleadings. Place an "X" in oneof the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below.

United States plaintiff. (1) Jurisdiction based 011 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here.

United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an "X" in this box.

Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment to theConstitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U. 5. plaintiff or defendant code takes precedence, and box1 or 2 should be marked.

Diversity of citizenship. (4) This refers to suits under 28 U. S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of thedifferent parties must be checked. (See Section III below; federal question actions take precedence over diversity cases.)

III. Residence (citizenship) of Principal Parties. This section of the .TS 44 is to be completed if diversity of citizenship was indicated above. Mark this sectionfor each principal party.

IV. Nature of Suit. Place an "X" in the appropriate box. If the nature of suit cannot be determined, be sure the cause of action, in Section VI below, is sufficientto enable the deputy clerk or the statistical clerks in the Administrative Office to determine the nature of suit. If the cause fits more than one nature of suit, selectthe most definitive.

V. Origin. Place an "X" in one of the seven boxes.

Original Proceedings. (1) Cases which originate in the United States district courts.

Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section 1441. When the petitionfor removal is granted, check this box.

Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date.

Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date.

Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or multidistrictlitigation transfers.

Multidistrict Litigation. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C. Section 1407. When this boxis checked, do not check (5) above.

Appeal to District Judge from Magistrate Judgment. (7) Check this box for an appeal from a magistrate judge's decision.

VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statutesunless diversity. Example: U.S. Civil Statute: 47 USC 553

Bnef Descnption: Unauthonzed reception of cable service

VII. Requested in Complaint. Class Action. Place an "X" in this box if you are filing a class action under Rule 23, F.R.Cv.P.

Demand. In this space enter the dollar amount fin thousands of dollars) being demanded or indicate other demand such as a preliminary injunction.

Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded.

VIII. Related Cases. This section of the .TS 44 is used to reference related pending cases if any. If there are related pending cases, insert the docket numbersand the corresponding judge names for such cases.

Date and Attorney Signature. Date and sign the civil cover sheet.

Case 2:09-cv-00880-SRB Document 14 Filed 04/27/2009 Page 1 of 2

AO 440 (Rev. 02/09) Summons in a Civil Action

UNITED STATES DISTRICT COURTfor the

District of Arizona

HARVEY PENSACK, INDIVIDUALLY AND ONBEHALF OF ALL OTHERS SIMILARLY SITUATED )

)Plaintiff

)v. ) Civil Action No.

NUTRACEA, BRADLEY D. EDSON, TODD C. )CROW, and DAVID BENSOL )

Defendant 1)

SUMMONS IN A CIVIL ACTION

To: (Defendant's name and address) DAVID BENSOL

A lawsuit has been filed against you.

Within 20 days after service of this summons on you (not counting the day you received it) or 60 days if youare the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ.P. 12 (a)(2) or (3) you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 ofthe Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff's attorney,whose name and address are: Richard G. Himelrick, Tiffany & Bosco, P.A., 2525 E. Camelback Road,

Third Floor, Phoenix, Arizona 85016

Laurence Rosen, The Rosen Law Firm, P.A., 350 Fifth Avenue, Suite 5508,New York, New York 10118

If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint.You also must file your answer or motion with the court.

CLERK OF COURT

Date: Signature of Clerk or Deputy Clerk

Case 2:09-cv-00880-SRB Document 1A Filed 04/27/2009 Page 2 of 2

AO 440 (Rev. 02/09) Summons in a Civil Action (Page 2)

Civil Action No.

PROOF OF SERVICE(This section should not he filed with the court unless required by Fed R. Civ. P. 4 (1))

This summons for (name of individual and title, if any)

was received by me on (date)

O I personally served the summons on the individual at (place)

on (date) ; or

O I left the summons at the individual's residence or usual place of abode with (name)

, a person of suitable age and discretion who resides there,

on (date) , and mailed a copy to the individual's last known address; or

O I served the summons on (name of individual) , who is

designated by law to accept service of process on behalf of (name of organization)

on (date) ; or

O I returned the summons unexecuted because ; or

O Other (speci,fr):

My fees are $ for travel and $ for services, for a total of $ 0.00 •

I declare under penalty of perjury that this information is true.

Date: Server's signature

Printed name and title

Server's address

Additional information regarding attempted service, etc:

I Print I Save As... 1 Reset




District of Arizona


)Plaintiff



Defendant 1)


To: (Defendant's name and address) TODD C. CROW






CLERK OF COURT




Civil Action No.





on (date) ; or






on (date) ; or


O Other (speci,fr):





Server's address






District of Arizona


)Plaintiff



Defendant 1)


To: (Defendant's name and address) BRADLEY D. EDSON






CLERK OF COURT




Civil Action No.





on (date) ; or






on (date) ; or


O Other (speci,fr):





Server's address






District of Arizona


)Plaintiff



Defendant 1)


To: (Defendant's name and address) NUTRACEA






CLERK OF COURT




Civil Action No.





on (date) ; or






on (date) ; or


O Other (speci,fr):





Server's address



CLASS ACTION COMPLAINT JURY TRIAL DEMANDEDsecurities.stanford.edu/filings-documents/1042/...20 15...

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