PrortoGroup LLC / ReGen

An Open Letter to Members, Investors, and Potential Investors of ProtoGroup, LLC and to anyone dealing with Mr. Christos Fotiadis:

 

Let me begin by stating that I am a former Board Member of ProtoGroup LLC. My goal in writing this is to inform all those involved with ProtoGroup LLC, and/or Christos Fotiadis, of the severe financial condition of the company and of breaches of fiduciary duty and possible crimes committed by ProtoGroup’s founder and CEO, Mr. Fotiadis. ProtoGroup LLC, its agent and offices are located at 2043 West Belmont Street, Suite 4, Chicago, IL 60618. 

If you are an investor, member, vendor with outstanding invoices, someone who has provided services in exchange for ownership, are considering making an investment in ProtoGroup, are considering making introductions to potential investors for Mr. Fotiadis, or loaning Mr. Fotiadis money, then you should consider the information in this message prior to making such an investment. 

As a former member of the Board of Directors of ProtoGroup, I was appointed by Mr. Fotiadis to help grow the company and to represent the interests of all the stakeholders in ProtoGroup in 2009. One of my duties as a board member was to ensure that the LLC membership is kept abreast of material developments affecting the company and their investment. For more than a year, the Board of Directors demanded that a letter be sent to the LLC members advising them of the severe technical problems with the company’s assets as well as the financial and legal liabilities facing the company and Mr. Fotiadis personally. When Mr. Fotiadis (the CEO) refused to comply with this request, the Board requested contact information for all the membership so we could contact the members directly. CEO Fotiadis refused to provide member contact information to multiple members, not just the BoD. Thus this is our last effort to try to contact the membership to describe the present status of the company and your investment. 

In addition to refusing to provide member contact information, Mr. Fotiadis obstructed the BoD from performing its duties by refusingd to provide numerous documents and data that the Board requested, and in fact, had a duty to review pursuant to its role as representatives of the membership. The list of documents Fotiadis refused to provide includes but is not limited to financial statements, contracts, sales records, legal actions threatened or filed against the company, tax returns, emails and the disclosure of any other material information that would have a direct impact on the company. It has come to my attention that several members who have knowledge of the deteriorated status of the company also requested similar information and all were refused access by Mr. Fotiadis. It is important for you to know that Mr. Fotiadis’ failure to supply the requested information to the Board and Members is, in and of itself, a breach the company’s Operating Agreement, and of Federal and State Securities Laws requiring full disclosure to owners of material information regarding such matters. 

The former General Counsel and VP of ProtoGroup, Jason Lechter, had also received numerous requests from the Board of Directors for this same information. Like Mr. Fotiadis, Mr. Lechter also refused to provide any of the requested documents or Member contact information to the Board of Directors or to other members, citing that he would only provide information that the CEO authorized him to provide. Given Mr. Lechter’s position as General Counsel, his refusal to recognize the authority of the board of directors over the CEO has raised suspicions as to the degree of his involvement in the matters detailed in this letter. 

Unfortunately, the problems with ProtoGroup and with Mr. Fotiadis do not stop here. The company’s one and only asset, a software tool called ReGen, is incomplete, not functionally valuable to customers, is precluded from being sold due to unpaid invoices and Mr. Fotiadis’ failure to obtain proper licensing for third-party (integrated) software, and more. These problems were presented to Mr. Fotiadis in numerous Board meetings and in memos and were ignored.

 As an entity, ProtoGroup is currently insolvent and has serious pending legal actions and debt collections that could drive the company into bankruptcy. It is my opinion that, based on the amount of money ProtoGroup raised, the revenues it likely generated, and the minimal amount of money it actually spent on building its business, that it should be anywhere close to being insolvent. In fact, I believe the company should be flush with cash but is instead flush with debt. I will detail below some of my views as to how ProtoGroup likely reached its current state:

 

Embezzlement

 

My best estimate indicates that there as much as 80% of the money invested in ProtoGroup remains unaccounted for. I have been unable to determine how the vast majority of the company’s funds were spent and Mr. Fotiadis has refused to answer any and all formal requests for documents, spreadsheets, bank statements, financial statements and/or tax returns that would explain the dire financial condition of the company. What is clear is that more than $1, 100, 000 was raised from investors or generated in revenues by the company. In the 18 months since the Board began making inquiries, Mr. Fotiadis has provided nothing to dispute the fact that as much as 80% of the money that flowed through ProtoGroup was spent on non-company matters or on personal (non-company related) expenses claimed by Mr. Fotiadis or on extravagant travel, accommodates and amenities solely to Mr. Fotiadis’ benefit. 

In fact I believe it likely that Mr. Fotiadis used the missing ProtoGroup money to pay his mortgage, utilities, living expenses, fly around the world first-class and stay in lavish hotels in places like Japan, China, and Greece to name a few without ever completing the development of the company’s software and without securing enough sales to sustain the business. On top of this, Fotiadis lists himself as the single biggest debtor to the company, claiming back salary due to him of more than $780, 000 and back rent (for what it is unclear).. As a result of Fotiadis’ refusal to provide any evidence to refute these claims, I have every reason to believe that the company’s funds were misused and misappropriated by Mr. Fotiadis, making him guilty of embezzlement of corporate funds. I have been left with no choice but to reported him to a number of civil and criminal authorities and to my knowledge there is at least one formal investigation against him is underway and other authorities have contacted me and told me that they are “processing” the claims and considering investigations of their own.

 

Investor Fraud, Stock Fraud and More

 

Mr. Fotiadis and ProtoGroup already have several lawsuit judgments that have been won and are being pursued for payment. There are also likely to be more actions filed in both Federal and State courts around the country. I know this because the first few judgments were mine. Two of the judgments I obtained were for fraud and were handed down to ProtoGroup and to Mr. Fotiadis personally by a court in Virginia where ProtoGroup asked me to set up offices for the company during my tenure there in 2009. In spite of the fact that these debts are currently “first in line to be paid by both parties”, I am strongly recommending that no one invest in ProtoGroup before doing extensive due diligence and speaking with me, the other investors that I have been able to contact, and/or with State and Federal Authorities before doing so. Contact information for these authorities and for the few members of ProtoGroup that I am in contact with will be made available to you upon request. 

Those familiar with the law will understand just how rare and difficult it is to prove and obtain a fraud judgment through an actual trial where there is testimony from both parties. Fraud charges are regularly dismissed as “your word against mine” claims and thus carry a high-burden of proof. In Mr. Fotiadis’ case, the charges were not dismissed and my claims were upheld against both ProtoGroup and against Mr. Fotiadis personally. You should recognize that it requires an overwhelming amount of evidence and testimony to obtain a fraud judgment. A transcript of my trial is available for anyone seeking it – it is public information and I will be happy to provide it. 

Also available are copies of other lawsuits filed against Fotiadis and ProtoGroup, which are also a matter of public record. My judgments will, in my opinion, be the first of many investor fraud judgments that will befall the company and Mr. Fotiadis personally. With the possibility of up to $1 million in fraud judgments potentially facing ProtoGroup, any investor that puts new money into the company will likely find that it quickly went out the back door in payment of an existing judgment against the company. Mr. Fotiadis routinely omits and misrepresents material information before and after money is invested, essentially telling any investor what he believes at that time will cause that investor to write a check with a total disregard for the truth or the law. 

Members should specifically note that Mr. Fotiadis was given multiple opportunities over the last year and a half to address the problems facing the company and himself personally. He has simply chosen not to because he knows that facing his accusers and disclosing the information they have been requesting will bring his actions to the light of day and result in a complete shutdown of ProtoGroup and destroy his only source of income. This ending is inevitable given the circumstances. 

I suspect that Mr. Fotiadis is praying that by keeping the members and investors “in the dark”, that they all will simply write off their losses and go away. This appears to have been his mode of operation for the first 4 years of the company’s existence. Mr. Fotiadis has gone to great lengths to find money to pay his personal debts and mounting legal bills, even going so far as to creating an “anonymous charity website” and forwarding the link to that site and requesting donations via email from his former colleagues, friends, family and strangers. As he has done on numerous occasions, Mr. Fotiadis made these requests for money without fully disclosing all of the material information required regarding how the money he was very willing to take would be spent. 

I felt it to be my duty to all Members in ProtoGroup to pursue my personal claims and to notify everyone of this horrible situation. The reality is that allowing Mr. Fotiadis to start over without any accountability for the money he squandered, the bills he accumulated, or the money he embezzled might encourage him to defraud and harm even more innocent people. 

Regarding the company’s intellectual property, there is another matter that all Members should be aware of. Anyone who invested in ProtoGroup prior to 2009 (when I signed on with the company) invested in a company that was structured simply as a “shell” and that ProtoGroup itself had no ownership in the software assets being built with the money invested. In other words, investors who may have thought they were investing in the ownership of ReGen, which is ProtoGroup’s only asset, were not doing that at all. When I tried to validate ownership of the actual asset before signing my agreement, Mr. Fotiadis explained to me that he personally retained ownership of ReGen and that ProtoGroup was subject to a license agreement with him. This situation, in hindsight, is particularly disturbing because I fear that had Mr. Fotiadis succeeded in building a valuable product - which he did not - then an “exit” for the company would have been at the mercy of Mr. Fotiadis. ProtoGroup would likely have had no say in such an exit and Mr. Fotiadis would have been the only “seller”. Mr. Fotiadis would have had no obligation to pay his original investors anything back even if the company was wildly successful.

 

I mention this because as part of my agreement with Mr. Fotiadis, I demanded that the rights to the software belong solely with ProtoGroup and not with him personally. While he agreed to do so and provided me with a document of the transfer of the asset that is ReGen, as the majority shareholder in ProtoGroup, he could easily rescind such an agreement and leave all of the current members with nothing of value. Should Mr. Fotiadis transfer the ownership of the company’s software assets back to himself personally, he could leave the owners and investors holding nothing but an empty shell of a company that has debt and law suits pending. 

Additional actions are being pursued against both ProtoGroup and Mr. Fotiadis personally as I write this letter and they will undoubtedly have an impact upon your ownership and investments. That is why I feel compelled to post this message. It is my personal goal to provide a way for all those who feel they have claims to obtain as much information as possible regarding these matters – to get it. And I urge that if you know of other investors or vendors who may not be aware of these issues, and/or who are owed money by ProtoGroup or by Mr. Fotiadis personally, that you share this letter with them.

 

You should also be aware that several of the other owners/investors have reported Mr. Fotiadis and ProtoGroup to State and Federal Authorities as well because we believe that the evidence supports criminal charges as well as civil actions. We are encouraging everyone who has evidence of Mr. Fotiadis’ personal or professional misdeeds to provide it to the appropriate authorities evertying available to support their investigations.

 

If Mr. Fotiadis is as innocent as he claims, then he should be willing to respond to this letter publically and to immediately provide every member with the information requested herein. The law compels Mr. Fotiadis in his role as CEO to provide every member with this information. Mr. Fotiadis is accountableto all of the other Members of ProtoGroup and must provide explanations regarding his misuse of corporate funds, his decisions that resulted in the creation of a valueless and unsellable product, and his personal actions and inactions that led to fraud judgments, additional pending litigation and the company’s insolvency.

 

As stated, additional actions are being taken and there is information that you, as a Member in ProtoGroup, LLC, should have if you wish to either join in those actions with fellow Members or start your own action in an effort to seek some form of restitution. 

Please feel free to contact me via the email address below. To support you, I have prepared a document outlining the summary of crimes that I believe Mr. Fotiadis and ProtoGroup are guilty of and a body of evidence to support the facts. I will be gladly share that information with all those who can prove that they are owners, members, and/or debtors of ProtoGroup LLC. 

I regret having to inform you of this situation using a public forum but Mr. Fotiadis really left me no other choice. And I regret that I was unable to do more to inform and support you. 

Respectfully Yours

 [email protected]

-------------------

I am writing this complaint as a follow-on to a comment I posted to another complaint. My concerns have grown that Mr. Fotiadis is continuing to mislead potential investors, that he has not notified any of his existing shareholders/members that their investment is about to dissolve due to his failure as CEO, self-dealing. securities fraud and misuse of corporate funds. This note is designed as a warning to anyone considering investing money with ProtoGroup or Mr. Fotiadis personally and as a notification to existing ProtoGroup LLC members of what is transpiring.

 

The complaint listed below is re-posted here to ensure that it will be available to those existing and potential members because Mr. Fotiadis continues to break the laws of the State of Illinois by not notifying them of this dire situation. This action is only one of many that this company will suffer once all of the members are notified of the judgments already that weigh on Mr. Fotiadis personally and on ProtoGroup for fraud and more. 

In the last 18 months, Mr. Fotiadis has suffered multiple judgments at the hands of judges, accrued a large amount of debt, and had his entire management team and his BoD resign because of his actions. As a result, Mr. Fotiadis has been reported to and is being investigated by several state and federal authorities (SEC, IRS, and the State of Illinois) for his misconduct and failure to disclose material information to new investors, employees, BoD members and existing shareholders/members.

 

In the coming months, as the existing members of ProtoGroup become aware of what has been transpiring - multiple suits from various people are certain to be filed in several states. Mr. Fotiadis has taken in via mis-information - and squandered - more than $900, 000 - without producing any sellable or working product or even one sale over the course of six years. 

In an attempt to save himself - Mr. Fotiadis broke the law AGAIN. Following his first round of legal losses in Virginia, Mr. Fotiadis created a fraudulent charity web site (www.saveamericandreams.org - see attached) in an attempt to defraud friends and former co-workers of money to fight his growing legal bills. Even in the midst of being investigated, even following his fraud judgments, even while being sued for fraud in another State - Mr. Fotiadis STILL published on his "charity" web site fraudulent claims and he failed to disclose the nature of how the money "donated" would be used. What he failed to tell people was that he wasn't fighting an opponent but simply seeking money to post an appeal of his judgments. More of the same deceitful behavior that has brought him to ruins. Lies upon lies.

 

Anyone who is approached by Mr. Fotiadis for an "investment" should contact the authroities listed above immediately. The State Corporation Commission and Attorney General's office in the State of Illinois is the best place for you to start.

 

Given the fact that the existing judgments against him have already been registered in the State of Illinois, Cook County - it is certain that Mr. Fotiadis will have the assets of ProtoGroup and all of his personal property siezed to cover the judgments and other existing debts - leaving his investors with nothing more than an empty shell of a company and a CEO who may face criminal charges. Multiple attempts to engage Mr. Fotiadis to make his investors whole or to do what he could to return some of their investments by appropriately managing the company through bankruptcy have been spurned or ignored by Mr. Fotiadis and will likely cause his legal problems to multiply as time goes on.

 

To ensure that all of the existing complaints are visible to investors - I am re-posting Mr. Rowen's legal action that is currently pending in the State of Virginia against Mr. Fotiadis and against ProtoGroup. 

I applaud Mr. Rowen's efforts and the personal expenses he has incurred in his attempt to stop Mr. Fotiadis from hurting others.

 +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

 Mr. Rowen's Complaint:

 

ProtoGroup LLC and Christos Fotiadis (CEO) Complaints - Fraud, Negligence, and Breach of Duty Litigation 

Review all ProtoGroup LLC and Christos Fotiadis (CEO) complaints 

ProtoGroup LLC and Christos Fotiadis (CEO) 

Posted: 2010-12-10 by mrowen 

Fraud, Negligence, and Breach of Duty Litigation

 Complaint Rating: Company information:

 ProtoGroup, LLC

 2043 W Belmnt Ave #4, Chicago IL

 Virginia

 United States

 http://dockets.justia.com/docket/virginia/vaedce/1:2010cv00261/251944/

 

I am writing this message in an attempt to communicate to two sets of people: any ProtoGroup LLC member, and any prospective investor in ProtoGroup LLC. My goal is to inform you of the severe financial and legal liabilities facing ProtoGroup that I believe you are unaware of. I have asked Christos Fotiadis (ProtoGroup's CEO) on numerous occasions to inform it's members of the dire situation facing ProtoGroup, but Mr. Fotiadis perpetually refuses to do so. I've asked for contact information for the members (which I have a legal right to according to the ProtoGroup Operating Agreement) but he refuses to provide me with their contact info. Last week I heard that Fotiadis was trying to raise money for ProtoGroup again, and thinking that he would not disclose material information as he failed to do when I invested, I am posting this info online with the hopes of preventing more unsuspecting investors from being defrauded by Mr. Fotiadis.

 I purchased ProtoGroup LLC member units directly from Christos Fotiadis in May of 2009, and then subsequently loaned money to ProtoGroup LLC in June of 2009. I made these investments based on what looked like a breakthrough software migration product developed by ProtoGroup called ReGen. While the slick demo he used to get me to invest worked flawlessly and was incredibly impressive, over time I came to the realization that the software could not successfully migrate real world software applications. As time went on I became aware of more and more material information that Mr. Fotiadis failed to disclose to me prior to my investing, and also uncovered a myriad of lies that he told me and other investors, board members, and employees. As a result, I have file a lawsuit against Mr. Fotiadis and ProtoGroup alleging fraud, negligence, and breach of duty. My evidence is over 1500 pages in length, and I've attached a link to my lawsuit should you wish to read the ugly details. For those of you who would prefer just an overview of my lawsuit and ProtoGroup's current status, I'll provide that below.

 I estimate that ProtoGroup currently has over $1, 000, 000 in liabilities and $0 in the bank. I have to estimate these figures because Mr. Fotiadis has refused to provide any updated financial statements more recent than year-end 2008. The company is clearly insolvent, and at any time, the debtors could demand payment and force the company into bankruptcy.

 Mr. Fotiadis hired a COO, head of sales, and a CFO, 2 of which were based in Virginia. He also added to board of directors members, both based in Virginia. ProtoGroup then opened an office in Virginia. When I sued in Virginia (where I live and the ProtoGroup Virginia office where I witnessed the demo), Fotiadis tried to deny that ProtoGroup ever had a presence in Virginia. I tell you this so you understand the long and seemingly random early pages of my lawsuit. They are designed to prove jurisdiction over the case for a court based in Virginia, which the court has ruled it does have jurisdiction. 

A few examples of lies, negligence, and breach of duty by Christos Fotiadis that I have smoking gun evidence of:

 * ReGen could convert Lotus Notes applications and save enormous amounts of time and money versus manual conversion. I spoke with the architect and developer who oversaw 100% of the ReGen code, and who personally wrote 95% of the code) and he swore in an affidavit that the software could not do what Fotiadis was claiming it could do, that he had been telling Fotiadis this for years, and that Fotiadis just ignored his views. Ignoring the opinions of the person who developed the software regarding what the software is capable of is a central argument in my negligence and breach of duty claims.

 * ReGen has not protected its Intellectual Property (IP). Fotiadis filed the patent on ReGen several years after the statute of limitations expired. He also failed to list the developer who architected and wrote the code as an inventor, despite many of the claims in the patent being the developer's ideas, not Fotiadis's. He continues to try to prosecute the ReGen patent nevertheless, and is thus committing patent fraud on the US Patent & Trademark Office. I have reported my concerns to the USPTO.

 * Fotiadis failed to disclose countless material facts to me prior to my investing which are detailed in my litigation. He failed to disclose these material facts to the employees, board members, and other investors as well. All employees, board members, and vendors to ProtoGroup that I am aware of have ceased their relationships with ProtoGroup, and all of them are either owed money (unpaid invoices, unpaid salaries, unpaid commissions) and/or have potential fraud claims they could bring against ProtoGroup.

 * Fotiadis proudly announced the expansion of the management team and the board of directors in August 2009 in a memo to the LLC members. ALL of these board members and employees resigned between November 2009 and January 2010 due to the lies and deceptions by Fotiadis that they subsequently uncovered. Mr. Fotiadis has failed to inform members of this material adverse development.

 * A former board member reported Mr. Fotiadis to the Illinois Secretary of State, and they have opened an official criminal investigation into the actions of Mr. Fotiadis. I have been in contact with the investigator regarding the evidence in my litigation. 

* Fotiadis hacked into the email system of another company that ProtoGroup's former COO was on the board of. He stole copies of emails by the former COO and has submitted them as evidence in my litigation. The former COO of ProtoGroup has filed an official complaint with the Internet Crime Complaint Center (IC3) alleging wire fraud, a crime punishable by imprisonment as experienced by the guy that hacked into Sarah Palin's email a few years ago.

 * ProtoGroup's former COO and Board Member, has already sued Fotiadis and ProtoGroup twice in Virginia courts and won both trials. As a result, both Fotiadis and ProtoGroup each have two outstanding judgments against them, one of which is for fraud. Any investor who innocently invests money in ProtoGroup could find that money quickly confiscated as payment of the judgment, so my main message to any prospective investor in ProtoGroup is "BUYER BEWARE".

 * Fotiadis has made a number of statement under oath in my litigation that were conflicting with other statements made under oath elsewhere in my litigation or in the lawsuit brought against him by his former COO, all of which could be determined to be perjury when presented to the court during my trial.

 * ProtoGroup did not license the interface that is used on it's only product - ReGen - and has unpaid bills to the developer that built the product. As a result, ProtoGroup does not have the rights to market and sell ReGen in it's current configuration, and hundreds of thousands of dollars in re-engineering development are likely necessary to bring ReGen to market. Add to that the fact that ProtoGroup does not have a working copy of the software (the 3rd party developer has control of the server components) and thus ProtoGroup does not have access to its only product.

 If you would like to know more about my case, you can click the link attached and read my complaint, or you can email me any questions you may have.

 

AGAIN - IF MR. FOTIADIS APPROACHES YOU OR SOMEONE YOU KNOW ABOUT AN INVESTMENT - PLEASE NOTIFY THE AUTHORITIES IMMEDIATELY.