Virtual Communications Corporation Officer Found Liable to Investors

Virtual Communications Corporation officer Vernon Rodriguez was found liable to a group of Plaintiffs who purchased Promissory Notes from the company in 2015. In addition to Mr. Rodriguez, former CEO, and current shareholder Ronald Robinson was also found liable and, pending the issuance of a final judgment, will be ordered to compensate the Plaintiffs. The case is Hotchkiss v. Ronald Robinson and Vernon Rodriguez, filed in Clark County District Court, case # A-17-762264-C. The Court’s decision was issued on April 27, 2020.

Virtual Communications Corporation, a  Las Vegas company raised about $4 million from investors throughout the country in an unregistered securities offering.  The securities took the form of promissory notes, and were personally guaranteed by Virtual Communications Corporation’s former CEO Ronald Robinson. Plaintiffs were purchasers of these promissory notes.

The Company claimed it ran out of money in early 2015, and stopped paying the nine percent interest to investors under the notes.  Afterwards, investors began to file lawsuits in Clark County District Court against the company and the guarantor Ronald Robinson.

In one case which resulted in a $200,000 judgment to an investor, after a ruling by the court that Virtual Communications Corporation sold unregistered, nonexempt securities, the company filed a Chapter 11 bankruptcy.  The investor continued to pursue claims against the guarantor Ronald Robinson, and the court found Robinson liable and issued a judgment against him.  That judgment remains unpaid.

In this separate case, nine individual investors filed suit against Virtual Communications Corporation, Ron Robinson and VCC’s chief financial officer Vernon Rodriguez. The Plaintiffs alleged that Robinson and Vern Rodriguez were liable as control persons for VCC’s sale of unregistered securities. The case against Virtual Communications Corporation was stayed after it filed for bankruptcy, and Plaintiffs continued to pursue their claims.

After a bench trial on February 24-25, 2020 in Clark County District Court, Department Eight Judge Cristina Silva issued a decision finding that Robinson and Vern Rodriguez were liable as control persons for Virtual Communications Corporations sale of unregistered securities.  The Court also found that Robinson was liable as a guarantor. Robinson had sought to escape liability, claiming that his grand daughter Alisa Davis acted without his authority in supplying pre signed promissory notes to VCC’s fund raiser Retire Happy without Robinson’s permission.  When Ms. Davis took the witness stand she testified, as she had done in a prior case, that Mr. Robinson had authorized the use of the pre-signed notes. This testimony contributed to the findings that Robinson was liable to the investors on his guarantee.

The investors damages are in excess of $900,000, and the court has asked for briefing on damages in order to issue the final judgment. Under NRS §90.460 the sale of unregistered securities gives rise to liability under NRS §90.660.  Statutory damages provide for rescission, or compensatory damages equal to the purchase price, interest at the legal rate and reasonable attorney’s fees.

Mr. Rodriguez remains a manager for Virtual Communications Corporation, which continues to market its virtual ALICE receptionist product.  The Plaintiffs, mostly retirees who invested through IRA accounts, and whose claims against VCC were extinguished in the bankruptcy, received preferred shares in the reorganized VCC.  Those shares are restricted, non-tradeable, and have not paid any distributions.

Plaintiffs were represented by The Law Office of David Liebrader.

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