Spartan Capital Securities and Alzamend Neuro, Inc. (ALZN): Multi-Million Dollar Claim Filed Against Spartan
The Levin Papantonio Rafferty law firm has filed a claim in FINRA Arbitration against Spartan Capital Securities regarding sale of Alzamend Neuro (ALZN) stock to a customer of Spartan. The claim seeks multiple millions of dollars of damages. Levin Papantonio Rafferty is interested in speaking with other investors who were sold Alzamend stock by their Spartan Capital Securities broker or financial advisor or other brokers and broker dealers.
The Claim alleges that Spartan aggressively marketed shares of Alzamend to its clients representing it as a great opportunity that would generate significant and quick profits. The claim also alleges that Spartan represented to the customer they would be able to quickly sell shares of Alzamend when it went public, but that the customer was wrongfully restricted from selling shares of Alzamend due to Spartan’s negligence and misconduct. The claim alleges that Spartan’s relationship with Alzamend presented significant conflicts of interest between Spartan and the customers Spartan sold Alzamend stock. From its opening price on June 15, 2021 at $29/share through the end of November 2021 shares in the stock have plummeted to around $2.14/share, representing a potential loss of over 90%. The claim further alleges that Spartan Capital has been deeply involved with Alzamend for years creating a significant conflict of interest which caused Spartan to put its own interest ahead of its customers’ interest.
Based on publicly available filings it appears that Spartan was the main investment banking and brokerage firm involved with Alzamend over the last four plus years. On August 22, 2017, Alzamend filed a Form D Notice of Exempt Offering of Securities, a form which disclosed that Spartan Capital Securities, LLC intended to solicit sale of up to $4,000,000 of securities offerings. For the sale of up to $4,000,000 in shares, Alzamend would pay Spartan up to $1,800,000, including 10% of the offering proceeds, if it raised more than more than $2.5mn, (a) a maximum of $1.4mn under a consulting agreement and 20 million shares of Alzamend common stock under a separate consulting agreement. The Claim alleges that Spartan’s substantial holdings in Alzamend stock were a significant motivating factor in its sale and conduct towards its customers sold Alzamend stock.
As of January 30, 2018, Alzamend entered into a Placement Agreement with Spartan Capital Securities, LLC to place the PPM offering. Spartan was Alzamend’s “exclusive placement agent.” Further, “during the period commencing on December 29, 2017 and ending at such time as the Company’s common stock is listed on a national securities exchange, Spartan will have the right to designate one member of the Company’s Board of Directors (the “Board”). If Spartan does not elect to designate a member of the Board, then the Company will permit a representative of Spartan to attend all meetings of the Board as an observer.”
Alzamend confirmed that it “entered into a five year consulting agreement with Spartan pursuant to which Spartan has agreed to provide consulting services with respect to general corporate matters, including, but not limited to, advice and input with respect to raising capital, potential M&A transactions, identifying suitable personnel for management, developing corporate structure and finance strategies, assisting the Company with strategic introductions, assisting management with enhancing corporate and shareholder value and introducing the Company to potential investors. In December 2017, since the maximum amount was raised in the Offering, the Company paid to Spartan a consulting fee of $1,400,000 for the services to be rendered over the sixty (60) month term of this consulting agreement.” Further, Mr. Ault’s “MCKEA and Spartan also entered into a five-year consulting agreement (the “MCKEA Consulting Agreement”). Pursuant to the MCKEA Consulting Agreement, upon the receipt by the Company of no less than $2,500,000 in gross proceeds from the PPM, MCKEA will transfer to Spartan 20,000,000 shares of Alzamend common stock. During the term of the MCKEA Consulting Agreement, Spartan will provide consulting services related to general corporate and other matters related to MCKEA’s investment in the Company such as advice on mergers and acquisition transactions, finance strategies, identification of potential management candidates and other strategic introductions.”
In June 2019, Alzamend and Spartan entered into yet another agreement. This time, Alzamend and Spartan entered into a two-year uplisting agreement through which Spartan agreed to provide consulting services with respect to a potential public offering. Spartan was again compensated under this agreement via a cash payment in the amount of $475,000 and the issuance of 500,000 shares of our common stock.
Milton Todd Ault founded Alzamend and was the Chairman and Director and the largest shareholder of Alzamend (individually and through his entities like MCKEA Holdings, LLC, Ault Global, Ault Life Sciences, etc…). Mr. Ault is a former registered representative who was allegedly sanctioned and suspended by FINRA in 2012 for engaging in unauthorized trading, failing to remit payment for a transaction to a customer, and failing to deliver securities to a customer. Mr. Ault was the CEO of Zealous Capital Markets, LLC, a firm which was a FINRA Member at one point. FINRA found that Mr. Ault effected dozens of trades in multiple customer accounts without authorization or consent in violation of FINRA rules. As a result, FINRA issued a fine of $75,000, restitution of over $300,000, and suspension. See FINRA Letter of Acceptance, Waiver, and Consent No. 2008-0161571-01. Mr. Ault allegedly failed to make restitution to those customers, claiming he was unable to locate the customers. However, he also did not forward the undistributed restitution to the state where the investor resided as he was directed to by FINRA. Further, Mr. Ault was the CEO of Zealous Holdings when it filed for Chapter 11 bankruptcy. Zealous was ultimately not entitled to bankruptcy discharge, and ceased doing business leading it to be permanently closed. In addition, Mr. Ault personally filed for bankruptcy under Chapter 11 in December 2009.
Alzamend is a preclinical stage biopharmaceutical company which is attempting to develop Alzheimer’s treatment drugs. Alzamend has only one (1) full-time employee. The Claim alleges that Alzamend has had no real revenues, and that Spartan has been a major source of raising investor funds for the company As Alzamend recognized “there can be no assurance that we will be able to generate any investor interest in our securities. Further, any financing that we may wish to enter into may be subject to the consent of Spartan Capital Securities, LLC (“Spartan”) and there can be no assurance that Spartan will provide its consent to any such financing. If we do not obtain additional financing, our business will never commence, in which case you would likely lose the entirety of your investment in us.”
Investors who were sold Alzamend Neuro and have suffered losses or harm due to investment in Alzamend are encouraged to contact the Levin Papantonio Rafferty law firm for a free and confidential legal consultation.
What Our Clients Say
Below are some of the emails and letters that our clients have sent us.
At a time in our life when we were most vulnerable we lost control of our finances. We fell victim to a broker that took huge commissions and did not disclose that we were not able to access our money. Peter Mougey and his wonderful staff worked with us to make us whole again and got our money released. I cannot say enough about their work ethic, professionalism, and kindness during this stressful time for us. We had a 100% positive conclusion to our case and we strongly recommend Peter and the firm. We can now sleep at night! Fred & Pat H.
My husband and I were very pleased with the work that Peter and his team provided. He was very knowledgeable of the circumstances of our case and kept us informed throughout the process. He is extremely qualified and worked diligently on our behalf. We are positive that this case would not have been resolved in our favor had it not been for Peter's expertise and his passion. He definitely cares about his clients and we sincerely appreciate his efforts. Rachel C.
FRS is a governmental body. FRS retained the services of Peter Mougey of the LP law firm in a multimillion-dollar lawsuit involving extremely complex issues. Mr. Mougey quickly mastered the issues and gave advice that was vital in bringing about a successful resolution. Two of the most important features of Mr. Mougey’s representation was his understanding of government and his ability to communicate complicated legal concepts to a 10-member board of trustees in language that was easily understood by all. I did not know Mr. Mougey before FRS retained him and, fortunately, have not experienced circumstances where the system would need his services again. However, if needed, I would have no hesitation in retaining his services again. Please let me know if you need any additional information or assistance. Steven S.
Edison's famous adage can't ever be ignored of course: 1 part inspiration and 99 parts perspiration. However the two attitudes must be present indissolubly--both are essential--if results are to be obtained. Peter Mougey’s group is aware of such a requirement, they work very hard at the latter, and the former comes easily to them, a rare combination anywhere to be found indeed. Raphael B.
I would like to express my sincere gratitude to Peter Mougey and your entire team on behalf of my family for the amazing job done during your representation. From day one I received kindness, rapid responses to all of my questions, with polite and patient encounters with all of your staff assistants. You are the best- and I will be eternally grateful to you and your entire team. Michelle E.