Wait, I thought Buckhannon worked for Clinical Testing Corp! And where did this duo dig up nearly two million dollars?
On August 22, 2016, Zia Shlaimoun and Robert Buckhannon submitted declarations on behalf of an alleged California-based Goldstar Laboratories LLC/Advanced Biomedical, Inc. seven-figure testing lab acquisition.
An attorney representing Advanced Biomedical, Inc. filed evidentiary objections on August 31, 2016 to the Shlaimoun/Buckhannon declarations, extensively detailing doubts on the duo and the credibility of their declarations.
A judge is expected to rule on the Shlaimoun/Buckhannon declarations during a hearing scheduled on September 28, 2016.
Advanced Biomedical, Inc. (dba Pathology Laboratory Services, Inc.) filed for bankruptcy October 1, 2014 under chapter 11 of the United States Bankruptcy Code (frequently referred to as a “reorganization” bankruptcy) in U. S. Bankruptcy Court in the Central District of California.
Back in January 2015, Robert Buckhannon issued a series of increasingly bizarre press releases promoting his new role with a company initially described as “Clinical Testing Corporation”, later “Clinical Testing Corp, LLC”.
In the press releases, Buckhannon claimed he planned “on opening genetics laboratories in three new locations” and “creating better patient outcomes and groundbreaking healthcare discoveries.”
One release even stated that Buckhannon would “be responsible for developing new laboratories in Las Vegas, Nevada, Phoenix Arizona, West Palm Beach, Florida, and Denver, Colorado.”
Buckhannon not only managed to insist in a press release that he would travel to “Phoenix, Arizona to view construction of the latest CTC lab”, he later successfully convinced the government to modify the terms of his pretrial release.
(Buckhannon's story has been covered extensively, and almost exclusively on this blog, including his federal hedge fund fraud indictment, his association with longtime crony Zia Shlaimoun, his marriage to Shlaimoun's cousin, Marlena Michaels, and the ongoing federal arson investigation of the suspicious fire that destroyed Battle Creek's On Deck Sports Bar & Grill, owned by Buckhannon and erstwhile girlfriend, former cheerleader to his football player Kelly Demoss.)
If you're interested, I recommend you read my initial Buckhannon story, where I dubbed him the crooked chiropractor.
Here are the declarations of Robert Buckhannon and Zia Shlaimoun, as filed with the court on August 22, 2016.
I, ROBERT L. BUCKHANNON, pursuant to 28 U.S.C. § 1746, hereby declare that the
following is true:
l. All facts set forth herein are based upon my personal knowledge. If were called to
testify, I could and would testify competently to the facts set forth herein.
2. I am the Director of New Business Development and an employee of Goldstar
Laboratories LLC ("GS").
3. As a result of an agreement between GS and PLS, during the middle October 2015, I started working to increase utilization of PLS’s laboratory services. As a result of my efforts I was able to acquire new referral sources that represented more than 250 additional patient samples per month for PLS. These translated into significant new net revenue for PLS.
4. I also worked with my team to establish new procedures and to fix existing
procedures related to the way in which specimens were logged in at PLS, change the way reports we generated and delivered to referring clinicians by PLS and established protocols to ensure accurate and complete billing procedures for PLS.
5. I also brought in billing professionals to analyze and suggest methods to increase
efficiency and accuracy of the billing and posting of payments at PLS.
6. I also suggested an implementation plan to upgrade the Laboratory Information
System so as to more effectively disseminate information both to and from referring clinicians'
offices and to the billing team so as to maximize collections on services performed by PLS.
7. Additionally, I was present during the negotiations with Dr. Karimi and his counsel
Mr. Gardner, and Mr. Shlaimoun.
8. I have personal knowledge and am a witness to the agreement that was signed
involving GS and PLS on October 20, 2015, wherein, GS was to purchase and own 80% of PLS as part of its reorganization plan.
9. I have personally reviewed the disclosure statement on file with this Court and it is far
from full disclosure and the truth. Both Karimi and his lawyer Gardner knew of GS's written
agreement which valued the company at $2,400,000.00 and GS's offer to purchase 80% of the company for $1,920,000.00. This would have allowed for all creditors' to be paid in full and the company to be debt free within a few years after confirmation of the Plan.
Executed this 22nd day of August, 2016 at St. Louis, MO.
I declare under the penalty of perjury under the laws of the United States that the foregoing is true and correct.
I, ZIA SHLAIMOUN, pursuant to 28 U.S.C. § 1746, hereby declare that the following is true:
1. All facts set forth herein are based upon my personal knowledge. If I were called to testify, I could and would testify competently to the facts set forth herein.
2. I am the Managing Member of Goldstar Laboratories LLC (“GS”). I hold 100% of the equity interest in GS. GS is a Party in Interest in this case.
3. In 2015 my company, GS, in an effort to expand its services and footprint in the United States, was looking to acquire other Laboratories such as the Debtor’s Laboratories.
4. In October 2015 GS was looking to purchase a clinical laboratory in California and came across Advanced Biomedical Inc. d.b.a. Pathology Laboratory Services (PLS) being advertised for sale.
5. Through an agent for PLS, I was introduced to the owner Cyrus Karimi (Karimi). During our discussions he did represent that he was in bankruptcy and currently going through Chapter 11 reorganization.
6. I am not familiar with the Chapter 11 process or procedures.
7. Sometime around the second week of October 2015, I met with Karimi and his lawyer Mr. Dixon Gardner, who is counsel of the Debtor. Dr. Rob Buckhannon, who is GS’s Director of New Business Development, was present during this meeting.
8. In this meeting we discussed bringing in our laboratory processes and procedures and marketing power in an effort to increase revenues to PLS and potentially acquire 80% of PLS.
At the time PLS was being grossly mismanaged and not able to meet its ongoing obligations.
9. A number of items were agreed upon during the meeting, which was memorialized into a Confidential Memorandum of Understanding (the “Agreement”), which is being provided to this Court as Exhibit "A". Due to issues of confidentiality a copy will only be provided to Chambers and the United States Trustee’s office.
10. The Memorandum was memorialized on October 20, 2016 and signed by myself and Mr. Karimi.
11. Under the Agreement, it was agreed that GS would start representing PLS and that a portion of the profits made each month would go towards purchasing 80% of PLS upon the PLS Bankruptcy Plan being confirmed.
12. Under the Agreement GS was to provide PLS marketing services. PLS was to process some of the laboratory work or samples of business generated by GS and reference the remainder to other laboratories, which is a common and customary practice in the industry.
13. The Agreement clearly spelled out the profit share formula, which was 80% of the net profit paid to GS and 20% of the net profit paid to PLS. Furthermore, the Agreement specified that upon confirmation of the bankruptcy plan GS and PLS would enter into a subsequent agreement in which GS would purchase 80% of PLS. The parties agreed the value of PLS would be set at $2.4 million dollars following confirmation for purposes of the Agreement. Pursuant to the agreement $1.92 million dollars would be paid from the GS's share of profits over time as defined by the Agreement. Out of the $1.92 million dollars that would be paid to PLS for the acquisition, the creditors would be paid whatever the bankruptcy plan provided for. Pursuant to the Agreement in exchange for GS’s investment and efforts GS would receive an 80% commission, 50% of which would be applied to its purchase of PLS. These funds were to be used to pay down creditor claims in full.
14. I also understood that the Agreement was to be disclosed in the bankruptcy proceedings and subject to Court and creditor approval.
15. As soon as the Agreement was signed GS began to provide marketing services to PLS. Dr. Buckhannon began managing new business development for PLS and began updating PLS’s internal operations so that PLS would start turning a profit within 90 days.
16. GS paid out over $250,000 for marketing projects to increase the revenues of PLS.
17. In addition to its marketing efforts GS purchased for PLS equipment worth $80,000 for allergy testing, which PLS did not have and Dr. Karimi wanted. Once Karimi saw the profits rise in PLS, as can be seen from the Monthly Operating Reports. Karimi breached the agreement without justification, told GS and Dr. Buckhannon that they were no longer welcome on the premises and locked them out and wanted to change the Agreement although it had already been signed.
18. Karimi had stated prior to March 2016 plan confirmation would be completed within weeks and everything was on schedule. However, to this date GS has never received its rightful commissions under the Agreement, which are estimated to be well over $500,000.00.
19. Unfortunately, Dr. Karimi decided to spend all of the money earned after the Agreement and not pay GS. Further, from a cursory review of the monthly operating reports there appears to be certain anomalies such as payment of laboratory chemicals under an individual’s name, (no last name mentioned). Laboratory chemicals can only be purchased from licensed businesses, not individuals as they are regulated.
20. I have tried for months now to get a hold of Karimi and his lawyer on the status of the case and the Agreement and all efforts have failed. Attorney Gardner was aware of our intention to enter in to agreement with Karimi and should have known about the valuation of the company at $2,400,000.00, which personally Karimi arrived at.
21. Additionally, I can show in the month of December 2015 GS brought in a substantial amount of business estimated to be in excess of $500,000 in gross billing. The total number is not yet known as all charges had not been posted to the reports that we were provided and we were never provided the total amount of reports of which Karimi only appears to have collected an amount of $184,000 in a report that was ran in February for collections for December and January. There is potentially significant more monies that would have been collected from GS marketing efforts. Those monies should be apparent in the billing and collection reports within the PLS billing and collection software programs. Of these amounts, GS was is to receive 80% of the net amount as a commission.
22. I have many of these reports in my records and can make them available to the Court and trustee.
23. Karimi appears to have mismanaged the business and not been forthcoming with the Court and the Debtor’s creditors. A Trustee should be appointed and I will make an offer to purchase this business 100% and an effort to satisfy all creditors in this case.
Executed this 22nd day of August, 2016 at Irvine, CA.
I declare under the penalty of perjury under the laws of the United States that the foregoing is true and correct.
Dixon Gardner, the attorney representing Advanced Biomedical, responds on behalf of the company and its CEO, Cyrus Karimi.
A. There is no evidence Goldstar Laboratories LLC exists as a legal entity and that it is authorized to do business in California; thus, it is precluded from filing any action in this bankruptcy case under California law.
As of August 26, 2016, Goldstar Laboratories LLC is not listed as an entity created under the laws of the State of California. Any contracts entered into with a nonexistent legal entity are not enforceable under California law unless the entity is subsequently created and adopts the contract.
If GS is a suspended limited liability company, then California Revenue & Taxation Code Section 23304 provides that any contract entered into by GS during its suspension is voidable by the other contract party.
If GS did not exist when the Confidential Memorandum of Understanding was entered into and this is an enforceable contract (Debtor asserts it is not), then Mr. Shlaimoun as GS’s alleged sole owner and Mr. Buckhannon as GS’s employee and business development director may be personally liable for the CMU as a contract and there is no need for them to state that they will make an offer to buy the Debtor because they already have as a promoter: a person who takes an active part to form GS as a company.
As a penalty for not registering with the California Secretary of State to do transact intrastate business in California, GS is precluded from maintaining in California courts, including this Bankruptcy Court, actions arising from such business against the Debtor, such as objecting to its Second Amended Plan and Disclosure Statement and attempting to enforce any contract.
If GS does not exist as a legal entity at all, then it has not power to exercise any rights, powers or privileges of a legal entity, it is illegal for GS to perform any business for Debtor, and to enforce any contract between Debtor and GS.
B. Disclosures made by Zia Shlaimoun and Robert Buckhannon are breaches of their non-disclosure agreements.
Mr. Shlaimoun for GS and Mr. Buckhannon entered into Non-Disclosure Agreements with the Debtor in October 2015. Their disclosing the Confidential Memorandum of Understanding (CMU) and information about the Debtor’s operations to this Court are breaches of these agreements and are not subject to litigation privilege under California Civil Code.
C. The allegations made by Zia Shlaimoun and Robert Buckhannon are not admissible evidence as set forth in the evidentiary objections; debtor believes their declarations are violations of FRCP 11 and U. S. C. Section 1927 and request sanctions.
The bottom line is that Mr. Shalimoun and Mr. Buckhannon failed to present any evidence with documents to support their allegations. In summary, their declarations seek to persuade the Court that GS’s contributions for the Debtor helped the Debtor to improve financially. Debtor requests sanctions for the cost to respond to the declarations, including attorney argument, declaration along with Cyrus Karimi, Advanced Biomedical CEO.
D. The facts support a finding that Robert Buckhannon sought to take advantage of Cyrus Karimi during this bankruptcy case and should be investigated for doing so; Buckhannon is under a federal criminal proceeding for fraud in Nevada. Buckhannon’s declaration should be ignored entirely.
The facts support a finding that Buckhannon sought to take advantage of Karimi during the bankruptcy case by Buckhannon seeking to induce Karimi with promises of profitable customers to occupy part of Advanced Biomedical’s premises for at least a month without paying rent, allege without authorization that GS represented Advanced Biomedical as its authorized agent to the public, stored GS’s Phadia machine at AB’s facility without compensation for a few months, submitted samples to test from money-losing customers and then asked Karimi to sign an unauthorized contract in February or March 2016 without any input from AB’s attorney, Dixon Gardner.
After Karimi refused to cave in to Buckhannon’s demands that he sign an illegal contract, Buckhannon withdrew all connection with AB by vacating the back office, ceasing to allege it represented AB, and removing the Phadia machine.
All of these actions are breaches of the CMU, were the court to find it is a valid contract.
Now, five months later and on the eve of AB’s hearing for the Second Amended Disclosure Statement, Buckhannon and Shlaimoun emerge to allege that AB owes Goldstar Laboratories money.
The US Trustee’s office should certainly investigate the dubious allegations made both by Buckhannon and Shlaimoun and charge them with using AB’s assets illegally.
There is considerable doubt as to whether GS even exists since it is not registered with the California Secretary of State to transact business in California. It GS does exist, this would be another fraud by Shlaimoun and Buckhannon.
Buckhannon is in a pending criminal trial in Nevada over his committing wire fraud. His declaration should be entirely ignored because of his being a defendant in that criminal trial. His veracity is definitely suspect.
Advanced Biomedical CEO Cyrus Karimi's declaration:
On or about October 6, 2015, Zia Shalimoun signed on behalf of Goldstar Laboratories, LLC (“GS”) the Non-Disclosure Agreement to receive information about AB and its business.
The agreement states that GS will not disclose any confidential information received from AB without its written consent.
On or about October 16, 2015, Robert Buckhannon signed the Non-Disclosure Agreement.
In early October, 2015, I made contact with Shlaimoun about GS’s interest in making an offer to purchase AB or to provide samples for AB to test in its business. I set up a meeting on or about October 15, 2015 with Shlaimoun, Buckhannon and attorney Dixon Gardner.
At this meeting, I did not sign any agreement with GS, Shlaimoun and Buckhannon to sell AB and its business. GS, Shlaimoun, and Buckhannon did not provide me with a sale price for GS to purchase AB and its business at this October 15, 2015 meeting.
The only matter agreed upon by me, Shlaimoun, and Buckhannon at this meeting was that AB would perform diagnostic tests based on samples submitted by GS in AB’s regular business.
Had GS, Shlaimoun and Buckhannon made an offer to purchase AB and its business for $2.4 million or $1.92 million at the October 15, 2015 meeting, I certainly would have requested that Mr. Gardner submit such an offer to the Court to approve the sale.
As AB’s sole authorized representative, I have never provided GS, Shlaimoun and Buckhannon with any written authorization to disclose any information I have disclosed to them after they both entered into the Non-Disclosure Agreements.
The actions of Shlaimoun and Buckhannon to disclose to the Court information about AB and the CMU are violations of the Non-Disclosure Agreements and the CMU itself.
My understanding of the CMU is that it was only an agreement to encourage GS, Shlaimoun and Buckhannon to provide AB with samples to test and generate revenue.
Shlaimoun and Buckhannon sent AB samples from December 2015 to March 2016 to test.
Records show GS did not submit samples in November 2015; GS submitted charges of $520,502.48 in December 2015; charges of $327,471.16 in January 2016; charges of $102,011.24 in February 2016; and changes of minus $105.00 in March 2016.
After March 2016, GS did not send AB any more samples to test. Charges are list prices only for samples submitted.
These list prices are not the actual amounts of money collected by AB for performing tests on these samples.
The contracts with insurance companies or Medicare usually pay only 20% of the list price and AB writes off the difference. My review of the samples sent show they did not generate a profit.
I have reviewed the daily reports of the financial data for AB since October 1, 2014, and the increase in monthly revenue from November 2015 ($101,767) to $334,932 in revenue is due to my own efforts to market the business to large, repeat-business customers.
AB has not received any samples to test from Shlaimoun and Buckhannon since March 2016.
In February or March of 2016, Buckhannon came to me to ask if GS could use a small room (about 300 square feet) in the back office of AB’s current location in Santa Ana, California. I agreed to let GS use this space for two to three weeks before GS would move to an office in Santa Ana.
At the time, GS was going to conduct a marketing effort to find more samples for AB’s business to test to increase its revenues.
AB uses sales reps across the United States to generate revenue by acquiring more samples to test for disease in AB’s laboratory.
GS never acquired any equipment for AB and its business. In December 2015, GS ordered a Phadia 250 System from Phadia US Inc. The machine cost $80,000.
Shlaimouin and Buckhannon wanted to have me conduct allergy tests on this machine on samples submitted to them by AB for testing. This machine was set up in AB’s laboratory. However, I never conducted a test on this machine and was the only individual who knew how to use the machine.
On or about February or March 2016, Buckhannon came to me and asked me to sign a contract that would replace the CMU.
I advised him that AB’s attorney would have to be involved in any such contract, that it would need court approval, too, and I refused to sign the new contract.
In response, Buckhannon removed the Phadia 250 System from AB’s office in Santa Ana and never sent any more samples after March 2016 and did not take any actions to market AB’s business after that date. Since GS never offered to pay rent to occupy the back office, I asked GS to pay rent, but it refused to do so.
This was another basis for me to ask Buckhannon and GS to leave AB’s premised in Santa Ana.
I never agreed to let GS represent AB as its authorized agent.
Once I let GS occupy the back office at the Santa Ana location, Buckhannon began making representations to the public that GS was AB’s representative without my permission and against my objections.
GS, including Buckhannon, never took any action to upgrade the laboratory information system.
The only action GS ever took was to have a Susan Christenson review AB’s contracts to see if they were valid.
Dixon Gardner, the attorney representing Advanced Biomedical in its bankruptcy proceedings, weighs in with more detail in his August 31, 2016 declaration, calling bullshit on Buckhannon and Shlaimoun's assertions.
Relating details of the October 15, 2015 meeting with Cyrus Karimi (CEO of Advanced Biomedical), Robert Buckhannon and Zia Shlaimoun, Gardner asserted in his declaration that “neither Buckhannon or Shlaimoun submitted a price for an offer to purchase AB. Near the end of the meeting, Gardner stated he told both men that AB was only interested in testing samples sent by Goldstar Laboratories LLC and that it did not require the bankruptcy court’s approval.
At the meeting, I did not see any agreement signed by Karimi, Buckhannon, Shlaimoun and Goldstar Laboratories LLC.”
Since October 15, 2015, Gardner’s declaration states “he had not met with Shlaimoun or Buckhannon.”
In his declaration, Gardner states he “was unaware of any Confidential Memorandum of Understanding between Debtor (Advanced Biomedical) and Goldstar Laboratories LLC until Zia Shlaimoun filed his declaration with this Court on August 22, 2016. No such agreement was brought to my attention by anyone at the October 15, 2015 meeting with Mr. Karimi, Mr. Buckhannon, and Mr. Shlaimoun.”
Winding up, Gardner reiterates a salient fact: “Goldstar Laboratories LLC never registered itself with the California Secretary of State do business” which prohibits it from conducting business in the State of California.
How is that Buckhannon is not behind bars, waiting for his federal fraud trial to begin?
It's not likely the feds are in the dark, are they?