Cloth Fraud

FILED
12-Person Jury 3/5/2024 12:28 PM

Hearing Date: 7/8/2024 10:00 AM
Location: Richard J Daley Center IRIS Y. MARTINEZ
Judge: Wilson, Thaddeus L CIRCUIT CLERK
COOK COUNTY, IL
2024CH01610
Calendar, 1
IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS 26678234
COUNTY DEPARTMENT, CHANCERY DIVISION
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
DIANE FOWLER, individually )

and on behalf of the class members described )
below, )
)
Plaintiff, )
)
v. ) No. 2024CH01610
)
SCHMIDT ADVISORY SERVICES, INC. )
d/b/a CATALYST WEALTH )
MANAGEMENT, SANFORD SCHMIDT )
ETHAN SCHMIDT, JORDAN SCHMIDT, )
and JASON CLOTH, )
)
Defendants, )
)
C2 MOTION PICTURE GROUP, LLC, )
)
Respondent in Discovery. )
CLASS ACTION COMPLAINT
Plaintiff, DIANE FOWLER, individually and on behalf of class members described below,
by and through her undersigned attorneys, LOFTUS & EISENBERG, LTD. and for her Complaint
against Defendants, SCHMIDT ADVISORY SERVICES, INC. d/b/a CATALYST WEALTH
MANAGEMENT, SANFORD SCHMIDT, JORDAN SCHMIDT, and JASON CLOTH states as
follows:
I. INTRODUCTION
1. Jason Cloth is a movie producer and principal of two bankrupt entities. Cloth
purported to raise money for specific movie projects but instead commingled all the invested funds
and moved money from entity to entity without any regard for what was agreed to with investors.
At some point in or about 2021 the scheme turned Ponzi and in 2023 it went bankrupt.
2. Hollywood loves sequels and so do Jason Cloth (“Cloth”) and Aaron Gilbert
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(“Gilbert”). In the late 2010’s Cloth’s business partner Gilbert benefitted from another film Ponzi
Scheme called Crystal Wealth that victimized thousands of Canadian investors. The Crystal
Wealth scheme ended with a soft landing for Gilbert and a huge settlement from Crystal Wealth’s
auditor for not realizing the Ponzi Scheme sooner. Right about when Crystal Wealth was cratering,
Creative Wealth Media Fund (“CWMF”) came in and took up the mantle with Gilbert and engaged
in the same practices with new investors, this time in America.
3. Since approximately 2021 Cloth does not pay investors on profitable projects,
makes lulling payments on unprofitable projects to select investors, and repeatedly misrepresents
facts in order to induce investment and keep investors at bay while maintaining his lavish lifestyle.
4. Ethan Schmidt (“Ethan”), Jordan Schmidt (“Jordan”), Sanford Schmidt (“Sandy”
or “Sanford”), and SCHMIDT ADVISORY SERVICES, INC. d/b/a CATALYST WEALTH
MANAGEMENT (“SAS”)(collectively “Schmidt”) served as the brokers for Cloth in America,
Schmidt held themselves out as a fiduciary for investors and sold dozens of individuals on the lies
told by Cloth raising over $30,000,000 in Cook County.
II. PARTIES
5. Plaintiff, Diane Fowler, is, and at all times relevant to this action, has been a citizen
of the state of Oklahoma and domiciled in Oklahoma.
6. Defendant, Sanford Schmidt, is a citizen of Illinois and domiciled in Cook County,
Illinois.
7. Defendant, Jordan Schmidt, is a citizen of Illinois and domiciled in Cook County,
Illinois.
8. Defendant, Ethan Schmidt, is a citizen of Illinois and domiciled in Cook County,
Illinois.
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9. Defendant, SCHMIDT ADVISORY SERVICES, INC. d/b/a CATALYST
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WEALTH MANAGEMENT, is an Illinois company whose sole member is Sanford Schmidt.
10. Defendant, Jason Cloth, is a citizen of Canada and domiciled in Florida.
11. Respondent in Discovery, C2 Motion Picture Group, LLC (“C2”) is a Delaware
Limited Liability Company operated by Cloth and Dave Kaplin.
III. JURISDICTION AND VENUE
12. Pursuant to 735 ILCS 5/2-209, this Court has personal jurisdiction over Defendants
because Defendants committed the tortious acts complained of in Cook County, Illinois.
13. Venue in this county is proper pursuant to 735 ILCS 5/2-101, because the acts and
omissions complained of occurred in this county. Defendants purposely availed themselves of
jurisdiction in Cook County by contracting with Cook County residents, directing phone, email,
and letter correspondence to investors in Cook County, meeting with investors in Cook County
and making oral misrepresentations here. CWMF raised over $34,000,000 in Illinois of its
$80,000,000 total capital raised.
14. The unregistered securities at issue in this case are not “covered securities” within
the meaning of National Securities Market Improvement Act of 1996 (NMSIA), 15 U.S.C. §
77r(b), and accordingly this action is not removable to federal court under the Securities Litigation
Uniform Standards Act (SLUSA), 15 U.S.C. § 77p(f)(3), nor is it subject to the procedural
requirements of the Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. § 78u–4(a). The
securities were not issued by a nationally registered investment company nor was it designated for
trading in a national securities exchange.
15. Schmidt are forum defendants from whom significant relief is sought, greater than
two thirds of the Schmidt Class are domiciled in Cook County, and the claims relate to the rights,
duties, and obligations relating to or created by or pursuant to a security. 28 U.S.C.
§ 1332(d)(4)(B); § 1332(d)(9).
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IV. FACTS COMMON TO ALL COUNTS
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
A. Cloth’s Fraudulent Scheme
16. Cloth is an individual who resides in Florida. Cloth is the owner and control person
of Creative Wealth Media Finance Corp. (“Creative Wealth” or “CWMF”) and several related
entities.
17. Creative Wealth is a pass through entity with no assets.
18. On its website, Creative Wealth describes itself as “a prolific film and television
financing company that has executive produced over 50 movies, while raising and deploying in
excess of $650 million for a portfolio of critical hits, commercial blockbusters and cult favorites.”
19. Creative Wealth is the primary financier for BRON Studios (defined below) since
Crystal Wealth was shut down by regulators.
20. Cloth is the founder of Creative Wealth and serves as its managing director. He is
also the co-founder of BRON Creative, as described below, and Cloth owns 15% of BRON Studios
at all times relevant.
21. BRON Studios, Inc. is a corporation incorporated under the laws of the Province of
Vancouver, Canada, with its principal place of business in Vancouver, British Columbia.
22. Except where otherwise noted, BRON Studios USA, Inc. and BRON Studios, Inc.
are referred to together herein as “BRON Studios.” Bron Studios is controlled by Aaron Gilbert and
Jason Cloth.
23. Cloth was a director of BRON Studios at all times relevant.
24. Bron and Gilbert were previously involved in another Canadian Ponzi Scheme
called “Crystal Wealth” and portentously referred to as “CWMF”.
25. Creative Wealth follows the name and business model of Crystal Wealth that was
operated by Clayton Smith.
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26. Throughout the late 2010’s Smith produced movies alongside Cloth including “The
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Childhood of a Leader”.
27. As of 2017 Crystal Wealth claimed to have $193 million under management that
were for the most part invested in Aaron Gilbert’s Media House Capital and used to fund Bron
productions. Crystal Wealth operated as a Ponzi Scheme premised on funding big budget film
projects.
28. After an Ontario Securities Commission (“OSC”) investigation and insolvency
proceeding, Crystal Wealth’s principal, Clayton Smith, escaped with a fine that was never paid and
Aaron Gilbert and Bron were allowed to continue with their operations and repeat the scam with a
new “CWMF” called Creative Wealth.
29. Ultimately Crystal Wealth’s auditor, BDO, bore the brunt of the many unpaid
investors and settled for tens of millions of dollars.
30. Right when Crystal Wealth was cratering in bankruptcy and securities enforcement
actions, BRON Studios was making millions with its new partner Creative Wealth on the movie
Joker.
31. C2 Motion Picture Group, LLC (“C2”) is a Delaware Limited Liability Company
operated by Cloth and Dave Kaplin.
32. C2 was formed on May 5, 2022, just as Creative Wealth and BRON Studios were
defaulting.
33. C2 picked up where Creative Wealth left off but apparently with new investors.
34. Cloth raised tens of millions of dollars in the United States for several pictures and
series from approximately 2019 through 2023 on behalf of BRON Studios, Crystal Wealth, CWMF,
and now C2.
35. Cloth raised the bulk of the American investment via two intermediaries or brokers,
Schmidt and Maraboyina Capital (“Maraboyina”) in Texas.
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36. Schmidt’s compensation from Creative Wealth was not disclosed, but upon
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information and belief he received a carried interest in the “investments” he placed he placed with
Creative Wealth.
37. Cloth’s scheme was complicated, and it appears that it did not matter what project
an investor supposedly invested in, and instead, Cloth just paid who he felt he needed to in order to
keep his scheme going.
38. Investors were promised repayment based on the success of specific film projects.
39. Investors were promised that they would be paid if the project was profitable and
accepted the risk that they would not be paid if it was not profitable.
40. Investors were led to believe that they had a direct interest in the project and the
success or failure of the investment only depended on the profits of the project.
41. Investors were assured that each project was thoroughly analyzed and would be
successful.
42. Contrary to the promises made, Cloth would pay whatever he felt like whenever he
felt like regardless of the success or failure of the project invested in.
43. Upon information and belief, a significant portion of the money invested was
consumed by Cloth and his salesmen and never actually invested in film production.
44. Cloth would invest in movies via various entities, but the repayments made to
investors had little relation to what they purportedly invested in.
45. Cloth would pay out on investments in failed projects when it suited his needs to
keep an investor engaged.
46. Cloth would not pay investors on successful projects when it did not suit his needs
to keep that particular investor paying.
47. At times, investors would be promised payment based on the success of projects
they did not even invest in.
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48. Since forming C2 Cloth has promised Class Members that they will be repaid for
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investments in Creative Wealth and CWMF from C2.
49. Creative Wealth, CWMF, and BRON Studios had no internal controls, audits, or
any structure in place to ensure the invested funds went where they were promised to go. The lack
of auditing is the only material difference between Creative Wealth and CWMF.
50. Cloth’s scheme of misrepresentations and robbing profitable ventures to make
Ponzi payments on others is best illustrated with a handful of specific projects Class Members
invested in:
i. Ghostbusters: Afterlife
51. On or about December 18, 2018, Bron Creative, the joint venture between Bron
Studios and Creative Wealth Media, closed a multi-picture, $100 million co-financing deal with
Warner Bros. that included investment in Ghostbusters: Afterlife (“Ghostbusters”).
52. Ghostbusters was a huge financial success. Its budget was only $75 million and it
made $204 million at the box office alone following its release on November 19, 2021.
53. Despite the huge success, investors were not paid.
54. On June 15, 2022, Maraboyina emailed an investor:
“I wanted to give you an update on Ghostbusters. We received the first studio

ultimate in January, and then recently received the second one (numbers as of
3/31/2022). Profit is continuing to increase, and the next studio ultimate will come
out at the end of June. I have attached the first ultimate and a screenshot of the most
recent one is attached below. We will be financing repayment based upon the next
ultimate. Full repayment is expected within the next 30-60 days. I appreciate your
patience as this project was delayed, but I think you will be very happy with the
final return. If you have any questions, please let me know”
55. On August 26, 2022, Maraboyina emailed an investor:
Good afternoon. I hope that you are doing well. We just received an update on the
Ghostbusters repayment, and I wanted to keep you in the loop as to timing and
when to expect a wire. We are working with BRON and Comerica for the line of
credit that will allow us to repay principal, interest, and an initial tranche of profit
as quickly as possible.
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BRON and Sony have signed off on all documents and have send everything to
Comerica. They are establishing a separate facility for this one transaction and not
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putting it through their general line of credit. While beneficial - no cross-

collateralization risk for investors and straight forward reporting - it still requires a
few more steps to establish than putting the studio ultimates through our existing
line. BRON just received a new ultimates report from Sony that will provide for
additional funds to be pulled through the facility. They have additionally already
received approximately 90% of the value of the tax credits on the film, so future
tax credit receipts will not have a material effect on the amount available through
the refinancing. Comerica will provide all the loan documents as well as work
with Sony to get any third-party documents sorted. Sony needs to execute an
NOA with Comerica confirming the agreement to provide financial
information directly to Comerica and several other covenants that are
specifically negotiated. BRON got ahead of this and this document is substantially
negotiated at this point. In addition to the loan documents and the Sony agreement,
there are several other documents, for example, certificates of insurance from Sony,
that we are working on obtaining now to ensure a quick closing. That said, a
realistic timeframe from this point forward is three to four weeks. We are
doing everything we can to push Comerica to move faster than this, but I
wanted to give you an estimate.
56. On September 15, 2022, Maraboyina emailed an investor on behalf of CWMF:
“Ghostbusters repayment is imminent, so we will have that out in the next few business days.”
57. Schmidt made similar promises to his investors in late 2022 about Ghostbusters
paying soon.
58. On September 21, 2022, Maraboyina emailed another investor on behalf of CWMF:
We just received an update on the Ghostbusters repayment, and I wanted to

keep you in the loop as to timing and when to expect a wire. We are working with
BRON and Comerica for the line of credit that will allow us to repay principal,
interest, and an initial tranche of profit as quickly as possible.
BRON and Sony have signed off on all documents and have send everything to
Comerica. They are establishing a separate facility for this one transaction and not
putting it through their general line of credit. While beneficial - no cross-
collateralization risk for investors and straight forward reporting - it still requires a
few more steps to establish than putting the studio ultimates through our existing
line....
Comerica will provide all the loan documents as well as work with Sony to get any
third-party documents sorted. Sony needs to execute an NOA with Comerica
confirming the agreement to provide financial information directly to Comerica and
several other covenants that are specifically negotiated. BRON got ahead of this
and this document is substantially negotiated at this point.
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In addition to the loan documents and the Sony agreement, there are several other
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documents, for example, certificates of insurance from Sony, that we are working
on obtaining now to ensure a quick closing.
That said, a realistic timeframe from this point forward is 5-7 business days.
We are doing everything we can to push Comerica to move faster than this, but I
wanted to give you an estimate
59. On October 4, 2022, Maraboyina emailed an investor on behalf of CWMF:
“I spoke with Arron this morning and we are waiting on funds from Comerica
which will then be transferred to BRON and then to CWM. We are expending
this any day now. I know the delay has been frustrating for everyone; I following up
daily with Aaron Gilbert and his team”
60. On October 28, 2022, a CWMF employee emailed an investor:
“We have a checklist call with Akin (bank’s counsel) today but we don’t have that
far to go to get to a closing on Ghostbusters. Because it’s being pulled from our
general line of credit, we’ll need Union’s approval and a few other issues need to
be addresses, but the action loan itself is quite advanced and I don’t see other issues
causing any material delays....”
61. On February 16, 2023, Cloth emailed Maraboyina: “we are expecting $ right now
within days.”
62. On February 19, 2023, Cloth emailed Maraboyina: “26% and it will be in next
week.”
63. Cloth told another investor Bron received 33% of the profits.
64. Class members were never paid the full return on their Ghostbusters investment.
65. Plainly, Cloth promised more returns than he could satisfy and his salesmen,
Schmidt and Maraboyina were oblivious to the inner workings of the scheme they were promoting.
66. Another investor was repaid less than half his principal invested in Ghostbusters,
and payment came from an entity called Shaggy Dog Media that was not disclosed in any
investment documents.
67. In July 2023, Cloth said another large investor was paid on Ghostbusters.
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ii. Monkey Man
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68. CWMF and Bron produced the Dev Patel movie, Monkey Man. It was produced at
a total expense of $10,500,000 and then sold to Netflix for $34,000,000.
69. Monkey Man was a huge success.
70. Cloth claimed that Creative Wealth actually received 25% of Monkey Man’s net
profits in compensation for a $6,500,000 loan.
71. Further, Creative Wealth had registered a charge on Kid Unknown Holdings Ltd.,
the production company for the Monkey Man project, on or about March 30, 2021 and that this
charge was satisfied on or about August 6, 2021. In other words, it appears as though Creative
Wealth received monies in connection with the Monkey Man project over two years ago, yet has
failed to pay anything to investors.
72. On January 27, 2022, Schmidt repeated Cloth’s representation to investors that
Monkey Man sold for $33,000,000 with a total profit of over $20,000,000,
73. On September 7, 2022, Maraboyina emailed an investor:
Netflix has the film and editing is complete. BRON is finalizing everything with
Netflix's lawyers, and we expect everything to be completed in the coming weeks.
Netflix will be paying BRON starting at the end of the year, but CWM is going to
be paying investors in the next month or so with other funds.
74. Despite the success of Monkey Man, Class Members were not paid on their
investment in the project.
iii. Shadowplay
75. On or about March 19, 2020, Class Members invested in financing episodes 101-
108 of the series Shadowplay.
76. Class Members entered into a participation agreements that provided:
Financier shall participate in the Collections and be repaid principal and interest
and share in “Adjusted Gross Revenues” derived from exploitation of the Picture,
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on and subject to the terms provided in Schedule “A” to the extent of its
Participation.
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Lender agrees to pay and otherwise account to Financier on or about fifteen (15)
calendar days after Lender’s actual receipt of amounts due and payable to Lender
pursuant to the Financing Agreements, amounts due and payable to Financier,
pursuant to the Client Term Sheet in respect of the Participation, as such amounts
are earned and paid by the Borrower to Lender, pursuant to the terms of the
Financing Agreements
77. On July 16, 2020, Cloth entered into term sheet for another loan for the same
project with the same terms with Hudson, LP.
78. On December 9, 2020, Maraboyina emailed an investor:
The production risk isn’t an issue for any of your investments. Digital Animation
will be sold within a couple of months. Shadowplay repayment is scheduled for
February.
79. On March 4, 2021 a class member texted Maraboyina:
Q: Hey do you have any update on Shadowplay repayment?

A: Will have an update from BRON by end of the day today.
80. On April 16, 2021, Maraboyina emailed an investor:
Casey, I hope that you are doing well. I wanted to get back to you regarding an
update on Shadowplay. The sale to Netflix is being finalized right now but has
been delayed several weeks as a result of...”
81. An investor told Maraboyina that he could invest more as soon as Shadowplay paid
off.
82. On February 2, 2022, the investor’s investment in Shadowplay miraculously paid
off right in time for him to invest in another CWMF film, National Anthem.
83. The payoff on Shadowplay had nothing to do with the success of the investment
and everything to do with the investor’s willingness to rollover the investment into another project.
84. Cloth stated in affidavit filed on December 16, 2022 in SDNY 1:22-cv-05520:
[Shadowplay] was not successful as Creative Wealth had hoped, and Shadowplay
did not generate sufficient gross receipts to pay Hudson. Therefore, no amount is
due and owing to Hudson, from Creative Wealth or anyone else” (affidavit exhibit)
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“repayment of those outstanding amounts was conditioned on Shadowplay’s
generation of sufficient receipts.”
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85. The same terms for the same investment yielded a 20% profit for one investor while
another investor received nothing on the same purportedly failed project.
iv. Gossamer
86. Class Members invested in two failed projects Fables and Gossamer.
87. Both projects were complete failures and nothing was paid.
88. On June 3, 2022, Oaks invested in Gossamer.
89. On June 16, 2022, Maraboyina told investors that CWMF renegotiated the
deal with Bron and was now getting 40% of the profits on Gossamer.
90. On January 27, 2023, Cloth communicated to Sandy Schmidt in Illinois:
I’ve been asked to provide a further update on the initial financial exit from the
various film / TV productions financed by all of you. Firstly, and I cant stress this
strongly enough, there is zero risk of non repayment. All the shows, except for
Bear Grylls (that deal is being worked on now) are sold and have sold for far
in excess of production cost. I think Ive stated this before, film finance is very
much akin to a first lean construction finance loan. Other then the first 10-15% of
monies received, we are always the first party to be repaid with interest. Just like
construction, the purchaser of the property does not “close” until the project is
delivered as substantially complete. That is exactly the same mechanic in film at
tv finance. We have multiple, non related productions contained within a fund and
a few one off productions that sit exclusive to the media fund. Delivery of all of
these shows will occur anywhere from a few months from now to 18-24 months
from now. If we waited for delivery and payment from the studios / distributors
repayment would be irregular and very choppy. I found over the years that didn’t
sit well with clients and caused needless angst to clients. Aaron Gilbert and
myself took it upon ourselves to put in place a credit facility which allows us
to take deal paper and bring forward the cash value. That value is to
exclusively be used to repay clients from the underlying deals. To get to that
point all 26 agreements on all 9 shows need to be legally reopened and
Comerica inserted as a party to the transaction. Once new docs are drafted,
they must be sent to the legal council of every party connected to each show for
review and comment. Once everyone has agreed to all of the new docs they have
to go out for wet ink signatures. Once all the wet ink is back at Comerica, closing
is arranged (usually within 48 hours) and funds are transferred to our
collection account for distribution to clients. Closing a bank facility for 1 show
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is heavy work, 9 is enormous. Covid played a role in slowing the lawyers work
in Dec and early Jan, but things are rolling along now. I’ve told Sandy this on
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numerous occasions that there are probably 100 people working to push all parties
to review, comment, sign, and execute documents as soon as possible. I cant push
people any harder. They will stop taking my call. We are all at the end here. I
anticipate funds closing very shortly, as a matter of fact I’m being told
imminently. The payments being processed now will allow for full exits with
all outstanding interest. Further profit participation will provide investors with
returns well above 100%. Future revenues will include; merchandise, gaming,
publishing, music, digital strategies (nft). You all will make money for years to
come from there shows. For further comfort (and please do not share any of this
info with anyone outside our group), I am going to give out the purchase details for
each show. For clarification though, I must admit that I don’t have all of the
waterfalls yet (those are being prepared) so I cant quite calculate the exact quantum
of profit owed to us per project. Also please remember that we are only one of
many parties entitled to profit participation.
Monkey Man
10,500,000cost
Netflix 33,000,000 purchase price
Hailey and the Hero Heart

2,775,000 (CW Loan)
Warner Brothers (Cartoon Network) 3,650,000 (only for North America)
The rest of the world is being sold now
Bubbles Hotel
5,500,000 (CW Loan)
Warner Brothers (Cartoon Network) 8,700,000 purchase price
Fables
10,500,000 cost
Netflix (North America) Paramount + (Rest of World)
17,000,000 purchase price
Gossamer
10,800,000 cost
Netflix (North America) Paramount + (Rest of World)
18,700,000 purchase price
Robin Hood
In production
Bear Grylls Corporate have agreed to post a corporate guarantee of our loan. That
guarantee is being financed with our Comerica line as well. Clients will reveive
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their investment plus outstanding interest. A distribution deal is being worked on
now, and I should have further details shortly to share with you.
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As always, I don’t take it lightly that you have all entrusted me with your hard
earned money. We are always very careful to select shows that we identify as those
with the greatest return potential that can survive in all market conditions. I know
you will all be happy and impressed with the total return performance of these first
few shows.
91. Cloth told Schmidt Gossamer was already sold but didn’t pay investors anything
for their investment in it.
92. Cloth’s favorite lie to deploy when in a bind is that a Comerica line of credit will
soon come save the day and neither Schmidt nor Maraboyina bothered to confirm there was
actually a line of credit or that it would be used to pay investors.
v. Young Bear Grylls
93. On May 4, 2020, pursuant to a loan and security agreement, CWMF agreed to loan
to an entity called YBG Commercial Ltd. (“YBG Commercial”) approximately $11,000,000 to
fund the production of the Young Bear Grylls (“YBG”) animated trilogy, with distribution to be
handled by Bron. The Catalyst pitch deck showcased the YBG trilogy as one of the Fund’s featured
projects.
94. Class members relied on Schmidt’s representations they would receive “capital
out” in 12 months, that each film project was carefully vetted, and the investment would be used
“exclusively” to fund the YBG films.
95. On December 30, 2020, only a few months after class members entered into the
participation agreement, Schmidt told investors that the “three Bear Grylls animated movies are
well into production with 2 out of 3 complete,” and that a bidding was imminent. Once the film
was sold, Schmidt claimed, investors would be taken out of the investment within just 45 days.
96. In the first quarter of 2021, Creative Wealth released a newsletter advising that the
production on Fables, Gossamer, Bubble’s Hotel, and Hailey & the Hero Heart was completed, and
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negotiations were ongoing for the sale of each of these projects to major streamers and/or TV
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Networks. Negotiations for the sale of Young Bear Grylls were also reportedly ongoing at this
point.
97. On June 9, 2021, Schmidt again emailed investors advising them that production
was “underway” and that there were ongoing “sales discussions” regarding distribution rights.
“The films will be distributed worldwide in 196 countries,” Schmidt claimed, with North American
distribution via major streaming services such as Apple, Amazon, Netflix, and HBO Max.
98. On May 10, 2022, Schmidt emailed investors, claiming that the YBG films were
still “out for sale,” this time at the Cannes Film Festival. Schmidt advised them that he hoped the
Fund’s exit would occur at the end of the month. “Your investment in not at risk of loss of
principal,” he reassured. “Unfortunately, it is just taking longer than expected. We are very close.”
99. On July 20, 2022, Schmidt reported that the “films were recently completed,” and
that streaming services including Netflix were vying for distribution.
100. Months passed without an update. Then, on September 1, 2022, Schmidt emailed
investors, including CBL, a projected financial outlook for the YBG franchise, which promised an
incredible “80 million of potential revenue”—more than six times the trilogy’s initial production
budget. Schmidt said he was still determining an exit strategy for investors. He acknowledged that
the timing of the investors’ exit had been “misrepresented,” but that as soon as Bron sold the films,
their capital would be returned. “I strongly believe this will be an excellent investment,” he stated.
“Just taking longer than we had hoped. Thank you for your patience.”
101. On February 15, 2023, Schmidt emailed investors, with another update on the YBG
trilogy and financial projections from Bron. “We expect YBG to be monetized this year,” Schmidt
assured, stating he would know more the following month. According to the email, the first film
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was “completed,” and the second film was in “Post,” and the films would be shopped around to
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global buyers that month.
102. In reality the project was never completed. YBG made no money and the project
remains in limbo.
B. Bron Bankruptcy
103. On July 10, 2023, Cloth spoke to a group of investors in Illinois about the Bron
bankruptcy. Sandy Schmidt acted as master of ceremonies for this Zoom meeting and recorded
the meeting.
104. Remarkably, Cloth attributed all the failures and investment losses to Bron despite
the fact that he was an owner and director of Bron.
105. Cloth said the cause of the bankruptcy was “it’s financial mismanagement” and that
“we haven’t worked with Bron in a about a year and a half.”
106. He claimed CWMF had nothing to do with it and no liability because “we are a
flow through entity.”
107. Cloth claimed, “we know that there is value in other investments Bron made” and
that C2 agreed to pledge its share to a bank for a line of credit to repay the Bron and CW investors.
108. Just like he did years earlier, Cloth claimed Comerica would come to the rescue
and “credit facility will be in place within 90 days” and “we [C2] will pull revenue forward to pay
off those notes”.
109. Cloth boldly claimed that CW and Bron investors would be paid soon based on
the success of C2’s investment in Mission Impossible.
110. Cloth claimed in July 2023 that was a 100% likelihood that he would repay the
notes to the Illinois within 110 days of July 10, 2023.
111. The Comerica line of credit was made up. Just like before.
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112. Mission Impossible, while a huge production was not profitable, and paramount
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lost $40,000,000 on the production.
113. C2 is not listed on IMBD as a producer of Mission Impossible.
C. CWMF Bankruptcy
114. On or about November 28, 2023 CWMF filed a petition for voluntary bankruptcy
in Ontario, Canada.
115. The bankruptcy was just three months after Cloth put all the blame on Bron and
Gilbert and promised that CWMF would clean things up and they would be repaid.
116. CWMF claims to have over $80,000,000 in total liabilities of which $34,000,000
is owed to Illinois investors.
117. Cloth has gone quiet and recently gave up his defense of a related fraud case in
the Southern District of Florida.
D. Schmidt’s Participation in the Scheme
118. Cloth raised money in the United States via two principal firms who acted as
placement agents selling notes for investment, including Schmidt, most of whom raised funds from
friends, family, and other downstream investors for the purpose of investing in promissory notes
and co-investment agreements used to fund individual projects offered by Cloth and promissory
notes to fund CMWF including Series B and Series E notes and later in Schmidt’s own fund,
Catalyst Wealth that aggregated investment for CMWF. (hereinafter “Cloth Offering”).
119. Schmidt is family business that has a solid reputation that enabled the sale to dozens
of investors with no knowledge of the film business and plenty of funds available for investment.
120. Cloth could not have tapped into Chicago-area wealth without Schmidt.
121. Cloth needed Schmidt after burning bridges with Canadian pension funds in the
Crystal Wealth scam.
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122. Cloth’s scheme was a house of cards and an iota of due diligence by the middleman
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earning paid to sell the investment would have demonstrated this investment was not safe for
anyone.
123. Schmidt relied on personal relationships and word-of-mouth referrals to obtain
investors.
124. Schmidt typically solicited investors in person, over the telephone, and via email
for the Cloth Offering.
125. Schmidt solicited over $30,000,000 in investment for the Cloth Offering of which
approximately $30,000,000 remains outstanding.
126. Schmidt was Cloth’s salesmen and broker raising money for Cloth throughout the
Midwest.
127. Schmidt negligently relied on only representations from Cloth when recommending
the investment to Plaintiff rather than confirming anything with third parties or looking into Bron
or CWMF’s finances or the principal’s previous Ponzi scheme.
128. During this time, Cloth made representations and provided purported contracts,
emails, and other information to Schmidt, which Schmidt negligently believed to be true and
accurate without investigating the obvious holes in the story that was far too good to be true.
129. Schmidt proceed to sell Plaintiff and the Class investment in the Cloth Offering by
regurgitating the lies told by Cloth.
130. Schmidt acted as the gatekeeper of information from Cloth.
131. Plaintiff reasonably relied on Schmidt’s due diligence on the investment and
representations that they were actually investing in specific projects rather than Cloth’s personal
piggy bank.
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132. Rather than relying on any substantive investigation of its own, Schmidt relied on
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the fact that Cloth kept paying as sufficient evidence that the apparent Ponzi Scheme was
legitimate.
133. Schmidt was taken hook line and sinker by Cloth and did not bother to do his own
independent due diligence when promoting the Ponzi Scheme.
134. Schmidt kept his head in the sand so long as the lulling payments kept coming in
from Cloth then parroted Cloth’s absurd lies when payments did not come as promised.
135. Now Schmidt is trying to keep investors at bay by promising a miracle in the
Canadian bankruptcy. The same tool employed by the last iteration of this Ponzi scheme, Crystal
Wealth.
E. Schmidt’s Duty to Plaintiff and the Class
136. The Cloth Offerings were structured as co-investment in various film projects.
137. For all intents and purposes, Schmidt was acting as a placement agent or broker
for Cloth and paid to make the sales.
138. Plaintiff reasonably relied on Sandy Schmidt’s representations and due diligence
into Cloth because he was an investment advisor, a CFP (Certified Financial Planner),a
International Board of Certified Financial Planners, ChFC (Chartered Financial Consultant), CLU
(Chartered Life Underwriter), and has FINRA Series 6, 63, 65, & 22 securities registration.
139. Jordan was the primary point of contact with Plaintiff and was previously
acquainted with her son. Jordan is a registered Broker and passed a FINRA Series 63 Examination.
140. Ethan claims he created the Catalyst Wealth division of SAS:
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FILED DATE: 3/5/2024 12:28 PM 2024CH01610
141. Ethan is a registered Broker and Investment Advisor that passed his Series 66 and
Series 7 Examinations.
142. Brokers such as Schmidt who sell private placements to retail customers for a
commission, such as Schmidt, are required to register with the Financial Industry Regulatory
Authority (“FINRA”).
143. FINRA regulates broker/dealer firms like Schmidt and their registered
representatives (i.e., stockbrokers), and promulgates rules and regulations that brokerage firms and
their registered representatives must adhere to.
144. A placement agent, or at least a party acting in that role such as Schmidt, is required
to perform reasonable due diligence on a private placement prior to offering it for sale to its
customers pursuant to FINRA Rule 2111.05(a), FINRA Regulatory Notice 10-22, NASD Notice
to Members 03-71, and NASD Notice to Members 05-26, 17 C.F.R. § 240.15l-1(b)(1).
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145. SEC Regulation Best Interest (“Reg B1”) provides Schmidt as a placement agent
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owed the following duties to Plaintiff and the Class:
(ii) Care obligation. The broker, dealer, or natural person who is an associated
person of a broker or dealer, in making the recommendation, exercises reasonable
diligence, care, and skill to:
(A) Understand the potential risks, rewards, and costs associated with the
recommendation, and have a reasonable basis to believe that the
recommendation could be in the best interest of at least some retail customers;
(B) Have a reasonable basis to believe that the recommendation is in the best
interest of a particular retail customer based on that retail customer's
investment profile and the potential risks, rewards, and costs associated with the
recommendation and does not place the financial or other interest of the broker,
dealer, or such natural person ahead of the interest of the retail customer;
(C) Have a reasonable basis to believe that a series of recommended transactions,
even if in the retail customer's best interest when viewed in isolation, is not
excessive and is in the retail customer's best interest when taken together in light of
the retail customer's investment profile and does not place the financial or other
interest of the broker, dealer, or such natural person making the series of
recommendations ahead of the interest of the retail customer.
(17 C.F.R. § 240.15l-1(b)(1).)
146. In order to ensure that it has fulfilled its responsibilities, FINRA requires that a
broker-dealer in a Regulation D offering must, at a minimum, conduct a reasonable investigation
concerning:
a. the issuer and its management;
b. the business prospects of the issuer;
c. the assets held by or to be acquired by the issuer;
d. the claims being made; and
e. the intended use of proceeds of the offering.
147. Schmidt had a duty to conduct a reasonable investigation in connection with each
offering, notwithstanding that a subsequent offering may be for the same issuer.
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148. FINRA has also provided detailed guidance on how a broker-dealer such as
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Schmidt was acting with the Cloth Offering may ensure an adequate investigation has taken place
into the issuer and its management, the issuer’s business prospects, and the issuer’s assets.
149. As set forth in FINRA Regulatory Notice 10-22 and securities industry standards,
a reasonable investigation of Cloth and its history by Schmidt would have included:
a. Examining historical financial statements of Cloth, with particular focus, if
available, on financial statements that have been audited by an independent
certified public accountant and auditor letters to management;
b. Looking for any trends indicated by Cloth’s financial statements;
c. Contacting customers and suppliers regarding their dealings with Cloth;
d. Reviewing Cloth’s contracts, leases, and financing arrangements;
e. Inquiring about Cloth’s past securities offerings and the degree of their
success; and
f. Inquiring about the length of time that Cloth had been in business and
whether the focus of its business was expected to change.
150. This was not done here. The full extent of the investigation was reliance on
information supplied by the apparent Ponzi Schemer. There was zero independent investigation
done by Schmidt.
a reasonable investigation of Cloth’s business prospects by Schmidt should include:
a. Inquiring about the viability and value of any movies funded by Cloth;
b. Inquiring about the industry in which Cloth operates, and the competitive position
of Cloth; and
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c. Requesting any business plan, business model or other description of the business
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intentions of Cloth and its management and their expectations for the business, and
analyzing management’s assumptions upon which any business forecast is based.
A broker/dealer should test models with information from representative assets to
validate projected returns, break-even points, and similar information provided to
investors.
152. This was not done here. Instead, it is apparent that Cloth oversubscribed each
investment and operated a Ponzi Scheme with the excess investment.
153. Minimal investigation would have confirmed that the investments were
oversubscribed and investors were getting paid with new investments rather than proceeds of the
movies they supposedly invested in.
a reasonable investigation of Cloth’s assets and facilities should include:
a. Carefully examining any reports by third-party experts that may raise red
flags;
b. Obtaining an expert opinion from auditors and financial experts and others
as necessary to form a basis for determining the suitability of the investment
prior to recommending the security to investors;
c. Inquiring about previous or potential regulatory or disciplinary problems of
the issuer;
d. Obtaining a credit check of Cloth;
e. Making reasonable inquiries concerning the issuer's management.
Maraboyina should have inquired about such issues as the expertise of
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management for the issuer's business and the extent to which management
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has changed or is expected to change;
f. Inquiring about the forms and amount of management compensation, who
determines the compensation and the extent to which the forms of
compensation could present serious conflicts of interest. A party acting as a
broker-dealer might make similar inquiries concerning the qualifications
and integrity of any board of directors or similar body of the issue; and
g. Inquiring about the length of time that the issuer has been in business and
whether the focus of its business is expected to change.
155. Schmidt failed to do this third party confirmation of this supposedly nine-figure
operation.
156. A broker-dealer that offers securities, including those offered under Regulation D,
must meet the suitability requirements of FINRA Rule 2111. This means that the broker-dealer
must have a reasonable basis to believe that a recommendation to purchase, sell or exchange a
security is suitable for the customer.
157. FINRA Rule 2111.05(a) is the source of a broker-dealer's obligation to perform a
reasonable investigation of the issuer and offered securities before offering securities in a
Regulation D for sale to its clients.
158. Reasonable-basis suitability requires that a broker-dealer (1) perform reasonable
diligence to understand the potential risks and rewards associated with a recommended security or
strategy and (2) determine whether the recommendation is suitable for at least some investors
based on that understanding. A broker-dealer can violate reasonable-basis suitability under either
prong of the test.
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159. Schmidt could not rely blindly upon the issuer for information concerning a
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company, nor may it rely on the information provided by the issuer in lieu of conducting its own
reasonable investigation.
160. While broker-dealers like Schmidt are not expected to have the same knowledge as
an issuer or its management, firms are required to exercise a high degree of care in investigating
and independently verifying an issuer’s representations and claims. The fact that a broker-dealer’s
customers may be sophisticated and knowledgeable does not obviate this duty to investigate.
161. Of course, under these circumstances, Schmidt was in a position to know more
about Cloth, understand its business, its finances, and its outlook better than just a mere broker-
dealer since it was acting as its placement agent or investment banker raising capital exclusively
for Cloth.
162. As the de facto placement agent and investment banker for Cloth, Schmidt was in
a unique position compared to another broker-dealer that was merely part of the investment
banking syndicate.
163. In the course of a reasonable investigation, a broker-dealer must note any
information that it encounters that could be considered a “red flag” that would alert a prudent
person to conduct further inquiry. A broker-dealer’s reasonable investigation responsibilities
obligate it to follow up on any red flags that it encounters during its inquiry as well as to investigate
any substantial adverse information about the issuer. When presented with red flags, the broker-
dealer must do more than “blindly rely” upon representations by the issuer’s management or the
disclosure in an offering document.
164. As described below, unfortunately for the Plaintiffs and the Class, Schmidt failed
to conduct proper due diligence, which caused Defendant’s conduct to fall below the standard of
care thereby breaching the duties that it owed the Plaintiffs and the Class.
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F. Cloth Defaults
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165. The cascade of defaults and lawsuits started in 2019 (years prior to Plaintiff’s
investment) and culminated in two bankruptcy filings last year.
166. In or about September 2022 the Ontario Securities Commission interviewed several
individuals involved in the scheme.
167. On or about July 19, 2023, Bron filed for bankruptcy protection in Vancouver and
a Creative Wealth entity offered to provide Debtor in Possession financing. The attempt to
manipulate the bankruptcy system failed.
168. On or about October 27, 2023, CWMF filed for bankruptcy protection in Ontario.
169. The whole adventure is a total loss with whatever value there was apparently
transferred to C2.
170. Upon information and belief, Cloth, via C2 put more than $100M into
four Paramount movies in the between August 2022 and August 2023 including: Mission:
Impossible — Dead Reckoning Part One, Transformers: Rise Of The Beasts, Dungeons &
Dragons: Honour Among Thieves and Babylon.
G. Plaintiff’s’ Investments Placed by Schmidt
171. In January 2023 Plaintiff invested $1,000,000 in CWMF via a Series B Note.
(Note Attached hereto as Exhibit “A” and incorporated herein)
172. Plaintiff invested $1,000,000 long after it should have been clear to Schmidt that
they were dealing with a crook after multiple defaults and significant litigation, and just six
months before the Bron bankruptcy.
173. The investment was part of a $20,000,000 loan to CWMF for the production of
motion pictures. See (Pitch Deck Attached hereto as Exhibit “B”)
174. Jordan facilitated the transaction for Schmidt and Fowler.
175. The Series B Note promised 12% interest paid monthly.
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176. Schmidt’s compensation was never disclosed.
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177. Plaintiff’s investment was a total loss.
178. Plaintiff demanded rescissions of her investment pursuant to Illinois Securities
Law.
V. CLASS ALLEGATIONS
179. Plaintiff states claims on behalf of a class of similarly situated investors in CWMF
for negligent misrepresentation against Schmidt and fraudulent misrepresentation against Cloth
which led the Class to lose money entrusted with Defendants totaling over $80,000,000 dollars.
180. Plaintiff brings this case as a class action on behalf of the classes of persons, defined
as follows:
Cloth Class
All persons who invested in the Cloth Offering from January 1, 2020 to December
31, 2023.
Schmidt Sub-Class
All persons who invested in the Cloth Offering with Schmidt from January 1, 2020
to December 31, 2023.
Excluded from the proposed Class and subclass are Defendants, their respective
officers, directors, and employees, affiliates, legal representatives, heirs,
successors, or assignees. Plaintiff reserves the right to amend the Class definition
as necessary.
181. The members of the putative classes are so numerous that joinder of all members
is impracticable.
182. Questions of fact and law as to all putative class members predominate over any
questions affecting any individual member of the putative class, including, but not limited to:
a) Whether Defendant, Schmidt, owed an extra-contractual duty of ordinary care to

Class Members;
b) Whether Defendant, Schmidt, breached its duty of ordinary care to Class Members;
27
c) Whether Defendant, Schmidt, negligently misrepresented the facts of their
investing in the Cloth Offering to Class Members;
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d) Whether Defendant, Schmidt, was unjustly enriched;
e) Whether Defendant, Cloth violated the Illinois Securities Law;
f) Whether Defendant, Cloth fraudulently induced Class members to invest; and
g) Whether Defendant, Cloth was unjustly enriched.
183. Plaintiff’s claims are typical of the claims of the Class because Defendants’
breaches of their respective duties (or aiding and abetting thereof) affected Plaintiff and the Class
uniformly and in precisely the same manner.
184. Plaintiff will fairly and adequately represent and protect the interests of the putative
class. Plaintiff has retained experienced class action counsel. The interest of Plaintiff is coincident
with and not antagonistic to the interests of the Class.
185. The questions of law and fact common to the members of the putative class
predominate over any questions affecting only individual members, including legal and factual
issues relating to liability and damages.
186. A class action is superior to other available methods for the fair and efficient
adjudication of this controversy because joiner of all putative class members is impracticable.
Moreover, because the damages suffered by individual members of the putative class may be
relatively small, the expense and burden of individual litigation makes it impossible for the
members of the putative class to redress the wrongs done to them individually.
187. The putative class is readily definable and prosecution of the action as a class action
will eliminate the possibility of repetitious litigation. There will be no difficulty in the management
of this action as a class action.
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IV. CLAIMS
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
COUNT I
Fraudulent Misrepresentation
Cloth Class v. Jason Cloth
188. Plaintiff on behalf of the Class, restates and realleges paragraphs 1 through 187 as
though fully set forth herein as paragraph 188.
189. Cloth directly and via his sales agents Schmidt and Maraboyina conveyed the
following misrepresentations and omissions in order to induce investment in the Cloth Offering
and lull investors to continue investing:
a) Cloth omitted that he was soliciting more funds than actually required for the
projects CWMF funded;
b) Cloth omitted that funds invested were being used to pay off old investors in failed
projects;
c) Cloth represented that invested funds were being applied to specific projects;
d) Cloth represented that the projects funds were applied to were profitable or soon
would realize a profit;
e) Cloth represented that projects sold and the only reason for delay was setting up a
credit facility with Comerica Bank;
f) Cloth omitted that commissions and fees were being paid to undisclosed individuals
and entities;
g) Cloth represented that specific projects were profitable when in fact they lost
money;
h) Cloth was a producer on projects he did not in fact produce;
i) Cloth omitted that the profits realized on successful projects were being used to pay
investors on failed projects rather than returned to investors in successful projects;
29
j) Cloth omitted investment in specific projects was being commingled with other
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projects; and
k) Cloth omitted CMWF was just a flow through entity with no assets.
190. Cloth knew that he told investors false statements of fact and omitted material facts
with a duty to disclose them.
191. Plaintiff and the Class reasonably relied on Cloth’s fraudulent representations and
omissions and invested tens of millions of dollars based on the false promises.
192. As a direct and proximate result of Cloth’s fraudulent representations and
omissions, Cloth is liable to Plaintiff and the Class for all of the investment losses that they suffered
in the Cloth Offering.
COUNT II
Violation of 815 ILCS 5/12(i)
Class v. Jason Cloth
193. Plaintiff on behalf of the Class, restates and realleges paragraphs 1 through 187 as
194. At all times relevant, there existed in the State of Illinois, a statute entitled the
Illinois Securities Law of 1953, 815 ILCS 5/1 et seq. (“ISL”).
195. Interests in CWMF that are the subject of this Complaint are “securities” as defined
in Section 2.1 of the ISL whether sold as promissory notes for a term greater than six months in
specific projects, promissory notes greater than six months for investment in slates of projects
(Series E Notes, Series B Notes, or membership units in Catalyst Wealth).
196. Pursuant to Section 12 of the ISL, 815 ILCS 5/12, it is unlawful for any person to
employ any device, scheme or artifice to defraud in connection with the sale or purchase of any
security, directly or indirectly.
30
197. On or about from approximately January 2019 to June 2023 Cloth did offer, as that
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term is defined in Section 2.5a of the ISL, an investment in the Cloth Offering to Plaintiff and the
Class by a solicitation by its principal Jason Cloth conveyed via his agents/brokers Maraboyina
and Schmidt and directly to the Class.
198. Cloth issued numerous statements and other papers or documents touting the value
of the investments and how the invested funds would be utilized.
199. Cloth’s representations to the Class to invest in CWMF was performed in the course
and scope of his employment as agent, control person, and owner of CWMF.
200. This solicitation contained materially false and untrue statements including
misrepresentations of the value of the projects backing the notes and units and how the funds would
be utilized.
201. Cloth’s solicitation to invest in the Cloth Offering omitted to state the following
material facts that were required to make the statement contained in the solicitation not misleading:
a) That Cloth was soliciting more funds than actually required for the projects CWMF
funded;
b) That funds invested were being used to pay off old investors in failed projects;
c) That commissions and fees were being paid to undisclosed individuals and entities;
d) That specific projects were profitable when in fact they lost money;
e) That Cloth was a producer on projects he did not in fact produce;
f) That the profits realized on successful projects were being used to pay investors on
failed projects rather than returned to investors in successful projects;
g) That investment in specific projects was being commingled with other projects;
h) That CMWF was just a flow through entity with no assets;
i) That Cloth laboring under numerous conflicting interests;
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j) That fees were paid to undisclosed entities controlled by Cloth; and
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k) Other material facts detailed herein.
202. Plaintiff was justified in relying on Cloth’s representations when they accepted the
investment advice to invest in the Cloth Offering because Cloth possessed superior knowledge and
skill.
203. As a result of the reliance on Cloth’s misrepresentations and omissions, the Class
has suffered financial losses totaling at least $80,000,000.
204. Pursuant to Section 13 of the ISL, 815, ILCS 5/13(A), the Class has purchasers of
securities, may rescind any securities transaction effected in violation of Section 12 of the ISL.
205. Section 13 of the ISL, 815 ILCS 5/13, imposed joint and several liability upon the
issuer, controlling person, and dealer; and each dealer or salesperson who participated or aided in
any way in making the sale.
COUNT III
Violation of 815 ILCS 5/12(g)
Schmidt Class v. Schmidt
206. Plaintiff on behalf of the Schmidt Class, restates and realleges paragraphs 1 through
187 as though fully set forth herein as paragraph 206.
207. At all times relevant, there existed in the State of Illinois, a statute entitled the
Illinois Securities Law of 1953, 815 ILCS 5/1 et seq. (“ISL”).
208. Interests in CWMF that are the subject of this Complaint are “securities” as defined
in Section 2.1 of the ISL whether sold as promissory notes for a term greater than six months in
specific projects, promissory notes greater than six months for investment in slates of projects
(Series E Notes, Series B Notes, or membership units in Catalyst Wealth).
209. Pursuant to Section 12 of the ISL, 815 ILCS 5/12, it is unlawful for any person to
obtain money or property through the sale of securities by means of any untrue statement of a
32
material fact or any omission to state a material fact necessary in order to make the statements
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
made, in the light of the circumstances under which they were made, not misleading.
210. On or about from approximately January 2019 to June 2023 Schmidt did offer, as
that term is defined in Section 2.5a of the ISL, an investment in the Cloth Offering.
211. Sandy, Ethan, and Jordan were each control persons of SAS at all relevant times
and directly participated in soliciting investors via text, email, and Zoom meetings.
212. Schmidt issued numerous statements and other papers or documents touting the
value of the investments and how the invested funds would be utilized.
213. This solicitation contained materially false and untrue statements including
misrepresentations of the value of the projects backing the notes and units and how the funds would
be utilized.
214. Schmidt’s solicitation to invest in the Cloth Offering omitted to state the following
material facts that were required to make the statement contained in the solicitation not misleading:
a) That Cloth was soliciting more funds than actually required for the projects CWMF
funded;
b) That funds invested were being used to pay off old investors in failed projects;
c) That commissions and fees were being paid to undisclosed individuals and entities;
d) That specific projects were profitable when in fact they lost money;
e) That Cloth was a producer on projects he did not in fact produce;
f) That the profits realized on successful projects were being used to pay investors on
failed projects rather than returned to investors in successful projects;
g) That investment in specific projects was being commingled with other projects;
h) That CMWF was just a flow through entity with no assets;
i) That Cloth laboring under numerous conflicting interests;
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j) That fees were paid to undisclosed entities controlled by Cloth; and
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k) Other material facts detailed herein.
215. Plaintiff was justified in relying on Schmidt’s representations when they accepted
the investment advice to invest in the Cloth Offering because Schmidt were trained and licensed
brokers who possessed superior knowledge and skill.
216. As a result of the reliance on Schmidt’s negligent misrepresentations and
omissions, the Class has suffered financial losses totaling at least $30,000,000.
217. Pursuant to Section 13 of the ISL, 815, ILCS 5/13(A), the Class has purchasers of
securities, may rescind any securities transaction effected in violation of Section 12 of the ISL.
218. Section 13 of the ISL, 815 ILCS 5/13, imposed joint and several liability upon the
issuer, controlling person, and dealer; and each dealer or salesperson who participated or aided in
any way in making the sale.
COUNT IV
Negligent Misrepresentation
Schmidt Sub Class v. Schmidt Defendants
219. Plaintiffs on behalf the Schmidt Sub Class, restates and realleges paragraphs 1
through 187 as though fully set forth herein as paragraph 219.
220. To establish the applicable standard of care under the circumstances, the Court may
examine professional standards of conduct in the industry. In this case, the applicable standards of
conduct for Schmidt are the rules promulgated by FINRA, which each of the Schmidt Defendants
were members of.
221. Those who undertake any work or calling for which a special skill is required such
as a broker-dealer have a duty not only to exercise reasonable care in what they do, but also to
possess a standard minimum of special knowledge and ability.
222. Schmidt owed Plaintiff and the Class a duty to act as a reasonably prudent broker-
dealer would do under the same or similar circumstances. The duties set forth herein arise from
34
the regulations, customs and usage of the brokerage trade, including rules promulgated by FINRA.
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
These duties and obligations flow to Plaintiff and the Class members as a result of the client
relationship between Cloth, the Plaintiff, and the Class.
223. As set forth above, Schmidt breached their legal duty to provide accurate
information to Plaintiff and the Class as prospective purchasers of investments in the Cloth
Offering by omitting material facts, and such material facts were necessary to make the statements
made, in light of the circumstances under which they were made, not misleading.
224. By reason of the aforesaid, Schmidt are guilty of negligent misrepresentation and
omission in connection with the offer and sale of investments in Cloth Offerings.
225. At all times relevant to this action, Schmidt had knowledge of, or reasonable
grounds to believe the existence of facts by reason of which their liability under this Count is
alleged to exist, and with this knowledge, Schmidt made material omissions of fact with respect to
the offer and sale of the Cloth Offering in each of its forms.
226. As described above, Defendant negligently breached its duties to Plaintiff and the
members of the Class.
227. Had a reasonably prudent broker-dealer under the same or similar circumstances
conducted adequate due diligence on CWMF to understand the risks and rewards of the Cloth
Offerings, it would have concluded that the risks in investing in CWMF far outweighed any
potential reward, and it would not have approved of the Cloth Offerings for sale to any of their
clients.
228. By approving of the sale of the Cloth Offerings to its clients, notwithstanding the
numerous red flags identified herein, Schmidt demonstrated that it failed to understand the risks
and rewards of the Cloth Offerings, or consciously ignored the risks presented by these red flags
in order to ensure it maximized its placement agent fees and commissions.
35
229. Schmidt knew or should have known that Plaintiff and the Class would place their
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
trust and confidence in Schmidt that it had a reasonable-basis to conclude that CMWF was suitable
for at least some investors, and that it had conducted adequate due diligence to understand the risks
and rewards of the Cloth Offering.
230. Schmidt knew or should have known that it was reasonably foreseeable that
Plaintiff and the Class would act in reliance on Schmidt’s approval to sell the Cloth Offering.
231. Plaintiff and the Class acted in reliance on Schmidt’s approval to offer to sell the
Cloth offerings.
232. But for Schmidt’s approval to sell the Cloth Offerings, Plaintiff or the Class
members would not have even been presented the opportunity to participate in the Cloth Offerings.
233. As a direct and proximate result of Schmidt’s negligence, Schmidt is liable to
Plaintiff and the Class for all of the investment losses that they suffered in the Cloth Offering.
COUNT V
Unjust Enrichment
Cloth Class v. Cloth
234. Plaintiff on behalf the Class, restates and realleges paragraphs 1 through 187, as
235. Cloth received and retained a benefit from Plaintiffs and the Class and inequity has
resulted.
236. Cloth benefitted from the sale of investment in the Cloth Offering based on his
fraudulent representations and his sales agents negligent representations.
237. Thus, all Class Members conferred a benefit on Cloth.
238. It is inequitable for Cloth to retain these benefits.
239. Plaintiffs and the Class were not aware of the true facts about the investment and
did not benefit from Defendant’s conduct.
240. Cloth knowingly accepted the benefits of his unjust conduct.
36
241. As a result of Schmidt’s conduct, the amount of his unjust enrichment should be
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
disgorged in an amount according to proof.
COUNT VI
Unjust Enrichment
Schmidt Sub Class v. Schmidt Defendants
242. Plaintiff on behalf the Class, restates and realleges paragraphs 1 through 187, as
243. Schmidt received and retained a benefit from Plaintiffs and the Class and inequity
has resulted.
244. Schmidt benefitted from the sale of investment in the Cloth Offering based on
Cloth’s fraudulent representations and their own negligent representations.
245. Thus, all Class Members conferred a benefit on Schmidt.
246. It is inequitable for Schmidt to retain these benefits.
247. Plaintiffs and the Class were not aware of the true facts about the investment, and
did not benefit from Defendant’s conduct.
248. Schmidt knowingly accepted the benefits of their unjust conduct.
249. As a result of Schmidt’s conduct, the amount of his unjust enrichment should be
disgorged in an amount according to proof.
37
COUNT VII
Respondent in Discovery
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
C2
250. Plaintiffs, restates and realleges paragraphs 1 through 188, as though fully set forth
herein as paragraph 250.
251. C2 has information essential to the determination of who should properly be named
as additional defendants in this action.
252. Cloth told Class Members they would be paid from projects produced by C2
253. 735 ILCS 5/2-402 provides in pertinent part:
“The plaintiff in any civil action may designate as respondents in discovery in

his or her pleading those individuals or other entities, other than the named
defendants, believed by the plaintiff to have information essential to the
determination of who should properly be named as additional defendants in the
action.
Persons or entities so named as respondents in discovery shall be required to

respond to discovery by the plaintiff in the same manner as are defendants and
may, on motion of the plaintiff, be added as defendants if the evidence discloses
the existence of probable cause for such action.
A person or entity named a respondent in discovery may upon his or her own
motion be made a defendant in the action, in which case the provisions of this
Section are no longer applicable to that person.”
254. Plaintiff respectfully requests that the Court order Respondent in Discovery C2 to
answer the attached summons for discovery.
38
WHEREFORE, Plaintiff on behalf of the Class prays for judgment against Defendants as
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
follows:
a) Finding that this action satisfies the prerequisites for maintenance as a class action
as set forth in 735 ILCS 5/2-801, and certifying the proposed Class as defined
herein;
b) Designating Plaintiff as representative of the proposed Class, and Alexander N.
Loftus, Esq. as Lead Counsel;
c) Attorneys’ Fees;
d) All actual and compensatory damages caused by Defendants breach including loss
of interest and reasonable costs in excess of $80,000,000;
e) Punitive Damages against Jason Cloth in excess of $100,000,000; and
f) Any and all further relief that this Court deems just and appropriate.
Respectfully Submitted,
One of Plaintiff’s Attorneys

Alexander Loftus, Esq.
Ross Good, Esq.
LOFTUS & EISENBERG, LTD.
161 N. Clark Suite 1600
Chicago, Illinois 60601
p: 312.899.6625
[email protected]
[email protected]
Firm No: 64600
Dated: March 5, 2024
39
IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS
FILED DATE: 3/5/2024 12:28 PM 2024CH01610

below, )
)
Plaintiff, )
)
v. ) No.
)
and JASON CLOTH, )
)
Defendants, )
)
)
EXHIBIT “A”
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
TERMS AND CONDITIONS OF THE SERIES B SECURED LOAN
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
SECTION 1 Terms of the Loan - Security

A. The Loan shall form part of the “Series B” loan in the aggregate amount of up to
$20,000,000.00 USD as set forth in Schedule “A” attached hereto, the terms and conditions of which are set
forth in the term sheet (the “Term Sheet”) attached hereto as Schedule “A”. The Loan shall rank in pari passau
with other Series B loans accepted by the Corporation. The Loan, and any and all Subsequent Loans (as defined
below), if any, shall be secured by the assets of the Corporation pursuant to a security agreement (the “Security
Agreement”, attached hereto as Schedule “D”). The Lender hereby acknowledges and agrees that this
Agreement forms an inter-lender agreement providing that each Series B loan will be registered under the PPSA
pursuant to the security provided by the attached Security Agreement, and shall rank pari passu as against one
another.
B. The Lender acknowledges that the Corporation has entered into term sheet agreements with the
borrower (collectively, the “Borrower”) (collectively, the “Picture Term Sheet”) in respect of motion pictures.
C. Pursuant to the terms of the Picture Term Sheets (together with any amendments, supplements,
extensions and renewals thereof, and any related agreements, security agreements, documents and instruments),
the Corporation has extended and/or will extend from time to time loans, advances, equity investments and
other financial accommodations to the Borrowers upon certain collateral security including the present and
future accounts of the Borrowers.
D. Lender agrees to advance the Loan to the Corporation, upon the terms and conditions set
forth herein, in order for the Corporation to fulfil its financing obligations in respect of the Pictures in
accordance with the terms set forth in the Picture Term Sheets.
SECTION 2 Interest
A. Interest: The principal amount of the Loan remaining from time to time unpaid and outstanding shall
bear interest from the date of Closing to and including the date of repayment in full, both before and after
default, demand, maturity, and judgement at the rate and payable as set forth in the Term Sheet. Interest shall
not be less than a minimum of 5% of the total principle invested.
SECTION 3 Maturity
The principal amount of the Loan shall become due and payable in full on that date that is indicated in Schedule
A.
SECTION 4 Subsequent Loans

Each subsequent loan (each a “Subsequent Loan”) provided by the Lender will be subject to the same terms
and conditions and security provided for herein. All Subsequent Loans will be added to the outstanding amount
of the Loan and evidenced by a contract note reflecting the specific term of such Subsequent Loan.
SECTION 5 Closing
Closing (“Closing”) shall occur on the date that the Lender provides the amount of the Loan to the
Corporation by way of certified cheque, bank draft or wire transfer or such other method of payment acceptable
to the Corporation, or such other date and time as may be determined by the Corporation.
-3-
SECTION 6 Conditions of Closing
The Lender, on its own behalf or on the behalf of the Disclosed Beneficial Lender, if applicable, acknowledges
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
that the acceptance of the Loan as contemplated by this Agreement is subject to, among other things, the
following conditions being fulfilled or performed on or before Closing, which conditions are for the exclusive
benefit of the Corporation and may be waived, in whole or in part, by the Corporation in its sole discretion:
(a) The Lender agreeing to execute and deliver to the Corporation all reports, undertakings or other
documents required under Applicable Securities Laws in connection with this Loan;
(b) The representations and warranties of the Lender having been true and correct as of the date of this
Agreement and being true and correct at Closing; and
(c) All documentation relating to the offer of this Loan in form and substance satisfactory to the
Corporation.
SECTION 7 Acknowledgments of the Lender

The Lender, on its own behalf or on the behalf of the Disclosed Beneficial Lender, if applicable, acknowledges
that:
(a) A LOAN ADVANCED TO THE CORPORATION PURSUANT TO THE TERMS AND

CONDITIONS AND SECURED BY THE SECURITY AGREEMENT ATTACHED IS
NOT WITHOUT RISK AND THE LENDER (AND ANY DISCLOSED BENEFICIAL
LENDER) MAY LOSE HIS, HER OR ITS ENTIRE LOAN;
(b) The Corporation may complete additional financings or borrowings in the future in order to develop
the business of the Corporation and fund its ongoing development, and such future financings may
affect the Lender’s rights hereunder but there is no assurance that such financing will be available, on
reasonable terms or at all, and if not available, the Corporation may be unable to fund its ongoing
development;
(c) The Corporation has the right to accept or reject the Lender’s Loan in whole or in part. If the
commitment is rejected in whole or in part, all or a portion of the Loan amount, as the case may be,
will be promptly delivered to the Lender, without interest.
SECTION 8 Representations and Warranties of the Lender

The Lender, on its own behalf or on the behalf of the Disclosed Beneficial Lender, if applicable, represents and
warrants as follows to the Corporation at the date of this Agreement and at Closing and acknowledges and
confirms that the Corporation is relying on such representations and warranties in connection with the Loan:
(a) THE LENDER HAS KNOWLEDGE IN FINANCIAL AND BUSINESS AFFAIRS, IS

CAPABLE OF EVALUATING THE MERITS AND RISKS OF THIS LOAN TO THE
CORPORATION, AND IS ABLE TO BEAR THE ECONOMIC RISK OF SUCH LOAN
EVEN IF THE ENTIRE LOAN AMOUNT IS LOST;
(b) This loan has not been made through, or as a result of, and is not being accompanied by, (i) a general
solicitation, (ii) any advertisement including articles, notices or other communications published in any
newspaper, magazine or similar media or broadcast over radio or television, or (iii) any seminar or
meeting whose attendees have been invited by general solicitation or general advertising;
(c) None of the funds that the Lender is committing to lend to the corporation are to the knowledge of
the Lender, proceeds obtained or derived, directly or indirectly, as a result of illegal activities;
-4-
(d) If the Lender is an individual, he or she is of legal age and is legally competent to execute, deliver and
perform his or her obligations under this Agreement. If the Lender is not an individual, (i) it has the
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
legal capacity and competence to execute, deliver and perform its obligations under this Agreement;
and (ii) the execution and delivery of and performance by the Lender of this Agreement have been
authorized by all necessary corporate or other action on the part of the Lender;
(e) If the Lender is committing on its own behalf, this Agreement has been duly executed and delivered
by the Lender, and constitutes a legal, valid and binding agreement of the Lender enforceable against
him, her or it in accordance with its terms;
(f) If the Lender is acting for a Disclosed Beneficial Lender, the Lender is duly authorized to execute and
deliver this Agreement and all other documentation in connection with the commitment on behalf of
the Disclosed Beneficial Lender. This Agreement has been duly authorized, executed and delivered by
or on behalf of such Disclosed Beneficial Lender and constitutes a legal, valid and binding agreement
of such Disclosed Beneficial Lender enforceable against him, her or it in accordance with its terms;
(g) The execution and delivery of and performance by the Lender (and any Disclosed Beneficial Lender)
of this Agreement do not and will not (or would not with the giving of notice, the lapse of time or the
happening of any other event of condition) result in a breach or violation of or a conflict with, or allow
any other person to exercise any rights under any of the terms or provisions of the Lender’s (and any
such Disclosed Beneficial Lender’s) constating documents or by-laws, if applicable, or any other
contract, agreement, instrument, undertaking or covenant to which the Lender (and any Disclosed
Beneficial Lender) is a party or by which it is bound; and
(h) The Lender (and the Disclosed Beneficial Lender) has obtained such legal and tax advice as it considers
appropriate in connection with the Loan and the execution, delivery and performance by it of this
Agreement and the transactions contemplated by this Agreement. The Lender (and the Disclosed
Beneficial Lender) is not relying on the Corporation, its affiliates or counsel to any of them in this
regard.
(i) The Lender is an “accredited investor” within the meaning of National Instrument 45-106 and agrees
to execute the Accredited Investor Status Certificate attached hereto at Schedule “E”.
(j)
SECTION 9 Covenants of the Lender

The Lender (and any Disclosed Beneficial Lender) will execute, deliver, file and otherwise assist the Corporation
in filing any reports, undertakings and other documents required in connection with the Loan.
SECTION 10 Representations and Warranties of the Corporation

The Corporation represents and warrants as follows to the Lender at the date of this Agreement and at Closing
and acknowledges and confirms that the Lender is relying upon such representations and warranties in
connection with the Loan:
a) The Corporation is duly incorporated, organized, validly existing and in good standing under the laws
of the Province of Ontario. The Corporation is duly qualified and in good standing in all jurisdictions
where the failure to so qualify would have a material adverse effect on the business or condition,
financial or otherwise of the Corporation;
-5-
b) The Borrower has full corporate right, power and authority to enter into this Agreement. The Borrower
has full corporate power and authority to own, operate and carry on its business as now conducted;
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
c) Neither the execution and delivery of this Agreement or the documents related hereto nor the
consummation of this loan transaction nor compliance with the terms, conditions and provisions
hereof or thereof will conflict with or result in a breach of any of the terms, conditions or provisions
of the charter documents or bylaws of the Corporation, any law, rule or regulation having the force of
law; any contractual restriction binding on or affecting the Corporation; or any writ, judgment,
injunction, determination or award which is binding on the Corporation; or result in, or require the
imposition of any lien upon or with respect to the properties now owned or hereafter acquired by the
Corporation, under any contractual provision binding on or affecting the Corporation;
d) The execution and delivery of this Agreement and the consummation by the Corporation of the
transactions herein contemplated have been duly authorized by all necessary corporate action of the
Corporation, and no authorization, consent, approval, licence or exemption under any applicable law,
rule or regulation having the force of law, and no registration, qualification, designation, declaration or
filing with any official body, is or was necessary therefor;
e) This Agreement, and the documents related hereto have been duly executed and delivered by the
Corporation and constitute legal, valid and binding obligations of the Corporation enforceable against
it in accordance with the terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally and the effect of general
principles of equity (regardless of whether such enforceability is considered in a proceeding in equity
or at law);
f) The Corporation is not in default in any material respect under any material indenture, mortgage, deed
of trust, agreement or other instrument to which it is a party or by which it or any of its property may
be bound; and
g) The Corporation owns all of the properties and assets that it purports to own. All agreements by
which the Corporation holds an interest in a property or asset are in good standing in all material
respects according to their terms.
The Corporation agrees that the Lender is entitled to the benefit of all representations, warranties and covenants
of the Corporation. The representations, warranties and covenants of the Corporation contained in this
Agreement, together with such changes as are necessary in order to reflect that they are being made by the
Corporation to the Lender
SECTION 11 Covenants of the Borrower

During the Term of the Loan the Corporation Shall:
(a) ensure that all amounts that may rank in priority to the security are paid in full and on time;
(b) report any material adverse change in the business of the Corporation to the lender immediately
following the occurrence; and
(c) immediately pay over to the Lender the full amount owing under the terms of this Agreement received
by the Corporation upon any sale of the shares in the Corporation.
-6-
SECTION 12 Survival
The representations, warranties, acknowledgements and covenants contained in this Agreement and any
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
certificate or document delivered pursuant to or in connection with this Agreement will survive Closing and
continue in full force and effect for a period of .
SECTION 13 Beneficial Lenders

Whether or not explicitly stated in this Agreement, any acknowledgement, representation, warranty, covenant
or agreement made by the Lender in this Agreement, including the schedules will be treated as if made by the
Disclosed Beneficial Lender, if any.
SECTION 14 Schedules
The following Schedules are incorporated into and form an integral part of this Agreement, and any reference
to this Agreement includes the Schedules:
Schedule "A" Term Sheet for the Loan

Schedule "B" Payment Information
Schedule “C” General Security Agreement
SECTION 15 Interpretation
Any reference in this Agreement to gender includes all genders. Words importing the singular number only
include the plural and vice versa. The division of this Agreement into Sections and other subdivisions and the
insertion of headings are for convenient reference only and do not affect the Agreement’s interpretation. All
references in this Agreement to dollars or to “$” are to the currency of the United States of America, unless
otherwise specifically indicated. In this Agreement (i) the words “including”, “includes” and “include” mean
“including (or includes or include) without limitation”, (ii) the words “the aggregate of”, “the total of”, “the
sum of”, or a phrase of similar meaning means “the aggregate (or total or sum), without duplication, of”.
SECTION 16 Assignment
This Agreement becomes effective when executed by all of the parties to it. After that time, it will be binding
upon and enure to the benefit of the parties and their respective successors, heirs, executors, administrators
and legal representatives. This Agreement is not transferable or assignable by any party to it.
SECTION 17 Entire Agreement

This Agreement constitutes the entire agreement between the parties with respect to the transactions
contemplated by it and supersedes all prior agreements, understandings, negotiations and discussions, whether
oral or written, of the parties. There are no representations, warranties, covenants, conditions or other
agreements, express or implied, collateral, statutory or otherwise, between the parties in connection with the
subject matter of this Agreement, except as specifically set forth in this Agreement. The parties have not relied
and are not relying on any other information, discussion or understanding in entering into and completing the
transactions contemplated by this Agreement.
SECTION 18 Time of Essence

Time is of the essence in this Agreement.
SECTION 19 Governing Law

This Agreement will be governed by, interpreted and enforced in accordance with the laws of the Province of
Ontario any Disclosed Beneficial
Lender), irrevocably attorns and submits to the non-exclusive jurisdiction of the courts of the Province of
-7-
h court or that such court provides an inconvenient forum.
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
SECTION 20 Language of Documents

It is the express wish of the parties to this Agreement that this Agreement and all related documents be drafted
in English. Les parties aux présentes conviennent et exigent que cette convention ainsi que tous les documents
s'y rattachant soient rédigés en langue Anglais.
SECTION 21 Execution by Facsimile and Counterparts

This Agreement including the schedules may be executed in any number of counterparts (including
counterparts by facsimile) and all such counterparts taken together will be deemed to constitute one and the
same document.
[SIGNATURE PAGE TO FOLLOW]
-8-
SCHEDULE “A”
at t t n to
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
TERM SHEET
CREATIVE WEALTH MEDIA FINANCE CORP.
SECURED LOAN
SERIES “B”
Borrower: Creative Wealth Media Finance Corp. (the “Borrower”)
Lender: As written on the Cover Sheet of this Loan Agreement
Total Raise: Up To $20,000,000.00 USD
Use of Funds: To provide the Borrower with capital to support secured Film Financing
Interest Rate: 12% annualized interest, paid monthly to Maturity Date
Maturity: December 31, 202 (the “Maturity Date”)
Interest Payments: Interest will be paid monthly
Repayment of Loan: The Borrower shall repay the entire Loan on that date that is the Maturity
Date.
Closing Date: Continuous
Subsequent Loans: Each subsequent loan provided by the Lender will be subject to the same
terms and conditions and security provided for herein. All Subsequent
Loans will be added to the outstanding amount of the Loan and evidenced
by a contract note reflecting the specific term of such Subsequent Loan.
-10-
IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS
FILED DATE: 3/5/2024 12:28 PM 2024CH01610

below, )
)
Plaintiff, )
)
v. ) No.
)
and JASON CLOTH, )
)
Defendants, )
)
)
EXHIBIT “B”
41
Catalyst Wealth
Management Media Fund I*
*See “Important Information at the end of this presentation
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Contents
 Media Opportunity
 Terms & Objectives
 Key Data
 Managing Partners
 Past, Present, & Future Content
 Public Spotlight
 Industry Overview
 Project Evaluation Process
 Fund I
 Projects
 Team Bios
2
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Media Opportunity
 An investment in an access fund co-managed with Creative Wealth Media
finance company. Creative Wealth Media manages over $750 million of capital
for theatrical, television, and digital animation productions. The fund offers a
unique diversified investment opportunity to participate in the sale and
ongoing revenues generated from the opportunistic environment of four
digital children's animation productions.
3
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Terms & Objectives
 Investment Objective - Catalyst Wealth is sponsoring a closed ended
investment fund for a limited number of qualified investors. The objective of
the fund is to generate a high level of current returns and appreciation from
loans for studio and independently produced motion pictures, television, and
animated production.
 Investment strategy - providing investors with attractive short / medium term
project lending at high yields. The objective of the fund is to generate high
current income with additional strong ancillary returns on digital animated
content being exclusively produced for the global streaming market.
 Fund size: $20 MM
 # of Projects: 4
 Term: approximately 12-18 months
 Manager Co-Investment**: $1 MM
 Preferred Return: 8% + 25% profit participation of fund projects
 Projected Annual Return: 18%+ net of fees 4
 Fees: 2 & 20
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Key Data
 Four children’s digital animation productions
 A-list Hollywood talent
 Aggregate co-finance investment $28,000,900
 Investment structured as debt with 25% equity participation
 Featured productions
 Fables
 Gossamer
 Hailey & the Hero Hearts
 Bubbles Hotel
5
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Key Data Cont.
Bron Animation Slate Figures
Projected Net Merchandise and Licensing estimates
Total CW / Bron Latest Whisper
Series CW / Bron Cost to Date Est Sale Date Yr 1 M&L Yr 2 M&L Yr 3 M&L
Loan estimate
Fables $ 9,042,192.00 $ 5,500,000.00 $ 18,500,000.00 August 2021 $ 462,500.00 $ 3,230,000.00 $ 3,634,000.00
August 2021
Gossamer $ 11,404,296.00 $ 1,500,000.00 $ 21,000,000.00 $ - $ - $ -
August 2021
Bubbles $ 5,897,431.00 $ 2,450,000.00 $ 11,000,000.00 $ 2,000,000.00 $ 10,500,000.00 $ 23,560,000.00
August 2021
HHH $ 2,556,188.00 $ 1,100,000.00 $ 6,000,000.00 $ 1,825,000.00 $ 10,000,000.00 $ 24,175,000.00
Total $ 28,900,107.00 $ 10,550,000.00 $ 56,500,000.00 $ 4,287,500.00 $ 23,730,000.00 $ 51,369,000.00
6
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Managing Partners*
• Specializes in financing solutions for
studio and distributors of film
entertainment
• 50 years of combined media,
entertainment, and investment
experience
• More than $750 million in financing for
approx. 60 motion pictures since 2010
• Driving force in studio and
independent production.
• Produced and/or financed motion
pictured alongside Warner Bros.,
Sony, MGM, Paramount, A24,
Universal, and Lionsgate.
• Bron Digital is a state-of-the art
virtual production and service
company 7
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Past, Present, & Future Content
 Bron Studio overview of past and future
 https://www.dropbox.com/s/5ue6s7bk0ulpat8/BRON%20REEL%20012320.mp4?dl=0
 Bron Animation
 https://www.dropbox.com/s/jl7yv4gre191pui/BRON%20Digital%20Sizzle%20Reel%20
06-15-20.mp4?dl=0
 Hailey & the Hero Hearts
 https://www.dropbox.com/s/wjn7fl1dx83nrvy/HHH_Opening.mp4?dl=0
 Fables
 https://vimeo.com/476100015 (password: pM7wW8hL8r)
8
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
9
Public Spotlight
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
10
Industry Overview
Industry Overview
 Offsetting the slowdown in U.S box office revenue is the projected growth in
VOD (video-on-demand).
 Netflix, Amazon Prime, Apple, HBO, and Hulu revenue expected to grow at
11.3% CAGR with total revenue increasing to US$14 billion in 2021.
 In order to create filmed entertainment capital is required.
 Major Hollywood studios use outside financing to help diversify their
investment across a greater number of projects, but still remain control and
ownership of product.
11
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
The Streaming Platforms
 Technology giants are jumping into the content marketplace, following the
huge success of Netflix.
 There is a flood of money coming into the feature film and episodic content
space.
12
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Television
 There are more buyers than ever, looking for all sorts of content. With over 60
buyers in the US alone, the demand for content has never been stronger.
13
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Creative Wealth Media Project
Evaluation Process
 There are six steps in the CWM review process for each
project
 Preliminary Review
 Due Diligence Review
 Film Committee Review
 CAP Executive Review
 Fund Review
 Closing Process
14
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Preliminary Review
 This is an initial, high-level review by CWM Corporate Business Affairs, Finance and the Film Committee
Chair. This initial review requires the creation of an Intake Form by the designated Project Manager:
 Cast & Key Crew (Producer, Director, Writer, Cast)
 Synopsis / Log line
 Genre
 Sales Agent (Foreign & Domestic) & track record
 Budget
 Production Schedule
 CAP Requested Amount
 Preliminary Finance Plan
 Sales Agent Estimates
 Proposed back-end
 Type of loan
 Closing Timeline / available fund cash flow according to projected start date.
15
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Due Diligence Review
 If recommended by the Film Committee Chair, the CWM Project Manager then
prepares the Document Brief which serves to assess the viability of the
project and if the proposed investment conforms to Fund
requirements/parameters throughout the due diligence review process. The
elements being analyzed include, but are not limited to, the following
 Business Affairs: Chain of Title, Sales Agent’s (foreign and domestic) material terms
& conditions, Cast & Crew attachment & agreements, incorporation documents,
Recoupment Schedule & related financiers, and other relevant documents
 Finance: Collateral analysis based on sales estimates, Finance plan, Budget,
Production Schedule, Cash flows, and other relevant documents
 Creative: Script review / coverage created, cast attachments, director and other
relevant documents and creative elements
16
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Film Committee Review
 The CWM Film Committee will review the project’s Document Brief to
determine whether the project is viable and suitable for the Fund based on
the information provided. If further information is required, the Film
Committee will work with the Project Manager to further clarify as needed
17
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
CAP Executive Review
 If approved by the Film Committee, CWM’s VPs of Business Affairs & Finance
will review the Document Brief from a corporate perspective, and the
President will have final corporate approval before recommending to the
Fund
18
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Fund Review
 The CWM President will then take the Document Brief to the Fund /
Investment Committee for final Fund approval, at which time, if approved,
the closing process will commence. CAP’s Executive Team and the Film
Committee will be available to answer any questions the Fund may have at
this stage prior to making an approval decision
19
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Closing Process
 Once approved by the CWM Fund / Investment Committee, the project will
progress to closing. Some of the key closing documents are as follows:
 Equity Financing Agreement
 Tax Credit Opinion
 Completion Bond Agreement
 UCC Financing Statement
 Copyright Mortgage
 Inter-Party Agreement (if applicable)
 Inter-Creditor Agreement (if applicable)
 Subordination Agreement (if applicable)
 Collection Account Agreement and/or Waterfall Agreement
 Legal and Chain of Title Opinion
 Laboratory Pledgeholder Agreements
20
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21
Projects in Fund I
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22
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23
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25
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27
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33
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34
Jason Cloth
Founder and CEO, Creative Wealth Media
 Jason M. Cloth is the founder and CEO of Creative Wealth Media, one of the most
prolific production and financing entities in the film and television industry, with a
slate that currently includes Apple’s TV+ Tom Hank’s WWII film GREYHOUND; Apple’s
new TV series starring Reese Witherspoon and Jennifer Aniston as THE MORNING SHOW
co-hosts; and the upcoming film release CANDYMAN (MGM Studios), to name a few.
 Cloth founded Creative Wealth Media Group of Companies in 1992 and partnered with
a Toronto based Merchant Bank to provide financing on more than 40 film and
television productions.
 Cloth is also a Director of BRON Media Corp. Cloth joined BRON Studios in September
2014 in a key strategic financial and investor management role. He has executive
produced more than 77 feature films with producer BRON Studios, along the way
raising excess of $750 million for the film industry.
 Additional film credits for Cloth include the acclaimed Denzel Washing led film
FENCES (Paramount); Joaquin Phoenix led JOKER (Warner Bros); Charlize Theron led
BOMBSHELL (Lionsgate) and ADDAMS FAMILY (MGM Studios); THE GOOD LIAR (Warner
Bros); QUEEN & SLIM (Universal)
 Cloth began his career in 1988 as a Fixed Income Economist for CIBC/Wood Gundy and
hold a graduate degree in Economics. 35
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Sandy Schmidt, CFP®, ChFC®, CLU®
Managing Partner
 As the Founder and Chairman of Schmidt Financial Group and Catalyst Wealth
Management, Sandy has been advising affluent families and their team of core
advisors on intelligent solutions to protect, transfer, leverage and integrate
their wealth for over 38 years. Sandy believes that the wisdom and knowledge
acquired developing unique financial and estate plans for the ultra-wealthy over
three decades benefit the individuals and families whom he serves.
 As part of the planning process, review and analysis of clients existing
investments became an integral part of the advisory and planning process. By
understanding various asset classes over the years, Sandy learned firsthand the
importance of diversification and risk mitigation within the investment process.
As part of the overall planning process, Catalyst Wealth incorporates the ability
to help clients invest, diversify, integrate and monitor their investable assets.
 Sandy earned his BS in Accounting from the University of Illinois at Chicago. He
has also earned the financial credentials of CFP (Certified Financial Planner),
International Board of Certified Financial Planners, ChFC (Chartered Financial
Consultant), CLU (Chartered Life Underwriter), and has FINRA Series 6, 63, 65,
& 22 securities registration.
36
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Ethan Schmidt, CFP®, CRPC®
Partner
 Ethan Schmidt assists individuals in designing a winning
financial game plan to achieve personal goals. He joined
Catalyst after spending several years at Merrill offering
personalized unbiased advice to individuals and families to
improve their financial situation. Ethan was recognized as
a top advisor in the country.
 As Partner, he takes pride in building long lasting
relationships and implementing goal achieving strategies.
In addition, he has a unique ability to integrate all the
financial elements to design a complete portfolio
 Ethan is a Certified Financial Planner™ (CFP®), Chartered
Retirement Planning Counselor (CRPC®), licensed
insurance advisor and holds securities Series 7 and Series
66 securities registrations with FINRA.
37
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Important Information
 This presentation (“Presentation”) is neither an offer to sell nor a solicitation of an offer to buy any security, nor is it an offer of any sort of investment advice. An offer may only be made via a written offering document
(“Memorandum”) provided by Catalyst Wealth Management Media Fund I, LLC (the “Fund”) that offers limited liability company interests in the Fund (“Interests”). Schmidt Advisory Services, Inc., d/b/a Catalyst Wealth
Management (“Catalyst”) will provide the Memorandum only to qualified and accredited investors, and has prepared this Presentation solely to enable you to determine whether you are interested in receiving additional
information about it or the Fund. This Presentation should be read in conjunction with the Memorandum, and this Presentation is not intended to be relied upon as the basis for an investment decision, and is not, and should
not, be assumed to be complete.
 While many of the thoughts expressed in this Presentation are stated in a factual manner, the discussion reflects only Catalyst’s beliefs about the markets in which the Fund will invest when following its investment strategies
as are described in the Memorandum. The Memorandum’s description of the Fund’s investment strategies may be changed without investor consent, and Catalyst’s views expressed herein are subject to change. The
descriptions of the Fund’s investment strategy herein are in summary form, are incomplete and do not include all of the information needed to evaluate any potential investment in the Fund. Prospective Fund investors should
recognize that an investment in the Fund involve substantial risks, some of which are disclosed in the Memorandum. The contents of this Presentation are qualified in their entirety by the Memorandum and the Fund’s Limited
Liability Company Agreement (“Operating Agreement”), as they may be amended or supplemented from time to time. Only by carefully reviewing and considering those factors and the rest of the Fund’s offering documents
(in addition to other independent investigations) can an investor determine whether such risks, as well as the Catalyst’s experience and compensation, conflicts of interest and other information contained therein are
acceptable to the investor. The Fund does not undertake any obligation to revise or update any statement in this Presentation for any reason.
 Catalyst and its affiliates will have complete control over the Fund’s operations and the management of its assets. There are significant restrictions on the transferability of the Interests, there will be no market for Interests
and no person should invest with the expectation of monetizing an Interest. Capital invested in the Fund is subject to significant restrictions on transfer and may not be redeemed. The Fund’s fees and expenses, which would
include compensation of Catalyst, may outweigh the Fund’s gains, if any.
 Fund Differs from Catalyst Accounts: Capital invested in the Fund should not be considered an investment that is similar to a separate account with Catalyst. There are material differences between the investment
strategies, risks, liquidity and fee structure between the Fund and any separate account held with Catalyst. Prospective investors who are currently or who become direct clients of Catalyst should carefully review the
Memorandum and in particular the acknowledgment such persons must execute to understand the differences between the Fund’s strategies and risks and those of a separate account with Catalyst.
 Creative & BRON: As discussed in the Memorandum under “Summary of the Investment Program—Investment Sourcing,” Creative Wealth Media Finance (“Creative”) and its affiliate, BRON Studios and BRON Animation
(“BRON”), have informally agreed to assist Catalyst in selecting the Fund’s investments. Neither BRON nor Creative have any binding obligation to offer any projects to the Fund or assist Catalyst in its sourcing of the Fund’s
investments.
 Confidentiality: Catalyst reserves all copyright and intellectual property rights to the content, information and data within this Presentation. The contents in this Presentation are protected by copyright and no part or parts
hereof may be modified, reproduced, stored in a retrieval system, transmitted (in any form or by any means), copied, distributed, published, displayed, broadcasted, used for creating derivative works or used in any other way
for commercial or public purposes without the prior written consent of Catalyst. The recipient agrees to keep the contents of this Presentation confidential and use it solely to evaluate whether further investigation of the
Fund is warranted.
 This Presentation should not be construed as investment or other advice—it is presented for information purposes only and is not intended to be either a specific offer by any person to provide any financial service or product.
Purchasers of Interests will only be members of the Fund, and will have no equity in, or any standing or other recourse against, Catalyst.
 The Fund currently intends to commence operations in August 2020 and has no performance or operating history. Past performance of the Fund, Creative, BRON or their respective personnel is not indicative of
future Fund results.
 Forward-Looking Statements: Certain information in this Presentation constitutes forward-looking statements, opinions and beliefs. Due to various risks and uncertainties, actual events or results or the actual performance
of the Fund may differ materially from such forward-looking statements, opinions or beliefs. In addition, new risks may arise from time to time. Accordingly, such statements should be evaluated with the understanding of
their inherent uncertainty.
 Third Party Sources: Certain information in this Presentation, such as the project review process by BRON / Creative, has been obtained from third party sources and, although believed to be reliable, has not been
independently verified and its accuracy or completeness cannot be guaranteed. No representation is made with respect to the accuracy, completeness or timeliness of this Presentation, and any recipient agrees that none of
the Fund, Catalyst nor their respective affiliates, partners, members, employees, officers, directors, agents or representatives will have any liability for any misstatement or omission of fact or any opinion expressed herein.
 The recipient should consider that all investments carry risk and the Fund’s proposed strategies may experience losses.
 End Notes
 (1) As discussed in the Memorandum under “Summary of the Investment Program—Investment Sourcing,” Creative and BRON have informally agreed to assist Catalyst in selecting the Fund’s investments. Neither BRON nor
Creative have any binding obligation to offer any projects to the Fund or assist Catalyst in its sourcing of the Fund’s investments. 38
 (2) As discussed in the Memorandum, the Manager or its principals may fulfill this co-investment via the contribution to the Fund of existing investments, at cost. See “Conflicts of Interest” in the Memorandum.
FILED DATE: 3/5/2024 12:28 PM 2024CH01610
Thank You!
 Sanford Schmidt
 [email protected]
 773-774-2600
 Ethan Schmidt
 [email protected]
 847-313-5005
39
FILED DATE: 3/5/2024 12:28 PM 2024CH01610

Cloth Fraud

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FILED

12-Person Jury 3/5/2024 12:28 PM

DIANE FOWLER, individually )

CLASS ACTION COMPLAINT

against Defendants, SCHMIDT ADVISORY SERVICES, INC. d/b/a CATALYST WEALTH

MANAGEMENT, SANFORD SCHMIDT, JORDAN SCHMIDT, and JASON CLOTH states as

in the same practices with new investors, this time in America.

4. Ethan Schmidt (“Ethan”), Jordan Schmidt (“Jordan”), Sanford Schmidt (“Sandy”

or “Sanford”), and SCHMIDT ADVISORY SERVICES, INC. d/b/a CATALYST WEALTH

MANAGEMENT (“SAS”)(collectively “Schmidt”) served as the brokers for Cloth in America,

told by Cloth raising over $30,000,000 in Cook County.

of the state of Oklahoma and domiciled in Oklahoma.

6. Defendant, Sanford Schmidt, is a citizen of Illinois and domiciled in Cook County,

7. Defendant, Jordan Schmidt, is a citizen of Illinois and domiciled in Cook County,

8. Defendant, Ethan Schmidt, is a citizen of Illinois and domiciled in Cook County,

WEALTH MANAGEMENT, is an Illinois company whose sole member is Sanford Schmidt.

10. Defendant, Jason Cloth, is a citizen of Canada and domiciled in Florida.

11. Respondent in Discovery, C2 Motion Picture Group, LLC (“C2”) is a Delaware

Limited Liability Company operated by Cloth and Dave Kaplin.

III. JURISDICTION AND VENUE

omissions complained of occurred in this county. Defendants purposely availed themselves of

$80,000,000 total capital raised.

trading in a national securities exchange.

duties, and obligations relating to or created by or pursuant to a security. 28 U.S.C.

A. Cloth’s Fraudulent Scheme

17. Creative Wealth is a pass through entity with no assets.

Crystal Wealth was shut down by regulators.

at all times relevant.

23. Cloth was a director of BRON Studios at all times relevant.

called “Crystal Wealth” and portentously referred to as “CWMF”.

operated by Clayton Smith.

28. After an Ontario Securities Commission (“OSC”) investigation and insolvency

new “CWMF” called Creative Wealth.

investors and settled for tens of millions of dollars.

operated by Cloth and Dave Kaplin.

and now C2.

Schmidt and Maraboyina Capital (“Maraboyina”) in Texas.

keep his scheme going.

investors had little relation to what they purportedly invested in.

keep an investor engaged.

to keep that particular investor paying.

they did not even invest in.

investments in Creative Wealth and CWMF from C2.

50. Cloth’s scheme of misrepresentations and robbing profitable ventures to make

Warner Bros. that included investment in Ghostbusters: Afterlife (“Ghostbusters”).

53. Despite the huge success, investors were not paid.

54. On June 15, 2022, Maraboyina emailed an investor:

“I wanted to give you an update on Ghostbusters. We received the first studio

55. On August 26, 2022, Maraboyina emailed an investor:

putting it through their general line of credit. While beneficial - no cross-

56. On September 15, 2022, Maraboyina emailed an investor on behalf of CWMF:

We just received an update on the Ghostbusters repayment, and I wanted to

59. On October 4, 2022, Maraboyina emailed an investor on behalf of CWMF:

60. On October 28, 2022, a CWMF employee emailed an investor:

a total expense of $10,500,000 and then sold to Netflix for $34,000,000.

69. Monkey Man was a huge success.

profits in compensation for a $6,500,000 loan.

failed to pay anything to investors.

73. On September 7, 2022, Maraboyina emailed an investor:

investment in the project.