Izhak Ben Shabat, co-founder and CEO of Seacret Direct, has filed a prolonged declaration detailing WorldVentures’ collapse and the months main as much as it.
Shabat’s declaration was filed in help of Eddie Head, who’s a defendant in proceedings initiated by WorldVentures.
Written as a stand-alone submitting, Shabat’s declaration reads fairly nicely by itself.
Thus I’ve offered it beneath, not in its entirety however with minimal modifying.
Notice that any daring textual content is on my half to emphasise what I really feel are essential factors (together with beforehand unknown info).
WV’s criticism (in opposition to Eddie Head) is rife with false statements and deceptive narratives in regards to the historic interactions between Seacret and WV.
I’m making this declaration to set the report straight.
The true story begins in 2016, when WV’s CEO Wayne Nugen first approached me about the opportunity of beginning a enterprise relationship between Seacret and WV.
Nugent and two of Seacret’s executives, Dan Stammen and Eddie Head, flew to Phoenix, Arizona, on a few events to fulfill with me to debate a possible “merger of equals” between our two firms.
THose discussions, whereas pleasant and productive, didn’t lead to an settlement between Seacret and WV at the moment.
A number of years later within the spring of 2020, I acquired phrase by means of a contact at … Jeunesse that WV is perhaps eager about restarting negotiations with Seacret.
I requested certainly one of Seacret’s area managers, Muzafer Najfi, to succeed in out to WV.
After receiving an encouraging response from Najfi, I emailed Nugent to followup, and he convened a convention name with me and Head to debate WV’s curiosity.
As I discovered on that decision, WV at the moment was experiencing a pointy downturn in its enterprise attributable to … COVID-19, was struggling to pay commissions to lots of its gross sales representatives, and was looking for a method to jump-start its gross sales to keep away from a mass exodus of gross sales representatives and monetary collapse.
It was my impression that Nugent seen Seacret as a possible savior for WV, and he needed Seacret to ascertain WV as an affiliate in order that WV might refer its members to buy Seacret merchandise.
Finally, after just a few weeks of back-and-forth negotiations, Seacret and WV entered right into a Co-Advertising Settlement (CMA) dated July 22, 2020, which designated WV as an affiliate of Seacret and permitted WV to supply Seacret merchandise below sure phrases and circumstances.
I led the negotiations over the CMA on behalf of Seacret.
I largely interacted with Nugent, who informed me that he made all the essential enterprise selections for WV and demanded that his counter-negotiator be the one who made all the essential enterprise selections for Seacret.
To a lesser extent, I additionally interacted with Head, who appeared to have been tasked with finishing up Nugent’s enterprise selections and circulating the assorted drafts of the CMA.
Throughout the negotiations over the CMA, Nugent and I had quite a few candid discussions about Seacret’s long-standing curiosity in establishing its personal journey membership program.
At one level Nugent even advised that when the worldwide journey business had recovered from the pandemic, the events ought to take into account increasing their enterprise relationship in order that WV might fulfill the journey advantages bought by Seacret’s agent.
Whereas the events didn’t enter into an settlement protecting journey, we did embrace a provision within the CMA that contemplated a later settlement on that matter.
A number of months after the CMA was executed however only some weeks after WV started providing Seacret merchandise to its members, I began listening to rumors that WV’s monetary situation was persevering with to deteroriate.
It was additionally evident from Seacret’s gross sales information that WV’s gross sales representatives weren’t motivated to promote the Seacret merchandise that have been provided below the CMA.
Across the similar time, Najfi knowledgeable me that he had been contacted by WV’s President Bo Quick to rearrange a convention name with me, Quick, and WV’s COO Michael Poates.
Throughout that decision, which occurred on October 1, 2020, Poates informed me that WV’s monetary situation was so poor that it will not be capable to function for for much longer and was contemplating submitting for chapter.
Poates additionally informed me that he and Quick meant to sideline Nuguent (by threatening a felony referral), hearth Head and most of his gross sales group, and take management of WV.
A felony referral is
a discover to a prosecutory physique, recommending felony investigation or prosecution of a number of entities for crimes which fall into that physique’s jurisdiction.
If Wayne Nugent has dedicated crimes pertaining to WorldVentures, alleged or in any other case, I’m unaware of them.
I additionally don’t imagine Michael Poates (proper) has publicly mentioned what crimes he believes Wayne Nugent has dedicated.
So far as I do know there additionally hasn’t been any felony conduct alleged in WorldVentures’ chapter proceedings.
Again to Shabat’s declaration;
Poates then provided to facilitate the sale of WV to Seacret for $15 million.
In change, Poates and Quick needed me to agree to offer them and different WV executives 49% of the shares of the mixed firm.
For sure, I used to be shocked and deeply involved by the information of the potential chapter, the deliberate “takeover”, and the extent of Poates’ and Quick’s self-dealing.
I ended the decision by declining their provide and resolved to speak instantly with Nugent, because the proprietor and CEO of WV, in regards to the points raised by Poates and Quick.
On or about October 7, 2020, I despatched an electronic mail to Nugent, Poates, and Head expressing my considerations a few potential chapter and suggesting that Seacret and WV conform to terminate the CMA.
Earlier than sending my electronic mail, I spoke with Poates and Quick to offer them discover and a chance to touch upon my deliberate communication.
Quick was adamant that the communication not be centered on the potential chapter, however on lackluster gross sales – in any other case, he stated, Nugent and Head “would really feel no accountability.”
I then texted and known as Head to ask for affirmation of the potential chapter.
Head seemed to be shocked by my query and denied having any data of a possible chapter.
He requested me to attend 24 hours so he might focus on the difficulty with Nugent and schedule a follow-up name.
In my follow-up dialog with Nugent and Head, Nugent strongly denied that WV was contemplating submitting for chapter, however he conceded that WV was in a precarious monetary situation.
He additionally informed me he needed to discover a distinct type of partnership that may permit WV to maintain working whereas on the similar time benefiting Seacret.
At a later level, I additionally informed Nugent about Poates and Quick’s scheme to take management of WV.
Nugent fired Quick after receiving my info however stored Poates on board as a result of Nugent stated he felt Poates could possibly be “managed”.
Within the quite a few discussions that adopted between Nugent and me … Nugent satisfied me that the reply to WV’s issues was to not terminate the CMA … however to double down on our enterprise relationship and take into account a “merger” of the 2 firms.
Nugent was strongly pushing for an settlement as quickly as potential as a result of WV’s gross sales representatives had not been paid the commissions they’d earned for months and have been voicing their intent to depart the corporate.
As I found later, WV’s failure to pay its gross sales representatives was an issue of its personal making.
Poates informed me that WV had fund to pay gross sales representatives, however selected to pay different collectors as a substitute due to considerations over an involuntary chapter submitting.
Shockingly, I later discovered that WV apparently did have the funds to pay Poates, Paul Jenkins (WV’s Chief Know-how Officer), and Eric Haynes (WV’s Chief Authorized Officer) bonuses totaling virtually $750,000 in August and November of 2020.
By late October 2020, WV’s chapter appeared inevitable regardless of Nugent’s earlier denials.
In a dialogue presided over by Nugent, me, and our respective attorneys, the events agreed on a two-step course of the place they’d first enter right into a solicitation settlement to attempt to stabilize the gross sales power after which Seacret would enter right into a letter of intent that may be the idea of a “stalking horse” provide for WV’s belongings sooner or later chapter.
Round this time, and at Nugent’s urging, Nugent and I made a number of displays to WV’s main gross sales representatives in regards to the proposed mixture.
These displays have been meant to instill confidence that brokers had merchandise to promote on which they’d be paid commissions and that WV had a viable path ahead, despite the fact that these representatives had not been paid by WV in months.
Importantly, throughout these displays, Nugent and I repeatedly represented what WV’s gross sales leaders have been demanding as a precondition of staying with WV: that Seacret would launch its personal journey membership program and, as a part of this launch, deliberate to combine WV’s “Dream Journeys” and “You Ought to Be Right here” journey applications after the mix.
From late October to early November 2020, attorneys for WV and Seacret negotiated the phrases of a Restricted Solicitation Settlement dated November 11, 2020 and a letter of intent to buy WV’s belongings out of chapter (LOI).
As negotiations have been underway, Shabat claims Poates and Haynes have been stored abreast of the negotiations
and have been urging Nugent to signal and return it to Seacret as quickly as potential.
Shabat claims this alleged truth is “in begin distinction to WV’s present allegations within the Grievance of a “conspiracy” led by Head.
On or about November 11, 2020, Nugent (on behalf of WV) and I (on behalf of Seacret) signed the LSA and LOI.
Executed copies of each agreements have been instantly circulated to all events and their counsel. Nobody objected at the moment.
On the contrary, the settlement was celebrated.
Round (November 14, 2020), I turned conscious that WV was executing a workforce reeducation that included a number of high-level staff.
As a part of this course of, Nugent contacted me and requested me to contemplate hiring a few of WV’s staff to help within the transition to Seacret and in order that they could possibly be faraway from WV”s struggling payroll. Poates additionally made the identical request.
For instance, on a name with me on November 17, 2020, Poates repeatedly requested that Seacret rent a number of WV staff as a way to assist keep away from expensive severance funds and WARN Act points.
Additional, Poates informed me that WV would supply an inventory of staff to be launched for Seacret to rent.
The next day, Haynes did ship an electronic mail to Seacret’s outdoors counsel formally approving Seacret’s recruitment of sure WV staff and confirming that WV was “waiving” ant anti-solicitation rights it may need with respect to these staff below Sec 1.5 of the LSA.
The “waiver” lined ten present WV staff (together with Eddie Head and Justin Name) and three former WV staff.
Nugent and Poates have been copied on the e-mail, and Poates responded with “Thanks!”
Apparently, Haynes (who, as WV’s Chief Authorized Officer, is the individual accountable for deciphering and imposing WV’s worker rights) himself utilized for a job at Seacret in late October 2020.
Following the general public announcement of the LSA, and all through November and into December 2020, WV and Seacret negotiated the phrases and circumstances of an asset buy settlement (APA) that may be offered in WV’s imminent chapter as a “stalking horse” bid for WV’s belongings.
WV’s chapter counsel, together with Seacret’s outdoors counsel, drafted the APA.
Throughout that point, and as expressly approved by the LSA, Seacret started registering WV gross sales representatives as Seacret brokers in order that they might start promoting Seacret services and products and obtain commissions for these gross sales instantly from Seacret.
Below the LSA, WV is entitled to obtain a royalty from Seacret based mostly on the gross quantity of those gross sales.
Seacret has paid $747,835.30 in royalties to WV up to now and $701,438.35 in royalties since WV filed for chapter.
WV continues to obtain and settle for the royalties paid by Seacret.
As the 2 sides have been going forwards and backwards making an attempt to finalize the APA, Poates known as me and urged me to contemplate together with Rovia in Seacret’s provide.
Poates additionally represented to me that if Seacret provided to offer him and several other different present WV executives an possession stake in Rovia, he would guarantee that a sale of Rovia can be consummated.
He additionally reiterated his plan to push Nugent out of the corporate.
A number of days in a while December 12, 2020, I known as Poates and recorded the decision.
Poates repeated this proposal, together with volunteering that he had “pre-borrowed” $1 million to spend money on the transaction and that Rovia’s “inventory will sky rocket” after closing.
I didn’t conform to Poates’ scheme, and Seacret didn’t embrace Rovia in its buy provide at the moment.
On or about December 21, 2020, WV filed for chapter.
On or about December 30, 2020, I acquired a name from Head, who knowledgeable me that he had been compelled to resign from WV.
Michael Poates publicly introduced Eddie Head was leaving WV within the first week of January.
Poates framed Head’s “compelled resignation” as a “private choice”.
Whereas I had at all times anticipated Head — together with Nugent and several other different WV staff — would ultimately be part of Seacret as a part of the transition contemplated by the LSA and LOI, I had not beforehand had a dialogue with Head about his employment at Seacret.
Throughout our name, and as expressly permitted by WV again in November 2020, I provided a job to Head, though we didn’t focus on his place or job tasks intimately.
I had gotten to know Head over the previous couple of months, thought extremely of him, and knew that his skilled expertise and expertise can be a superb match for Seacret.
When Head formally joined Seacret in early January 2021, I assigned him to work on undertaking growth, particularly with respect to the event of latest advertising and marketing and gross sales instruments, hiring and grooming a brand new govt group to help Seacret’s rising enterprise, together with a chief authorized officer and gross sales leaders in Europe, Central America, and South America, supporting the opening of Seacret’s Hong Kong enterprise, and creating a undertaking administration group and enterprise practices to help enterprise-level calls for.
After Seacret’s Chief Technique Officer Tyler Williams left the corporate on or about January 20, 2021, I requested Head to take his place on a brief foundation.
Head now holds the title of President.
Opposite to WV’s allegations in its Grievance, Seacret didn’t rent Head to create or launch a brand new journey membership program as a result of at the moment I used to be nonetheless below the impression that WV meant to honor its dedication to collaborate with Seacret on the built-in journey membership program envisaged by the LSA and LOI.
Head is just not chargeable for the general efficiency of Seacret and has no position in product growth.
Since becoming a member of Seacret, Head has by no means had any duties or oversight concerning any journey advantages provided by Seacret and has not been concerned within the growth of a journey membership program.
Furthermore, Head has by no means disclosed to me (or anybody else at Seacret) any of the confidential or proprietary info now claimed by WV.
To the extent Seacret is in possession of any of the confidential or proprietary info now claimed by WV, Seacret obtained that info instantly from WV because of the efficiency of the CMA and LSA.
Shortly after the chapter was filed, WV inexplicably dropped Seacret’s buy provide although the APA had been finalized and was able to current to the Courtroom as soon as the disclosure schedules have been ready.
WV additionally suspended Seacret’s entry to the info room that had been arrange for events curiosity in bidding on WV’s belongings on the pretext that Seacret didn’t have a nondisclosure settlement (though the LOI included confidentiality provisions and Seacret had been offered info below these provisions for weeks), and WV thereafter refused to barter a nondisclosure settlement.
In different phrases, WV minimize Seacret off from the bidding course of and denied its entry to the info it wanted to enhance its bid.
On the similar time, WV shared the confidential LOI between Seacret and WV with different potential bidders, presumably as a way to entice them to make a suggestion.
Lastly, on or about January 28, 2021, WV despatched out a discover to its gross sales representatives stating that there can be no merger between WV and Seacret and that WV would solely permit its gross sales representatives to promote Seacret merchandise, as outlined within the LSA, till such time as the worldwide journey business rebounded.
Shabat winds up his declaration with the stunning admission that former WV Dan Stammen is poised to return.
On or about February 26, 2021, Dan Stammen, a former President of WV, hosted a Zoom name with numerous Seacret and WV gross sales representatives.
On this name, a recording of which I’ve seen, Stammen made quite a few disparaging feedback about Seacret and presaged the precise litigation that WV filed in opposition to Seacret per week later.
Stammen additionally informed the attendees that he was coming again to WV as CEO and that he had a deal to take the corporate out of chapter.
When requested who can be staying at WV in reference to this deal, Stammen replied that Michael Poates, Eric Haynes and Paul Jenkins would run the enterprise.
Noticeably absent from that checklist is Wayne Nugent. Did Poates lastly get Nugent to again off, with or with out the specter of a felony referral?
On the time of publication I haven’t heard something out of WorldVentures signalling Nugent’s departure or Dan Stammen’s govt return.
Stammen is a co-owner of Spherature Investments, WorldVentures’ dad or mum firm.
As per public chapter filings, as of December 2020 WorldVentures owed Stammen $1.7 million {dollars}.
The court docket has but to subject a ruling on WorldVentures’ movement for a preliminary injunction in opposition to Eddie Head.
Individually, WorldVentures has additionally filed go well with in opposition to Seacret Direct.
Replace twenty eighth March 2021 – Izhak Shabat’s declaration is certainly one of 5 in help of Eddie Head.
I’ve gone over claims made in all 5 declarations in a separate article.
Replace 14th April 2021 – WorldVentures has secured a preliminary injunction in opposition to Eddie Head.