My appellate brief

This is my appellate brief

Jurisdiction

A- Subject matter jurisdiction is based on 1-Securities And Exchange Commission's (SEC) Rule 10b-5 (17 C.F.R. 240. 10b-5) 2-Diversity of Citizenship (doc 31, pg 4 #B). B-Appeal is from the US District Court of Southren Florida in the Eleventh Circuit of Appeals. C- The Notice of Appeal filed on 9/6/13 and entered 9/9/13 (doc 47).D- Appeal from final order entered 8/19/13 (doc 46).

Statement of the Issues

1- Reducing time to serve complaint to less than 120 days (doc 5). 2- The correctness of serving the complaint instruction (doc 6, pg 2 #3).3- Personal jurisdiction complaint dismissal cause on Action(doc 33). 4-Insufficient Service of Proc. complaint dismissal cause for Jorge (doc 39).5- Failure in 1 above, complaint dismissal cause for Jorge (doc 39).6-Failure to state a claim complaint dismissal cause for Onteco (doc 40). 7-Particularity pleading complaint dismissal cause for Onteco (doc 40). 8-Lack of direct standing complaint dismissal cause for Onteco (doc 40). 9-Quashing of the service of process on Dror (doc 43).10- Final dismissal if with prejudice (doc 46).

Statement of the Case

The Plaintiff/Appellant was a shareholder with a very significant ownership percentage in Defendant/Appellee Onteco (doc 1) and filed this lawsuit with the district court on the defendants/Appellees to recover, prevent and correct the intentional dilution and potential dilutions resulted from the activities of the defendants.

Course of proceedings and dispositions

The Plaintiff filed his lawsuit on 1/17/13 (doc 1). On 4/9/13 the district court ordered serving the complaint within 21 days (doc 5). On 4/17/13 the district court issued an instruction ordered to the Plaintiff as a Pro Se litigant (doc 6). On 7/1/13 the district court granted defendant's Actions motion to dismiss (doc 33).On 7/17/13 the district court granted defendant Jorge's motion to dismiss (doc 39).On 7/18/13 the district court granted defendant Onteco's motion to dismiss (doc 40). On 7/23/13 the district court granted defendant Dror's motion to quash (doc 43). On 7/23/13 the district court also ordered the Plaintiff to serve defendant Dror within 14 days (doc 43). On 7/24/13 the district court ordered the Plaintiff to serve on defendant Haim Mayan within 21 days (doc 45). On 8/19/13 the district court dismissed the case for "failuer to comply to comply with Court Orders" (doc 46). None of The Plaintiff's claims were litigated beyond the pre answer motions and the complaint was never answered by any defendant.There also weren't any hearings held for these decisions.

Statement of The Facts

Note: Some numbers mentioned here where rounded to the closest up or down at same scale .1-The Plaintiff was a shareholder in Onteco who from about the end of September 2011 started making significant additions to his position by buying shares in the open market (doc 1 pg 4 # 11, # 12, # 14, # 15 ). 2-Because of SEC requirement on his increasingly large position,The Plaintiff filed SEC Schedule 13D on 10/19/11 for holding 7.2 percent of the total outstanding common stock shares, then on 10/27/11 for 9.9 percent (doc 1 pg 4 #16, #17).3-Since aquiring 10 percent of the outstanding shares made The Plaintiff an "insider" according to SEC definition, on 11/2/11 he filed SEC Form 3 stating holding over 27 million shares or 10.71 percent (doc 1 pg 4 #18).4-About two hours later on that same date Onteco Corporation filed SEC form 8-k giving Dror, the CEO, a compensation of 70 million shares that came very close to doubling his entire position of less 71.5 million shares he held up to that time (doc 1 pg 4 # 19 , pg 4 # 20) .5-Note that the whole Nexphase Lighting Subsidiary,with intellectual property estimated at over $17 million according Onteco's SEC filings ,was aquired by Onteco for less than 68 million earlier in the year (doc 1 pg 3 # 9, # 10) .6-Not only that. Onteco's SEC filing mentioned in #4 above declared an enttirely new class of shares called Series A Preferred shares with each share having the voting power of 10000 common stock shares.The filing gave Dror 150,000 of these shares which is equivalent to 1.5 billion shares common stock voting power.The entire reported voting power of all voting classes before this was less than 254 million common stock votes (doc 1 pg 4 # 21, pg 5 # 22).7-The board of directors mentioned as authorizing the compensations in #4 and #6 above is actually another name for Dror, the compensated CEO himself, because he was its sole member (doc 1 pg 4 # 23). 8-The Plaintiff filed increasing ownership to over 38, 43 million shares on 11/4/11, 11/8/11 respectively (doc 1 pg 5 #25). 9-11/16/11 Onteco increased its 750 million authorized shares to 2 billion shares (doc 1 pg 5 # 26).10-On 11/17/11 The Plaintiff filed increasing ownership to over 53 million shares (doc1 pg 5 # 28). 11-Later on 11/17/11 Onteco filed it third quarter Report in which: (a) "Related Parties", to which most of the convertible notes had been sold,was changed from "Related Parties" to "Non-affiliated Related Parties".(b) it claimed that over 229 million shares were issued to 28 investors with convertible notes.Most of these converted shares, however, actually came from notes that were originally issued to "an investment firm".(c) It claimed that Onteco signed new convertible notes at half the minimum conversion price it usually use.(d) Two convirtable notes even allowed conversion below common stock par value (doc 1 pg 5 # 29, # 30, # 31, pg 6 # 33, # 34). All these changes facilitate dilution .with regard to (a) and (b), they can help in avoiding SEC market selling limitations on quantity and period restrictions on affiliations based on relationships or holding size. And it also help avoiding filing requirements on selling shares for affiliates and entities with ownership above 5 percent.12-To 1/13/12, The Plaintiff's contined buying shares in the open market and filed for increased holding to over: 56, 58, 65, 89, 94, 97, 98, 107, 124, 140, 150, 157, 176, 189, 197 million shares (doc 1 pg 6 # 35).13- 1/17/12 Onteco filed with the SEC 1 to 1000 reverse split (each 1000 share to be combined into one new share).Also, the par value was kept at 0.001 and was not multiplied by 1000 (doc 1 pg 6 # 36, # 37) The filing claimed that the reverse split was decided on 11/2/11 (doc 1 pg 7 # 39). It did not explain how that fits with no mentioning or alluding for such possibilty in their SEC filings before or even between those two dates (11/2/11 and 1/17/12). It also did not explain how that claim would make sense of the SEC filing announcement for increased authorized shares Onteco made on 11/16/11 (doc 1 pg 5 # 26) other than misleading by mentioning the less sever of two factors with similar type of consequences and therefore suggesting the absence of the more sever one. The filing also mentioned "decision factors" that "were discussed among the members of the Board of Directors" despite the fact that the Board of Directors had only a single member,Dror (doc1 pg 7 # 40). The word "share" will continue to refer to pre reverse split shares unless otherwise qualified. 14-The filing in #11 also reported outstanding shares number close to being doubled within 63 days (373 million to 746 ML) (doc 1 pg 6 # 38).

15- 1/31/12 Onteco compensated Dror and another executive with the equivalent of 30 billion and 20 billion shares respectively (doc 1 pg 7 # 41).

16- Despite the holding period restrictions of 17 C.F.R § 230.144 ("Rule 144") by the SEC on the market selling of restricted securities, The Plaintiff's continued market buying exceeded both numbers of outstanding shares in #13 above (373 million and 746 million).Filing for exceeding the first number happened on 2/17/12 when The Plaintiff reported holding over 427 million shares within just over 3 months from when that number represented the total number of outstanding shares (doc 1 pg 7 # 42 # 43). On 3/21/12 The Plaintiff showed continuance to also exceed the second number (746 million) by reprting a holding of 771 million shares within 67 days from when that number represented the total number of outstanding shares (doc 1 pg 8 # 46 # 47).Onteco and its trasfer agent, Action, were responsible for allowing or disallowing restricted shares to enter the Market and the compliance with Rule 144 (doc 1 pg 11,doc 33 pg 2). Also, although The Plaintiff stopped buying after reaching the 771 million holding, the market trading volume continued to be in the equivalent of billions and tens of billions of shares (doc 1 pg 7 # 44 pg 8 # 48). Onteco's report mentioned below (#17 ) stated indirectly that shares in the market increased to be 51 billion on 4/16/12 (doc 1 pg 9 #55).17-4/16/2012 Onteco filed its 10-k report showing (a) Increase in outstanding shares to the equivilance of over 101 billion (doc 1 pg 8 # 51) . (b) Reverse split shares were being issued at pre-reverse split share converion prices for conversion of notes (doc 1 pg 9 # 54) (c)

Summery of the Arguments

1-The district court erred in reducing the time for The Plaintiff to serve his complaint in violation of FRCP Rule 4(m) (doc 5).2-The district court was misleading in its instruction order (doc 6 , pg 2) because of an overwhelming number of every day court examples and interpretations to FRCP Rule 4 which shows that generalization is incorrect.3-There is a personal jurisdiction on defendant Action based on (a)Nationwide service of process (15 USC& 78aa). (b) Sufficient minimum contact through its work as a transfer agent. (c) Satisfying Florida's Long Arm Statute Fla. Stat. 48.193 (1)(b) .4- Jorge and Dror were fairly served because (a) Service was in substantial compliance with FRCP Rule 4. (b) The Plaintiff gave sufficient actual notices where it cant be missed (c) Defendants kept continuously denying the existence of those clear actual notices which suggest strong intention to evade and actively ignore service (d) The intention to evade service was also clear from other actions they did. 5-There are Clear claims in the complaint upon which relief can be granted.6-There is enough particularity pleading for fraud claim in the complaint to satisfy FRCP Rule 9(b) .7- The complaint describes clear tort and injury to The Plaintiff .Therefore it shouldn't be dismissed even if The Plaintiff had failed in expressing that injury as fraud.

8- The Plaintiff has a direct standing to bring his lawsuit on Onteco because

(a) The dilution claim to the plantiff's ownership and rights. (b) Challenging the legitimacy of the board of directors since there is no known path for the election of that board except through the same dilution in question here.(c) The level of disregard to shareholder's interest in the actions of those inside can give a direct standing starting from challenging their representation for the shareholders even if they were in their positions legitimately.9-The complaint was ready to fit the derivative requirement because no reasonable hope exist for obtainig the relief from those who act the kind of actions described in the complaint.10-The final dismissal can not be with prejudice because it is essancially a dismissal for failure to comply with FRCP Rule 4(m) disguised as "failure to comply with the related orders".

Standared of Review

Al the decisions were based on text submitted to the district court without nhearings .Since the Court of Appeals has exactly everything upon which it can see facts as did the district court the standard of review here is De Novo.

The Arguments

Part 1: Order reducing time to serve the complaint

The order to serve the complaint within 21 days issued on 4/9/12 (doc 5) reduced the time to serve the complaint to 104 days instead of 120 days. Therefore it was in violation of FRCP Rule 4(m) which gives a plaintiff 120 days to serve his complaint as indicated by "If a defendant is not served within 120 days..".The understanding that the entire 120 days are for The Plaintiff to serve is also supported by the part that states if after failling to serve the complaint within 120 days "The Plaintiff shows good cause for the failure, The district court must extend the time for service for an appropriate period". That clearly suggests that the entire 120 days are for The Plaintiff to serve his complaint even if the complaint was served at the end of that period for no good cause. Moreover,The district court did not issue the order or inform The Plaintiff of its intention to reduce that 120 days for service until the last 21 day of that shortened period.

Part 2:The misleading part in the order of instructions

The part of the instructions order (doc 6 pg 2 # 3) issued 4/17/13 stating " If a pro se plaintiff cannot serve the complaint on a defendant, due to lack of information, the case will be dismissed with respect to that defendant" was misleading to The Plaintiff. Everyday rullings from other district courts and many interpretations by higher courts all weigh against that generalization.At least one example of how misleading that generalization ,especially when issued to a pro se litigant trying to achieve that service for the first time, is the statutory laws and court orders allowing service by publications.

Part 3: Dismissal of the case on Action

The complaint on Action was dismissed based on absence of personal jurisdiction to bring it to the federal district court in Florida (doc 33 pg 7) . First, Since there is a fraud claim in the complaint related to violation of The Securities Exchange Act of 1934 through the violation of SEC Rule 10b-5 (17 C.F.R. 240.10b-5) then there is a nationwide personal jurisdiction authorized under 15 USC & 78aa. The district judge answered that (doc 33 pg 6) by suggesting that the due process constitutional requirements were not satisfied here.

There are clear examples of circuit courts emphasizing that with laws like that 15 USC & 78aa minimum contact is sufficient to satisfy personal jurisdiction if occurred in any place in the entire country (doc 20 pg 5). In fact,the citations requiring minimum contacts within the forum state with regard to 15 USC & 78aa seems harder to find.

Nevertheless,there is sufficient minimum contact with the forum state here. Action purposefully availed itself to the forum state (Florida) for the pecuniary benefit of working as the transfer agent for Onteco because:

"parties who "reach out beyond one state and create continuing relationships and obligations with citizens of another state" are subject to regulation and sanctions in the other State for the consequences of their activities"

[Burger King Corp. v. Rudzewicz, 471 US 462 - Supreme Court 1985)]. In its position as the transfer agent for defendant Action it was responsible for market access of restricted shares to the market. Action, permitted a huge amount of restricted shares to be sold in the market in violation of the waiting period imposed by 17 C.F.R § 230.144 ("Rule 144") and from that the cause of action on it arose (doc 1 pg 11,Doc 33 pg 2) . The citation mentioned by the disctrict court [future tech. today,inc v. osf health care sys, 218, F. 3d 1247, 1251 (11th circuit. 2000)] in its response was not suitable because it had nothing to do with 15 USC & 78aa or any other nationwide personal jurisdiction authorizing statute. Even without the question of nationwide personal jurisdiction, there are substantial differences with that case: (a) Unlike here, in that case services were provided by a plaintiff in Florida to a defendant outside Florida. (b) Also unlike here,in that case the contact with the forum state was not part of the defendant's business which was health care and contacted Florida only for services related to Y2k. (c) Again, unlike here, the defendant's contact with the forum state was not for pecuniary benefit.

Also unlike that case, The Plaintiff here doesn't have the option of taking his entire case to the defendant's state because there are other defendants all of them including the main defendant (Onteco) are residents of Florida. Otherwise the Plaintiff himself is a resident of Tennessee not Florida and could have sued defendant Actions in its home state just like he did with the other defendants. It is interesting how despite this fact it was the district court who used the "fair play and substancial justice" in selection of forum state for its argument to dismiss the complaint against Actions (doc 33 pg 6). Florida's long arm statuary requirement also apply here. Fla. Stat. § 48.193(b) states that the state's long arm personal jurisdiction applies on an entity "Committing a tortious act within this state (Florida)". Actions committed a tortious act and that is why Fla. Stat. § 48.193(b) apply here. Actions ,by allowing restricted shares to enter the market despite the restrictions imposed by SEC Rule 144 ,committed a tortious act that caused the share price of Onteco, a Florida resident corporation, to go lower and in turn the value of The Plaintiff ownership in Florida to go lower and therefore injured The Plaintiffin in florida. Although the injurred Plaintiff was not in Florida, his injury happenend in Florida. It is not unlike ,for example, if some physical property was unjustly taken away in Florida and therefore causing an injury to its owner outside Florida. [ Note:The statement "beggining on May 16,2011 (The Plaintiff) began taking ownership.." (doc 33 pg 1) might be misleading because what The Plaintiff mentioned being a shareholder from that date but the intensive buying started from September 2011 (doc 1 pg 4 #11, #15)].

Part 4:Dismissal and service quashing orders

The district court issued an order dismissing the complaint on Jorge (doc 39)and later followed that by an order quashing the service on Dror (doc 43) .

A- Common argument on both

Both orders did not serve justice because The Plaintiff put a real substancial effort to serve the complaint and very effectively reached and inform the defendants about the lawsuit .The Plaintiff used the best possible path to provide actual notices to the defendants about the lawsuit. That path is the filings for Onteco itself with the SEC. On 4/2/12 the Plaintiff filed with the SEC that he intends to file a lawsuit against Onteco and related parties (doc 32 pg 3 #4, EXHIBIT 6) then again on 5/9/13 (doc 32 pg 3 #6, EXHIBIT 7 ) where The Plaintiff declared that a lawsuit had been actually filed and gave the details.It is hard to think of anything that can reach a CEO of a public company and those in its leadership more than its own filings with the SEC. Dror was the CEO from before the date of the lawsuit intention filing of 4/2/12 until he resigned on 11/9/12 (doc 41 pg 2 # 5 when Jorge became highest executive in Onteco until his resignation on 5/30/13 (doc 32 pg 2 #1). Nevertheless, both defendants even while occuping the highest executive positions of Onteco corporation kept denying in its SEC filings that they know of any intended lawsuit (doc 32 pg 3 #7) . How can the highest executive of a public corporation not know about something clearly filed with the filings for his corporation with the SEC? The Plaintiff also made a web site where he put a copy of the complaint and scanned all the summons and included the address of that website with his filing of 5/9/13 with the SEC (doc 32 pg 3 #5 , #6) .

Despite how much those filings with the SEC notices cant be missed, from the filing of the first notice on 4/2/12 to the resignation of the last of the two defendants from the highest executive position in Onteco all quarterly and annual filings by Onteco contained this : "Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties.As of the date of this Annual Report, no director, officer or affiliate (i) a party adverse to us in any legal proceeding, or (ii)has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties"

B- Dismissal of the complaint on Jorge

In addition to actual notices mentioned in A above, The Plaintiff also tried to inform the defendants about the lawsuit through emails that included the complaint and summons as attachments and received email confirmations that those emails were recieved (doc 32 pg 3 #8, EXHIBIT 3 ,EXHIBIT 1) .

First, The Plaintiff tried to serve on Jorge, who was at the time the highest executive of Onteco at its address which the defendant Jorge also mentioned as his address in his SEC filings but the service failed for both (Jorge and Onteco). Then The Plaintiff noticed that Onteco had just reported less than a week ago ,on 4/16/13, that on 11/8/13 it changed its address. That meant had The Plaintiff even tried to serve on Jorge using Onteco's address from the first day The Plaintiff filed his complaint on 1/17/13, all the efforts would have went to that bad address because it was the address most recently reported by Onteco as its current address in its SEC filings. But service on the new address ,and within less than 10 days from the date it was anounced by onteco,also failed for both Onteco and its highest executive, Jorge, because of its being a bad address (doc 32 pg 1 #1 and pg 2). Despite how two different process serving companies I hired declared it as bad adress (doc 32 pg 2, EXHIBIT 4, EXHIBIT 5) , Onteco filed a SEC report on 5/21/2013 signed by Jorge as the hieghest executive officer in which it again mentioned the same address as its current address (doc 32 pg 2 #2).

It needs to be noted that the failure of process service on these addresses is not like any service of process address failure because: (a) Unlike where a plaintiff find a defendant's address from different source,these addresses were provided by the defendant,Jorge, himself. (b) Jorge provided these addresses in his SEC filings where information is required to be correct. (c) Investors depend mainly on information filed with the SEC and someone with a position like that of Jorge's with the company has even more duty to himself to keep shareholders updated with the current and correct address to be notified about company related actions taken by shareholders. (d) That need is even more emphasized by the fact that The Plaintiff made filings with the SEC in which he declared his intention to file his lawsuit as mentioned in part A of this section.

The Plaintiff then directed his effort to serve on Jorge at the best residence address he can find for him.The Plaintiff hired a different process server to serve on Jorge at his residence address. The process server later informed The Plaintiff that Jorge was served in that address (doc 32 pg 3 #9, doc 10).

In the affidavit of his motion to dismiss for insufficient service of process Jorge alleged that the service address was the address of his girlfriend and he used to "split time" between his alleged current address and that address for a period from "July 2010 until May 12" and from May 12 he lived with his girlfriend in his alleged current address (doc 22 pg 17) . Nevertheless, in the affiddavit of the person who received the complaint and summons that person stated that he had just moved in that address since May 1 2013, address 9 days ago (doc 22 pg 20).

Jorge also did not mention anything that would show how he was prejudiced by the service even if his allegations were true. In addition Jorge and Onteco's earlier attorney mentioned that Jorge was "served" on 5/15/13 and that Onteco was "served" on 5/16/13 (doc 16). The actual service dates were on 5/9/13 (doc 22 pg 17) and 5/10/13 (doc 12) respecively.That shows by the admission of his lawyer that service took the same time to be communicated to the Defendent directly as it did with Onteco who was served through its registered agent and did not raise the objection of Insuffient Service of Process as did Jorge (doc 24 pg 1). That motion was partially granted with an extension until June 10 (doc 17) .

If service was not in complete compliance with rule 4 here then so was the case " in Union Asbestos & Rubber Co. v. Evans Prods. Co., 328 F.2d 949 (7th Cir.1964), service on a secretary was held good but The district court noted the extenuating circumstances that the defendant was out of the office 75-80% of the time and that the notice was immediately communicated to the defendant." [Direct Mail Specialists, Inc. v. Eclat Computerized Technologies, Inc., 840 F.2d 685 (9th Cir. 1988)]. In this case the defendant gave work addresses and continued to give addresses which turned out to be bad. So he was "out of the office" the equivalence of 100 percent of the time.

In his response The Plaintiff also suggested ,as an alternative, the district court's use of US Marshals to serve on Jorge's affidavit alleged address (FRCP Rule (4)(c)(3)) with cost of that to be on The Plaintiff (doc 32 pg 5).

Despite the level of the defendant's insistance on complying with the technicalities of rule 4 in serving the complaint on him, he did not serve or inform The Plaintiff about his motion through the mail or any other way . The Plaintiff was able to respond because he used the PACER system over the internet. The defendant's certificate of service also did not mention service on The Plaintiff (doc 22 pg 10). That failure to serve could have been a grownd to keep the motion "inchoate until served under Rule 5(a)" [International Controls Corp. v. Vesco, 556 F.2d 665,669 (2d Cir. 1977)]. The Plaintiff had raised this issue to the court (doc 32 pg 5).
Another reason for the dismissal was the "Failure to Comply with the court's April 9, 2013 order" (doc 39 pg 6) disscussed above in "Part 1" .Despite what The Plaintiff thought about the fairness and validity of that order he put the effort to comply with it (doc 32 pg5) and (doc 31 pg 5- pg6).

C-Quashing the service on Dror

Service on Dror was achieved by the sheriff office of the county.According to the Sheriff's report,that address was tried 6 attempts from 5/17/13 until served on 6/10/13 (doc 30). In comparison the same Sheriff office returned a non service on defendant Haim after one attempt on 5/17/13 (doc 41 pg 3).

So if the address was wrong then the Sheriff wouldn't have needed to spend that much time and effort on it and could have reported it wrong much earlier as well. Also to the best knowledge of The Plaintiff the address used is the address on the defendant's driver license at the time (doc 4 pg 1 # 4).

In continuation with the evading of service showed in the denyal of the lawsuit notifications in The Plaintif's SEC filings mentioned in part A of this section, even Dror's alleged residence address in the affidavit of his motion to quash did not state more than the city and county of that alleged address (doc 34). That is aside from how alleging only a fragment of an address cast doubts on the truth of the claim.
In both services on Jorge and Dror there were substantial compliance with FRCP Rule 4. "Rule 4 is a flexible rule that should be liberally construed so long as a party receives sufficient notice of the complaint" [United Food & Commercial Workers Union v. Alpha Beta Co. 736 F.2d 1371 (9th Cir. 1984)]. I used SEC filings and I can not think of anything that would inform the highest level executives at a public company about something better than filing that with the SEC. Also, court citations out there speak about "substantial compliance" not absolute compliance with rule 4 of the FRCP that would give easy escape not to be held accountable in front of courts based merely on evading service despite very sufficient actual notices and not being prejudiced.

Part 5: Dismissal of complaint on Onteco

A- FRCP Rule 12 (b) (6) as a dismissal cause

The allegation that the complaint did not contain a claim upon which relief could be granted is clearly false as the reading of the complaint would show. Such claims can be taken from all the content of the complaint and not from the relief demand section only. FRCP Rule 12 (b) (6) is about stating an injury upon which the court can grant a relief and not about only what a plaintiff directly demand. Also, the district court incorrectly restricted the view to the FRCP Rule 12 (b) (6) through the FRCP Rule 9 (b) requirement by unnecessarily combining the two togather.

B- FRCP Rule 9 (b) as a dismissal cause

The complaint fullfills the pleading requirement for FRCP 9(b).The district court applied the requirements for fraud claims under 10b-5 too literally. Second, there is a clear direct tort and injury described in the complaint and the failure to present it as a fraud shouldn't cancel these injuries. That directness also makes presenting the injury as fraud may not look like the usual presentations for fraud.The injury of intentional dilution described in the complaint was as direct injury as ,for example, taking away a personal properity from its owner.The "misstatements or omissions" The district court was looking for are not intened for a case that discribe an injury as clear as this (or at least shouldnt be applied this way).The misstatement or omission were simply implied through the positions held by the defendants which imply that they should work for the best interest of shareholders.The district court made arguments as if it was not talking about the same complaint. It said:

"Taking Plaintiff's allegations as true, the complaint simply does not sufficiently state a cause of action for securities fraud.Plaintiff does not state with any particularity the misstatements or omissions of material fact made by Onteco. The only "statements" mentioned in the complaint pertain to Onteco's press release and Securities and Exchange Commission ("S.E.C.") Form 8-k filings on November 12th, 16th, and 17th, 2011. [D.E. 1 at 19, 21, 26] .Plainliff only refers to these "statements" generally and does not include any specific information as to their fraudulent nature.Moreover, Plaintiff does not include any allegations that these "statements" by Onteco were made with scienter or that he relied on any on them in making his stock purchases. The complaint just generally avers that Onteco and members of its board of directors made a concerted effort to dilute his equity position. [D.E. at 11]"

I took the "12th" to mean 02 otherwise there was no 8-k filing mentioned for that date.Also, [D.E. 1 at 19, 21, 26] probably meant [D.E. 1 at 19, 26, 29].

So much to repond to, so little space here. Luckly, because of the direct falsehood of much of what is there, a general responce is sufficient and the complaint and the Statement of the facts here provide a better detailed response.

The 8-k filings to which the court referred were part of a bigger set of claims describing actions taken by the defendants which caused injury to The Plaintiff. The fraudulent nature in these actions can be directly seen in that these actions were intentionally done not in the best interest of shareholders.The same thing goes for the "scienter" claim. Also,The Plaintiff's scienter claim is implied in his fraud claim and his use of words like "intentionaly" in "count I" and "count II" (doc 1 pg 10-11).The "reliance" part was also incorrectly applied by using it on the wrong object by the court.The relaince was on the defendants to work for the best interest of shareholders which was betrayed by the actions in the claims of the complaint.In addition, the question of reliance could be essential for cases where the fraud claim is directly targetting the purchase of the securities by the plaintiff. In the case against this defendant,on the other hand, The Plaintiff's injury claims targeted and sought correction for the dilution of his ownership and not his purchase of the securities in the first place.That is clearly indicated through the relief demand section of the complaint (doc 1 pg 12 # A ). The dilution claim is similar to a claim of invalid taking away of a property claim by the person who sold it to the new owner.Even if the new owner did not relay on the seller's claim (or implied claim) that the seller will abid himself by the selling, as long as the seller agreed to the selling ownership had transferred to the new owner and the new owner suffered a tort in the seller's taking away of that property. The claim that The Plaintiff "generally aver" is ,again, one of those false claims that are directly contradicted by the complaint. Also, not much concerting was needed for that "concerted effort" with concentration of power in very few persons. After all, Onteco had one person "board of directors" during most of the events mentioned in the complaint ( doc 1 pg 5 # 23, pg 2 # 5) .

C-Lack of Direct Standing as dismissal cause

The Plaintiff had a direct standing to bring this lawsuit.The dilution to The Plaintiff's ownership and the rights related to that ownership by issuing shares has a path of injury to The Plaintiff that is distinct and seperated from the injury to the corporation. In fact it is possible that a dilution causes a corporation no injury and result in a good tradeoff increase in its assets but still causes harm to the original shareholders if ,for example, that dilution was not needed for any sufficient cause except to make the original shareholders share their ownership with others.

Not only there is a direct standing in this case but the other alternative is not even closely supported. Had The Plaintiff brought his dilution claims on behalf of the corporation the question would be what injury did the corporation suffer?What difference would it make for the corporation if it is owned through millions or billions of shares and to whoever the shareholders could be?Depleting the authorized shares?What about the case here where the diluters also continously add or do not hesitate to add to authorized shares (doc1 pg 5 # 26)? How does that compare to the injury suffered by a shareholder who had his ownership siginificantly lowered not in a process that is for the best interest of shareholders?

I am not sure that district court citing from Florida's case law instead of Federal or state of incorporation laws,Nevada, (doc 1 pg 2 # 2) is suitable here. In any case, case law or any law can only serve as a guidance to understand whether direct or derivitive standing apply and can not prevent or forbids an existing standing. Otherwise it would be in violation of the constitutional due process.

The district court admits that because of the effect of dilution on The Plaintiffs voting rights (Although it specificly mentioned only the reverse split) he can bring a direct claim except that "All shareholders in Onteco could make the same argument" (doc 40 pg 5).

First, The Plaintiff had a very big percentage of ownership distinguishing him from all other shareholders in his interest in the case. Second, there is no violation to FRCP Rule 19 which sets the conditions for required joinder of parties and the district court did not mention how that rule would prevent The Plaintiff from bringing his individual case.

Resolving the dilution issue can also lead to change in control and thereby open the door for dealing with what currently appears to be derivative demands.

2- The legitimacy of the board of directors upon which the argument for the derivative path stands is itself in question because of the power of the dilution and the ownership obtained by The Plaintiff on electing the board of directors for Onteco and allows direct standing in challenging that legitimacy by challenging the validity of the dilution.

The complaint showed the size of the ownership obtained by The Plaintiff and also the size of the dilution that happenend. Both of those eclips the most recent total shares outstanding reported before the CEO compensation of 11/2/11 (doc 1 pg 5 # 22).The Bylaws of Onteco require that:

"The annual meeting of stockholders for the election of directors shall be held on a day during the first six months of each fiscal year, at a time, and at a place all as set by the Board of Directors. At said meeting the stockholders shall elect by plurality vote, a Board of Directors, and may transact such other business as may come before the meeting." (doc 31 pg 2 # 2).

The Plaintiff knows of no such meeting held and do not remember recieving any voting opportunity to ellect the board of directors of Onteco (doc 31 pg 3) . The only way that the board of directors of Onteco was elected,if it was, is based on shares from the same dilution in question. Therefore, unlike other cases where the legitmcy of the board of directors is not related to the cause of action , in this case the dilution in question itself, if invalid, can show that the board of directors was not legitimate. Therefor there is a direct standing in challenging the legitimacy of the board of directors through the challenging of the validity of the dilution. If there was no sufficient valid amount of shares to cause the board of directors to be elected then the representation of the board to shareholders was illegitimate and shareholders can directly bring even what otherwise is perceived as derivative demands.

3-The Plaintiff's claims against the board of directors of Onteco are not based on differences with reasonable actions from the board of Onteco. So,even if we assume that the representation for shareholders was based on valid grounds,the level and amount of clear fraud and/or careless or reckless disregard for shareholder's interest that was described in the complaint challenges the reasonableness of the representation of the board to shareholders and allows shareholders to bring direct claims.

4- The Plaintiff pointed out to The district court that the complaint can be easily modified to being brought as a derivetive complaint (doc 31 pg 3).The district court makes an argument against that based on the lack of a statement showing what efforts The Plaintiff took to obtain the desired actions and/or the reason for not obtaining the desired actions or not making the efforts.The answer to that is suffeciently clear from reading the complaint.With that level of unreasonble actions ,disregard to shareholders and self serving it is hard to think that a reseaonble person would expect a positive outcome from such requests and with the conflict of interest involved.

Part 6: Final dismissal

The district court issued its final dismissal on 8/19/13 (doc 46) stating failure to comply with court's order without specifying whether the dismissal was with or without prejudice. If The district court intended the dismissal to be with predjudice then it would be an error because it is essentially a dismissal for failure to serve the complaint on the defendants within the 120 days service time limit in FRCP Rule 4(m) which specify a dismissal without prejudice. "Rule 4(m) does not permit dismissal with prejudice" [Jackson v. City of New York,22 F.3d 71 (2d Cir 1994)].In addition these orders were related to extending the time for service of process on Dror and Haim .The district court gave these orders after it had already dismissed the action on the main defendant and two other defendants. The court did not state in these orders ,that they were not given as an option to The Plaintif and may lead to dismissal with prejudice.

Conclusion

The way the district court handled this case and the decisions and explanation for the decisions it issued were not only wrong but also far from reflecting fairness and rendering judgement in good faith. Much of the discussions in the court orders seems distractingly fragmented and even contradictory. They also reflected what is hard to be seen as other than an intention to deny what is in the complaint instead of seeing it.

Respectfully Submitted

Amir A Kammona October 21, 2013

17o Hillsborough Lane,Lenoir City, TN 37772

(865) 271- 1676 Email: FRDPVL@YAHOO.COM