A new advisor already has to sue Ameriprise

8/14/2019 A new advisor already has to sue Ameriprise

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Philip J. Nathanson Arizona State Bar #013624THE NATHANSON LAW FIRM8326 E. Hartford Dr. Suite 101Scottsdale, AZ 85255(480) 419-2578

(480) [email protected]

Attorney for Plaintiffs

IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF ARIZONA

NET VEST FINANCIAL, LLC, andand JOHN CARTOLANO,

Plaintiffs,

vs.

AMERIPRISE FINANCIALSERVICES, INC.,

Defendant.

No.

COMPLAINT FOR TEMPORARYRESTRAINING ORDER,PRELIMINARY INJUNCTION,DAMAGES AND OTHER RELIEF.

Plaintiffs, NET VEST FINANCIAL, LLC and JOHN CARTOLANO, for

their Complaint against Defendant, AMERIPRISE FINANCIAL SERVICES, INC.,

allege as follows:

Parties, Jurisdiction and Venue

1. Plaintiff, NET VEST FINANCIAL, LLC, is an Arizona limited

liability company organized and formed under the law of Arizona, with its home

office and principal place of business located in Scottsdale, Arizona.

2. Plaintiff, JOHN CARTOLANO, is an independent financial advisor.

Plaintiff is a citizen of Arizona.

Case 2:13-cv-01967-GMS Document 1 Filed 09/26/13 Page 1 of 32


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3. Defendant, AMERIPRISE FINANCIAL SERVICES, INC., is a

Delaware corporation with its home office and principal place of business

located in Minneapolis, Minnesota (hereinafter sometimes referred to as

Ameriprise or Ameriprise Financial).

4. The jurisdiction of this court is invoked pursuant to the diversity

jurisdiction provisions of 28 U.S.C. 1332. Venue is proper in this District.

General Allegations

5. Plaintiff CARTOLANO had a long-standing business relationship

with LPL Financial as his broker/dealer. Plaintiff NETVEST FINANCIAL, LLC,

was the entity that performed the marketing and managed the operations and

independent relationship with LPL Financial. Plaintiff CARTOLANO was with

LPL for 18! years. Plaintiff NET VEST FINANCIAL, LLC, was formed and

operating since 1996, and with NETVEST FINANCIAL, LLC, Plaintiffs marketed

securities offered through LPL Financial. For the past 17 years, CARTOLANO

has owned and operated NetVest Financial, which provides comprehensive

estate and trust planning services, as well as financial planning involving

securities and insurance products to clients to meet their financial goals. Integral

to the operations of NetVest Financial, CARTOLANO hosts approximately 4-8

seminars per month entitled Trusts and Beyond where he discusses estate

planning, establishes trusts (both revocable and irrevocable) and provides related

asset titling services to clients. Additionally, as a part of those seminars,

CARTOLANO represents himself as a financial advisor who also sells securities



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and various insurance products. As Defendant knew, it is (and has always been)

critical to CARTOLANOs business that he have the ability to co-brand and co-

market NetVest Financial LLC and his broker-dealer relationship in a

comprehensive manner to provide asset and estate management. CARTOLANO

and his team manage client assets of approximately $180 million and generate

revenues of approximately $2 million per year. Prior to being fraudulently

induced to join Ameriprise, Plaintiff CARTOLANO and his team experienced

revenue growth with their business model of approximately 12% per year.

6. Prior to being fraudulently induced to invest in and join the

Ameriprise franchise, CARTOLANO was an independent registered agent of

LPL, where he was allowed to operate NetVest Financial. Having grown the

business from the ground up, CARTOLANO employs a staff of 11 individuals,

which include sales, administrative and operations personnel. While at LPL,

CARTOLANO was able to cultivate approximately $2.8 million in new client

assets per month. Approximately 40% of those assets were invested in variable

annuities and the remaining 60% were allocated into fee-based accounts.

Accordingly, each month, CARTOLANO was able to grow his business and

generate approximately $165,000 in sales commission as a direct result of his

Trusts and Beyond seminars.

7. In and about July 2012, Ameriprise Financial approached Plaintiff

CARTOLANO and offered him an opportunity to get capital and to provide

Plaintiff CARTOLANO with the same services that he had had at LPL, but with



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further attention paid to Plaintiff in terms of providing capital and succession

planning at the firm. In order to induce Plaintiff CARTOLANO to enter into an

agreement, Ameriprise Financial specifically offered to provide the same services

that Plaintiff CARTOLANO had at LPL, and assured said Plaintiff that he would

be able to operate under the Ameriprise Financial relationship in the same

fashion that he operated for 18 ! years with LPL. These promises and

assurances were a condition precedent to Plaintiff CARTOLANO entering into

any relationship with Ameriprise Financial. Based upon those promises and

assurances, Plaintiff CARTOLANO was willing to enter into the $1.1 million

seven-year forgivable note arrangement that Ameriprise Financial proposed.

Additionally, Ameriprise Financial offered and provided $600,000 in a loan,

through Ameriprise's banking department, at a 6+ percent interest rate for the

next seven years. Ameriprise Financial Services, Inc. is a national broker-dealer

and FINRA member firm that is a subsidiary of Ameriprise Financial. A large

percentage of Ameriprises registered representatives are independent contractor

franchisees like Mr. Cartolano who are not employees of Ameriprise, but rather

are independent financial advisors with their own unique business models (the

Ameriprise Franchise Group, or the Independent Channel). On its website,

the Ameriprise Franchise Group purports to allow experienced financial advisors

to develop their practice the way they have always envisioned with flexibility

and support. That flexibility and support were not experienced by Mr.

Cartolano, as detailed below.



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8. The promises made by Ameriprise Financial to induce Plaintiff

CARTOLANO to enter into a relationship with Ameriprise Financial were made

repeatedly, both before and after the execution of agreements between the

parties. Plaintiff CARTOLANO would not have entered into those agreements

had he not been assured that everything would continue, in terms of the

operations of his business, as it was prior to his relationship with Ameriprise

Financial. Plaintiff CARTOLANO explicitly discussed with Ameripirse

Financial, and made it a condition of entering into a relationship with Ameriprise

Financial, that the marketing strategies that Plaintiff had in place were in fact

going to work the same way as before because Plaintiffs business was on a

growth track due to the kind of marketing Plaintiff was doing prior to the

Ameriprise Financial transaction.

9. Ameriprise agents stated that that they were impressed by

CARTOLANO 's business model and specifically stated that Ameriprise would

provide additional resources to expand and grow the business exponentially.

CARTOLANO emphasized that he would need to operate NetVest Financial

exactly the way he had at LPL and that it was necessary that he be able to co-

market and co-brand NetVest Financial and Ameriprise for purposes of

conducting his Trusts and Beyond Seminars, just as LPL had allowed him to do.

Ameriprise agents assured CARTOLANO that he could continue with his

business and marketing model whereby CARTOLANO would be allowed to

continue to co-brand and comarket NetVest Financial and Ameriprise.



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AGREEMENT, a copy of which is attached hereto as Exhibit #1 and is

incorporated herein by this reference (hereinafter referred to as the franchise

agreement).

12. Transferring Plaintiff CARTOLANOs business from LPL to

Ameriprise entailed a movement of over 350 clients maintaining more than 2,200

accounts. There were substantial costs associated with the transfer as a result of

the downtime in terms of future production. Ameriprise told Plaintiff the

transfer would take 60 to 90 days. But Ameriprise knew it would take six

months, not 90 days.

13. Thirty days prior to the contractual date of August 12, 2012, which

is the date of the franchise agreement, was required, under the circumstances, to

not take in any new business thirty days prior to August 12, 2012. When Plaintiff

CARTOLANO committed to a thirty-day date of August 12th, on or about

July 10-12, 2012, CARTOLANO took all appropriate steps to move forward with

the Ameriprise Financial transaction.

14. Ameriprise promised to send a special team to draft the necessary

business paperwork, to help Plaintiff CARTOLANO design buy/sell agreements;

help design the new structure so Plaintiff could move forward with the necessary

documents, sign the necessary contracts to effectuate the Ameriprise Financial

transaction. Ameriprise sent a team headed by Tom Titus. It was his firm called

Smart Concepts that was the lead firm. Ameriprise promised to pay Smart

Concepts for its services, and to help Plaintiff put together the necessary



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structure both legally and structurally to marry everything together to create a

healthy relationship with Ameriprise.

15. Smart Concepts, via Tom Titus, informed Plaintiff how great

Ameriprise was going to make everything for Plaintiff from that point forward.

At the end of the series of meetings, it became more and more apparent that

there was really not a group at Smart Concepts to help Plaintiff design a way of

morphing what Plaintiffs current structure was into structures or a structure or

multiple structures that would make things work with Ameriprise.

16. As this series of meetings with Smart Concepts went on, Plaintiff

notified the responsible people at Ameriprise that the amount of time that was

going by to get this done was, in fact, a downtime for Plaintiff. So they were

willing to advance us $100,000 of the $1.1 million in advance, and which they

did, to help offset the downtime because of how long it was taking.

17. Plaintiff was induced to sign the franchise agreement, Exhibit #1,

by promises and assurances from Ameriprise that it would be made to include

ancillary amendments, which were promised to include certain provisions that

would allow Plaintiff to maintain his existing customer base as well as Plaintiffs

future customer base, and that those clients would be, in fact, always be Plaintiff

CARTOLANOS clients by definition. Since that time Ameriprise has proclaimed

that those amendments and addenda to the franchise agreement would be issued

after the fact to that effect, but Ameriprise has yet to deliver such amendments

and addenda.



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18. Smart Concepts and Ameriprise, all of the way up to August 12th,

had plenty of time to do the really necessary research and to provide the

necessary personnel to do a complete and comprehensive analysis as to how why

Plaintiff operated the way it did. Instead Ameriprise and Smart Concepts

focused most of their time on Plaintiffs revenues. But they never once did a

comprehensive investigation of the breakdown of Plaintiffs business, the

business expenses, and why Plaintiff operated the way it did structurally, legally,

financially, et cetera. Ameriprise and Smart Concepts wanted to impose on

Plaintiff contracts that jeopardized Plaintiffs revenue stream because the chosen

representatives of Ameriprise Financial did not take the time to completely

analyze and structure the transaction around the manner in which that revenue

stream was generated. Ameriprise had not familiarized Mr. Titus with

CARTOLANO's business model. Initially, CARTOLANO was told that Smart

Concepts would structure a deal whereby CARTOLANO's senior registered

representatives would assign their clients over to CARTOLANO in order to

comport with the Ameriprise Franchise model and, pursuant to new agreements,

CARTOLANO personally would share in only a very small percentage of the

revenues generated from those accounts. Thereafter, for the first time, Mr. Titus

informed CARTOLANOthat Ameriprise would not allow CARTOLANOto use

the entity NetVest Financial, LLC. Instead, Mr. Titus informed him that he would

have to function under a "team name" called NVO Financial (which was not a

legal structure) in order to comply with the rules of the Ameriprise franchise.



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Furthermore, Mr. Titus told CARTOLANO that he was instructed by

"higher-ups" at Ameriprise not to discuss this issue any further with

CARTOLANO. Accordingly, Ameriprise did not view or treat NetVest as an

integral part of the franchise and effectively wanted the entity out of the

relationship, despite Ameriprises prior representations and promises.

19. Worst of all, with regard to the Trusts and Beyond seminars,

Ameriprise management initially represented that CARTOLANO could co-

market and co-brand the names NetVest Financial alongside Ameriprise.

However, several months into his tenure with the firm, Ameriprise's Compliance

Department told CARTOLANO that he could not co-market the Ameriprise

brand, and that he would be required to remove the Ameriprise name from all

brochures and seminar materials. That decision, which was contrary to all prior

representations,emasculated CARTOLANO's entire business model, because he

no longer could hold himself out as an Ameriprise financial advisor at his

Trusts and Beyond seminars.

20. Plaintiff CARTOLANO was the registered principal branch

manager of his own branch when he was with LPL. But when Plaintiff joined

Ameriprise as a franchisee, Ameriprise enforced an outside Office of Supervisory

Jurisdiction, OSJ, which is a registered principal that existed outside of Plaintiffs

branch. Ameriprise nevertheless assured Plaintiff that there would be proper

compliance and proper systems in place. Ameriprise assured Plaintiff that the

liability issues and the compliance issues that are enforced by FINRA would be



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handled professionally by Ameriprise. But Ameriprise knew that it had no

intent of fulfilling that promise because it knew that it did not have the personnel

and expertise and make assurances regarding liability and compliance issues.

21. Plaintiff later learned, long after signing the franchise agreement,

about Ameriprises lack of expertise in supervising a branch office. Their lack of

supervision was and is fraught with the probability of creating liability, and their

systems are just not capable of really uncovering or discovering any kinds of

problems that exist in a branch office. Ameriprise knew this, yet represented to

Plaintiff just the opposite as the truth.

22. A representative of Ameriprises trust deparment came out and

met with Plaintiff. The Ameriprise trust department wasn't very advanced.

Plaintiff needed to know what language Plaintiff needed to have and

requirements we needed to have in customer documents since Plaintiff is in the

revocable trust preparation business -- which they knew we were. That is part of

Plaintiffs marketing structure -- that Plaintiff needed to have documentation

from the trust department so Plaintiff could name, if Plaintiff needed to, that

trust company as a potential successor trustee for Plaintiffs clients' documents.

Plaintiff clarification on fees that apply to the franchise owner and individual

advisors. Plaintiff needed to have suggestions on how not to interrupt systematic

ACH instructions on our client accounts that are currently set up -- that were

currently set up in the LPL accounts during this transitional process. Anything

that related to being operational, from the transfer of securities and monies in



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accounts to ACH transactions, in or out journal transactions, in or out, at the

level in which we were operating.

23. But when Plaintiff arrived at Ameriprise, Plaintiff was assigned

untrained and unskilled personnel from Ameriprise to allegedly assist Plaintiff.

These were inexperienced people that basically had less experience than

Plaintiffs receptionist. Plaintiff fought day after day, hour after hour, with these

Ameriprise employees. Plaintiffs staff had to beg and do whatever they could to

get information from these inexperienced staff members at Ameriprise.

Plaintiffs employees participated in more than 850 telephone calls with these

Ameriprise employees. And when brought to the attention of the senior VP at

Ameriprise, no one at Ameriprise took those telephone calls seriously.

24. In an attempt on an ongoing basis to fulfill Plaintiffs fiduciary

responsibility to his business, and Ameriprise, Plaintiff CARTOLANO

repeatedly tried to demonstrate to Ameriprise that damage had been occurring

during this entire process, and that it is still occurring to this day. Plaintiff

provided Ameriprise with a document entitled "Three- Month Review --

Ameriprise." It started off with training, and Plantiff went on to explain that if

Plaintiff had the proper training regarding the Ameriprise processes, the

technology, and the systems to begin with, approximately 200 hours of Plaintiffs

time could have been spared. There was very little hands-on support beyond the

superficial overview of Advisor Compass and Thompson One, which are the two

technology platforms.



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25. Plaintiff received a call from Gary Gassmann, an Ameriprise

executive, wherein he proceeded to tell Plaintiff that he was sending his IT tech

support team to redo Plaintiffs computer system. One year earlier Plaintiff had

installed a state of the art computer network system in Plaintiffs facility which

addressed the computer stations at each desk, security cameras, AV equipment,

telephony integration, etc. This cost us approximately 150k, was well displayed

in an air conditioned and climate controlled room and was Windows based, etc.

Because their systems were VPN/DOS based, they would have interfered with

Plaintiffs computer system. Plaintiff accordingly said that

"under no circumstances" would they be allowed to touch our systems. So

Ameriprise came up with an alleged temporary arrangement by sending Plaintiff

15 laptops. Those laptops currently sit at every station to access their AMPF

systems. Ameriprise disclosed 7 months thereafter that it did have a Windows

based system available at the time.

26. If Plaintiff wanted to sell a bond in a client portfolio, Ameriprise

had not instructed Plaintiffs employees how to effectuate such a sale, 90 days

into the relationship. As a broker, one needs to know instantly how to execute a

stock or a bond trade. After many conversations with the front-end inept service

individuals that didn't even know what an equity desk or bond desk was, it

made it extremely difficult to do trades. Plaintiff was also used to having tools

that compare client portfolios. So when asked to provide us with those kinds of

tools at Ameriprise, Josh Cohen and others told Plaintiff that they were not



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available. However, Plaintiff later discovered that was not true, and that such

tools were available.

27. Plaintiff was led to believe by Ameriprise that Plaintiff would be

improving proposals and deliverables for Plaintiffs prospective clients to help

Plaintiff gather new business in the world of financial plans and investment

proposals, platform proposals. However, at that point, Plaintiff had seen none of

those tools. Thanks to Ameriprise, Plaintiff took a giant step in the wrong

direction with regard to Plaintiffs ability to deliver portfolio analysis, investment

proposals, recommendations, and solutions to Plaintiffs prospective clients. That

severely hindered and hinders Plaintiffs ability to do business.

28. As to commissions and money tracking regarding revenues coming

into Plaintiffs branch, Plaintiff did not at the 90-day time frame obtain the

information from Ameriprise to understand the commission systems and

tracking. Ameriprises systems themselves were archaic, confusing, and

cumbersome. It took nearly ten months to get Ameriprise to provide to Plaintiff

their web-based commission system that had been there the entire time, that was

much more proficient, easier to read, and that had the ability to track client data,

client commissions, et cetera, on a one-screen basis, because it was web-based.

Plaintiff actually was not allowed to even use that until well into the 10th month

of operations. Plaintiff was then forced to use their VPN-based system for

commission tracking, which is worse than a DOS-based system. With that

Plaintiff could not track the revenue coming into the firm, who got paid for what,



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what was paid for what came in, what wasn't paid for yet. Plaintiff could not

manage his financial practice without that kind of data. Plaintiff was forced to

use a payroll system that was and is inept. When Plaintiff was told several

different scenarios were going on as to the working of the commission system,

such as the overrides and the rep. adjustments, it caused several accounting

strategies to be started and then abandoned, therefore wasting additional time

and effort when productivity could have been spent elsewhere.

29. Ameriprise did not provide assistance and help in response to

Plaintiffs questions and needs. Where Plaintiff found that there had been

multiple ACAT and non-ACAT rejections -- this is a system that -- ACAT stands

for automatic account transfer systems, some accounts can be moved via the

ACAT system; other accounts, because of the type of securities within the

account itself, cannot be ACAT transferred. It falls into the non-ACAT category.

But when either one of those systems rejected a transfer of an account, there was

no communication by the home office. Yet this is the most important process in

the move. When Plaintiff requested a transfer of an account from a firm, and it

got rejected, Plaintiff did not know what to tell the client, when to tell the client,

how to resolve the problem with the client, because no one from the Ameriprise

home office even bothered to let Plaintiff know. This was and is inefficiency at

its highest order. When an account was not anything that needed further

requirements, it wasn't until Plaintiffs employees looked into the account to find

the status that Plaintiff discovered it was rejected. Ameriprise never told



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Plaintiff to expect this lack of service and ineptitude.

30. Journaling at Ameriprise, which is moving securities or money

from one account to the other, was poorly designed, and it didn't recognize

relationships via the Social Security number or tax ID number. If a registration

was off by one letter or by an ampersand instead of "and," the system at

Ameriprise not recognize what is being said, forcing Plaintiffs employees to

spend 15 to 20 minutes on the phone just to get a periodic journal created, or

journals created for Plaintiffs clients.

31. Ameriprise executives at the highest level represented to Plaintiff,

on numerous occasions, that Plaintiff would still be an independent franchise

capable of marketing Plaintiffs brand, which brand was NetVest Financial LLC.

But Ameriprise actually intended to restrict Plaintiffs brand, without disclosing

that fact to Plaintiff, and instead representing just the opposite to Plaintiff to

induce Plaintiff to become a franchisee of Ameriprise.

32. At the time those representations were made, Ameriprise did not

intend to live up to those representations to Plaintiff that Plaintiff would still be

an independent franchise capable of marketing Plaintiffs brand, which brand

was NetVest Financial LLC. The intent of Ameriprise was and is evidenced by

the insistence of Ameriprise that Plaintiff remove the NetVest Financial LLC

from the logo; that the logo be removed from Plaintiffs building; and also that

the bull and bear image from the logo be removed. Ameriprise further insisted

on the removal of Plaintiffs current website after one year. These were and are



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major issues that were expressed to be unacceptable from the start. Amerprise

rejected Plaintiff portraying himself and NetVest Financial LLC as independent,

which Plaintiff was promised. Plaintiff was not even allowed by Ameriprise to

use the word independent anymore. Accordingly, as more fully alleged herein,

Ameriprise, through its various agents, fraudulently induced Mr. Cartolano to

leave his former broker-dealer of 18 years, LPL Financial, LLC (LPL) and join

Ameriprise by falsely promising Mr. Cartolano that his independent practice,

NetVest Financial, LLC would be able to operate at Ameriprise exactly the way it

had at LPL, and that Ameriprise was willing to invest in Mr. Cartolano so that he

could expand NetVest Financials operations, thereby increasing its revenues,

both for Mr. Cartolano and for Ameriprise. Instead, the promises and

representations made by Ameriprise were not true and have caused

CARTOLANO to suffer significant damages. Ameriprises misconduct is clearly

evidenced by the fact that CARTOLANO was forced to resign just over one year

into his tenure with Ameriprise and to move his entire practice and staff of 11

individuals back to LPL in order to mitigate his damages.

33. It thus became apparent, after the relationship was formed and had

moved into operations, that Ameriprise was insisting that Plaintiff operate his

business Ameriprises way. It became apparent after the relationship was

formed that these were the systems and structures that Ameriprise knew, from

day one, that Ameriprise would use, and that Ameriprise therefore had no

intention of adapting their organization to allow for what it was Plaintiff was



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doing to generate the revenues Plaintiff was generating. Ameriprise clearly

lacked the intent to implement and approve what Plaintiffs structure was, and to

permit the Plaintiffs current structure that had been in place for a very long

period of time.

34. It was all about an agenda that became more evident as time went

on. Ameriprise, over time, made it apparent that they wanted to dismantle

Plaintiffs existing structure, and to insert structure(s) that were more suitable to

AMPF's way of doing things and their means of controlling Plaintiffs manner of

doing business. No effort was made by AMPF to understand the complexity of

Plaintiffs existing LLC structure, registered trade name, years of doing business,

nor the kinds of business that Plaintiff was doing. Ameriprise was pushing hard

to have Plaintiff end up using an entity or, in their terms, a marketing name,

NetVEST Financial that wasn't in fact a legal entity at all. Ameriprise refused,

contrary to prior representations, to permit Plaintiff to use NetVest Financial

LLC as an operating and marketing arm of the enterprise.

35. Whether it was stationery, or pictures on Plaintiffs website, it all

became relevant as to the control mechanisms that Plaintiff was not told about

that were put into force starting at about the 90th day moving forward. The cost

of transition as of that date had been approximately $400,000. Plaintiff also

wanted to know what the platinum partnership was, what it did. Ameriprise

never said.

36. Plaintiff repeatedly informed Ameriprise of Plaintiffs concerns that



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surrounded the representations and promises that were made to Plaintiff to

induce Plaintiff to enter into the franchise agreement, and its related agreements,

especially from the Tom Titus group and other Ameriprise personnel, to the

effect that the continuation of NetVest Financial, LLC, as a very successful

independent financial advisory firm, would occur. And eight months into the

franchisor-frachisee relationship, Ameriprise had literally destroyed Plaintiffs

business, which Plaintiff informed Ameriprise about in writing. And this was

one of many attempts by Plaintiff to explain to Ameriprise that something

needed to be done.

37. There were many nonqualified accounts that weren't transferred

even after 120 days; 60 accounts of outside mutual funds that were transferred

after 120 days of delay; 30 retirement accounts, which held REITS, which were

not transferred after 90 days. And the fact that there was a 42 percent error ratio

in how the ACAT process had been processed by Ameriprise's back office. A

42% error ratio is a very high number in any business. And there have been

numerous ACAT/non-ACAT rejections with no communication, as alleged

above.

38. Plaintiff reiterated to Ameriprise that Plaintiff needed the

definitions and contractual agreements designed and made for NetVest

Financial, LLC, and written agreements for Plaintiff to keep Plaintiffs existing

client book of business. This was yet another request for attention to be paid to

Plaintiff regarding issues that Plaintiff felt were very critical. Plaintiff reiterated



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that it wanted the written agreement previously discussed and promised for full

approval of NetVest, LLC's, "Trusts and Beyond" seminar series, which is

Plaintiffs OBA. Plaintiff did not receive any answer from Ameriprise.

39. Plaintiff calculated the damages suffered by NetVest Financial LLC,

as in excess of $869,000.

40. Contrary to Ameriprises prior representations, assurances and

promises, Ameriprise completely ignored Plaintiffs issues, problems and

concerns, further evidening Ameriprises fraudulent and unreasonable conduct.

41. As a direct and proximate result of the foregoing, the cost of

transferring to Ameriprise and the financial consequences from the false

promises and misrepresentations made to Plaintiff farexceed the amount of any

loans or promissory notes extended to Plaintiff by Ameriprise. The cost of

transferring to Ameriprise and the fallout from the false promises and

misrepresentations have damaged CARTOLANO's business and far exceed the

amount of the promissory notes extended to him by Ameriprise. The costs

related to the transferof customers both to and away from Ameriprise have cost

CARTOLANO and his practice over $900,000.00. Additionally, the NetVest

Financial fiasco has affected CARTOLANO's ability to attract new clients

through his Trusts and Beyond seminars, and has caused (and continues to

cause) damages in excess of $2,600,000.00 in lost revenue and reputational

damage. As alleged herein, the limited products which were available to

Plaintiffs existing clients, as well as the sub-par support, services and technology



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at Ameriprise, also translated into additional loss of revenue as Plaintiff and his

staff were forced to spend additional time and resources compensating for

Ameriprises inadequacies and unreasonable conduct, as opposed to generating

revenue. Plaintiff has continued to sustain damages, and will continue to sustain

damages into the future, in connection with lost growth as a result of

Ameriprises conduct. In total, Mr. Cartolano estimates his damages to be in

excess of $4,000,000, as of this point in time. There were also

commissions/receivables through 8/30/2013 of approximately $170,000. There

was an additional bonus due of 125,000 on 11/20/2013, together with other

payments and damages that are due and owing to Plaintiff.

42. Ameriprise visited Plaintiffs office on 8/13/2013, which visit was

supposed to last until 8/15/2013, but did not. Ameriprise sent Plaintiff an

agenda about 30 days prior to the meeting, which showed that Ameriprise

wanted to review risk mitigation. At that meeting it became apparent that the

only mitigation of risk Ameriprise was concerned with was risk that related to

Ameriprise, and not anyone else. That was not reasonable or good faith conduct.

43. As a result, Plaintiff CARTOLANO must terminate his relationship

with Ameriprise, in line with paragraph 17(A) of the franchise agreement, and

the applicable law.

44. The franchise agreement contains various arbitration provisions as

to Plaintiff CARTOLANO. Plaintiff NET VEST FINANCIAL, LLC is not a party

to that franchise agreement, and is not a party to any arbitration agreement. As



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to Plaintiff CARTOLANO, the franchise agreement, in paragraph 27(E), provides

in relevant part that:

either Independent Advisor or Ameriprise Financial may applyto a court of law for immediate injunctive relief, or other temporary

or emergency relief, as allowed by FINRA rules

Consistent with that contractual provision, FINRA Rule 13804, provides in

relevant part that:

(a) Temporary Injunctive Orders

(1) In industry or clearing disputes required to besubmitted to arbitration under the Code, parties may seek a

temporary injunctive order from a court of competent jurisdiction.Parties to a pending arbitration may seek a temporary injunctiveorder from a court of competent jurisdiction even if another partyhas already filed a claim arising from the same dispute inarbitration pursuant to this paragraph, provided that an arbitrationhearing on a request for permanent injunctive relief pursuant toparagraph (b) of this rule has not yet begun.

(2) A party seeking a temporary injunctive order from acourt with respect to an industry or clearing dispute required to besubmitted to arbitration under the Code must, at the same time, file

with the Director a statement of claim requesting permanentinjunctive and all other relief with respect to the same dispute inthe manner specified under the Code.

45. In line with the foregoing FINRA Rule 13804, Plaintiff

CARTOLANO is filing a FINRA statement of claim on the same date as the filing

of this Complaint. No arbitration hearing has begun or is about to begin. This

Court therefore has the jurisdiction and power to enter temporary or preliminary

injunction orders as to Plaintiff CARTOLANO.

46. Plaintiff NET VEST FINANCIAL, LLC seeks injunctive relief and



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damages from this Court, since it is not required to arbitrate any aspect of its

claims. Defendant took the position with Plaintiff CARTOLANO that NET VEST

FINANCIAL, LLC was not and should not be part of his business with

Ameriprise.

47. Defendant has in the past refused to transfer all customer accounts

when a customer submits a written transfer request. Defendant should be

required to transfer all customer accounts upon written demand of the customer.

48. As a direct and proximate result of one or more of the aforesaid

improper acts of defendant, Plaintiffs contractual and property rights in and to

the Plaintiffs business will be injured and destroyed. If not enjoined from

pursuing its illegal and unreasonable conduct, Defendant will damage or destroy

Plaintiffs extensive business efforts to create and operate its business, as well as

Plaintiffs valuable investment in and to its business.

49. Absent the issuance of an injunction by this Court prohibiting the

defendant from interfering with Plaintiffs conducting their business away from

Ameriprise, and from damaging the assets and business of Plaintiff, Plaintiff's

investment in its field will be dissipated or extinguished, causing Plaintiff to

suffer irreparable harm and damage.

50. Without injunctive relief, Plaintiff will suffer irreparable harm

because its business and investments will be destroyed by the conduct of the

Defendant, should that conduct be permitted to continue. Defendant will be

unable to compensate the plaintiff for the ensuing irreparable harm if not



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name, trademark, service mark or other commercial symbols;

(b) Cartolano and Defendant had a community of interest in the

marketing of the services by agreement; and

(c) Cartolano, as the franchisee paid, directly or indirectly, a

franchise fee under M.S.A. 80C.01(9). Said franchise fee constituted the 10% of

the gross revenue received by Ameriprise, together with the fees and other

charges that the Plaintiff franchisee was and is required to pay under the

franchise agreement, and has agreed to pay, for the right to enter into business

and to continue the business under the franchise agreement, including, but not

limited to, the payment either in lump sum or by installments of any fee or

charges based upon a percentage of gross or net sales whether or not referred to

as royalty fees, any payment for goods or services, or any training fees or

training school fees or charges.

56. Defendant engaged in unfair and inequitable practices under

M.S.A. 80C.14 and M.S.A. 80C.13, and the rules promulgated thereunder, by

the Minnesota Commissioner of Commerce, Minn. R. 2860.4400(G) which rules

prohibited Defendant from imposing on the Plaintiff franchisee by contract

or rule, whether written or oral, any standard of conduct that is unreasonable.

Defendants violations of that statute, and the administrative rule promulgated

thereunder, based upon the allegations herein, included, but are not limited to:

(a) Representing and promising Plaintiff that it could operate itsbusiness as it had done prior to becoming a franchisee ofAmeriprise, when in fact Amerprise had no intention ofpermitting Plaintiff to do so;



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(b) Requesting Plaintiff to make representations to regulatorybodies that were untrue;

(c) Subjecting Plaintiff and his business to slipshod andsubstandard work procedures and systems;

(d) Assuring Plaintiff that all the problems would be alleviated,and then doing nothing about those problems.

57. Defendant additionally engaged in unfair and inequitable practices

under M.S.A. 80C.14, and the rules promulgated thereunder, by the Minnesota

Commissioner of Commerce, Minn. R. 2860.4400(J), in that:

(a) Defendant required Plaintiff Cartolano to waive a jury trialin the franchise agreement;

(b) Defendant required Plaintiff Cartolano to waive the right torecover damages, under the foregoing statute, rule andunder M.S.A. 80C.17(1) and M.S.A. 80C.17(3).

58. Defendant violated M.S.A. 80C.14, and Plaintiff Cartolano has the

right to pursue this action under M.S.A. 80C.17.

WHEREFORE, Plaintiffs, NET VEST FINANCIAL, LLC and JOHN

CARTOLANO, pray for the relief set forth below against the Defendant,

AMERIPRISE FINANCIAL SERVICES, INC., its officers, agents and employees,

and therefore requests the following relief from this Court in this Count I of the

Complaint:

A. That this Court issue a temporary restraining order pursuant to

F.R.Civ.P. 65, or, as the case may be, a preliminary injunction pursuant

F.R.Civ.P. 65, by its clerk and under its seal, enjoining the Defendant,

AMERIPRISE FINANCIAL SERVICES, INC., its officers, agents and employees,



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attorneys, agents, servants and all other persons acting under its direction and

control:

(i) From interfering with Plaintiffs termination of Defendant, andfrom interfering with Plaintiffs future operation of the Plaintiffs

business separate and apart from Ameriprise;

(ii) From attempting to enforce any alleged monetary obligation ofrepayment from Plaintiff to Ameriprise until the entire controversyis resolved in this Court and in any FINRA arbitration, including,but not limited to, any promissory note or repayment obligationalleged to be owed to Ameriprise, until the entire controversy isresolved in this Court and in any FINRA arbitration, and thedamages owed to Plaintiff are adjudicated;

(iii) From taking any action which would prevent the change of broker-dealer and/or registered agent from Ameriprise (or any of itssubsidiaries, affiliates or agents) to LPL Financial, LLC (or any of itssubsidiaries, affiliates or agents);

(iv) From taking any action which would prevent the change of broker-dealer and/or registered agent from Ameriprise (or any of itssubsidiaries, affiliates or agents) to LPL Financial, LLC (or any of itssubsidiaries, affiliates or agents) on any customer insurance policy,annuity contract or other investment or insurance productcurrently held outside of Ameriprise;

(v) To pay all commissions/receivables and bonuses that are due andowing;

(vi) To pay all fee based revenue that is due and owing;

(vii) To transfer all clients to Plaintiff, whether the clients are inPlaintiffs name, Jayson Walkers name, James P. Norris name andany joint business of the above or team associated with saidpersons;

(viii) To transfer all client accounts upon the written direction of theclient, without imposing any additional transfer requirements;

(ix) To prohibit Defendant from contacting Plaintiffs clients;



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(x) To permit the NetVest name, phone and website to be used byPlaintiff so that Plaintiff may continue to present Trusts andBeyond;

(xi) To transfer all customer accounts and securities to LPL Financial,LLC, serviced by Cartolano and any of his team members;

(xii) To transfer Cartolano's personal and retirement accounts andsecurities to LPL Financial, LLC;

(xiii) To require Ameriprise to honor all written requests by customersserviced by Cartolano to liquidate any securities positions inproprietary Ameriprise products and to transfer those funds to LPLFinancial, LLC;

(xiv) That Ameriprise be prohibited from taking any action which would

interfere with the transfer of customer accounts and securities toLPL Financial, LLC; and

(xv) That Ameriprise be prohibited from interfering in any way with theoperation of NetVest Financial, LLC.

B. That said temporary restraining order may be issued immediately

(with or without previous notice to the Defendant), or said preliminary

injunction may be issued with previous notice to the Defendant; that the Plaintiff

be excused from giving bond; but if required by this Court, Plaintiff be ordered

to give bond upon such condition and with such security as the Court prescribes.

C. That upon final hearing and determination of this cause a

permanent injunction be issued enjoining the Defendant and any successor,

attorney, agent, servant or other person acting under his direction or control

from committing any of the aforesaid wrongful acts; and

D. That this Court grant accelerated discovery so that plaintiff may

ascertain, on an accelerated basis, in time periods substantially shorter than the



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time periods provided for discovery in the Federal Rules of Civil Procedure, the

nature and extent of the information in Defendants possession regarding the

forgoing allegations.

E. Declare that the Ameriprise franchise with Plaintiff is terminated.

F. Declare that the jury trial and damages provisions in the franchise

agreement are violative of the Minnesota Franchise Act and unenforceable.

G. That Plaintiff recover the damages authorized by the foregoing

statutory provisions, and that judgment be entered thereon against Defendant.

COUNT II - FRAUD

1. Plaintiffs incorporate paragraphs 1- 54 of the General Allegations as

though fully alleged herein.

55. Upon information and belief, Ameriprises agents were fully aware

at the time they made the aforementioned promises to Plaintiff regarding

operating NetVest Financial LLC, that Plaintiff would not be allowed to continue

to operate and co-brand his business in the way he had at LPL. Ameriprise had

no intention of performing its promise. Mr. Cartolano has suffered significant

damages as a direct and proximate result of Respondents misconduct.

56. As alleged herein, all of the misrepresentations by Ameriprises

agents regarding the Ameriprise franchise, as well as the manner in which

Plaintiff CARTOLANO would be allowed to conduct business at Ameriprise,

were made to Plaintiff CARTOLANO to induce him to invest in and operate an

Ameriprise franchise, and to transfer all of his customer assets to Ameriprise.



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Mr. Cartolano justifiably relied upon those misrepresentations and was severely

damaged in doing so.

WHEREFORE, Plaintiffs NET VEST FINANCIAL, LLC and

JOHN CARTOLANO, pray that the Court grant them the requested relief against

Defendant, AMERIPRISE FINANCIAL SERVICES, INC., as follows:

A. Such compensatory and punitive damages that are established bythe evidence;

B. Pre-Judgment and Post-Judgment Interest;

C. Reasonable Attorney Fees;

D. Costs and other fees.

E. Such other and further relief as this Court deems appropriate.

COUNT III INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE

1. Plaintiff NET VEST FINANCIAL, LLC incorporates paragraphs 1-

54 of the General Allegations as though fully alleged herein.

55. Plaintiff NET VEST FINANCIAL, LLCs expectancy of continuing

its relationship with CARTOLANO, as an operations and marketing company,

and the future businesses and business arrangements that it enjoyed with

CARTOLANO prior to Ameriprises interfernence, constituted valid business

expectancies.

56. Defendant knew about those relationships and expectancies, which

knowledge led them to engage in the foregoing conduct.

57. In approaching third parties and making the representations and

statements Defendant chose to make, Defendant intentionally interfered with the



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SERVICES, INC., as follows:

A. Such compensatory damages that are established by the evidence;

B. Pre-Judgment and Post-Judgment Interest;

C. Reasonable Attorney Fees;

D. Costs and other fees.

E. Such other and further relief as this Court deems appropriate.

NET VEST FINANCIAL, LLC and JOHN CARTOLANO

By: /s/ Philip J. NathansonPlaintiffs Attorney

Philip J. Nathanson Arizona State Bar #013624THE NATHANSON LAW FIRM8326 E. Hartford Dr. Suite 101Scottsdale, AZ 85255(480) 419-2578(480) 419-4136

[email protected]


Date post:	04-Jun-2018
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