Summit Investment Group Denies Allegations in $1M TeraWulf Investment Lawsuit
On Monday, March 18, 2024, a response was filed on behalf of The Summit Investment Group, LLC, Michael C. Basile, Victoria Basile, and the Conjugal Partnership Basile-Basile in the United States District Court for the District of Puerto Rico.
The filing was an answer to a complaint that had been lodged against the defendants by Lonnie Davis. Davis had invested $1 million in the cryptocurrency mining company TeraWulf, which was undergoing a merger with another firm called IKONICS. However, Davis claimed he lost money on the investment.
In the response, the defendants denied allegations of wrongdoing and fraud. They stated that Davis is an experienced investor who made the decision to invest in TeraWulf independently based on his own research and due diligence. The defendants said they had no direct communication with Davis regarding the investment.
According to the response, Davis was introduced to the opportunity by his friend and fellow investor Matthew Martorello. Martorello had initially approached Michael Basile, the managing partner of Summit Investment Group, about investing in TeraWulf. Martorello then convinced Davis to jointly invest $5 million in the company’s stocks with Summit.
The response details how Martorello structured the investment, distributing the funds among himself, his wife, a family trust, and Davis. Summit said it was unaware of these arrangements. The stocks being acquired in the private investment in public equity (PIPE) deal were shares of TeraWulf that were to start publicly trading once the merger with IKONICS, an imaging solutions company, was completed.
Through this deal, Davis would get 52,823 shares of TeraWulf. However, he only lost money after the stock price dropped substantially in the following days and weeks. The defendants maintained they made no misrepresentations to Davis and that the information they provided Martorello about TeraWulf and the deal came from the companies’ public filings and was a matter of opinion, not fact.
The filing seeks the dismissal of all causes of action in Davis’ complaint. This includes claims of fraudulent inducement, violations of securities laws, breach of contract, and a demand for punitive damages. The defendants argued they were not liable as the agreement signed by Davis was simply for a “carry fee” dependent on investment profits and did not involve the direct sale or marketing of securities.
Please contact BlockTribune for access to a copy of this filing.
