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Van Krikorian and Global Gold Corp Accused of Misappropriating Funds From Investor



It appears that a disgruntled employee of Global Gold Corp. (otcmarkets: GBGD) from Armenia, (which there are many of) decided to expose his former employers and dropped off some files to my attention. In that file was a copy of a "Derivative Action Complaint" which was prepared by Consolidated Resources Armenia (CRA), GBGD's latest victim.

The COMPLAINT outlines that Mr. Van Krikorian, the President, Director and Corporate Counsel  of GBGD, and Mr. Ian Hague, independent director and controlling shareholder of GBGD (and founder of FireBird Management) conspired to defraud its investor, CRA, of $5MM capital investment and $2MM Note and retain the benefit of the capital infusion for GBGD.

Evidence of this complaint supports what I discovered in the past, that GBGD (aka "GGC") was trying to defraud CRA out of their $7MM investment made on the Toukhmanuk and Getik gold properties in Armenia. CRA owns 49% of the Joint Venture known as  Global Gold Consolidated Resources (GGCRL), and GBGD ("GGC") owns 51%.

Mr. Ian Hague and Mr. Van Krikorian abused their powers as directors of GGCRL and GBGD in order to commit the worst kind of fraud – specifically blocking receipt by GGCRL and depriving CRA investors of all of its Armenia mining assets while seeking to extort millions of dollars in cash and equity illicitly from CRA in exchange for allowing the obligatory asset transfer to occur.

This COMPLAINT was prepared on behalf of CRA by DORSEY & WHITNEY LLP, which is one of America's top 100 LAW FIRMS.

A full copy of the complaint is posted below:







Some of the more egregious items outlined in the COMPLAINT accuse Mr. Ian Hague and Mr. Van Krikorian of the following:
"Krikorian and Hague have refused without justification to bring about the transfer of key assets to GGCRL, assets essential for it to conduct its business and deliver shareholder value. Krikorian and Hague have failed to assist in the transfer of these assets, as a means to coerce egregious employment terms for Krikorian and to alter the terms of the joint venture for the benefit of GGC and themselves personally, at the expense of the other joint venture partner, CRA. Krikorian and Hague have perpetuated a series of improper actions undermining GGCRL’s business, including: 
(i) concealment and misrepresentation of substantial GGC liabilities, including tax liabilities that posed material risks to the assets to be transferred to GGCRL;  
(ii) fraudulent transfers of corporate funds to personal bank accounts of GGC officers; 
(iii) misappropriation and misuse of corporate funds, and 
(iv) self-dealing. (2)"
"Rather than take steps as directors of GGCRL to ensure that the Closing took place, Krikorian and Hague have caused GGC to block the Closing and have attempted to extract more value for GGC and themselves, at the expense of CRA and GGCRL. (62)"   
"Krikorian even expressly indicated at a GGCRL board meeting that he and Hague intend to persist in blocking the Closing until they “get what they want”—simply ignoring their duties as directors of GGCRL. (64)" 
"Throughout these delays, Krikorian has repeatedly sought to negotiate an employment agreement with GGCRL for himself, with terms egregiously favorable to him personally. In particular, as a portion of his executive compensation to be paid by GGCRL, Krikorian has demanded that he personally receive a minimum of 5% of the shares of GGCRL in addition to significant salary increases, annual bonuses, and a golden parachute providing for a huge windfall payment of accelerated compensation equating to millions of dollars (66)"  
"and with Hague’s full knowledge and unconditional support, Krikorian has blocked completion of the Closing and both prevented and severely damaged the Public Listing process in part as a ploy to attempt to force GGCRL to agree to Krikorian’s egregious terms of employment. (67)" 
"Throughout the delays, acting in their capacities as directors of both GGC and GGCRL, Krikorian and Hague have attempted to force a wholesale alteration of the material terms of the Joint Venture Agreement, to secure terms more favorable to GGC, at the expense of CRA. (68)" 
"Holding out for egregious and damaging employment terms and a wholly reshaped joint venture deal, Krikorian and Hague also refused to go forward with negotiations on two reverse merger opportunities, which would have brought significant value to GGCRL and its shareholders. (69)"
"Krikorian and Hague systematically delayed the Closing at every step laid out in the Joint Venture Agreement. Krikorian made it an overt strategy to abuse his role and signing authority as interim executive chairman, using the routine signing of GGCRL corporate documents necessary for developing its business as bargaining chips to exact special favors for GGC and Hague and himself.( 72)"
"Krikorian and Hague have stated that, by preventing the Closing of the joint venture, they intend to retain the benefit of the capital infusion GGC received from CRA—which made it possible for GGC to stay in business—(76) "
"As a part of their ongoing effort to avoid tax liabilities to the Armenian
government, upon information and belief Krikorian and Hague have supported and encouraged fraudulent transfers of GGCRL funds.
In particular, Krikorian and Hague have knowingly transferred corporate funds to personal bank accounts—including without limitation accounts in the name of the Country Manager, Ashot Boghossian—in order to evade Armenian tax authorities. (81)" 
"Krikorian and Hague misappropriated and misused substantial corporate funds, repeatedly using funds advanced by CRA for purposes other than those disclosed. For example, a substantial portion of the $5 million advanced by CRA, as well as the $2 million of addition interim funding, was intended to be used for plant expansion and balance sheet cleanup. Instead, Krikorian and Hague directed GGC to use a substantial portion of those $5 million of funds for other unapproved purposes, and diverted substantial portions of those funds to GGC obligations, to the detriment of GGCRL and its shareholders, all while blocking the intended plant expansion and balance sheet cleanup. In other words, Krikorian and Hague have authorized GGC to use those funds for unapproved purposes instead of forcing GGC to use those funds as otherwise agreed, or have themselves blocked GGCRL from using those funds for high-priority purposes. (85)"
http://www.briefingwire.com/pr/global-gold-corp-otcqb-gbgd-manager-and-director-accused-of-misappropriating-funds-from-investor

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Below is the signed complaint filed by Global Gold Mining, the subsidiary of Global Gold Corporation (GBGD) that was filed with the Prosecutor of Yerevan City, Mr. Badalyan.


Translated from Armenian

To: Mr. Badalyan,
Prosecutor of Yerevan city

From: Hrayr Ghukasyan
Global Gold Mining LLC
Representative of the Armenian Branch

Address: 2a/2 Tumanyan, Yerevan, Republic of Armenia Tel: 010 52-94-18, 093 988-797
Consider and report to:
A.R.Zakharyan
(signature)
15.09.2010