The largest shareholder in presidential hopeful Gareth Sheridan’s US company Nutriband was accused of having “an unfortunate, long history of illegal and otherwise improper conduct” in a legal claim filed in New York in 2023.
Vitalie Botgros, who owned 39 per cent of Nutriband when the company filed a prospectus with the US Securities and Exchange Commission (SEC) in July, is one of several defendants in a civil case taken by a New York broker that has yet to come to trial.
The other defendants in the case are Nutriband, Mr Sheridan, Nutriband president Serguei Melnik, a Florida consultancy run by Mr Melnik called Wolf Blitz Inc, and a Portuguese company owned by Mr Botgros.
The broker, Joseph Gunnar & Co, is seeking fees and damages arising from work on a proposed offering of Nutriband shares during a period when, according to the firm, Nutriband was not to seek financing by other routes.
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In the claim, the broker is alleging that Nutriband breached the agreement when it withdrew the planned offering and agreed a $3 million increase to a $2 million credit line facility it already had with Mr Botgros’s Portuguese company, TII Jet Services LDA.
Nutriband is contesting the charges and counter claiming that it abandoned the offering after it noticed “perplexing” changes in its share price in the run-up to the proposed 2023 offering.
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It alleged the share movements were due to improper actions, including the provision of insider information to investors, by Gunnar.
Both sides are denying the claims made by the other, and both are seeking substantial damages. The case is before the commercial division of the supreme court of the state of New York, county of New York, where the minimum amount at issue must be $500,000.
In its claim, Gunnar said it believed Mr Botgros was a Russian citizen and the owner of the Wolf Blitz consultancy.
After claiming that Mr Botgros had a history of improper conduct, it cited as evidence a 2019 news report about the controversial privatisation of Air Moldova in 2018, a transaction subsequently strongly criticised by the Moldovan parliament.
The news report noted Mr Melnik was a shareholder in the company that bought the Moldovan airline and that Mr Botgros, who was at the time an adviser to Wolf Blitz, had formerly worked for a Russian conglomerate with links to the operator of the airport in the Moldovan capital, Chisinau.
No other evidence was presented by Gunnar to support its allegation against Mr Botgros.
Several filings were made in the case in 2023, after which there was no further activity until June of this year when the court was told the law firm that had been acting for Nutriband, Mr Sheridan, Mr Melnik and Wolf Blitz, had been replaced. The court filings do not say who is acting for Mr Botgros or his Portuguese company.
Nutriband’s shares are quoted on the Nasdaq Capital Market, a lower-tier US market for early-stage companies with relatively low market capitalisations. It has accumulated losses of some $41 million as it works on a dermal patch product it hopes will be approved by the US Food and Drug Administration.
“Currently there are no pending hearings or motions” in the Gunnar case, Nutriband said in a recent filing. “In early 2024, the plaintiffs [Gunnar] proposed a settlement offer of $100,000. The company has not responded to that proposed settlement offer.”
