In Josh Crystal vs. Medbox, Inc. (MDBX), Medbox and several of its current and former officers and directors were sued in a class action lawsuit filed in the U.S. District Court for the Central District of California.  Also named as a defendant in the lawsuit are Pejman Vincent Mehdizadeh, Bruce Bedrick, Thomas Iwanski, Guy Marsala and Douglas Mitchell.  Here are some interesting allegations from the Complaint:

1. This is a securities class action on behalf of all purchasers of the common stock of Medbox between November 20, 2013 and December 29, 2014 . . . .

3.  Medbox was founded in 2010 by Defendant Pejman Vincent Mehdizadeh (“Mehdizadeh”), a mid-30s aged Iranian immigrant with a checkered history of business failures and criminal conduct, including grand theft in 2013. At the start of the Class Period on November 20, 2013, Defendant Mehdizadeh was Medbox’s controlling shareholder, owning approximately 65% of its common stock, and served as the Company’s Chief Operating Officer(“COO”) and Chairman of its Board of Directors (“Board”). . . .

4. During the Class Period, Defendants issued materially false and misleading statements regarding the Company’s financial results for the fiscal year ended December 31, 2013 (“FY 2013”) and each of the interim financial periods ended September 30, 2013 (“3Q 2013”), December 31, 2013 (“4Q 2013”), March 30, 2014 (“1Q 2014”), June 30, 2014 (“2Q 2014”) and September 30, 2014 (“3Q 2014”). Specifically, Defendants overstated Medbox’s revenues . . . .

13. Thereafter, on October 31, 2014, the Company disclosed that it had appointed a special board committee to investigate a letter from a former Company employee to the SEC “alleging wrongdoing by a former officer of the Company who

[was] a consultant to the Company” and that “a federal grand jury document subpoena [had been] served in August 2014 on the Company’s accountants by the U.S. Department of Justice….” . . . .

17. Finally, on the morning of December 30, 2014, . . . . The Company further disclosed that the earnings restatement had triggered a default on its debt covenants that had forced it to seek a forbearance from lenders. . . .

33. Defendant Mehdizadeh has a checkered history of business failures and criminal convictions, including grand theft in 2013. Specifically, in 2013, Defendant Mehdizadeh pled no-contest to a 15-count criminal complaint that was filed against him relating to a law firm Defendant Mehdizadeh managed as a
non-lawyer. Defendant Mehdizadeh received probation and agreed to pay $450,000 as part of a plea agreement. Defendant Mehdizadeh also declared bankruptcy in July 2010, which was discharged in 2011. . . .

35. At the start of the Class Period, Mehdizadeh owned approximately 65% of Medbox’s common stock and is still “the beneficial owner of the majority of the voting power of the Company[,]” owning or controlling approximately 58% of the Company’s outstanding shares, according to the Schedule 14C Mehdizadeh filed, or caused to be filed, with the SEC on or about January 9, 2015. . . .

Several law firms have jumped on this bandwagon.  See:

• Rosen Law Firm Announces Filing of Securities Class Action Against Medbox, Inc.

• LEVI & KORSINSKY, LLP Notifies Investors of Class Action Against Medbox, Inc. and Its Board of Directors and a Lead Plaintiff Deadline of March 23, 2015

• Rigrodsky & Long, P.A. Announces A Securities Fraud Class Action Lawsuit Has Been Filed Against Medbox, Inc.

• Johnson & Weaver, LLP Files Class Action Suit against Medbox, Inc.