Secured Worldwide VULT Joseph Lipton Fraud Verdict

Announced via Quantfund

Joseph Lipton, CEO of Secured Worldwide, VULT
Found to have Committed Fraud

New York, NY — January 18, 2017
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Ruling by McMahon, District Court Chief Judge, SDNY: Joseph Lipton, CEO of Secured Worldwide, the diamond technology company behind "VULT," committed Fraud. Kinney’s patent assignment is reversed, and damages are awarded. Lipton is prohibited from competing. Secured Worldwide, valued by investors at $50 million, cannot continue without license.

Joseph Lipton CEO of Secured Worldwide, Found to have committed fraud

A Federal Court has found that New York property developer, Arthur “Joseph” Lipton committed fraud. Lipton is founder and CEO of Secured Worldwide, LLC, a diamond technology company, and partner, with Extell Development Company, in the International Gem Tower on 47th Street. Lipton has been a long-time developer, landlord and investment-gem trader in New York’s diamond district.

The Court ruled that Lipton defrauded his partners in two companies, while forming Secured Worldwide in 2014, and continued the fraud through 2016. Major investors in Secured Worldwide include global logistics firm Malca-Amit, and Continental Holdings, Ltd., a Hong Kong based public jewelry and diamond investment company. Secured Worldwide's website is vult.com

Bill Boyajian, former President of the Gemological Institute of America (GIA), Nigel Paxman, CEO of Malca-Amit, Jay C. Plourde, former CEO of CLSA, a division of Citic Securities, Victor Chan, Executive Chairman of Continental Holdings, and Mark F. Lieberman, Partner in First Principles Capital Management, are members of the Board of Directors of Secured Worldwide.

Hon. Colleen McMahon, Chief Judge of the United States District Court for the Southern District of New York, entered her verdict and findings in late December, after a five day trial. Judge McMahon characterized Lipton’s testimony as “utterly-” and “entirely incredible”, his assertions as “manifestly not true,” and concluded that “Lipton was lying when he testified.”

Judge McMahon found that Jay Plourde and Mark Lieberman, co-founders of Secured Worldwide, actively helped Lipton to conceal the fraud. However, they were not defendants in the case.

Lipton had originally sued his co-founder and business partner, Cormac Kinney, for breach of contract. Kinney is an engineer and inventor, who developed the software, manufacturing processes and authentication technology for the Secured Worldwide VULT product. Kinney, with no legal experience, litigated the 21 month case Pro-Se.

Secured Worldwide VULT, technology which was returned to Kinney by court order

Using Kinney’s technology, VULT encases a computer-picked set of certified diamonds in transparent resin, with a wireless encryption chip, and a counterfeit-proof optical technology. Consumers can easily authenticate a diamond VULT with a smartphone, and instantly trade the diamonds inside VULT at a daily market price. After Kinney developed this technology, and assigned his patent application to Secured Worldwide, Lipton falsely claimed that Kinney contributed his technology for no equity.

Joseph Lipton disastrously attempted to convince the Court that he co-invented Kinney's technology, testifying that he studied Aerospace Engineering in a Ph.D program at New York University. Kinney proved that Lipton earned only a B.A. degree from NYU. Most strikingly, after Kinney produced hundreds of documents proving his development of the the patent, Lipton couldn’t produce a single document describing contributions he made.

Judge McMahon ruled that Joseph Lipton fraudulently induced Cormac Kinney to assign his technology to Secured Worldwide, and that it was Lipton who breached a contract for Kinney to further develop that technology. The Court awarded Kinney monetary damages, ordered his investment capital refunded, and returned to Kinney rights to the patent application and technology he had assigned to Secured Worldwide.

The Court also found that Joseph Lipton cheated his partners in another business, GemShares LLC of Chicago. GemShares invented the method to standardize sets of diamonds, for exchangeable consumer products and financial securities. GemShares was awarded a patent, for a computer to pick sets of diamonds to have identical financial value. Lipton became a minority investor in GemShares long after it had received the patent, which protects its consumer and financial diamond inventions.

Joseph Lipton then falsely claimed that he had invented GemShare’s consumer concept, years after the GemShares patent first described it. Lipton's alleged “invention” became the foundation of Secured Worldwide. Judge McMahon ruled that Joseph Lipton is prohibited from competing in any gemstone financial product endeavor, and that Secured Worldwide intentionally infringed the GemShares patent.

Four witnesses, each a business partner with Joseph Lipton, and his own lawyer, Max Moskowitz, testified that Lipton was untruthful or dishonest. Moskowitz, managing partner of intellectual property law firm Ostrolenk & Faber, was forced to contradict his own client's false claims, after Cormac Kinney won a motion to force Moskowitz to recuse himself as trial counsel, and to appear as a witness.

In what was described as an attempt to gain an unfair advantage, Lipton and Secured Worldwide hired Kinney's own lawyer of over 16 years, Ira Greenberg, a partner at Locke Lord, to first sue Kinney in March 2015. Locke Lord LLP is comprised of over 1,000 lawyers.

In a stunning reversal, Ira Greenberg failed to defend Lipton and Secured Worldwide against his former client's more serious counter-claims. With no legal training, for nearly two years, Kinney represented himself against the Harvard trained litigator, with 35 years experience, and emerged victorious.

The case is SDNY:15-cv-1761.