James E. Lakatos et al. v. Cornerstone Securities, LLC et al.

M.D. Florida

James E. Lakatos et al. v. Cornerstone Securities, LLC et al.

District Court, M.D. Florida·Decided July 9, 2026·No. 8:25-cv-03525·Unknown

Opinion

UMNIIDTEDDL ES TDAISTTERS IDCITS TORFI FCLTO CROIDUART TAMPA DIVISION

JAMES E. LAKATOS et al.,

Plaintiffs,

v. CASE NO. 8:25-cv-03525-SDM-LSG

CORNERSTONE SECURITIES, LLC, et al.,

Defendants. ___________________________________/

ORDER Alleging seven claims arising from the defendants’ investment advisory ser- vice, James and Gail Lakatos, John and Kathleen Bailey, Lisa Gates, and Kathleen White sue (Doc. 22) Cornerstone Securities, LLC, an investment advisory firm and Russell Fieger, Cornerstone’s Chief Executive Officer and Chief Compliance Officer. The defendants move (Doc. 34) to dismiss, and the plaintiffs respond (Doc. 37) in opposition. BACKGROUND Between 2018 and 2021, at dinners sponsored by Cornerstone, retirees James Lakatos (now seventy-eight and legally blind), Gail Lakatos (seventy-one), Lisa Gates (seventy-two), John Bailey (sixty-three), Kathleen Bailey (sixty-four), and Kathleen White (seventy-two) met non-party Christopher Burch, Cornerstone's regis- tered investment advisor, who, on Cornerstone's behalf, "marketed his services as high-level financial advice for retirees" and as "risk-mitigation oriented." (Doc. 22 ¶¶ 9–12, 26, 29, 68) Each plaintiff later opened an individual retirement account (IRA) that Burch managed for Cornerstone, which charged the plaintiffs thousands of dollars in advisory fees. (Doc. 22 ¶¶ 30–31) Between 2021 and 2022, despite the known risks, Burch invested "a substantial

portion" of the plaintiffs' IRAs (and in some instances nearly all) in POAI, a volatile "penny stock" issued by Predictive Oncology, Inc. (POI),1 a medical artificial-intelli- gence company that went public in 2021.2 (Doc. 22 ¶¶ 33–35, 40, 42, 48–49, 52–53, 55) Two events diluted the plaintiffs' positions in POAI: (1) on April 23, 2023, POI effected a 20-for-1 reverse stock split to cure POI's stock's having traded below $1.00

for thirty consecutive trading days in violation of Nasdaq's minimum-price require- ment3 and (2) in September 2025 POI effected a 1-for-15 reverse stock split to cure a renewed violation of the same requirement. (Doc. 22 ¶¶ 56–57) To recoup losses from their IRAs, the plaintiffs sue each defendant for negli- gence, breach of fiduciary duty, violation of the Florida Securities and Investor Pro-

tection Act, violation of the Florida Deceptive and Unfair Trade Practices Act, and

1 Now operating as Axe Compute, Inc. (Doc. 22 ¶ 61) 2 POI's June 14, 2021 offering prospectus acknowledges that investment in POAI involved a high degree of risk, that investors would suffer dilution, that POI likely would undertake additional dilutive equity offerings, and that POAI common stock had exhibited substantial volatility. (Doc. 22-8 at 3, 9) POI's November 5, 2021 Form 10-Q acknowledges that POI has "incurred a net loss in each of [POI's] annual periods since [POI's] inception" and that POI has funded operations through the sale of common stock. (Doc. 22-9 at 35) 3 POI had effected an earlier reverse stock split in 2019, before Burch invested the plaintiffs' money in POAI. (Doc. 22 ¶ 58) POI acknowledged that another violation of Nasdaq's minimum- price requirement could result in delisting and that, if delisted and unable to maintain a listing on an alternate exchange, the liquidity of POAI stock likely would suffer significant impairment. (Doc. 22 ¶ 56) "vicarious liability." The plaintiffs sue Cornerstone for breach of contract. James Lakatos, Gail Lakatos, and Kathleen White sue each defendant for violation of the Florida Securities and Investor Protection Act and the Florida Adult Protective Ser- vices Act.

DISCUSSION The Complaint Fails to Pierce the Corporate Veil as to Feiger A "general principle of corporate law is that a corporation is a separate legal entity, distinct from the persons comprising them." Gasparini v. Pordomingo, 972 So.

2d 1053, 1055 (Fla. 3d DCA 2008). Florida law will "disregard the corporate entity in only the most extraordinary cases," and those who wish to disregard corporateness “carry a heavy burden.” In re Hillsborough Holdings Corp., 166 B.R. 461, 468 (Bankr. M.D. Fla.), affd, 176 B.R. 223 (M.D. Fla. 1994). A plaintiff must establish (1) that the shareholder so dominated the corporation that the corporation had no independ-

ent existence, (2) that the corporate form was used fraudulently or for an improper purpose, (3) and that the improper use caused the plaintiff's injury. Dania Jai-Alai Pal- ace, Inc. v. Sykes, 450 So. 2d 1114, 1120–21 (Fla. 1984). The "law is clear that the mere ownership of a corporation by a few shareholders, or even one shareholder, is an insufficient reason to pierce the corporate veil," and the "mere fact that [a person]

is a stockholder and officer" of the corporation "does not, without more, create per- sonal liability." Gasparini, 972 So. 2d at 1055. A contrary rule "would completely de- stroy the corporate entity as a method of doing business and . . . ignore the historical justification for the corporate enterprise system." Dania, 450 So. 2d at 1120 (quoting Advertects, Inc. v. Sawyer Indus., Inc., 84 So. 2d 21, 24 (Fla. 1955)). The plaintiffs’ allegations fail to carry this heavy burden. Fieger appears in six of the seven claims, but the complaint describes Fieger's role in the disputed transac-

tion in vague, generic, and conclusory terms: Throughout the relevant period, Defendant Fieger was also an investment adviser due to his ownership, management, or con- trol of Defendant Cornerstone.

[T]hroughout the relevant period, Defendant Fieger was a per- son who, for compensation, either directly or through his own- ership or control of Defendant Cornerstone, engaged in the business of advising others on the sale and purchase of securi- ties and management of investment portfolios.

On information and belief, during the relevant period, Defend- ant Fieger was the founder, CEO, and CCO of Defendant Cor- nerstone. Fieger was, therefore, in charge of supervising the op- erations of his registered representatives and agents. As Defend- ant Cornerstone’s CCO, Defendant Fieger was also charged with implementing adequate compliance procedures in connec- tion with the firm’s management of its clients’ assets.

As a registered investment adviser, Fieger knew that he had a fiduciary duty to act in the best interests of his clients.

Despite that fiduciary duty, Fieger knowingly, or recklessly, failed to supervise the operations of Burch, causing substantial damage to Plaintiffs.

(Doc. 22 ¶¶ 25, 63–66) Across fifty paragraphs of “factual allegations,” the plaintiffs offer only a single concrete, specific, and individualized allegation against Fieger: On or about April 1, 2024, Ms. White contacted Defend- ant Fieger about the losses on her account with Defendant Cornerstone and the sudden departure by Burch, but De- fendant Fieger denied any supervisory responsibility except for the review of “any PowerPoint presentation for accuracy.”

(Doc. 22 ¶ 44)

Every allegation against Fieger concerns duties as a director and officer of Cornerstone, and none supplies a basis for personal liability. To avoid that conclusion, the plaintiffs argue that Fieger is liable as Burch's principal. But Burch was an agent of Cornerstone, not of Fieger, so any vicarious liability for Burch's conduct runs to Cornerstone. And at any rate, to shift corporate liabil- ity to Fieger on a "principal" theory is veil-piercing by another name and fails for the same reason. See Lipsig v. Ramlawi, 760 So. 2d 170, 187 (Fla.

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