Rick Cover offered stock in a Child Daycare Corporation to investors. He represented that he was investing $150 Thousand Dollars for 500 shares and offered 500 shares in blocks of 100 each for $30 Thousand per block. All shares were sold.
Of the original 500 shares, 250 Shares were held in his name and the other 250 shares were held in his wife's name.
Rick Cover needed additional money and sold 100 shares (50 from him and 50 from his wife) to me and another party for $30 Thousand Dollars.
We were told that there would be a shareholder meeting when the company opened it's door for business. The company opened and has been in business for almost two years. The shareholder have never held a meeting or received any dividens.
Rick Cover refuses to open the corporate books for inspection, has refused to co operate with my lawyer in providing a copy of Corporate by-laws, list of Officers, Financial ledgers or accounting of any kind.
When asked for copies of Corporate tax filings, he admits that he was operating under the table / off the books.
We have since found out, that Rick Cover never paid for the shares (the original 500) that he and his wife hold in their names and that he may not have had legal ownership of the 100 shares that he and his wife sold to me and my friend (for $30 Thousand dollars).
He also failed to register with the PA Dept of State, Securities Commission prior to selling the shares.
He has been operating the Child Daycare Center without a proper license and has been cited for the violation.
Since receiving somewhere in the area of $180 Thousand Dollars from investors, he has purchased a Summer Home at the Jersey Shore, purchase a boat, taken expensive family vactions, however he has fallen behind with his Utilities and building rental to the sum of Thousands of dollars and is on the verge of eviction due to non payment.
He has never supplied his shareholders any income tax forms such as K1 or 1099 etc which has prevented us from filing with the PA State Revenue and the IRS.
His pay checks to his part time / under the table employees have bounced (until recently).
I am concerned as a shareholder, that operating while in violation of Child Welfare Regulations, could void our Liability Insurance (if he has any) and that the children and their families may be at financial risk, should a mishap take place.
I have tried reporting this to the IRS, the PA Dept of Rev, PA Dept of Child Welfare, Local Police and a lawyer. However he is still in operation and his shareholders are being riped off and customers at risk. (while I have spent over a Thousand Dollars in Lawyer fees).
He and his wife owned and operated two other day care centers in the Philadelphia area (by simular name). I know very little regarding the operation of the other two daycare centers. However, it would be a suprise if he operated the other two locations on the up and up while being so deceptive and underhanded in the third location.
He recently sold one of the locations to another individual. He has made settlement on the tranaction and received his money (over $200K). However, being true to form, he failed to notify the State Department of Childwelfare about the sale and is allowing the new owner to operate under his license, which is yet another violation of the state child welfare law.
It is almost unbelievable that so many government and law enforcement organization can be notified about this con-man and no action is taken.
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