Bheri et al v. Bulakites et al

1
In the United States District Court
for the District of Kansas
_____________
Case No. 24-cv-02545-TC
_____________
RANJITA BHERI, ET AL.,
Plaintiffs
v.
BARRY BULAKITES, ET AL.,
Defendants
_____________
MEMORANDUM AND ORDER
Ranjita Bheri, with thirteen others, sued numerous out-of-state
corporations and individuals alleging various state and federal claims
arising out of financial investments the plaintiffs made with several de-
fendants. Doc. 5. All defendants have moved to dismiss. Docs. 18, 20,
42, & 46.
The end result of this Memorandum and Order is that the claims
are dismissed. As to the two federal claims, they are dismissed because
the Amended Complaint fails to state a claim upon which relief may
be granted. As a result, Table Bay Financial and America’s Tax Solu-
tions’s motion to dismiss, Doc. 20, is granted insofar as the federal
claims are concerned. But because there are no longer any federal
claims, there is no justification to exercise supplemental jurisdiction
over the state-law claims. All motions seeking to dismiss the state-law
claims are denied as moot. Docs. 18, 20, 42, & 46. Those state-law
claims are therefore dismissed without prejudice.
I
A
A federal court may grant a motion to dismiss if the complaint fails
“to state a claim upon which relief can be granted.” Fed. R. Civ. P.
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 1 of 14

2
12(b)(6). To survive a motion to dismiss for failure to state a claim, a
complaint need only contain “a short and plain statement . . . showing
that the pleader is entitled to relief” from each named defendant. Fed.
R. Civ. P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
Two “working principles” underlie this standard. Kan. Penn Gaming,
LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir. 2011); see also Ashcroft v.
Iqbal, 556 U.S. 662, 678–79 (2009). First, a court ignores legal conclu-
sions, labels, and any formulaic recitation of the elements. Penn Gaming,
656 F.3d at 1214. Second, a court accepts as true all remaining allega-
tions and logical inferences and asks whether the claimant has alleged
facts that make his or her claim plausible. Id.
A claim need not be probable to be considered plausible. Iqbal, 556
U.S. at 678. But the facts, viewed in the light most favorable to the
claimant, must move the claim from conceivable to plausible. Id. at
678–80. The “mere metaphysical possibility that some plaintiff could
prove some set of facts in support of the pleaded claims is insufficient;
the complaint must give the court reason to believe that this plaintiff
has a reasonable likelihood of mustering factual support for these
claims.” Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177
(10th Cir. 2007).
Plausibility is context specific. The requisite showing depends on
the claims alleged, and the inquiry usually starts with determining what
the plaintiff must prove at trial. See Comcast Corp. v. Nat’l Assoc. of African
Am.-Owned Media, 589 U.S. 327, 332 (2020). In other words, the nature
and complexity of the claim(s) define what plaintiffs must plead. Cf.
Robbins v. Oklahoma, 519 F.3d 1242, 1248–49 (10th Cir. 2008) (compar-
ing the factual allegations required to show a plausible personal injury
claim versus a plausible constitutional violation).
B
This case arises out of various types of investment products the
plaintiffs purchased through Defendants Table Bay Financial Net-
work, Inc. and America’s Tax Solutions, Inc. See generally Docs. 1 & 5.1
The plaintiffs allege that all of the defendants are associated with
1 All references to the parties’ briefs are to the page numbers assigned by
CM/ECF.
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 2 of 14

3
Defendant Table Bay Financial, a California corporation. Doc. 1 at ¶ 1;
Doc. 5 at ¶ 1.
The plaintiffs sued four entity defendants and three individuals. In
addition to Table Bay Financial, they sued America’s Tax Solutions,
Inc., a Delaware corporation, Creative One Wealth, LLC, a Kansas
limited liability company, and Table Bay Wealth, LLC, an unknown
entity but claimed subsidiary of Table Bay Financial and Creative One
Wealth. Doc. 1 at ¶¶ 1–4; Doc. 5 at ¶¶ 1–4. They also sued three indi-
vidual defendants, including Barry Bulakites, a Colorado individual,
who was the founder, President, and Chief Executive Officer for Table
Bay Financial. Doc. 1 at ¶¶ 6, 28; Doc. 1-1; Doc. 5 at ¶¶ 6, 28. The
plaintiffs also sued Joseph Sulzinger, the Chairman of the Board for
Table Bay Financial. See Doc. 1 at ¶ 7; see also Doc. 1-1; Doc. 5 at ¶ 7;
Doc. 5-1. And they sued Michelle Blackmon, the Chief Operating Of-
ficer for Table Bay Financial. See Doc. 1 at ¶ 5; see also Doc. 1-1; Doc.
5 at ¶ 5; Doc. 5-1. All (or almost all) of the allegations of wrongful
conduct stem from Bulakites’s interactions with the plaintiffs at vari-
ous times and places. See generally Docs. 1 & 5.
Of those defendants, two are no longer in this case. Bulakites died
on December 17, 2024. Subsequently, the plaintiffs filed a notice of
dismissal as to both Bulakites and Table Bay Wealth pursuant to Fed.
R. Civ. P. 41(a)(1)(A)(i), which was effective upon filing. See Doc. 41;
see also Waetzig v. Halliburton Energy Servs., 82 F.4th 918, 920 (10th Cir.
2023), rev’d on other grounds by 604 U.S. 305 (2025) (holding that dismissal
pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i) is automatic).
There are fourteen plaintiffs. See Doc. 1 at ¶¶ 8–21; see also Doc. 5
at ¶¶ 8–21. Eight plaintiffs reside in California, two reside in Kansas,
two reside in Georgia, and two reside in Washington. Doc. 1 at ¶¶ 8–
21; Doc. 5 at ¶¶ 8–21. Of the fourteen plaintiffs, there are four married
couples. See, e.g., Doc. 1 at ¶¶ 34, 45, 54, 60; Doc. 5 at ¶¶ 37, 48, 47, 63.
Generally speaking, the plaintiffs allege they gave money to Bu-
lakites and his entities and cannot get it back in violation of the terms
of the instruments they signed. Specifically, they contend that Bulakites
solicited them to invest in “various financial products, including annu-
ities, life insurance policies, stocks, bonds, promissory notes, and other
securities.” Doc. 1 at ¶ 25; Doc. 5 at ¶ 28. The plaintiffs allege that, as
a whole, they invested nearly $3.6 million “based on Defendants’ rep-
resentations.” Doc. 1 at ¶ 30; Doc. 5 at ¶ 33. They do not, however,
identify what those representations were. Instead, most of the
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 3 of 14

4
allegations describe the various plaintiffs’ unsuccessful but similar at-
tempts to recoup their money. See Doc. 1 at ¶¶ 40–59, 68–69; see also
Doc. 5 at ¶¶ 43, 62, 70, 71.
The experience of Plaintiff Ranjita Bheri is representative of that
of the other plaintiffs. Bheri gave $500,000 in exchange for a promis-
sory note from Bulakites and America’s Tax Solutions in November
2021. Doc. 1 at ¶ 31; Doc. 5 at ¶ 34. The payment for one of Bheri’s
promissory notes became due in November 2023, so Bheri emailed
Bulakites in March 2024, to request payment. Doc. 1 at ¶ 32; Doc. 5 at
¶ 35. Bulakites sent Bheri four checks for $125,994.59 each and then
stopped payments on all of the checks. Doc. 1 at ¶ 33; Doc. 5 at ¶ 36.
As a result, Bheri has obtained no payment on that note.
Samuel Chacko and Reeba Thomas had a similar experience. They
are a married couple who bought $350,000 in promissory notes from
America’s Tax Solutions in June 2019. Doc. 1 at ¶ 34; Doc. 5 at ¶ 37.
In August 2024, Chacko called Bulakites to request payments of the
amounts due under these promissory notes. Doc. 1 at ¶ 37; Doc. 5 at
¶ 40. Bulakites told Chacko that he would send a letter detailing the
settlement of the promissory notes in a week or two but never did.
Doc. 1 at ¶ 38–39; Doc. 5 at ¶ 40–42. Like Bheri, Chacko and Thomas
have obtained no payment on their notes.
And another married couple, Plaintiffs Gerald and Linda Sanders,
alleges that Bulakites advised them to roll over $500,000 to two annu-
ities and then never set up the annuities despite repeated requests to
do so. Doc. 1 at ¶¶ 60–62; Doc. 5 at ¶¶ 63–64. They allege that they
sent Defendants Blackmon, Bulakites, and Sulzinger a demand letter
in July 2024, seeking full payment of their rollover. Doc. 1 at ¶ 63; Doc.
5 at ¶ 65. Both Sulzinger and Blackmon responded, stating that they
had no knowledge of the assets. Doc. 1 at ¶¶ 64, 65; Doc. 5 at ¶¶ 66,
67. The plaintiffs further allege that Sulzinger and Blackmon have
claimed that they are not affiliated with America’s Tax Solutions, the
company that accepted the rollover funds. Doc. 1 at ¶ 67; Doc. 5 at
¶ 69. But the plaintiffs contend that corporate records reveal that
America’s Tax Solutions is a wholly owned subsidiary of Table Bay
Financial. Doc. 1 at ¶ 67; Doc. 5 at ¶ 69.
The plaintiffs, from Kansas and beyond, filed suit in the District
of Kansas. Doc. 1. Specifically, they sought to recover their invest-
ments based solely on common law theories of recovery. See id. In
Count I, they asserted a common law fraud claim against America’s
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 4 of 14

5
Tax Solutions, Table Bay Financial, and the individual defendants. Id.
at ¶¶ 75–81. They also brought three common law claims against all of
the defendants for breach of contract (Count II), conversion (Count
III), and breach of fiduciary duty (Count IV), as well as a request for
preliminary and permanent injunction. See generally id. 2 Although they
invoked 28 U.S.C. § 1332 as the basis for federal jurisdiction, Doc. 1
at ¶ 22, the Complaint failed to allege facts that would support such a
claim.
The Honorable Rachel E. Schwartz saw the jurisdictional defi-
ciency and ordered the plaintiffs to show cause for why their suit
should not be dismissed. Doc. 4. That is not unusual, as federal courts
have “an independent obligation to determine whether subject-matter
jurisdiction exists, even in the absence of a challenge from any party.”
Spring Creek Expl. & Prod. Co. v. Hess Bakken Invs. II, LLC, 887 F.3d
1003, 1013 (10th Cir. 2018) (quoting Arbaugh v. Y&H Corp., 546 U.S.
500, 514 (2006)). Among other things, the Order noted the Complaint
did not establish complete diversity of citizenship among the parties,
failed to establish citizenship of the individual defendants, and did not
allege the corporate defendants’ citizenship. See generally Doc. 4.
Plaintiffs responded in two ways. First, they filed a First Amended
Complaint that added two federal claims based largely on the same
factual allegations in the original Complaint. Compare Doc. 5, with Doc.
1. In particular, they sought to append these federal claims onto their
common law allegations with few, if any, additional factual allegations.
Doc. 5 at ¶¶ 115–132 (asserting violations of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and 78t(a),
and SEC Rule 10b-5(a)-(c), 17 C.F.R. § 240.10b-5(a)–(c); and the In-
vestment Advisers Act, 15 U.S.C. § 80b-6). These new federal claims
2 Plaintiffs have not suggested which state’s (or states’) law they believe ap-
plies to these common law claims. Resolving that question would require ap-
plication of Kansas choice of law principles. Geometwatch Corp. v. Behunin, 38
F.4th 1183, 1201 (10th Cir. 2022); Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S.
487, 496 (1941). Kansas courts follow the Restatement (First) of Conflict of
Laws (1934), which sets forth “lex loci contractus, i.e., the law of the state where
the contract is made governs,” for contract claims and “tort claims [are] gov-
erned by the law of the state where injury occurred.” M & I Marshall & Ilsley
Bank v. Higdon, 556 P.3d 498, 576 (Kan. 2024) (citing Restatement (First) of
Conflict of Laws §§ 332 (contract), 378 (tort)). Given the facts pled, it is likely
differing states’ laws will apply. That, however, is an issue for another day.
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 5 of 14

6
were pled against America’s Tax Solutions and Table Bay Financial,
but not against any of the other remaining defendants. Id. at ¶¶ 115,
125.
Second, the plaintiffs filed a formal response to the Order to Show
Cause. Doc. 6. In it, they noted that they had filed a First Amended
Complaint adding the two aforementioned federal causes of action
and, as a result, subject-matter jurisdiction was proper under 15 U.S.C.
§ 78aa and 28 U.S.C. § 1331. Doc. 6 at ¶¶ 3–4. Judge Schwartz
acknowledged the federal claims resolved the subject-matter concerns.
Doc. 8.
All of the remaining defendants move to dismiss. Table Bay Finan-
cial and America’s Tax Solutions jointly move to dismiss on several
grounds, including that the federal claims fail as a matter of law. See
Docs. 20 & 21. The other defendants raised various arguments to dis-
miss the state-law claims against them. See Docs. 18, 42, & 46.
II
The plaintiffs have failed to plausibly state a claim with regard to
their federal claims in their Amended Complaint. And without viable
federal claims, there is no justification to exercise supplemental juris-
diction over the state-law claims. As a result, Table Bay Financial and
America’s Tax Solutions’s motion, Doc. 20, is granted as to the federal
claims and denied as moot as to the remaining claims, and the other
defendants’ motions, Docs. 18, 42, & 46, are denied as moot.
A
In Count VI, the plaintiffs allege Table Bay Financial and Amer-
ica’s Tax Solutions violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and 78t(a), and SEC Rule
10b-5(a)–(c), 17 C.F.R. § 240.10b-5(a)–(c). Doc. 5 at ¶¶ 22, 115–124.3
3 Although the plaintiffs alleged violations of both Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, Doc. 5 at ¶ 22, Section 20(a) “is ob-
viously derivative of liability under some other provision of the Exchange
Act.” Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 253 n.2 (2010) (affirming
dismissal of Petitioners’ Section 10(b) and 20(a) claims because they failed to
state a claim under Section 10(b)); see Hampton v. root9B Techs., Inc., 897 F.3d
1291, 1303 (10th Cir. 2018) (same). As a result, the success of the 20(a) claim
rises or falls based on the viability of the Section 10(b) claim.
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 6 of 14

7
In particular, they allege that the defendants disseminated “false and
misleading reports, releases and public statements,” regarding Table
Bay Financial’s “businesses, operations, future financial condition, and
future prospects,” which caused the plaintiffs to “purchase[ ] or other-
wise acquire[ ] [Table Bay Financial] promissory notes at artificially in-
flated prices in reliance on the integrity of the market for such securi-
ties.” Id. at ¶ 121.
“Section 10(b) of the Securities Exchange Act and Rule 10b-5
promulgated thereunder ‘prohibit making any material misstatement
or omission in connection with the purchase or sale of any security.’”
Smallen v. W. Union Co., 950 F.3d 1297, 1304 (10th Cir. 2020) (quoting
Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S. 258, 267 (2014)); accord
15 U.S.C. § 78j(b); 17 C.F.R. § 240.10b-5; Goldman Sachs Grp., Inc. v.
Ark. Teacher Ret. Sys., 594 U.S. 113, 117–18 (2021); Macquarie Infrastruc-
ture Corp. v. Moab Partners, L.P., 601 U.S. 257, 260 (2024). A plaintiff
must prove five things to establish a violation of Section 10(b) and
Rule 10b-5: an untrue or misleading statement of material fact (or fail-
ure to state a material fact that would make the statement not mislead-
ing), that the statement was made in connection with the sale or pur-
chase of securities, that the defendant acted with the requisite scienter,
that the plaintiff relied on the statement and, as a result, suffered dam-
ages. Smallen, 950 F.3d at 1304 (citing In re Zagg, Inc. Sec. Litig., 797 F.3d
1194, 1200 (10th Cir. 2015)).
Rule 10b-5(b) accomplishes two things: it prohibits false state-
ments of a material fact and the omission of “a material fact necessary
‘to make the statements made . . . not misleading.’” Macquarie Infrastruc-
ture Corp., 601 U.S. at 263. In Macquarie, the Supreme Court explored
the second prohibition in the context of a private action under Rule
10b-5(b). Id. at 260; see also Ind. Pub. Ret. Sys. v. Pluralsight, Inc., 45 F.4th
1236, 1248 (10th Cir. 2022). The Supreme Court held that the prohi-
bition bars only “half-truths, not pure omissions.” Macquarie Infrastruc-
ture Corp., 601 U.S. at 264. The Supreme Court also held that silence is
permissible even if a party has a duty to disclose the information unless
“the omission renders affirmative statements made misleading.” Id. at
265.
Count VI fails as a matter of law. First, it fails to allege a false state-
ment. Second, it fails to allege scienter. As a result, the claim must be
dismissed.
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 7 of 14

8
1
A plaintiff asserting a Section 10(b) and/or Rule 10b-5 claim must
allege facts that, taken as a whole, support a reasonable belief that the
defendant(s) made a statement that was false or misleading. See Hamp-
ton v. root9B Techs., Inc., 897 F.3d 1291, 1298 (10th Cir. 2018) (noting
that the facts as plead must “support a reasonable belief that the de-
fendant’s statements identified by the plaintiff were false or mislead-
ing”). Such claims are subject to a heightened pleading standard under
the Private Securities Litigation Reform Act of 1995, 15 U.S.C. § 78u-
4(b). Id.; accord 15 U.S.C. § 78u-4(b). Specifically, the PSLRA requires a
plaintiff to meet a heightened pleading standard: “that is, respectively,
as to whether the statements at issue were false or misleading, and
whether the defendant acted with the requisite scienter.” Hampton, 897
F.3d at 1298 (citing 15 U.S.C. § 78u-4(b)(1)–(2)).
A plaintiff must identify each alleged misleading statement, pro-
vide the context-based reasons why the statement was misleading and,
if the statement or omission is made on information and belief, state
with particularity all facts upon which the plaintiffs formed the belief.
Hampton, 897 F.3d at 1298 (citing 15 U.S.C. § 78u-4(b)(1)). “To satisfy
this statutory burden, a plaintiff must ‘explain why the statement was
misleading, and allege with particularity his basis for believing that the
statement was false.’” Id. (quoting Nakkhumpun v. Taylor, 782 F.3d
1142, 1147 (10th Cir. 2015)). When reviewing the sufficiency of a plain-
tiff’s pleadings, a court evaluates “the facts alleged in a complaint to
determine whether, taken as a whole, they support a reasonable belief
that the defendant’s statements identified by the plaintiff were false or
misleading.” Id. (quoting Adams v. Kinder-Morgan, Inc., 340 F.3d 1083,
1099 (10th Cir. 2003)). In particular, the following factors are consid-
ered: the level of detail provided by the facts, the number of facts, the
coherence and plausibility of the facts considered as a whole, whether
the plaintiff discloses the source of their knowledge about a stated fact,
the reliability of the sources from which the plaintiff obtained the facts,
and other indicia supporting the conclusion that a reasonable person
would believe the statement was misleading. Id. at 1299 (quoting Ad-
ams, 340 F.3d at 1099).
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 8 of 14

9
The facts alleged in the Amended Complaint do not satisfy this
heightened burden of identifying a false statement.4 Most of the alle-
gations in the Amended Complaint assert generally that the individual
(or married) plaintiffs gave Bulakites a sum of money in exchange for
a promissory note that was never repaid despite repeated requests.
Doc. 5 at ¶¶ 31-78. Only two appear to identify statements made prior
to the defendants’ failure to honor the promissory note.
The most direct assertion is in Paragraph 121, where the plaintiffs
allege that “[a]s a result of the dissemination of the false and misleading
. . . reports, releases, and public statements, the value of the [Table Bay
Financial] promissory notes was artificially inflated throughout all
times.” Id. at ¶ 121. That contention is not actionable because the
Amended Complaint fails to identify any specific statement attributa-
ble to any defendant. As a result, there is no way of determining
whether that statement was false and nothing to suggest it was mis-
leading. Cf. Hampton, 897 F.3d at 1298 (explaining that a plaintiff must
first identify each alleged misleading statement and then provide the
reasons why the statement is misleading); see also Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (stating that mere labels and conclu-
sions or a formulaic recitation of the elements unadorned with facts
are insufficient to state a claim).
Paragraph 29 also mentions a pre-investment statement, but there
is no indication it is false or misleading. Specifically, they allege that
“[d]uring investor meetings, Defendant [Table Bay Financial] pre-
sented an organizational chart to potential clients which laid out the
corporate structure of [Table Bay Financial] and its associated entities
. . . .” Doc. 5 at ¶ 29. That organizational chart, which the plaintiffs
attached to the Amended Complaint, does not appear to make any
representations concerning the financial products plaintiffs purchased.
Doc. 5-1 at 1. Neither do the plaintiffs allege (nor do they argue) that
4 The plaintiffs do not provide contrary arguments. Instead, they simply de-
clare that the facts pled in their Amended Complaint are sufficient to satisfy
the heightened pleading standard for material misrepresentations. See Doc.
32 at 5; see also Doc. 5 at ¶¶ 28–78. But as set forth below, the plaintiffs have
failed to identify the particular statements made and what basis there is to
believe their allegations satisfy the applicable pleading standard. Cf. Hampton,
897 F.3d at 1301 (concluding that the Section 10(b) claim failed because the
Plaintiff failed to plead sufficient facts that the statements made were false or
misleading).
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 9 of 14

10
any of the information on that organizational chart was material to
their investment decision, that they relied on it, or (most importantly)
that it was false. Cf. Emps’ Ret. Sys. of R.I. v. Williams Cos., 889 F.3d 1153,
1167 (10th Cir. 2018) (concluding that there was no alleged omission
in part because Plaintiff failed to adequately allege that the discussions
were material). On the contrary, the plaintiffs used the information in
the chart to correctly identify the entities and individuals associated
with Table Bay Financial for purposes of bringing this suit. See, e.g.,
Doc. 5 at ¶¶ 1–7.
The Amended Complaint also fails to plausibly allege that the de-
fendants omitted any material fact. It generally alleges that the defend-
ants’ failure to disclose their inability to pay the promissory notes ac-
cording to the agreement terms constituted a material omission. See
Doc. 5 at ¶ 76. But that argument fails for at least two reasons. For
one, the plaintiffs have not identified an affirmative statement made
by any of the defendants, so there is no predicate statement that the
alleged omission renders misleading. Cf. Macquarie Infrastructure Corp.,
601 U.S. at 265 (holding that the failure to disclose information re-
quired by statute “can support a Rule 10b-5(b) claim only if the omis-
sion renders affirmative statements made misleading”). And for an-
other, there are no facts alleged that suggest that any of the defendants
knew they would not be able to pay the notes at the time they entered
into the agreements. See generally Doc. 5 at ¶¶ 28–78.
2
A plaintiff asserting a Section 10(b) and/or Rule 10b-5 claim must
also adequately allege facts that the defendants acted with the requisite
scienter. Smallen, 950 F.3d at 1304. Scienter requires a mental state of
either the “intent to deceive, manipulate, or defraud” or “reckless-
ness.” Id. (citing Anderson v. Spirit Aerosystems Holdings, Inc., 827 F.3d
1229, 1236–37 (10th Cir. 2016)). Intentional misconduct encompasses
deliberate illegal behavior, whereas recklessness is “conduct that is an
extreme departure from the standards of ordinary care, and which pre-
sents a danger of misleading buyers or sellers that is either known to
the defendant or is so obvious that the actor must have been aware of
it.” In re Zagg, 797 F.3d at 1201. “In the securities-fraud context, reck-
lessness is akin to conscious disregard—allegations of negligence or
even gross negligence fall ‘below the high threshold for liability under
Section 10(b) of the Exchange Act.’” Smallen, 950 F.3d at 1305 (citing
Dronsejko v. Thornton, 632 F.3d 658, 668 (10th Cir. 2011)). To determine
whether a plaintiff has plausibly alleged scienter, “a court ‘must
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 10 of 14

11
consider the complaint in its entirety’ and decide ‘whether all of the
facts alleged, taken collectively, give rise to a strong inference of scien-
ter, not whether any individual allegation, scrutinized in isolation,
meets that standard.’” Id. (quoting Tellabs, Inc. v. Makor Issues & Rights,
Ltd., 551 U.S. 308, 322–23 (2007)) (emphasis in original). “Under this
standard, a complaint survives dismissal ‘only if a reasonable person
would deem the inference of scienter cogent and at least as compelling
as any opposing inference one could draw from the facts alleged.’” Id.
(quoting Tellabs, Inc., 551 U.S. at 324).
Corporations do not have their own state of mind, so the scienter
of the corporation’s agents must be imputed to the corporation.
Smallen, 950 F.3d at 1312. The Tenth Circuit has recognized that “[t]he
scienter of the senior controlling officers of a corporation may be attributed
to the corporation itself to establish liability as a primary violator of
§ 10(b) and Rule 10b-5 when those senior officials were acting within the
scope of their apparent authority.” Id. (emphasis in original) (citation
omitted).
The Amended Complaint has failed to allege that anyone whose
conduct could be imputed to the corporate defendants acted with the
requisite scienter necessary to sustain a Section 10(b) and Rule 10b-5
claim.5 The plaintiffs have identified the following individual defend-
ants: Bulakites, Table Bay’s (former) President and CEO, Doc. 5 at ¶ 6,
Joseph Sulzinger, Table Bay’s Chairman of the Board and Registered
Broker, id. at ¶ 7, and, Michelle Blackmon, Table Bay Financial’s COO,
id. at ¶ 5. But there is nothing to suggest that any of them acted with
the appropriate amount of scienter.
The plaintiffs contend that Sulzinger and Blackmon “made false
representations regarding the nature and value of the investment
5 In the Ninth Circuit, a plaintiff may plead scienter against a corporate de-
fendant without establishing an individual’s scienter, such as where a com-
pany’s “public statements were so important and so dramatically false that
they would create a strong inference that at least some corporate officials knew
of the falsity upon publication.” Smallen, 950 F.3d at 1314 (emphasis in orig-
inal) (citing In re NVIDIA Corp. Sec. Litig., 768 F.3d 1046, 1063 (9th Cir.
2014)). The Tenth Circuit has not adopted this position and the plaintiffs
make no argument that it would be applicable. See id. (noting several circuit
courts have addressed the theory, few have adopted it, even less have applied
it to find scienter, and declining to determine whether the theory is viable).
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 11 of 14

12
products offered to Plaintiffs,” Doc. 5 at ¶ 80, based solely on the fact
that Sulzinger was the Chairman of the Board for Table Bay Financial,
id. at ¶ 66, and Blackmon was the COO, id. at ¶ 67. That is not enough
for an inference of scienter. See Smallen, 950 F.3d at 1313 (holding that
the fact that an individual’s corporate position means they should have
known about the false representations, without more, is not sufficient
to establish an inference of scienter).
Based on the Amended Complaint, it appears that Bulakites was
the principal person dealing with each of the plaintiffs on behalf of
these entities. As a result, it would be natural to assume that the
Amended Complaint would identify conduct that would suggest he
had the requisite scienter to impose liability on the entities he ran. But,
as previously stated, the Amended Complaint does not plausibly allege
that Bulakites made a material misrepresentation or omission that
could be imputed to the corporate defendants. See Smallen, 950 F.3d at
1313 (holding that the individuals’ state of mind could not be imputed
to the corporation because the complaint failed to raise a strong infer-
ence the individuals acted with scienter); cf. Meitav Dash Provident Funds
& Pension Ltd. v. Spirit AeroSystems Holdings, Inc., 79 F.4th 1209, 1230
(10th Cir. 2023) (declining to impute Mr. Campbell’s scienter to Spirit
because he did not furnish false information to be included in a state-
ment).
B
In the other federal claim, the plaintiffs allege that America’s Tax
Solutions and Table Bay Financial violated 15 U.S.C. § 80b-6 of the
Investment Advisers Act. Doc. 5 at ¶ 125–132. Under 15 U.S.C. § 80b-
6(1)–(2), investment advisors cannot “employ a device, scheme, or ar-
tifice to defraud a client or engage in a transaction, practice, or course
of business that operates as a fraud or deceit upon a client.” Malouf v.
SEC, 933 F.3d 1248, 1262 (10th Cir. 2019). In essence, the plaintiffs
seek a return of their monies. Doc. 5 at ¶ 83 (citing loss of investments
as a source of damages); Doc. 5 at ¶ 90 (citing as the amount of dam-
ages owed the exact dollar amount the plaintiffs have invested).
The Supreme Court in Transamerica Mortgage Advisors, Inc. v. Lewis,
444 U.S. 11 (1979), considered whether either Section 80b-6 (the Sec-
tion at issue in this case) or Section 80b-15 provides an implied private
right of action. The Supreme Court concluded that Section 80b-15
provided a limited private remedy to void an investment advisers con-
tract, but viewed Section 80b-6 “quite differently,” declining to find an
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 12 of 14

13
implied right of action for damages and monetary relief under Section
80b-6. TAMA, 444 U.S. at 19. That provision, the Court held, “simply
proscribes certain conduct, and does not in terms create or alter any
civil liabilities.” Id. As a result, the plaintiffs’ claim fails as a matter of
law and must be dismissed. See Donelson v. Ameriprise Fin. Servs., Inc., 999
F.3d 1080, 1094 (8th Cir. 2021) (citing TAMA, 444 U.S. at 19–20)
(holding that the class could not be certified under Rule 23(b)(2) for
violations of Section 80b-6 because “[t]here is no private cause of ac-
tion for violations of this section of the statute”); see also Goodrich v.
Bank of America N.A., 136 F.4th 347, 354 n.4 (D.C. Cir. 2025) (citing
TAMA, 444 U.S. at 14–15) (holding that it could not consider litigant’s
IAA Section 80b-6 claim because “that Act confers no private cause
of action”).
Federal law precludes the plaintiffs’ claim. Count VII seeks recov-
ery under a statute that the Supreme Court has held provides no private
right of action. Cf. Culp v. Remington of Montrose Golf Club, LLC, 133
F.4th 968, 990 (10th Cir. 2025) (stating that it is “tightly bound by Su-
preme Court precedent” and then applying the Supreme Court’s su-
pervening decision to resolve the issue). And the plaintiffs make no
argument to the contrary. As a result, this claim must be dismissed.
C
With the federal claims dismissed, the only claims remaining are
the common law claims that were pled in the original Complaint. That
implicates supplemental jurisdiction.
Pursuant to 28 U.S.C § 1367(c)(3), a “district court[ ] may decline
to exercise supplemental jurisdiction” if it “has dismissed all claims
over which it has original jurisdiction.” When deciding whether to ex-
ercise supplemental jurisdiction, a federal court should consider and
weigh in each case, and at every stage in the litigation, the values of
judicial economy, convenience, fairness, and comity. See generally Gold
v. Local 7 United Food & Com. Workers Union, 159 F.3d 1307, 1310 (10th
Cir. 1998), overruled on other grounds by Styskal v. Weld Cnty. Bd. of Cnty.
Comm’rs, 365 F.3d 855, 858 (10th Cir. 2004). A federal court may, and
usually should, decline to exercise supplemental jurisdiction over any
remaining state claims. I Dig Tex., LLC v. Creager, 98 F.4th 998, 1012
(10th Cir. 2024) (citations omitted); see also Foxfield Villa Assocs., LLC
v. Robben, 967 F.3d 1082, 1102–03 (10th Cir. 2020) (affirming dismissal
of “copious state law issues” on supplemental jurisdiction grounds
where the federal claim had been dismissed); accord Carnegie-Mellon Univ.
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 13 of 14

14
v. Cohill, 484 U.S. 343, 350 n.7 (1988). This preference acknowledges
that “notions of comity and federalism demand that a state court try
its own lawsuits, absent compelling reasons to the contrary.” Brooks v.
Gaenzle, 614 F.3d 1213, 1230 (10th Cir. 2010) (quoting Ball v. Renner,
54 F.3d 664, 669 (10th Cir. 1995)) (alteration omitted).
The values of judicial economy, convenience, fairness, and comity
support declining the exercise of supplemental jurisdiction over the
remaining claims. The nature of this suit concerns state law claims and
the federal claims were added only in an attempt to save the claim from
being dismissed due to lack of diversity jurisdiction. Discovery has not
yet begun in this case. And there are unanswered questions about
which state’s law governs which claims. A state court having a closer
connection to the underlying facts of this dispute seems better suited
for the task. As a result, it is appropriate to decline the exercise of sup-
plemental jurisdiction. Cf. Foxfield Villa Assocs., 967 F.3d at 1102–03
(affirming dismissal of supplemental claims despite the four years of
litigation spent on the case, during which the parties engaged in dis-
covery, filed many motions, and filed and objected to the pretrial or-
der).
III
For the foregoing reasons, Table Bay Financial and America’s Tax
Solutions’s motion to dismiss, Doc. 20, is GRANTED in part and DE-
NIED AS MOOT in part, and the other defendants’ motions to dis-
miss, Docs. 18, 42, & 46, are DENIED AS MOOT.
It is so ordered.
Date: March 16, 2026 s/ Toby Crouse
Toby Crouse
United States District Judge
Case 2:24-cv-02545-TC-RES Document 55 Filed 03/16/26 Page 14 of 14