GIUL, LLC v. SHENGHUO MEDICAL, LLC, & Others.

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28,
as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties
and, therefore, may not fully address the facts of the case or the panel's
decisional rationale. Moreover, such decisions are not circulated to the entire
court and, therefore, represent only the views of the panel that decided the case.
A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25,
2008, may be cited for its persuasive value but, because of the limitations noted
above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260
n.4 (2008).

COMMONWEALTH OF MASSACHUSETTS

APPEALS COURT

25-P-435

GIUL, LLC

vs.

SHENGHUO MEDICAL, LLC, & others.1

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

GIUL, LLC (GIUL), invested $64,000 in Shenghuo Medical, LLC

(Shenghuo),2 with the understanding that Shenghuo would use the

funds to secure its own investment in Guided Therapeutics, Inc.

(GTI), the manufacturer and worldwide distributor of a medical

device known as LuViva (LuViva device).3 When the investment did

1Michael J. Antonoplos, Richard P. Blumberg, Mark L.
Faupel, and Mark S. Pearlstein. Guided Therapeutics, Inc., was
joined solely on reach and apply claims.

2Shenghuo later changed its name to K2 Medical. The judge
and the parties referred to the company as Shenghuo and so do
we.

3The LuViva device is a cervical cancer screening and
diagnostic device which "uses spectroscopy to project light onto
a woman's cervix, causing cells associated with cancer to
fluoresce or to give other recognizable signals."
not produce the return that GIUL and its owner, Paul Conte,

anticipated, GIUL sued Shenghuo and its managing members,

Michael J. Antonoplos, Richard P. Blumberg, and Mark L. Faupel.

GIUL also sued Shenghuo's legal counsel, Mark S. Pearlstein.

The majority of GIUL's claims, which were advanced in initial

and amended complaints, were dismissed or resolved in favor of

the defendants prior to the commencement of a bench trial on

claims arising from the Massachusetts Uniform Securities Act,

G. L. c. 110A, § 410 (a) (MUSA), and the Massachusetts Consumer

Protection Act, G. L. c. 93A, § 11 (c. 93A).4 The judge ruled in

favor of the defendants on all remaining claims after the bench

trial.

On appeal, GIUL argues, among other things, that the judge

applied an incorrect legal standard when he concluded that GIUL

failed to prove that the defendants did not disclose material

information about GTI's financial condition before GIUL made its

investment. We agree. We vacate the portion of the judgment on

the MUSA and c. 93A claims as to Shenghuo, Antonoplos, and

4 The procedural history of the litigation is set forth in
the judge's findings and need not be repeated here. It suffices
to note that GIUL's claims of fraud, breach of fiduciary duty,
breach of contract, reach-and-apply claims, and conspiracy were
disposed of on motions for judgment on the pleadings and summary
judgment. GIUL makes no argument about these claims on appeal.

2
Blumberg, and remand for further proceedings consistent with

this memorandum and order. We otherwise affirm the judgment.

Background. We summarize the facts found by the judge as

articulated in his detailed findings. Faupel coinvented the

LuViva device, which, as noted, is manufactured by GTI. Faupel

served as chief executive officer of GTI from approximately 2008

through 2013, and again in 2023.5 Blumberg met Faupel around

2006 or 2007 and subsequently became a shareholder in GTI,

through which he gained familiarity with the LuViva device, its

intended use, and its international commercial prospects.

Blumberg reached out to entities that had experience in products

being marketed and used internationally. Ultimately, he

approached Antonoplos, who had served as chief executive officer

of a breast cancer diagnostics company.

Antonoplos was interested in the venture and, in February

2015, Antonoplos and Blumberg formed Shenghuo for the purpose of

obtaining licensing rights from GTI, raising capital from

investors, and distributing the LuViva device throughout Asia.

In the beginning, Antonoplos and Blumberg were the sole managing

members of Shenghuo and exercised full control over its

5 From 2013 to 2015, Faupel worked as a consultant for GTI
and then joined its board of directors in 2016.

3
operations. Soon thereafter, Faupel and Pearlstein became

members of Shenghuo as well.

In June 2016, Shenghuo entered into a licensing agreement

with GTI in which GTI gave Shenghuo a $200,000 conditional loan.

Under the agreement, GTI was obligated to repay the loan only if

it obtained at least $1 million in additional financing within a

specified timeframe. If GTI failed to obtain such financing, it

would not incur a repayment obligation, but the agreement

allowed for the possibility that any investment from Shenghuo

could be converted into GTI common stock.

Within weeks of signing the licensing agreement with GTI,

Shenghuo raised approximately $136,000 and sought additional

capital to meet the $200,000 investment requirement. Other

investors included John Imhoff and Stephen Maloof.6 Both of them

had ownership interests in GTI and made investments under

subscription agreements drafted by Pearlstein.7 Blumberg

communicated with these investors directly and explained that

repayment depended on GTI's success in raising funds.

6 Maloof had his spouse make the investment on his behalf.

7 These agreements provided that repayment would occur only
if GTI obtained financing and that investors would retain their
equity interest even if repayment occurred.

4
At about the same time, Antonoplos reached out to Conte,

who owns and controls GIUL.8 Antonoplos called Conte in June

2016 to solicit investments. The judge found that during this

conversation Antonoplos made clear to Conte that Shenghuo had no

present income and that its only "real asset was its licens[ing]

agreement with GTI." Antonoplos informed Conte that he had

already helped raise approximately $136,000 and said that

Shenghuo needed an additional $64,000 to complete its funding

obligations. Antonoplos further explained in "general terms

that anyone willing to invest the remaining $64,000 would

receive an ownership interest in Shenghuo as well as a

conditional right to repayment of the investment amount." The

judge found that Antonoplos told Conte that repayment of the

investment "was contingent on GTI raising an additional $1

million and then repaying Shenghuo," and that Antonoplos "never

told Conte that repayment would be guaranteed or that there

would be any deadline by which Shenghuo would be required to

repay this investment." During this same conversation, Conte

asked Antonoplos to send him an e-mail message summarizing the

investment opportunity.

8 Conte and Antonoplos had known each other for about ten
years and spoke with each other by phone several times a week.
Conte had decades of professional experience with financial
transactions and investments as well as a law degree.

5
As requested, on June 9, 2016, Antonoplos followed up in an

e-mail message to Conte. The e-mail message stated, "[H]ere is

a deal that perhaps you can assist on, but it has a short fuse

. . . check the website for [GTI]. . . . [I]f you look at the

[GTI] web site you will readily [] see the 'integrity' of this

device." Antonoplos then outlined the terms of the investment

as follows:

"As part of the aforementioned agreement Shenghuo need to
come up with a total of $200K payment (loan) to [GTI] by
July 31, 2016 . . . in this regard we have raised $136K so
we need an additional $64K by the end of July . . .

"For the $64K the following will be offered:

"20% interest if loan is paid back within 90 days, another
25% if not paid thereafter and any unpaid balance not paid
by December 31, 2016 will accrue and 20% annual compound
interest factor[.]

"Additionally, the lender will be given 100% warrant
coverage on their loan and in addition they will have the
ability to convert their loan into stock plus receive an
interest in Shenghuo."

Antonoplos then wrote, "Obvious[ly] . . . if there is interest

there is more documented info you would need but let me say

this[,] I am invested in this[,] it is a winner and the lender

is so covered[.] [L]et's discuss further." In the subject line

of the e-mail message, Antonoplos provided a link to GTI's

website.

At the time, GTI was a publicly traded company and had a

public website which provided information to potential

6
investors, including links to its prior regulatory filings with

the Securities and Exchange Commission (SEC). Those filings

disclosed that GTI was not profitable, had limited cash

reserves, carried significant debt, and required additional

financing to continue operations.9 More specifically, the

filings stated that GTI had a "working capital deficit of

approximately $4.0 million," was uncertain "that [its] existing

and available capital resources [would] be available to satisfy

[its] funding requirements through the second quarter of 2016,"

and had "substantial doubt about [its] ability to continue"

generating profit and functioning as a business. The judge

found that if Conte "had clicked on the link to GTI's website

that Antonoplos provided, he could easily have accessed GTI's

regulatory filings with the SEC, including the most recent 10-K

annual report and most recent 10-Q quarterly report." These

reports disclosed the information described above.

Two days later, on June 11, 2016, Conte responded to

Antonoplos's e-mail message and asked whether "the lender get[s]

the 64K in stock too in making the loan?" and if so Conte would

be interested in making an investment himself. Antonoplos

replied "Yes" and later that day sent a clarifying e-mail

9 While those filings were not introduced by the parties at
trial, the judge took judicial notice of them.

7
message and explained, "[J]ust to clarify, [the] $64K lender

gets, at his/her option: (1) . . . $76,800 if repaid within 90

days or 4,413,286 shares or . . . $83,200 if repaid later or

4,781,060 shares." Conte then agreed to the deal and Antonoplos

and Blumberg instructed Pearlstein to prepare an agreement for

Conte. Pearlstein did so by relying on the drafts of the

agreements he had prepared for Imhoff and Maloof. As the judge

explained, Pearlstein changed the name of the investor to Conte

and changed the amount of the investment from $60,000 to $64,000

but failed to insert the conditional repayment provision that

Antonoplos had offered Conte in the June 11 e-mail message. No

one noticed this error and, after reviewing it, Conte signed the

agreement on July 18, 2016, and wired Shenghuo $64,000 the next

day.10 Later, Conte asked to revise the agreement to state that

the investment was being made by GIUL rather than Conte

individually. Pearlstein made that change in the version he had

previously sent to Conte and that Conte had already signed.

After receiving the final investment from Conte in July of

2016, Shenghuo made its investment payment of $200,000 to GTI.

However, GTI's subsequent efforts to raise additional capital

10The agreement signed by Conte included representations
that he had sufficient knowledge and experience to evaluate the
investment, had access to relevant financial information, and
understood the risks.

8
from that point on and through early 2017 were unsuccessful.

Conte made inquiries about the status of GIUL's investment, and

in 2018 sent e-mail messages to Faupel, Antonoplos, and

Pearlstein seeking assurances that GIUL would be repaid with

interest. Antonoplos and Faupel passed Conte's e-mail messages

onto GTI's then chief executive officer, Gene Cartwright, who

assured Conte that he would be repaid when GTI raised $1 million

in financing, something GTI was "in the end stages of

completing."

However, by the end of 2019, GTI suffered a severe cash

flow crisis and failed to raise the additional $1 million. GTI

reached out to Shenghuo and explained that its existing $200,000

debt to Shenghuo was an obstacle to raising additional capital.

Blumberg and Pearlstein, the managing members at the time, then

concluded it was in the best interest of Shenghuo to enter into

an exchange agreement with GTI, under which Shenghuo's loan to

GTI would be converted into GTI stock. The exchange agreement

thereby (1) ensured that GTI would not need to raise the

additional capital to reach the $1 million repayment threshold,

and (2) effectively extinguished the condition under which

Shenghuo would have to repay GIUL. Although, as the judge

found, GTI has become very valuable since that agreement was

9
made, GIUL has still not received repayment on its initial

$64,000 investment.11

GIUL commenced this action in 2019. As previously stated,

a bench trial on GIUL's MUSA and c. 93A claims was held in March

2024. The thrust of GIUL's allegations at trial was that the

defendants withheld material information from Conte before GIUL

invested in Shenghuo. As relevant here, the judge found that

GIUL had not proved that (1) the defendants never intended to

provide GIUL with a conditional repayment right; (2) no one told

Conte that Shenghuo's managing members would make any future

decisions to exchange its loan to GTI for shares of stock in

GTI; (3) no one disclosed GTI's dire financial condition to

Conte; and (4) Conte was not told that repayment of GIUL's

investment depended on GTI's raising $1 million.12

11As Shenghuo's only asset is its equity interest in GTI
and GTI has done very well, Shenghuo's other investors, Maloof
and Imhoff, have seen sizable returns on their investment as
they both hold ownership interests in GTI. GIUL's return, in
comparison, has been far more modest as it does not hold any
independent ownership interest in GTI.

12 GIUL also claimed that it was misled by Shenghuo's
failure to explain that it had no "sales, approvals, products,
partners, or manufacturer or manufacturing expertise" and that
its only real asset was its licensing agreement with GTI, and by
not disclosing that GTI's investment banker was not investing in
GTI but seeking outside investors. The judge rejected these
allegations as well and GIUL does not challenge these rulings on
appeal.

10
Regarding Shenghuo's granting a conditional repayment right

to GIUL, the judge "found that the conditional repayment terms

always were and remain part of GIUL's subscription agreement

with Shenghuo," even though Pearlstein "inadvertently omitted

them from the final forms of the agreement [that] Pearlstein

sent to Conte for his signature." The judge also found that

Shenghuo was not required to disclose to GIUL that Shenghuo or

its managing members could convert Shenghuo's loans to stock in

GTI given "any reasonable investor in Conte's position would

have known, that Conte and GIUL would have no control over any

of Shenghuo's business decisions." As for GIUL's contention

that GTI's dire financial condition was never disclosed, the

judge found that Antonoplos told Conte to go to GTI's website

which contained its public filings and therefore GIUL did not

show "any material information about GTI was withheld from" it.

Lastly, the judge credited Antonoplos's testimony that he told

Conte that repayment of GIUL's $64,000 was conditioned on GTI

raising $1 million and relied on Conte's 2018 e-mail messages

which admitted the same.

Regarding Conte's MUSA claim against Pearlstein, the judge

held Pearlstein did not "make" nor have "involvement in mak[ing]

an offer to sell a security to GIUL or soliciting an offer by

GIUL to invest in Shenghuo," and that even if Pearlstein was

11
"acting as Shenghuo's legal counsel in connection with GIUL's

investment . . . that limited role as an agent" could not

subject him to primary or secondary liability under MUSA.

Similarly, with regard to Faupel, the judge found that Faupel

had no liability because he had no communication with GIUL about

its investment in Shenghuo and did not act as Shenghuo's agent

to facilitate the sale.

Discussion. 1. GIUL's MUSA and c. 93A claims against

Pearlstein and Faupel. GIUL has not raised any challenge

regarding the dismissal of the claims against Pearlstein.

Accordingly, any arguments regarding Pearlstein's liability are

waived under Mass. R. A. P. 16 (a) (9) (A), as appearing in 481

Mass. 1628 (2019). Even if this were not the case, we agree

with the judge that there was no evidence that Pearlstein, who

only drafted agreements as Shenghuo's counsel, "offer[ed],"

"s[old]," or "materially aid[ed]" the sale of a security. G. L.

c. 110A, § 410 (a) (2), (b) (defining primary and secondary

liability respectively under MUSA). The same reasoning supports

dismissal of GIUL's c. 93A claim against Pearlstein. Even if

GIUL had raised an argument regarding the judge's decision, we

would nevertheless agree with the judge that Pearlstein's

decision as a managing member in 2019 to exchange Shenghuo's

loan interest in GTI for common stock was a "reasonable exercise

12
of business judgment." We therefore affirm the judgment in

favor of Pearlstein in its entirety.

With respect to Faupel, GIUL argues that the judge

"entirely missed [its] point." We are not persuaded. To the

contrary, the judge properly concluded that a MUSA claim cannot

be brought against Faupel as he had no communications with Conte

or GIUL regarding Shenghuo's offer and, "although [he] was

acting as Shenghuo's agent during 2016 in trying to identify a

commercial partner in China," Faupel also did nothing to

materially aid the transaction at issue here. As Faupel cannot

be held primarily or secondarily liable under MUSA, all claims,

including the c. 93A claim, against him were properly dismissed.

2. GIUL's MUSA claim against Shenghuo, Antonoplos, and

Blumberg (remaining defendants). We reach a different

conclusion regarding the judgment as it concerns Shenghuo,

Antonoplos, and Blumberg.

When reviewing the decision of a judge after a bench trial,

we review his "findings of fact . . . for clear error" and

"legal conclusions, by contrast, we review de novo." H1

Lincoln, Inc. v. South Washington St., LLC, 489 Mass. 1, 13

(2022). To prove a claim under MUSA, the plaintiff must show

"(1) the defendant 'offer[ed] or [sold] a security'; (2) in
Massachusetts; (3) by making 'any untrue statement of a
material fact' or by omitting to state a material fact;
(4) the plaintiff did not know of the untruth or omission;

13
and (5) the defendant knew, or 'in the exercise of
reasonable care [would] have known' of the untruth or
omission" (footnote omitted).
Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43, 52 (2004),

quoting G. L. c. 110A, § 410 (a) (2).

To begin with, we agree with GIUL that while the judge

cited to the applicable law, he applied it incorrectly when he

concluded that GTI's financial condition had been disclosed to

Conte before GIUL made its investment.13 According to the judge,

Antonoplos's e-mail message which included a link to GTI's

website was a proper disclosure because "[i]f Conte had gone to

13We agree with the judge's reasoning that GIUL failed to
prove that its other allegations rise to the level of material
omissions under MUSA and that they are not unfair or deceptive
under c. 93A. Regarding GIUL's claims that the defendants never
intended to provide GIUL with a conditional repayment right and
that GIUL was not told repayment would only occur if GTI reached
the $1 million fundraising threshold, the judge relied on
Antonoplos's testimony, which he found credible, and, in
addition, did not credit Conte's contradictory testimony. The
credibility of the witnesses is the province of a judge in a
bench trial and as "the judge's account is plausible in light of
the entire record" we "decline to reverse it." Demoulas v.
Demoulas Super Mkts, Inc., 424 Mass. 501, 510 (1997). As for
GIUL's claim that it was not informed Shenghuo's managing
members would make all future decisions to exchange its loan to
GTI for shares of stock in GTI, we agree with the judge: "To
the extent that GIUL now contends that it had such a right,
. . . GIUL was never promised" that right by any of the
defendants based on our review of Antonoplos's June 9 e-mail
message and the agreement between GIUL and Shenghuo. And even
if it was, a reasonable investor, and especially someone like
Conte who had a law degree, would have known that GIUL would
have no right to dictate Shenghuo's subsequent business
decisions. See Marram, 442 Mass. at 58 (test for materiality
uses a "reasonable investor" standard [citation omitted]).

14
[GTI's website] he could have easily accessed and been able to

review GTI's filings . . . in which GTI fully disclosed its

financial and business prospects." However, as GIUL correctly

contends, buyers have no duty to investigate or verify facts

alleged by a seller of securities. See Marram, 442 Mass. at 53,

quoting MidAmerica Fed. Sav. & Loan Ass'n v. Shearson/American

Express Inc., 886 F.2d 1249, 1256 (10th Cir. 1989) ("the buyer

[of a security does not] have any duty to investigate or to

'verify a statement's accuracy'"). Consequently, when

Antonoplos provided Conte with a link to GTI's website and told

him to "check [it]," Conte was not required to then explore

GTI's website and seek out its public filings. A seller under

MUSA "who voluntarily discloses material facts in connection

with securities transactions assumes a duty to speak fully and

truthfully on those subjects" (emphasis added). Kushner v.

Beverly Enters., 317 F.3d 820, 831 (8th Cir. 2003), quoting

Helwig v. Vencor, Inc., 251 F.3d 540, 561 (6th Cir. 2001)

(addressing seller's disclosure obligations when selling

securities under Securities Exchange Act, 15 U.S.C. § 78j[b],

78t). See Marram, supra at 51 ("we look to Federal decisions"

on Securities Exchange Act for our interpretation of MUSA).

Simply providing the link to GTI's website, which required

additional navigation via the Internet to locate GTI's public

15
filings, is not the same as providing a link to the filings

themselves. Moreover, the argument that Conte knew or should

have known the link to GTI's website would disclose GTI's

financial problems is not supported by the text of the e-mail

message itself. In the second paragraph of the e-mail message,

Antonoplos told Conte "if you look at the [GTI] web site you

will readily . . . see the 'integrity' of this device which is

presently being manufactured and distributed worldwide."

Objectively viewed, the e-mail message does not disclose that

clicking onto GTI's website would reveal GTI's financial

difficulties. Rather, it indicated no more that the website

would confirm the "integrity" of the LuViva device. Our

conclusion that the judge erred is also consistent with MUSA's

central premise: to create a "strong incentive for sellers of

securities to disclose fully all material facts about the

security." Marram, supra at 51. Furthermore, because the

remaining defendants are potentially liable under MUSA for this

omission, they are also potentially liable under c. 93A should

the judge find, on remand, that the omission was material and

amounted to an unfair or deceptive practice.

That said, the omission of a fact is only one of the

elements of a MUSA violation. See Marram, 442 Mass. at 52. The

plaintiff also needed to prove that the fact omitted was

16
material. See id. Here, there was evidence that the entire

basis of this transaction was GTI's need for additional capital

in order to proceed with marketing its product. In that

context, the judge could find that the fact that GTI was not

viable without additional capital was not a material fact in the

context of this investment. Whether the facts and inferences

drawn from the facts lead to a conclusion of materiality is for

the trial judge to decide in the first instance.

Conclusion. We vacate so much of the judgment as entered

in favor of Shenghuo, Antonoplos, and Blumberg on GIUL's claims

under the Massachusetts Uniform Securities Act and G. L. c. 93A,

and remand for further proceedings consistent with this

17
memorandum and order. The remainder of the judgment is

affirmed.14

So ordered.

By the Court (Vuono,
Ditkoff & D'Angelo, JJ.15),

Clerk

Entered: June 22, 2026.

14GIUL's request for attorney's fees is denied. If, after
remand, judgment is granted in favor of the GIUL on its c. 93A
claim, GIUL shall be awarded reasonable attorney's fees under
that statute. See G. L. c. 93A, § 11. Attorney's fees
attributable to this appeal and any proceedings after remand may
be included in the award. See Patry v. Liberty Mobilehome
Sales, Inc., 394 Mass. 270, 272 (1985).

15 The panelists are listed in order of seniority.

18