XanGo Founder Bryan Davis – Sues Aaron Garrity and Others

In the US District Court district of Utah, Central Division Bryan B. Davis, Plaintiff, vs.Aaron Garrity , Gary Hollister, Gordon Morton, Joseph Morton, and Kent wood, Nate Brown, XIC LLC, a Utah LLC; XIC II LLC, a Utah LLC, John Does 1-25. Defendants.

XanGo was caught up in a corrupting plan where criminal elements were used to ship XanGo products into Russia avoiding paying customs taxes. Other allegations include; Civil Conspiracy, Money Laundering, Tax Fraud, and the misuse of XanGo assets, a RICO Fraud Scheme, and lastly Racketeering.

COMPLAINT Case Number 2:13-cv-00349-BCW

    1. Plaintiff Davis is a co-founder and a member of the Xango board.
    2. Defendant Aaron Garrity is a co-founder of XanGo. He is also the CEO and holds a chairman position on the board of directors.
    3. Defendants Gary Hollister, Joseph Morton, Kent Wood and Gordon Morton are co-founders and hold positions on the board of directors, also referred to as Management Defendants.
    4. Defendant Nate Brown is the CFO for XanGo.

XIC LLC and XIC II LLC are both Utah limited liability companies.


  1. XanGo is a marketing company established in Utah on September 11, 2002.
  2. All of the XanGo founders, the plaintiff included besought 19 other companies or individuals such as Angel Investors for money to start the business. Even though these entities bought into the business the founders still managed to maintain 86% ownership.
  3. Garrity stole thousands of dollars of XanGo assets in personal expenses and gifts for others, writing them off as “business expenses” over the course of time he was working at XanGo.
  4. Brown set up fake accounts in order to make way for Garrity and others to write off the embezzled assets.
  5. Garrity’s mistress who was also is assistant;Andrea Waterfall also used XanGo credit cards for various personal shopping expenses.
  6. Garrity submitted false expense reports to Accounting for his personal expenses, changed his credit card reports to cover up the lies and used his position and authority at XanGo to scare employees into pretending not to notice his false reports.
  7. Garrity started “culture of giving” which basically stated they the founders and all employees on their good sides could use company assets for their personal benefit.
  8. Garrity also is responsible for encouraging the other management defendants and various employees to use company assets just as he was.
  9. In the beginning of 2006 Angel became concerned and requested to see Xing’s books, and in October filed a case against them for a breech in contract.

Garrity and other founders went through various measures during the trial to cover up the misuse of XanGo’s assets, including hiring and influencing John P. Herrington’s report.
Even with Herrington’s help Garrity’s expenses could not be covered up at “business expenses” and Herrington was forced to admit to some of Garrity’s misspending.

  1. Brown’s advice to Davis was to re-group the spending but Davis did not agree to it.
  2. Nate Brown and the founders went ahead with the re-grouping despite Davis’ objections.
  3. XanGo counsel stated that no accounting rules were broken by Garrity and further XanGo and Angel announced that the issues had been resolved on July 29 2010.
    Initially after the settlement was closed Davis believed that the founders would end the illicit spending but later determined that they had no such plan.
  4. Garrity and founders continued to misuse assets and when Davis again began to object they attempted to suspension him out of the company.
  5. Management defendants convinced employees that Davis quit and not to talk to him about XanGo.
  6. Management defendants withheld bonuses from Davis.
  7. Garrity mislead XanGo security by filing false claims against anyone including Davis that were not on his side.
  8. Garrity also got access to non-traceable accounts where a fake alias was made and cash advantages were handed out through Garrity and Hollister’s assistants.


First Cause of Action

  1. The Management Defendants breached XanGo’s operating agreement in several financial manners.
  2. The Management Defendants are claimed to have breached contract and harm Davis in the amount no less than $3,000,000.
  3. The Management Defendants caused Davis to break his employment agreement with XanGo furthermore leading to liquidating Davis.

Second Cause of Action

  1. The Management Defendants broke their promise of good faith and fair dealings by their dishonest acts.
  2. By breaking their promise of good faith and fair dealings the Management Defendants have caused harm to Davis.

Third Cause of Action

The management Defendants and Brown despite being required to do so purposely and inattentively told misinformation to Davis

Fourth Cause of Action

The Management Defendants took part in various forms of fraud;
using assets for personal expenses.

  1. Garrity claimed no personal relationship with Waterfall
  2. Garrity Wood and Brown did not tell Davis that they were involved with bribing Russian officials
  3. Other financial scandals and cover ups.

Fifth Cause of Action

  1. The Manager Defendants and Brown came up with a plan for the purpose of stealing assets from XanGo for their own use.
  2. The Management Defendants and Brown also had an obligation to tell Davis the truth about the information kept from him.
  3. The fraudulent activities began in 2006

Sixth Cause of Action

  1. The Management Defendants and Brown plotted to keep the truth from Davis and further lied to cover up these truths.

Seventh Cause of Action

  1. 18 U.S.C & 19629(d) make it illegal for any person to plan on violating and part (a) (b) or (c) of this section:
  2. Under the name of XanGo the RICO Defendants used the enterprise to illegally steal XanGo assets causing other owners and distributors to forgo payment.
  3. The Rico Defendants solicited employees and other parties involved with XanGo in order for their financial scheme to work.
  4. The RICO Defendants have also participated in several activities including racketeering that affected interstate commerce from 2006 forward.
  5. Management Defendants have participated in deceitful activity with their interactions with XIC and XIC II
    Examples of racketeering- Mail Fraud, Money Laundering, Financial Institution fraud, and wire fraud
    in violation of 18 U.S.C & 1952 Defendants participated in interstate commerce in relation to money laundering
    18 U.S.C & 1956(a)(1) makes a financial transaction in which the person knows engages in unlawful activity illegal.As a result of the RICO Defendants violating 18. U.S.C. & 1962(c), Davis was harmed in that he was unaware of the fact that he was a part of a plan to defraud, losing his value in XanGo, losing payment for time and resources put into XanGo, denied rights stated in his contract, and by being frozen out of a company he co-founded and his reputation.
  6. Due to these damages Davis has been harmed to the amount of no less than 3,000,000 and is entitled to 3x his cost in suit as well as attorney’s fees.

Eighth Cause of Action

  1. Defendants caused XanGo to break their contract with Davis.
  2. Management Defendants purposefully damaged Davis’ reputation.

Ninth Cause of Action

The management Defendants broke their fiduciary obligations to Davis when they went against him when he was questioning their motivations and behaviors.

Tenth Cause of Action

The actions of the Management Defendants caused Davis reasonable expectations as co-founder to be violated.

Eleventh Cause of Action

Since the Management Defendants falsely included personal expenses in accounting reports they are expected to fully compensate for personal expenses and bribes or payments made.
Davis demands:

    1. Damages to be in amount of no less than $3,000,000
    2. Management Defendants be removed from management roles at XanGo
    3. appropriate punitive damages
    4. pay for attorney’s fees
    5. pre and post decision interest rate at the highest rate allowed
    6. any other judgment the court finds acceptable

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