DISTRICT COURT, CITY AND COUNTY OF

DENVER, COLORADO

1437 Bannock Street

Denver, CO 80202
FRED J. JOSEPH, Securities Commissioner for the State
of Colorado,

Plaintiff,

V.

COLORCOM, LTD., IFR TECHNOLOGIES, INC.

D/B/A ACCELERATED I/O. NC, CUSTOM DESIGN
AND MANUFACTURING, INC., JOSEPH D. DOLL,
and RICHARD H. JANOKA,

Defendants. COURT USE ONLY

JOHN W. SUTHERS. Attorney General
Case No
RUSSELL B. KLEiN, Assistant Attorney General*
1525 Sherman Street, 7
th
Floor J9 V J
Denver, CO 80203 Courtroom:
303-866-5287
Registration Number: 31965
*Counsel of Record
COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF

Plaintiff, Fred J. Joseph, Securities Commissioner for the State of Colorado,

by and through his counsel, the Colorado Attorney General, and for his Complaint
against the defendants, alleges as follows:

JURISDICTION

1. Plaintiff Fred J. Joseph is the Securities Commissioner for the State of

Colorado (the “Commissioner”) and is authorized, pursuant to § 11-51-703, C.R.S., to
administer all provisions of the Colorado Securities Act (the “Act”). Pursuant to §
11-51-602, C.R.S., the Commissioner is authorized to bring this action against the
Defendants and to seek temporary, preliminary, and permanent injunctive relief and
other equitable relief against the Defendants upon sufficient evidence that the
Defendants have engaged in or are about to engage in any act or practice constituting
a violation of any provision of the Act.

2. Venue is proper pursuant to § 11-51-602(1), C.R.S. in the district court

for the city and county of Denver, Colorado.

I
 SUMMARY OF ALLEGATIONS

3. From at least December, 2004 through July, 2008, defendants Joseph

Doll and Richard Janoka, through defendant companies Colorcom, Ltd. and IFR
Technologies. Inc., carried out a scheme to defraud investors by making false
statements intending to induce them into investing in “revolutionary” computer
technology. The defendants raised nearly $3 million from investors with the promise
that their “revolutionary” technology was ready to be marketed to the public, while
telling investors that they stood to earn a return of upwards of 600 times their initial
investment.

4. The representations to investors by these defendants were false, and in

reality, the defendants were well aware of their previous representations and failures
to bring the technology to market. The defendants also failed to disclose that the
defendants diverted substantial sums of investor money to pay for personal
expenditures, legal expenses and judgments in civil actions. In addition, the
defendants failed to disclose numerous civil suits related to prior investments, a Cease
and Desist Order entered by the state of Iowa for violation of that state’s securities
laws, and a plan for bankruptcy designed to interfere with creditors. The offer and
sale of the investments constituted violations of the registration provisions of the
Colorado Securities Act, § 1 1-5 1-101 —908, C.R.S. (the “Act”). The omissions and
misrepresentations by the Defendants constitute violations of the anti-fraud provisions
of the Act.

DEFENDANTS

5. Defendant Colorcom, Ltd. (“Colorcom”) is a limited partnership

organized under the laws of the State of Colorado, with its principal business address
at 8615 Carr Loop, Arvada, Colorado, 80005.

6. Defendant IFR Technologies, Inc. dlb/a Accelerated I/O, inc.

(“Accelerated”) is a Delaware Corporation with its principal business address at 4221
W 136
th
Avenue, Broomfield, Colorado 80020.

7. Custom Design and Manufacturing, Inc. (“CDM”) is a Delaware

Corporation with its principal business address of 4221 W. 136
th
Avenue, Broomfield,
Colorado 80023. CDM is a control person of Colorcom, Ltd.

8. Defendant Joseph D. Doll (“Doll”) is an adult male individual whose

last known address is 4221 W 136
th
Avenue, Broomfield, Colorado 80020. Doll is
a control person of Colorcom and Accelerated.

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 9. Defendant Richard H. Janoka (“Janoka”) is an adult male individual
whose last known address is 820 E Moreno, Colorado Springs, Colorado 80903.

GENERAL ALLEGATIONS

10. This case involves the fraudulent offer and sale of securities in the form
of shares of stock and units of ownership for Colorcom and Accelerated. Colorcom is
represented to investors as a company developing “revolutionary” graphics
conversion computer software. Accelerated is represented to investors as the
marketing company for Colorcom’s product. CDM is the general partner for
Colorcom, and Doll controls 100% of CDM.

11. Investors were referred to Defendants by word of mouth. None of the

investors were people who Doll or Janoka knew prior to the investment discussions.
In attracting investors to the company, Colorcom, Accelerated, CDM, Doll, and
Janoka (collectively, the “Defendants”) failed to make numerous material disclosures
and engaged in business practices which operated as a fraud. Approximately $2.9
million was raised from hundreds of investors. At least five of the investors were
Colorado residents.

12. The Defendants began offering the investments to prospective investors

in December of 2004, and continued through at least July of 2008. In making the
offerings and sales, the Defendants failed to make material disclosures. A target
product development date was repeatedly pushed back over four years, although new
investors were not advised of the prior failures to bring the product to market. Bank
records reflect that approximately $1 million of investor funds were used to cover
Doll’s personal expenses.

13. Doll created Colorcom, CDM, and Accelerated and presented himself
as the product inventor in meetings with investors. He represented the product as a
“revolutionary” computer product that would be marketed as “Pac-n-Zoom” and
allowed better compression for computer images, so that data could be fed into a
computer with “human-like speech recognition and human-like image recognition” so
that the computer could do such things as recognize weather in an image.

14. Investors primarily learned of Doll and Janoka through word-of-mouth.

Doll and Janoka were primarily responsible for selling the investments in Colorcom
and Accelerated. Doll and Janoka typically met with investors to introduce them to
the investment opportunity, providing investors with a Private Placement
Memorandum and a PowerPoint Presentation. Doll and Janoka told potential
investors that the expected return on their investment would be 600-fold, and that the
product would begin sales in 2004.

15. The Defendants developed a document titled 2004 Business Plan (the
“2004 Plan”) to provide to investors. The 2004 Plan, dated May 12, 2004 projected

3
profits for Accelerated of $32,905,000 in 2005, $573,696,000 in 2006, and
$834,266,000 in 2007, and an expected profit for Colorcom of$1 1,105,000 in 2005,
$297,226,000 in 2006, and $543,382,000 in 2007. It also showed that Colorcom and
Accelerated together were valued at $15,645,209.13. It explained that Doll had been
working on the technology for 18 years and had 5 patents on it, and that it would be
completed in just a few months. Among various claimed “reasons to invest” in the
2004 Plan, the Defendants indicated that “the final part of the technology is becoming
functional, and it should be completed within 10 weeks.”

16. A year later, the Defendants developed a similar document, titled the
2005 Business Plan (“2005 Plan”), to be provided for investors. The 2005 Plan, dated
June 28, 2005, showed an expected profit for Accelerated of $32,905,000 in 2006,
$573,696,000 in 2007, and $834,266,000 in 2008, and an expected profit for
Colorcom of$11,105,000 in 2006, $297,226,000 in 2007, and $543,382,000 in 2008.
These numbers were identical to the numbers projected in the 2004 Plan, pushed back
one year to reflect that no profit was actually made or expected in 2005. The 2005
Plan also showed that Colorcom and Accelerated together were valued at
$16,399,537.50. Again, the 2005 Plan explained to investors that the technology
would be completed in a few months and contained an identical “Reasons to Invest”
section with the same claims described in paragraph 14.

17. In 2006, the Defendants developed a 2006 Business Plan (“2006

Plan”), to be provided to investors. The 2006 Plan, dated March 30, 2006, indicated
that the first units of the product would be shipped in the second half of 2006 and
showed an expected profit for Accelerated of $32,905,000 in 2007, $573,696,000 in
2008, and $834,266,000 in 2009, and an expected profit for Colorcom of $11,105,000
in 2007, $297,226,000 in 2008, and $543,382,000 in 2009. These numbers were
identical to the numbers projected in the 2004 Plan and 2005 Plan, pushed back to
reflect that no profit was actually made or expected in 2005 or 2006. The 2006 Plan
also showed that Colorcom and Accelerated together were valued at $17,173,302.50.
The 2006 Business Plan contained a nearly identical “Reasons to Invest” section with
nearly identical claims described in paragraph 14 and 15.

18. According to the June 5, 2008 copy of the Private Placement

Memorandum, the technology was already developed at that time and the product
would start selling in July 2008 under the name Pac-n-Zoom. The Private Placement
Memorandum also showed an expected profit for Accelerated of $32,905,000 in
2009, $573,696,000 in 2010, and $834,266,000 in 2011, and an expected profit for
Colorcom of$1 1,105,000 in 2009, $297,226,000 in 2010, and $543,382,000 in 2011.
These numbers were identical to the numbers projected in the 2004 Plan, 2005 Plan,
and the 2006 Plan.

4
 DEFENDANTS’ UNTRUE STATEMENTS AND OMISSIONS

19. The Defendants failed to disclose to investors and potential investors,

in connection with the offer and sale of securities, material facts, including, but not
limited to, the following:

a. Of the approximately $2.9 million in income received by

Colorcom and Accelerated, approximately $1 million would be
used to cover Doll’s personal expenses.

b. Colorcom, Ltd. and its’ agents were subject to a Consent Order

issued by the state of Iowa, in connection with its alleged offer
and sale of unregistered securities, directing it to cease and
desist from further offers of unregistered, non-exempt securities
in violation of Iowa law on October 11th,
1999.

c. Doll was a creditor against Accelerated and CDM.

d. A civil action was filed against Colorcom Accelerated, and Doll

by Casa Construction because of failure to honor a promissory
note, which settled for $28,790.83 to be paid in installments.

e. A civil action was filed against CDM by PPC Associates for

failure to pay rent, which settled for $15,000 to be paid in
installments.

f. A civil action was filed against Accelerated and Doll by

LowDough Investor Group, LLP for failure to honor a
promissory note and for fraud, which settled for $104,349.55 to
be paid in installments.

g. Investor funds were used to pay civil judgments against Doll,

Colorcom, Accelerated, and CDM.

h. Investor funds were used to pay prior investors in Colorcom and

Accelerated.

i. Doll had a bankruptcy plan to interfere with creditors against

Accelerated that was developed in 2004 in response to a case
with the Internal Revenue Service and other civil litigation.

20. The Commissioner is aware of numerous individuals who have

invested with the Defendants. The following sub-paragraphs detail the known
scheme to defraud investors and the acts, practices and course of business engaged in

5
by the Defendants to defraud investors, and is typical of the conduct engaged in by
the Defendants with other investors:

a. In late 2004, investors LT and IT learned of a

teleconference through a coworker presented by Colorcom and
Doll, introducing new computer software technology. Investors
LT and TT met with Doll who discussed the potential impact of
the new technology that the Defendants were developing. In
December of 2004, LT and TI invested $40,000.00 in
Colorcom. In connection with the offer and sale of the
securities to LI and TI, the Defendants failed to disclose to LT
and IT material facts, including, but not limited to the
following: (1) the numerous civil lawsuits filed against various
defendants; (2) that investor funds were used to satisfy the
settlements and judgments in the aforementioned lawsuits; (3)
that investor funds would be used to pay prior investors; and (4)
that the state of Iowa entered a Consent Order directing
Colorcom to cease and desist from future violations of the
registration provisions of the Iowa Securities Act.

b. in June of 2007, investor RT learned of Accelerated,

Doll, and Janoka from a business partner. Shortly thereafter, RI
invested $6,000.00 followed by a second investment of
20,000.00 in June of 2007 in Accelerated. In connection with
the offer and sale of the securities to RT, the Defendants failed
to disclose to RT material facts, including, but not limited to the
following: (1) the numerous civil lawsuits filed against various
defendants; (2) that investor funds were used to satisfy the
settlements and judgments in the aforementioned lawsuits; (3)
that investor funds would be used to pay prior investors; and (4)
that the state of Iowa entered a Consent Order directing
Colorcom to cease and desist from future violations of the
registration provisions of the Iowa Securities Act.

c. In 2007, investor JL learned of Accelerated through

family contacts. In July of 2007, JL was provided with the
telephone number for one of the Defendant’s telephone
conferences. After the teleconference, Janoka provided investor
JL with a Subscription Agreement and questionnaire to
determine whether JL was an accredited investor. Shortly
thereafter, JL invested $13,750 in Accelerated. In connection
with the offer and sale of the securities to JL, the Defendants
failed to disclose to JL material facts, including, but not limited
to the following: (1) the numerous civil lawsuits filed against
various defendants; (2) that investor funds were used to satisfy
6
 the settlements and judgments in the aforementioned lawsuits;
(3) that investor funds would be used to pay prior investors; and
(4) that the state of Iowa entered a Consent Order directing
Colorcom to cease and desist from future violations of the
registration provisions of the Iowa Securities Act.

d. In February of 2008, investor TC learned of Accelerated

from a friend, and directly e-mailed Accelerated to inquire about
investing. Shortly thereafter, TC invested $10,000.00 in
Accelerated. In connection with the offer and sale of the
securities to TC, the Defendants failed to disclose to IC
material facts, including, but not limited to the following: (1) the
numerous civil lawsuits filed against various defendants; (2) that
investor funds were used to satisfy the settlements and
judgments in the aforementioned lawsuits; (3) that investor
funds would be used to pay prior investors; and (4) that the state
of Iowa entered a Consent Order directing Colorcom to cease
and desist from future violations of the registration provisions of
the Iowa Securities Act.

21. The investments are securities as contemplated by § 11-5 1-201(17),

C.R.S. in that they are at least investment contracts and an investment in notes and
stocks.

FIRST CLAIM FOR RELIEF

(Offer or Sale of Unregistered Securities)

22. Paragraphs 1 through 21 are incorporated herein by reference.

23. By engaging in the conduct described above, the Defendants have made
“offers” or “sales” of securities in the State of Colorado pursuant to § 11-51-201(13),
C.R.S.

24. By engaging in the conduct described herein, the Defendants offered

and sold securities in and from Colorado in violation of 11-51-301, C.R.S.

25. The Commissioner is entitled to an award of damages, interest, costs,

attorneys fees, restitution, disgorgement and other equitable relief on behalf of
persons injured by the conduct of the Defendants pursuant to § 11-51-602(2) and
604(1), C.R.S. (based on violations of 11-51-301, C.R.S.). The Commissioner is
also entitled to a temporary, preliminary and permanent injunction pursuant to § 11-
5 1-602, C.R.S. (based on violations of § 11-51-301, C.R.S.) against the Defendants,
their agents, servants, employees, successors and attorneys-in-fact, as may be; any
person who, directly or indirectly, through one or more intermediaries, controlled, or

7
is controlled by or is under common control with the Defendants; and all those in
active concert or participation with the Defendants.

SECOND CLAIM FOR RELIEF

(Securities Fraud)

26. Paragraphs 1 through 25 are incorporated herein by reference.

27. The conduct described above in this Complaint constitutes violations of

the Colorado Securities Act in that in connection with offer, sale, or purchase of
securities in Colorado, the Defendants, directly or indirectly:
a. employed a device, scheme, or artifice to defraud;
b. made written and oral untrue statements of material fact or
omitted to state material facts necessary to make the statements made, in light
of the circumstances under which they were made, not misleading; or
c. engaged in acts, practices or courses of business which operated
and would operate as a fraud and deceit on investors,
all in violation of § 1 1-5 1-501(1), C.R.S.

28. The Defendants offered or sold securities by means of untrue

statements of material fact and omissions to state material facts necessary in order to
make the statements, in light of the circumstances under which they were made, not
misleading (the buyers not knowing of the untruths or omissions), and therefore the
Defendants are liable to the Commissioner for damages under § 11-51-604(4), C.R.S.,
by operation of § 11-51-602(2), C.R.S. (based on violations of § 11-5 1-501(1)(b),
C.R.S.).

29. The Commissioner is entitled to an award of damages, interest, costs,

attorneys fees, restitution, disgorgement and other equitable relief on behalf of
persons injured by the conduct of the Defendants pursuant to § 11-51-602(2) and
604(4), C.R.S. (based on violations of 11-51-501, C.R.S.). The Commissioner is
also entitled to a temporary, preliminary and permanent injunction pursuant to § 11-
5 1-602, C.R.S. (based on violations of 11-51-501, C.R.S.) against the Defendants,
their agents, servants, employees, successors and attorneys-in-fact, as may be; any
person who, directly or indirectly, through one or more intermediaries, controlled, or
is controlled by or is under common control with the Defendants; and all those in
active concert or participation with the Defendants.

WHEREFORE, Plaintiff prays for relief as follows:

1. For preliminary and permanent injunctive relief against all Defendants,

and each of them, their officers, directors, agents, servants, employees, and
successors; any person who directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with any of the Defendants,

8
and all those in active concert of participation of Defendants, enjoining each of the
Defendants’ violations of the Colorado Securities Act, or successor statute.

2. For a judgment in an amount to be determined at trial against each

Defendant, jointly and severally, for restitution, disgorgement, and other equitable
relief pursuant to § 11-51-602(2), C.R.S., and for damages, rescission, interest, costs,
reasonable attorney fees, and such other legal and equitable relief as the court deems
appropriate, pursuant to § 11-51-602(2) and 604, C.R.S., all on behalf of persons
injured by the acts and practices of all Defendants constituting violations of the
Colorado Securities Act.

3. For an Order imposing a constructive trust on the fraudulently obtained

funds held by each Defendant and Relief Defendant, or any entity controlled by them,
and to order these Defendants to account for and disgorge all funds fraudulently
obtained by them from the investors and transferred to them.

4. For such other and further relief as the court deems proper.

JOHN W

1965*
Assistant Attorney General
Financial Unit
Business & Licensing Section
Attorneys for
*Counsel of Record