Lottery.com Leaders Say ‘Con’ Investor Seeks Hostile Takeover

Lottery.com’s leaders say they’re the ones being defrauded by “Florida Phil” as they’re pursuing a turnaround for the lottery-ticket platform.

A lawsuit filed by Philip Gurian, whose criminal history includes a mob-related stock trading scheme and money laundering, is an attempt to use Lottery.com for criminal activity, Christopher Gooding told the Delaware Chancery Court on Wednesday.

“This action is brought by ‘Florida Phil’ Gurian as part of a personal vendetta, with the view to mounting an illegal, hostile takeover,” said Gooding, one of Lottery.com’s directors who represented himself in the telephonic hearing. “He’s a con shouting ‘con’ at Lottery.”

Gurian was convicted in 2004 in connection with a federal probe into organized crime ties to pump-and-dump schemes involving microcap stocks. In 2014, he pleaded guilty to conspiracy to commit money laundering after federal authorities accused him of running a large-scale illegal gambling business.

Gurian’s lawsuit alleges Lottery.com violated the terms of an investment agreement with his firm, Honey Tree Trading LLC, and used the money to pay for CEO Matthew McGahan’s $25,000 monthly rent. Honey Tree says it loaned Lottery.com almost $1.3 million in exchange for shares and warrants, but the company never delivered.

“I don’t deny I’ve done things that got me into trouble” Gurian told Bloomberg Law when the lawsuit was filed in September. “That doesn’t mean they can say, ‘This guy is a bad guy so we have a right to steal his money.’”

Gurian misrepresented himself to Lottery.com with a pseudonym to avoid having his criminal past come to light, and Honey Tree can’t prove that it’s the firm’s money that was invested in Lottery.com, Gooding said. The money was invested “for reasons we are forced by his history to conclude” for money laundering purposes, he said.

“There is no question that Honey Tree is presently a shareholder and was a shareholder at the time it presented its pleading,” the firm’s attorney, Anne Melton of Lucosky Brookman LLP, told Vice Chancellor Nathan A. Cook.

According to Honey Tree’s motion asking Cook to fast-track the litigation, Lottery.com owes Delaware over $300,000 in taxes and hasn’t filed required annual reports. Gooding said Lottery.com’s directors knew about its tax liabilities, but they were “blissfully unaware” of its void status until recently and are working to resolve the issue.

Cook expressed frustration with Gooding’s pro se representation and admonished Lottery.com’s outside counsel for not yet securing Delaware counsel for the litigation. He instructed Lottery.com’s leaders to respond to Honey Tree’s complaint within a week and scheduled hearings later this month to consider interim injunctive relief.

“There are highly unusual allegations being made in this matter of misconduct,” Cook said. “Such actions would seem to present a sufficient threat of irreparable harm and the balance of the equities here would seem to strongly suggest this would be a matter for which expedited treatment would be appropriate.”

Honey Tree is also represented by Morris, Nichols, Arsht & Tunnell. McGahan, Gooding, and the other directors represented themselves and Lottery.com pro se.

The case is Honey Tree Trading LLC v. Lottery.com, Del. Ch., No. 2024-0921, hearing 11/6/24.