The Falkners are collectively being accused of 26 different instances of fraud, deceit and misusing corporate assets — claims the Falkners’ attorneys have denied outright. Carla Falkner told Lagniappe during an initial interview in September the lawsuits were “disgusting” and retaliation for her role as a “whistleblower.” Neither she nor her legal representation has offered any details to support the claim.

On Thursday, Dec. 1, the Falkners filed their first formal response to the accusations, pushing back specifically against the lawsuit filed by a group of investors who have put around $2 million into IMP products through its subsidiary companies, InnoMed One, and InnoMed Five.

The Falkners submitted a motion and brief asking Mobile County Circuit Judge Michael P. Windom to dismiss the investors’ lawsuit with prejudice, arguing among other things that the plaintiff’s suit is flawed, redundant, and that some claims fall outside of Alabama’s statute of limitations. A dismissal with prejudice would prevent the parties from refiling the same claim.

A four-member team of attorneys from Benton Law in Mobile and Lloyd, Gray, Whitehead & Monroe of Birmingham represents the Falkners. The brief filed Thursday argues a combination of issues with the complaint should result in dismissal before trial.

Motion to Dismiss

The defense argues primarily that the investors’ allegations are derivative of a lawsuit by the Falkners’ IMP business partners, Dr. Kirby and Dr. Deneen Plessala, who own a 50 percent stake in the company and filed the complaint in September seeking to revoke the Falkners’ ownership. That case is also pending before Circuit Judge Michael Youngpeter and is currently stayed as the four owners are one month into a 90-day mediation window.

The defense argues the “mirror” lawsuits would violate Alabama Code 6-5-440 prohibiting simultaneous actions for the same cause against the same party. Additionally, the defense claims investors failed to name the Plessalas as defendants in their lawsuit, which they say is necessary for the litigation to proceed under Alabama law.

The brief further claims the Plessalas are culpable for some of the very same claims the plaintiffs have accused the Falkners of.

“Most importantly, (the Plessalas) executed documents which called for founder payments that Plaintiffs now state was impermissible,” the brief states.

Among the investors’ allegations is that the Falkners allegedly directed company accountants to begin distributing $50,000 per month as “founder payables” from the company without disclosing the practice to their investors and not including the costs in projected budget reports. Plaintiffs claim this was a way to “double dip” from the company’s finances and “maximize personal gains.”

The Falkners further argue the Plessalas are just as liable for what investors have claimed are failures to deliver on promises, and claim the delay and potential failure in IMP’s ability to commercialize medical devices are as much the fault of the Plessalas “if not more so” than the Falkners.

According to the brief, the Plessalas were the ones responsible for conducting clinical studies and efficacy tests on IMP’s products, and their failures to secure FDA approval for the products is the reason device concepts have not reached the market and begun generating licensing revenue.

“The Plessalas … have played just as large a role in the company as the Falkners,” the brief states. “As 50 percent owners, the Plessalas have joint authority with the Falkners over the business decisions of IMP.”

The defense’s legal argument states the Plessalas actively participated in soliciting investor funds, had just as much control over company bank accounts, received payments, approved company decisions, and distributed the same investor materials the plaintiffs have alleged contained lies and omissions.

According to court documents, IMP’s investment pitch advertised Class II shares for $290,000, with each share representing a 1-percent, non-voting membership interest in a respective subsidiary. Each subsidiary represented different intellectual property being developed into a medical product. A timeline distributed during fundraising efforts showed six-year total revenues of $49.7 million with a payout of $497,000 for one-percent owners.

Despite the defense argument, an order issued by the Alabama Securities Commission in September exclusively names the Falkners as subjects of an investigation and directs them to immediately stop fundraising efforts in the state. The Commission also indicates the Falkners were selling securities that were unregistered with the state.

According to the Commission’s report, the Falkners helped Innovative Medicine raise approximately $10.5 million from more than 80 donors across 14 different states since the company's launch in 2016.

Immunity and limitations

Other justifications offered in support of dismissal include that the Falkners are “immune” from liability due to IMP’s operating agreement.

That agreement reads that “No Member, Manager or Officer of the Company shall be liable for any honest mistake in judgment or for any action or the omission to take any action in good faith or for any loss due to any of the foregoing, or due to the negligence, dishonesty, fraud or bad faith of such Member, Manager or Officer.”

The defense also argues the investors’ accusations are based on alleged promises by the Falkners which they have provided no evidence to suggest the couple did not intend to fulfill when they were made.

“Plaintiffs simply ignore delays that were caused by issues outside of the Falkners’ control, such as the COVID-19 pandemic that shut down many of the laboratories that had to sign off for FDA approval,” the brief states.

The investors’ allegations of fraud should also be thrown out, according to the defense.

The plaintiffs argue the Falkners misrepresented their education credentials, professional background and financial history during a fundraising campaign in 2017. The defense responded that these events fall outside of Alabama’s statute of limitations for fraud and cannot be litigated.

The defense also claims the Falkners cannot be held liable for the plaintiff’s conspiracy allegations because they cannot legally conspire among themselves under the “intracorporate conspiracy doctrine,” which holds a corporation may not be held liable for any alleged conspiracy with its own employees or agents.

Lastly, the defense argues the investors failed to exhaust their attempts to remedy their complaints before filing their lawsuit, arguing limited efforts and that the Plessalas were never served with similar demand letters.

“Plaintiffs point to one demand letter allegedly mailed to Carla Falkner in April 2022. The complaint includes no details other than a mediation was canceled. Plaintiffs point to no demand made on all owners,” the brief states.

The original suits filed against the Falkners allege the couple took roughly $5 million to support a “lavish” lifestyle and company money was even used to pay for their personal expenses, utilities, meals, international flights and over $60,000 in Amazon purchases, according to the lawsuit.

There is also an allegation the Falkners spent $28,000 of company money to pay for flights via British Airways to England in order for Carla Falkner, who is also a local country music artist, to record part of an album in 2021 at the famed Abbey Road Studios, where the Beatles recorded most of their music. Mrs. Falkner recorded “A Tribute to The Carpenters,” which is an album of covers of songs originally recorded by The Carpenters.

Legal representation for the Plessalas did not immediately respond to phone calls and email requests for comment. No timeline has been provided for when the plaintiffs are required to object to the motion and no hearings have been scheduled.