Prior to the Offering, Nvidia shipped to VisionTek $6-8 million worth of defective Component Parts. Once VisionTek discovered the Component Parts were defective, it negotiated a resolution with NVIDIA. VisionTek and Nvidia agreed that VisionTek would receive a credit equal to the value of the defective Component Parts and that VisionTek would destroy the defective Component Parts.The plaintiffs in this case aren't consumers who bought defective graphics cards, but VisionTek's own investors, who reportedly lost millions due to VisionTek's actions.
At the time it made the agreement with Nvidia, VisionTek was starved for cash and under intense pressure to get its products quickly into the marketplace. VisionTek therefore decided to renege on its agreement with Nvidia. Rather than destroying the parts as promised, VisionTek, upon information and belief, built its graphic cards using the defective Component Parts and then fraudulently sold those cards to its customers.