On June nineteenth the FTC filed a contemporary movement requesting sanctions towards Jason and Eunjung Cardiff.
As alleged by the FTC, the Cardiffs have did not adjust to a filed March thirty first contempt order.
This was adopted up by an emergency ex-parte software for a TRO, filed on June twenty third.
The FTC’s software was initially filed below seal. It was unsealed through July 2nd court docket order.
Within the software the FTC alleges
The U.S. Division of Veterans Affairs has suggested Plaintiff Federal Commerce Fee (“FTC” or “Fee”) {that a} fee of roughly $3 million will probably be issued – possible earlier than the tip of this week – to a enterprise enterprise Defendant Jason Cardiff controls.
An affidavit filed in assist of the FTC’s software revealed particulars in regards to the fee.
The applying presents proof of Defendant Jason Cardiff’s undisclosed management of a brand new enterprise (supplying surgical face masks and different private protecting gear) that’s at the moment producing important income, and which is scheduled to obtain a fee of $3 million from the U.S. Division of Veterans Affairs, possible earlier than the tip of this week.
The belongings of this enterprise and the actual fact of Jason Cardiff’s management haven’t been reported to the FTC or Receiver, as required by the Part XIV of the Preliminary Injunction (Dkt. 59), nor has Defendant Jason Cardiff transferred any belongings ensuing from his new enterprise exercise to the Receiver, as required by that Order.
The title of Cardiff’s new enterprise enterprise was VPL Medical LLC.
Coincidentally, VPL Medical LLC was the topic of an latest ProPublica investigative report.
On a Tuesday in April, J. David McSwane claims to have
referred to as the proprietor of VPL Medical LLC, an organization outdoors Los Angeles that had gotten a $6.4 million contract from the Division of Veterans Affairs to produce 8 million three-ply surgical masks to hospitals coping with the COVID-19 disaster.
My name freaked them out, Tim mentioned, and somebody on the firm had handed my quantity alongside to him.
I had referred to as VPL as a result of information confirmed the corporate integrated simply 4 days earlier than it gained the VA deal, and it went on to win one other $14.5 million no-bid contract the following day from the federal workplace in control of the nationwide stockpile.
Its new web site featured a photograph of the type of “ear loop” masks the federal authorities has since branded as ineffective Chinese language knockoffs.
The moniker stands for Viral Safety Labs, however the labs exist solely within the inventory artwork chosen for the web site.
We’ll return to McSwane’s story in a bit.
The VA fund the FTC had been involved about had been speculated to be frozen as per a beforehand granted injunction. This prompted the FTC to behave rapidly with their TRO software.
The drastic step of issuing the Proposed TRO with out discover is important due to Jason Cardiff’s repeated lies below oath and violations of the Preliminary Injunction and Asset Freeze, even below the specter of incarceration.
Any discover of this motion will virtually actually outcome within the dissipation of no matter belongings can be found in VPL accounts.
On June twenty fourth the FTC’s requested TRO was granted. Primarily based on in-camera proof introduced by the FTC, the court docket discovered;
There may be good trigger to imagine that Jason Cardiff is violating the Preliminary Injunction by failing to reveal his true position in VPL, and failing to account for belongings he has obtained via that enterprise.
The FTC is probably going to reach exhibiting that Jason Cardiff controls VPL and that VPL and its belongings, together with roughly $6 million paid or owed to it by the U.S. Division of Veterans Affairs, are “Receivership Property” as outlined within the Preliminary Injunction.
The proof introduced by the FTC to indicate Cardiff was in charge of VPL included electronic mail communications between Stacey Barket, a VPL government and the VA.
A number of emails that Stacey Barker, VPL’s “VP Enterprise Gross sales” or “Enterprise Account Govt,” despatched between April 8 and Might 1, 2020 to officers on the VA about its contract carbon copy “Jason Cardiff” utilizing a “(eliminated)@vplmedical.com” electronic mail tackle. No different particular person related to VPL is copied on these emails to the VA.
These emails relate to VPL’s vendor data, anticipated delays in VPL’s cargo of masks it was importing from China, and cargo and supply of these masks to the VA.
Much more tellingly, Ms. Barker acknowledged in an April 28, 2020 electronic mail replying to a FEMA consultant a few VPL bill for robes and goggles, “Cc’ing my CEO on this.”
The one particular person cc’d was Jason Cardiff, on the “(eliminated)@vplmedical.com” electronic mail tackle.
Moreover, the FTC introduced information exhibiting Cardiff has made
roughly 600 telephone calls to Ms. Barker, totaling almost 2,000 minutes of discuss time between March 25 and the tip of Might 2020, additional proof his management of VPL.
Via his lawyer, Cardiff had represented to the FTC that he was solely consulting for VPL.
Regardless of proudly owning the corporate, VPL’s incorporation paperwork solely checklist ‘checklist Bobby Bedi and Edward Jimenez as contacts’.
Bobby Bedi (proper) labored for Cardiff at Redwood. In accordance with the FTC, Bedi was a key determine in RengaLife’s launch.
The court docket went on to freeze roughly $18.2 million, obtained by Cardiff via Biztank Group and VPL.
As a part of the granted TRO, VPL Medical was additionally put below management of the court-appointed Redwood Receiver.
On June twenty sixth VPL filed an ex parte software to intervene and dissolve the granted June twenty fourth TRO.
Of their software VPL maintained the charade that Jason Cardiff was only a advisor.
Jason Cardiff is already a celebration to this motion however has an curiosity within the Disputed Funds as a result of he’s a advisor who will get paid by VPL as a advisor.
In any other case, he isn’t an officer, director neither is he a signatory on the checking account frozen by the FTC.
Bobby Bedi is the proprietor of VPL and agrees that he’s certain by the Preliminary Injunction.
Nonetheless, the funds belong to VPL. Mr. Bedi pays Mr. Cardiff as a advisor to ascertain and handle this firm.
The court docket didn’t purchase any of VPL’s assertions and denied its movement to dissolve the TRO on July 2nd.
Permission for VPL to intervene on a restricted foundation was granted, as a way to ‘defend its rights in its belongings … to the extent Jason Cardiff is unable to guard VPL’s rights’.
VPL was given a July third deadline to intervene. As on the time of publication they haven’t filed something.
J. David McSwane’s ProPublica article offers some fascinating perspective as this was all happening.
Tim, one in every of McSwane’s contacts and an virtually buyer of VPL’s, claims the masks VPL had been supplying had been supplied in Ziploc luggage.
Tim believes his take care of VPL was terminated as a result of he
requested too many questions of an organization consultant — about the place the masks had been sourced, in the event that they had been saved in sanitary circumstances and in regards to the firm’s credentials.
Upon getting involved with Bobby Bedi, McSwane was informed that Ziploc luggage weren’t used to retailer VPL’s masks.
He dismissed fraud allegations towards him and an affiliate as inevitable hiccups in doing enterprise.
Referencing the continuing Redwood proceedings, Bedi informed McSwane “the FTC was the fraud”.
An try to satisfy VPL and Bedi bought so far as rocking up for an appointment at Rock On IT’s workplaces in California.
We discovered the door. The signal mentioned “Rock On IT.” He knocked. Nobody answered. We waited within the operating automobile.
He referred to as the quantity he had for Cardiff, and the person who picked up mentioned he was in a gathering and needed to hold up.
Makes an attempt to contact Cardiff over LinkedIn and textual content message went unanswered.
Wanting ahead, the court docket has scheduled a listening to on the FTC’s June nineteenth contempt sanctions movement for July seventeenth.
The Cardiffs have been present in contempt twice now. They escaped jail within the April contempt ruling because of the COVID-19 pandemic.
If discovered to be in contempt once more on July seventeenth, whether or not the court docket will spare the Cardiffs once more stays to be seen.
Replace July eleventh, 2020 – A preliminary injunction was granted towards Cardiff and VPL on July seventh.
The present trigger contempt listening to has been pushed again to July twenty fourth.