Receiver accuses Jason Cardiff of inappropriate conduct

In an ex-parte movement requesting instruction from the court docket, the Redwood Receiver has accused Jason Cardiff of inappropriate conduct.

The inappropriate conduct pertains to the Receiver believing that Cardiff and VPL Medical are ‘looking for to make use of their payment software positions to incentivize the Receiver to behave improperly for his or her profit.’

“Payment software positions” pertains to Cardiff and VPL objecting to Receivership payment funds, based mostly on a but to be determined Supreme Court docket case.

A day and a half later that opposition was filed, Cardiff approached the Receiver about transferring out $1800 in COVID-19 reduction funds.

In line with the Receiver, the Cardiffs’ payment objection

rehash(es) their arguments beforehand made for his or her failed makes an attempt to this point to close down the receivership, and to “finish run” the a number of rulings by this Court docket and the Ninth Circuit Court docket of Appeals rejecting their prior makes an attempt to take action.

On the coronary heart of those objections is the Receivership’s continued operation of VPL Medical.

The Receiver nonetheless believes that VPL operations could also be performed profitably and legally, however such is sluggish going based mostly on a wide range of VPL administration, services, and gear persevering with points and VPL’s persevering with difficulties in conserving the gear working, all as extra significantly acknowledged within the concurrently filed Receiver’s report as to VPL operations.

However, authorized and worthwhile operations require an intent to pay for the bills of such operations, and never the ambiguous restrictions sought by Cardiff and VPL and not-so-veiled threats of not doing so.

Authorized and worthwhile operations additionally require a dedication from these concerned to not search financially improper and under-the-table benefits within the operation of the receivership property, or to hunt to have the Receiver breach fiduciary duties of disclosure to the Court docket.

That results in the second key occasion of the final week.

On January seventeenth Jason Cardiff

requested the Receiver to show over to Cardiff the $1,800 in Covid-19 reduction funds electronically deposited by the IRS to one among his receivership blocked accounts.

Extra regarding, Cardiff particularly requested at first that the Receiver to not inform anybody else about his request or the turnover of the $1,800, and to not contain any of the attorneys on this case.

The Receiver after all declined to show over these funds. Solely then did Cardiff admit discover was wanted.

The Receiver alleges the timing of Cardiff’s “inappropriate request”

could also be considered as making an attempt to have the Receiver …  wrongfully bend the Receiver’s choices to favor Cardiff, and to cowl that up.

Coordinated messaging? Mere coincidence? The Receiver doesn’t know, but additionally basically doesn’t imagine in coincidences.

The directions the Receiver is requesting pertains to continued operation of VPL Medical.

The concurrently filed subsequent Receiver report on VPL operations exhibits an organization that also can’t function, however which is making progress in that course, albeit very slowly.

Seven months after VPL was put into receivership, and 5 months or so after the Court docket authorized the VPL working plans, VPL’s employed executives Jason Cardiff and Bobby Bedi nonetheless haven’t been capable of make the manufacturing machines persistently operate, and haven’t generated any gross sales or orders.

Apparently what few masks VPL has been capable of produce “have now been licensed by a testing service as compliant”.

The Receiver is impartial on the query of continued VPL operations.

The Receiver stays cautiously optimistic that worthwhile and authorized operations can lead to money flows for the property. However, important funds have been expended to this point on such operations and not using a return to the property to date.

Personally I feel VPL has been a lark since Cardiff misplaced management of it to the Receiver. It definitely doesn’t sound like a enterprise being run severely at this level.

What mustn’t happen, nonetheless, is sustained VPL operations and not using a concomitant categorical dedication to pay for a similar, within the Receiver’s view, or VPL operations with out receivership oversight, with Cardiff and Bedi controlling the belongings together with financial institution accounts.

These belongings would doubtless be dissipated. That will not be in one of the best pursuits of collectors.

What additionally mustn’t happen, and can’t be allowed, within the Receiver’s view, is for Cardiff to really feel emboldened by litigation positions to attempt to acquire improper benefits from the Receiver.

The 2 choices offered by the Receiver are both persevering with to run VPL or shutting it down.

In his response to the Receiver’s ex-parte movement, Cardiff frames the submitting as

an extortionate menace by the Receiver and his lawyer designed to drive VPL’s homeowners to drop their objections to the Receiver’s Fifth Payment Request.

“Pay me or shut the enterprise down.” It is a false selection.

As a counter-proposal, Cardiff places forth the Receiver’s charges be deferred. Presumably pending the end result of the AGM Supreme Court docket case.

Deferring a ruling for 3 or 4 months is prudent and affordable underneath all of the circumstances.

With respect to his alleged “inappropriate conduct”, Cardiff states the Receiver’s claims are

not supported by the precise electronic mail correspondence however is the product of both exaggeration or embellishment.

The events have been speaking with one another informally for a while.

The Receiver can be Jason’s employer in addition to receiver and communications between the 2 should be considered in that gentle.

Till the Receiver felt threatened by VPL’s opposition to his charges, he has by no means questioned the integrity of how Jason has dealt with VPL’s enterprise actions.

From his request for residing bills, there is no such thing as a query that Jason is manner behind on paying money owed.

Jason needed to preserve authorized sources as a result of he is aware of his attorneys should not getting paid, that making requests via attorneys could be costly so he determined to straight ask the Receiver for steerage as to how his request ought to be dealt with.

There’s nothing on this electronic mail asking the e-mail be stored “secret” or which states Mr. Cardiff requested the Receiver “to not inform anybody.”

The query “Are you able to launch the maintain” and stating “there ought to be a method to not make an enormous deal and easily launch these funds with ease[.]” is a reliable query by a non-lawyer asking a Receiver for steerage.

The Receiver’s try to solid this as a sinister plot by Jason Cardiff is a misguided effort.

A listening to on the Receiver’s ex-parte movement has been scheduled for February fifth. Keep tuned…


Replace sixth February 2021 – On February third the Receiver filed an announcement, informing the court docket that discussions between the events had did not resolve “excellent disputes”.

As per the case docket the listening to on the fifth passed off. There hasn’t nonetheless been any updates to the docket to mirror the end result of the listening to.

I’ll examine again for an replace mid subsequent week.