Following on from allegations the Success By Health deleted evidence, the FTC has made new allegations pertaining to fabricated evidence.
Individual defendants called out by the FTC are Jay Noland, his wife Lina and Scott Harris.
At issue are two royalty agreements, between Success By Media and Enhanced Capital Funding.
The agreements are dated January 15th, 2017 and September 27th, 2018.
Said agreements have been cited by the Success By Health defendants in sworn declarations seeking relief.
The FTC has filed the agreements in support of one of their motions, and the court has relied on the agreements in at least one ruling.
The ruling pertains to Enhanced Capital Funding (ECF), an entity Noland and his wife own.
Earlier this year Noland sought the release of almost half a million in frozen ECF funds. The court denied Noland’s motion in August.
The FTC claims it did not learn the Success By Health and ECF agreements were fabricated until early November.
As revealed by the FTC;
Emails recently produced by Defendants, along with their past SEC and IRS filings, reveal they apparently created and signed the Royalty Agreements in January 2020, not in 2017 and 2018.
SBM’s November 2017 and January 2018 SEC filings have no mention of any royalty arrangement, and its tax return for 2017 shows no royalty payments.
In August 2019, over a year after both Royalty Agreements were allegedly signed and in effect, Noland and Crystal Roney (SBM’s and ECF’s accountant) traded the first “drafts” of an agreement (and just of the first agreement, never the second).
Not only that, but the terms of the agreement that was signed differ from the allegedly fabricated agreements made available to the court.
These unsigned August drafts were sent to Noland by Roney within days of the court granting a TRO in January 2020.
Why this happened has not been explained, which is strange considering Noland was in the US and would have thus supposedly had access to the hardcopies.
Just two days after Noland received the last of the unsigned drafts from Roney, he produced to the FTC signed copies of the Royalty Agreements with different dates.
Upon learning of the alleged fabrication, the FTC contracted Jay Noland’s attorney;
who later said he investigated but disagreed with the FTC’s findings and declined to provide any factual basis.
Instead, he filed a “Disclosure” with a post hoc rationalization, devoid of evidence, that fails to explain the related emails Defendants withheld for months (or federal filings).
The FTC concludes
too many facts contradict the Disclosure’s implausible explanation of wet signatures that supposedly existed only in hard copy in Noland’s home as of September 2018 until he converted them to PDF in January 2020.
Based on their findings, the FTC puts forth
it now has the requisite knowledge under ER 3.3 that evidence it offered the Court (i.e., the purported Royalty Agreements that Defendants produced to the FTC) is false, and no signed agreement existed between SBM and ECF prior to this case.
This conclusion is evident from the documents Defendants’ ultimately produced in late October 2020, and documents that they filed with the SEC and IRS pre-TRO.
“ER 3.3” refers to Ethics Rule 3.3, which is the stated rule the FTC filed their November 24th notice under.
At the time of publication the Success By Health defendants haven’t responded to the notice. Pending any action taken by the court, stay tuned…
Update 10th December 2020 – As per the outcome of a December 7th telephonic conference;
For reasons as stated on the record, the Court will not take any action at this time regarding Plaintiff’s Notice Pursuant to Ethics Rule 3.3 (False Evidence).
At the request of Plaintiff’s counsel, and there being no objection by Defense counsel, Plaintiff may file a spoliation motion.
I don’t have access to whatever was “stated on the record”, but sounds like the court wasn’t inclined to grant the FTC’s ethics rules violation motion.
Or they’ve hinted that the FTC should double down with a spoliation motion.
A spoliation motion specifically pertains to the destruction of evidence with prejudice – in that evidence was destroyed with the specific intent to withhold it from the plaintiff.
Seeing as that appears to be the case here, perhaps a spoliation motion will be more effective than the FTC’s previously filed ethics rules motion.
I’ll continue to monitor the case docket for updates. Stay tuned…