Regardless of being discovered to be in contempt, final month Jason Cardiff dodged incarceration based mostly on representations that VPL Medical was a viable enterprise.
In a nutshell, the courtroom dominated that Cardiff being put to work for VPL was of extra profit to the FTC than incarceration.
As a part of that association, the court-appointed Redwood Receiver is required to file periodic standing experiences.
As per the Receiver’s first October 1st report, manufacturing at VPL Medical is “roughly 4 weeks behind” schedule.
The scheduling was put forth to the courtroom by the Receiver,
based mostly on a number of discussions with and representations by Jason Cardiff (“Cardiff”) and Bobby Bedi (Bedi”), and their beliefs about what they might and would accomplish if licensed to take action, and with the Receiver’s interviews with different third events.
These representations date again to June twenty fourth, when VPL suggested the Receiver it could possibly be operational “inside days”.
The continuing manufacturing delays have been put all the way down to “a number of components”, however primarily
erratic and premature responses from numerous distributors who’re being scheduled and managed day-to-day by Cardiff and Bedi.
As of October 1st, VPL
remains to be not operational regardless of Cardiff and Bedi accessing all vital sources and a month of labor on operational points.
Because the Receiver took management of VPL Medical round $450,000 has been blown via, with nothing a lot to point out for it.
An extra $720,000 has been put aside, as a preemptive warning in opposition to tax points pending an IRS determination on a late submitting.
Regardless of VPL Medical being non-operational for the month of September, Jason Cardiff was paid $18,879. The funds nonetheless have but to be launched, pending an settlement reached between Cardiff and the FTC.
I think about the FTC aren’t impressed with the solely predictable state of affairs of VPL Medical being non-functional.
As to the manufacturing points, downside one is the air filtration and AC system.
In the course of the September 1 assembly, Bedi said that he was within the technique of acquiring bids from distributors and needs to be receiving them within the subsequent two days or so.
On September 10, the Receiver was notified by Cardiff through e-mail that an air filtration/AC system vendor confirmed he would begin set up on September 21 of the required air filtration/AC techniques.
The Receiver inquired if the prevailing electrical system within the manufacturing facility might meet and ship the ability wanted for the air filtration/AC system, to which Cardiff replied “at first look not a problem throughout the board.”
On September 17, the Receiver adopted as much as inquire if present electrical system might meet and ship the ability wanted for the air filtration/AC system, to which Cardiff replied that he could be assembly with the distributors shortly and would offer an replace.
On September 18, Cardiff notified the Receiver {that electrical} vendor wanted to begin that day to maintain on schedule.
{The electrical} system set up quote got here in the identical day and was $16,000, which was $7,500 greater than the unique funds of $8,500.
Working over funds and assembly with third events with out the Receiver being current are each violations of the courtroom’s orders.
Nonetheless, set up of the filtration/AC system continued.
The Receiver was notified that {the electrical} work could be accomplished over the weekend and the air filtration/AC vendor would begin that set up on September 21.
Cardiff said {that electrical} vendor could possibly be trusted and left to do the work by themselves, however he didn’t belief the air filtration/AC system vendor to be unsupervised.
The Receiver acquired the air filtration/AC system bill from Cardiff on September 18 and the Receiver requested wiring directions, which the Receiver didn’t obtain till September 22.
On the morning of September 21, the Receiver was first notified that the air filtration/AC vendor would arrive at midday.
Lower than two hours later the Receiver was notified vendor wouldn’t arrive till following day at 9:30 a.m.
On September 22, the Receiver arrived on web site on the appointed time of 9:30 a.m., however nobody was there.
The Receiver tried to name/textual content Cardiff with out success so the Receiver emailed Cardiff and he replied that he could be there shortly. Cardiff arrived round 10:00 a.m., and the air filtration/AC vendor arrived round 10:30 a.m.
The seller dropped off AC compressors, measured the location, compiled a components checklist, and left to choose up components.
The seller known as round 1:30 p.m. and requested cost in foreign money up entrance as a result of they googled the corporate identify and didn’t wish to get “burned.”
The Receiver declined to make cost in foreign money so Cardiff negotiated to 80% wire switch up entrance, 10% on September 25 and 10% when system is put in and working.
The Receiver was not capable of wire the funds that day as a result of it was previous the two:00 p.m. financial institution wire deadline.
The seller famous that he had all gear reserved pending cost and choose up so he might begin the subsequent day as soon as he acquired cost.
On September 23, the Receiver requested and acquired an electronically signed W-9 and a one 12 months guarantee and wired the 80% cost to the seller.
The seller was scheduled to begin work at 1:00 p.m. Cardiff emailed and notified the Receiver at 11:50 a.m. that the seller wouldn’t be on web site till 9:00 a.m. the subsequent day, September 24.
Bedi then adopted up with an e-mail and said vendor could be on web site at 10:00 a.m. on September 24.
On September 24, the Receiver arrived on web site 10:00 a.m. The seller arrived round 11:00 a.m., and proceeded to maneuver the compressor models to the roof.
Thereafter, the seller left to accumulate extra components. He said he would textual content Bedi on the return schedule.
At 3:00 p.m., Bedi knowledgeable the Receiver that the seller wouldn’t return to work till September 25 at 9:00 a.m.
On September 25, the Receiver arrived on web site 9:00 a.m.
When the Receiver entered the manufacturing facility, the Receiver observed the entry hatch to the roof was left open when vendor completed work on the roof the day before today.
The seller arrived round 9:30 a.m., and began work. Round 5:00 p.m., Cardiff talked to the seller to seek out out their schedule and determined that he would depart and requested Bedi to return and examine the power after vendor accomplished work.
The Receiver was later notified by Bedi that the seller left round 8:50 p.m. and would return on September 26 at 10:00 a.m.
The revised, anticipated completion date of the manufacturing facility is October 2.
No concept if that deadline was met. And sadly we’ll in all probability have to attend for the subsequent 60-day report submitting date to seek out out.
With respect to VPL’s manufacturing machines, on September 1st Cardiff and Bedi
repeatedly said that components could be out there from their Chinese language distributors inside two days through specific cargo.
The primary cargo of components didn’t truly arrive till September twenty second. The second cargo cleared US customs on September thirtieth.
Makes an attempt to rent required machinist assistants had been additionally unsuccessful.
On September 23 Bedi despatched an e-mail to 11 job candidates, from which he had acquired on-line functions, for machinist assistants, scheduling them to be on web site for interview on September 25 between 11:30 a.m. and 1:30 p.m.
On September 25 the Receiver waited on the workplace to interview the candidates however nobody confirmed up.
A brief employment company was contacted instead. As of October 1st nonetheless, they had been unable “to find any machinists”.
The automation engineer supervising the restore of VPL Medical’s machines, Mr. Singh, has in the meantime gone AWOL.
Throughout dialog with Bedi on September 28, Bedi said he has not been capable of attain Mr. Singh up to now 4 days in order that Singh’s availability stays unclear in the mean time.
Wanting ahead, Cardiff nonetheless appears optimistic about VPL Medical’s potential.
On September 29 Cardiff offered the Receiver with an inventory of potential enterprise alternatives.
The entities on the checklist look like credit score worthy and warrant comply with up.
Most, if not all, of the prospects wish to see an operational manufacturing facility earlier than executing a contract with VPL.
As detailed within the sections beneath, the manufacturing facility shouldn’t be but prepared for operation and the masks meeting machines aren’t prepared for manufacturing.
Subsequently, the Receiver can’t present the Courtroom with earnings projections right now.
It’s value noting that the viability of VPL Medical was, in no small half, decided by a pending Veterans Administration contract.
As per the contract, VPL Medical was to produce the VA with two million masks by July 14th.
On the time VPL Medical had one machine operational, which the Receiver decided was “not functioning properly”.
VPL Medical did handle to ultimately ship off 270,000 masks, nonetheless they had been promptly rejected by the VA.
The explanation for the rejection is said within the Receiver’s report.
Regardless of repeated representations all through this matter that such masks could possibly be bought, Cardiff has now apparently decided these masks aren’t readily saleable.
He has situated a possible candidate within the Los Angeles space who could also be prepared to just accept the masks as a donation.
In an October fifth filed response to the Receiver’s report, Jason Cardiff asserts his VPL Medical wage was “earned”.
The dispute with the FTC pertains to Cardiff’s requested dwelling bills, with the FTC sustaining Cardiff has didn’t purge his contempt (seemingly on account of VPL Medical remaining nonoperational).
Cardiff claims if he’s not paid he would possibly “lose any incentive to work”. A movement requesting the discharge of funds (payable to Cardiff) was filed on October seventh.
Pending the potential collapse of VPL Medical within the meantime, the Receiver’s subsequent report is due sixty-days from October 1st.
There’s additionally a possible authorized difficulty arising from a current determination Third Circuit determination.
I’m not going to get into that till the FTC recordsdata a response and/or the courtroom points an order. I’ll proceed to observe the case docket.