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`UNITED STATES DISTRICT COURT
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`SOUTHERN DISTRICT OF CALIFORNIA
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`
`
`SECURITIES AND EXCHANGE
`COMMISSION,
`
`v.
`
`BLOCKVEST, LLC, et al.,
`
`Plaintiff,
`
` Case No.: 18cv2287-GPC (MSB)
`
`REPORT AND RECOMMENDATION FOR
`ORDER GRANTING PLAINTIFF’S MOTION
`FOR TERMINATING SANCTIONS
`[ECF No. 93]
`
`Defendants.
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` Pending before the Court is Plaintiff’s Securities and Exchange Commission’s
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`“Motion for Terminating Sanctions” [ECF No. 93], Defendants’ Opposition [ECF No. 99],
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`and Plaintiff’s Reply in support of its motion for terminating sanction [ECF No. 102]. This
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`Report and Recommendation is submitted to the United States District Judge Gonzalo P.
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`Curiel pursuant to 28 U.S.C. § 636(b) and Civil Local Rule 72.1(c) of the United States
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`District Court for the Southern District of California. For the reasons set forth below, the
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`Court RECOMMENDS that Plaintiff’s motion for terminating sanctions be GRANTED.
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`/ / /
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`/ / /
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`/ / /
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`/ / /
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`18cv2287-GPC (MSB)
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`Case 3:18-cv-02287-GPC-MSB Document 113 Filed 04/20/20 PageID.6293 Page 2 of 35
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`I. RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
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`On October 3, 2018, Plaintiff Securities and Exchange Commission (“SEC”) filed a
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`Complaint against Defendants Blockvest, LLC (“Blockvest”) and Reginald Buddy Ringgold,
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`III a/k/a Rasool Abdul Rahim El (“Ringgold”). (Compl., ECF No. 1.) Plaintiff states that
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`Defendant Blockvest, a limited liability company, and Defendant Ringgold, Blockvest’s
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`founder and principal, offer and sell unregistered securities in the form of digital assets
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`called “BLVs,” and seeks to stop investment fraud involving an initial coin offering
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`(“ICO”)1 by Defendants. (See id.; see also id. at 2, 4-5.) The Complaint further alleges
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`that Blockvest claims to be the “first [U.S.] licensed and regulated tokenized crypto
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`currency exchange and index fund,” that it has already raised more than $2.5 million in
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`pre-ICO sales of its BLVs, and it will raise $100 million during its ICO to fund Blockvest’s
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`digital asset-related financial products and services. (Id. at 2.) Plaintiff contends that
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`Defendants falsely claim that their ICO has been “registered” and “approved” by the SEC
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`and other regulators, and that Defendants have partnered with and are audited by
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`Deloitte Touche Tohmatsu Limited. (Id.) Plaintiff further alleges that Defendants
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`created a fictitious regulatory agency, the Blockchain Exchange Commission (“BEC”), in
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`order to create legitimacy and an impression that their investment is safe. (Id.)
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`Plaintiff claims that Defendants do not have the required regulatory approvals and
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`the established business relationships they claim to have, because the BLV offering is not
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`
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`1 An ICO is a fundraising event where an entity offers participants a unique digital coin, token, or
`digital asset in exchange for consideration, frequently in the form of virtual currency, such as Bitcoin
`and Ether, or fiat currency. (Id. at 7.) Digital assets issued in an ICO entitle their holders to certain
`rights related to a venture underlying the ICO, including rights to profits, shares of assets, use of
`certain services provided by the issuer, and voting rights. (Id. at 7-8.) Digital assets may also be listed
`on online trading platforms, and are tradable for virtual or fiat currencies. (Id. at 8.) ICOs are typically
`announced and promoted through public online channels. (Id.) Generally, to participate, investors are
`required to transfer funds to the issuer’s address, online wallet, or other account. (Id.) After the
`completion of the ICO, the issuer distributes its unique digital assets (“tokens”) to the participants’
`unique addresses on the blockchain. (Id.)
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`18cv2287-GPC (MSB)
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`Case 3:18-cv-02287-GPC-MSB Document 113 Filed 04/20/20 PageID.6294 Page 3 of 35
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`“U.S. SEC approved,” nor is it approved by any other U.S. financial regulator, the BEC is
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`not affiliated with the SEC, and Blockvest is not affiliated with the name-brand
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`companies whose logos appear in its marketing materials. (Id. at 2-3.) Plaintiff
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`contends that investors’ assets therefore lack the safety and protections that
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`Defendants are falsely portraying in their scheme to raise money through Blockvest’s
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`planned ICO and ongoing pre-sales. (Id. at 3.)
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`Plaintiff asserts the following five causes of action: (1) fraud in connection with
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`the purchase or sale of securities, in violation of Section 10(b) of the Securities Exchange
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`Act of 1934 (“Exchange Act”) and Rule 10b-5(b); (2) fraud in connection with the
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`purchase or sale of securities, in violation of Section 10(b) of the Exchange Act and Rules
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`10b-5(a) and 10b-5(c); (3) fraud in the offer or sale of securities, in violation of Section
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`17(a)(2) of the Securities Act of 1933 (“Securities Act”); (4) fraud in the offer or sale of
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`securities, in violation of Sections 17(a)(1) and 17(a)(3) of the Securities Act; and
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`(5) unregistered offer and sale of securities, in violation of Sections 5(a) and 5(c) of the
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`Securities Act. (Id. at 2, 24-28.) Plaintiff’s Complaint seeks an order temporarily,
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`preliminarily and permanently enjoining Defendants from violating the federal securities
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`laws, and enjoining Defendant Ringgold from participating in an offer or sale of digital or
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`other securities, or making misrepresentations regarding regulatory approval in
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`connection with such offerings; a temporary restraining order and a preliminary
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`injunction freezing Defendants’ assets, requiring accounting from each Defendant, and
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`prohibiting destruction of documents; disgorgement of Defendants’ ill-gotten gains; and
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`payment of civil monetary penalties. (Id. at 3, 29-30.)
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`On October 3, 2018, Plaintiff also filed an ex parte application for a temporary
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`restraining order (“TRO”). (ECF No. 3.) On October 5, 2018, District Judge Curiel
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`granted Plaintiff’s ex parte application for a TRO, freezing assets, prohibiting destruction
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`of documents, granting expedited discovery, and requiring an accounting. (ECF Nos. 5 &
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`6.) The District Judge found that Plaintiff had made a prima facie showing based on
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`Defendants’ marketing and advertising through websites and media posts of Blockvest
`3
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`18cv2287-GPC (MSB)
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`Case 3:18-cv-02287-GPC-MSB Document 113 Filed 04/20/20 PageID.6295 Page 4 of 35
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`and its ICO, that BLV tokens were “securities.” (ECF No. 5 at 8-9.) The District Judge also
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`issued an “Order to Show Cause Re Preliminary Injunction and Orders: (1) Freezing
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`Assets; (2) Prohibiting the Destruction of Documents; (3) Granting Expedited Discovery;
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`and (4) Requiring Accountings” and set a hearing for October 18, 2018. (ECF No. 6 at 12-
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`13.) The District Judge subsequently granted the parties’ two joint motions to extend
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`the TRO and the hearing on the order to show cause until November 16, 2018. (ECF Nos.
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`15 & 17.)
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`In support of their opposition to Plaintiff’s motion for a preliminary injunction, on
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`November 13, 2018, Defendants filed investor declarations, which included declarations
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`from Chris Russell [ECF No. 32-6 at 67-68], Quintin Dorsey [ECF No. 32-8 at 6], and
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`Jacqueline Wartanian [ECF No. 32-8 at 4]; and on November 20, 2020—a declaration
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`from Amanda Vaculik [ECF No. 40-2 at 2]. On November 16, 2018, District Judge Curiel
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`held a hearing on Plaintiff’s motion for a preliminary injunction [ECF No. 37], and on
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`November 27, 2018—issued an order denying Plaintiff’s motion [ECF No. 41]. The order
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`cited, among other documents, investor declarations that Defendants filed in support of
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`their opposition to Plaintiff’s motion for a preliminary injunction. (See ECF No. 41.) The
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`District Judge concluded that in light of the evidence presented by Defendants, there
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`were disputed factual issues as to the nature of investments offered to the alleged
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`investors, and without full discovery, the Court could not determine “whether the BLV
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`token offered to the 32 test investors was a ‘security’” and “whether the 17 individuals
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`who invested in Rosegold purchased ‘securities’ as defined under the federal securities
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`law.” (Id. at 13-14.) The District Judge also found that Plaintiff failed to show a
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`reasonable likelihood that Defendants would repeat their violations because “it is
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`disputed whether there have been past violations.” (Id. at 15-16.)
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`Defendants filed an Answer on December 14, 2018. (ECF No. 43.) On
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`December 17, 2018, Plaintiff moved for partial reconsideration of the District Court’s
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`November 27, 2018 order. (ECF No. 44.)
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`Case 3:18-cv-02287-GPC-MSB Document 113 Filed 04/20/20 PageID.6296 Page 5 of 35
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`On February 14, 2019, the District Judge granted in part Plaintiff’s motion and
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`preliminarily enjoined Defendants’ violations of the antifraud provisions of the
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`Securities Act. (ECF No. 61.) In the order, the District Judge cited Defendants’ evidence
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`concerning the Rosegold investors and testers to conclude that there was a factual
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`dispute about whether those individuals purchased securities. (Id. at 13-14.) The
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`District Judge “denie[d] Plaintiff’s motion for reconsideration as to the offers or
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`promises made to the 32 test investors and 17 individual investors.” (Id. at 14.)
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`On December 27, 2018, Corrigan & Morris LLP, moved to withdraw as counsel for
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`Defendants Blockvest and Ringgold. (ECF No. 47.) District Judge Curiel granted defense
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`counsel’s request to withdraw as counsel on February 14, 2019, and gave Defendants
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`until March 15, 2019, to obtain substitute counsel. (ECF No. 62.) In the order, Judge
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`Curiel noted that as a limited liability corporation, Defendant Blockvest could not
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`proceed in federal court without counsel, and expressly cautioned Blockvest “that if it
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`fails to obtain new counsel and have counsel file a notice of appearance, it may be
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`subject to default proceedings.” (Id. at 3-4.) On March 18, 2019, Judge Curiel granted
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`Defendants’ ex parte request for additional time to obtain counsel and continued the
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`deadline until March 29, 2019. (ECF No. 64.) To date, no counsel has entered an
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`appearance on behalf of Defendants. (See Docket.)
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`On February 11, 2019, this Court held an Early Neutral Evaluation Conference, and
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`on April 22, 2019–a follow-up Settlement Conference. (ECF Nos. 59 & 71.) On April 24,
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`2019, the Court issued a scheduling order that set, among other deadlines,
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`September 9, 2019, as the deadline for fact discovery, December 26, 2019, as the
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`deadline for expert discovery, and January 27, 2020, as the deadline to file pretrial
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`motions. (ECF No. 72 at 1, 3.)
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`On January 10, 2020, Plaintiff filed the instant ex parte motion for terminating
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`sanctions, which was referred to this Court. (ECF Nos. 93 & 94.) On January 24, 2020,
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`Plaintiff filed a motion for summary judgement, which is currently pending before the
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`District Judge. (ECF No. 96.)
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`In the instant motion, Plaintiff SEC moves for terminating sanctions against
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`Defendants Blockvest and Ringgold pursuant to the Court’s inherent authority. (Pl.’s
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`Mot. for Terminating Sanctions (“Mot”) 13-14, 20, ECF No. 93-1.)
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`II. APPLICABLE LAW
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`District courts have inherent power to impose sanctions for “conduct which
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`abuses the judicial process.” Chambers v. NASCO, Inc., 501 U.S. 32, 44-45 (1991); see
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`also Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006) (“There are two sources of
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`authority under which a district court can sanction a party who has despoiled evidence:
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`the inherent power of federal courts to levy sanctions in response to abusive litigation
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`practices, and the availability of sanctions under Rule 37 . . . .”). District courts have
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`inherent power to impose sanctions, including default or dismissal, when a party has
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`“willfully deceived the court and engaged in conduct utterly inconsistent with the
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`orderly administration of justice.” Fjelstad v. Am. Honda Motor Co., Inc., 762 F.2d 1334,
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`1338 (9th Cir. 1985); see also TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 916 (9th
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`Cir. 1987) (“Courts have inherent equitable powers to dismiss actions or enter default
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`judgments[.]”).
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`Terminating sanctions are a severe remedy, and should be imposed only in
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`extreme circumstances, “where the violation is ‘due to willfulness, bad faith, or fault of
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`the party.’” In re Exxon Valdez, 102 F.3d 429, 432 (9th Cir. 1996) (quotation omitted);
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`see also Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir.
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`1995) (terminating sanctions are warranted where “a party has engaged deliberately in
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`deceptive practices that undermine the integrity of judicial proceedings.”). “The most
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`critical criterion for the imposition of a dismissal sanction is that the misconduct
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`penalized must relate to matters in controversy in such a way as to interfere with the
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`rightful decision of the case. This rule is rooted in general due process concerns. There
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`must be a nexus between the party’s actionable conduct and the merits of his case.”
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`Tripati v. Corizon Inc., 713 F. App’x 710, 711 (9th Cir. 2018) (quoting Halaco Eng’g Co. v.
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`Costle, 843 F.2d 376, 381 (9th Cir. 1988)).
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`18cv2287-GPC (MSB)
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`Case 3:18-cv-02287-GPC-MSB Document 113 Filed 04/20/20 PageID.6298 Page 7 of 35
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`In deciding whether to impose terminating sanctions, courts must weigh the
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`following factors: “(1) the public’s interest in expeditious resolution of litigation; (2) the
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`court’s need to manage its dockets; (3) the risk of prejudice to the party seeking
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`sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the
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`availability of less drastic sanctions.” Leon, 464 F.3d at 958 (quoting Anheuser–Busch,
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`69 F.3d at 348). In most cases, the first two factors weigh in favor of the imposition of
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`sanctions, and the fourth factor typically weighs against a default or dismissal sanction.
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`Stars’ Desert Inn Hotel & Country Club, Inc. v. Hwang, 105 F.3d 521, 524 (9th Cir. 1997).
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`“Thus the key factors are prejudice and availability of lesser sanctions.” Id. (quotation
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`omitted); see also Valley Eng’rs Inc. v. Elec. Eng’g Co., 158 F.3d 1051, 1057 (9th Cir.
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`1998) (when considering evidentiary, issue or terminating sanctions, factors three and
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`five “are decisive.”).
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`factors, a finding of “willfulness, fault, or bad faith” is required for dismissal or default
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`judgment to be proper. See Leon, 464 F.3d at 958; Anheuser–Busch, 69 F.3d at 348.
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`“Where a party so damages the integrity of the discovery process that there can never
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`be assurance of proceeding on the true facts, a case dispositive sanction may be
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`appropriate.” Conn. Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091,
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`1096 (9th Cir. 2007) (quoting Valley Eng’rs, 158 F.3d at 1058).
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`III. ANALYSIS
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`Plaintiff moves for terminating sanctions against Defendants pursuant to the
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`Court’s inherent authority, arguing that Defendants willfully and in bad faith deceived
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`the Court by filing forged and false declarations in support of their opposition to
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`Plaintiff’s motion for a preliminary injunction. (Mot. at 5, 13-14, 20.) Plaintiff asserts
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`that subsequent discovery revealed that the filed declarations “obscured critical details”
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`that the declarants were unaffiliated individuals who were provided Blockvest’s
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`fraudulent promotional materials by Defendants and their commissioned sales agents
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`18cv2287-GPC (MSB)
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`Case 3:18-cv-02287-GPC-MSB Document 113 Filed 04/20/20 PageID.6299 Page 8 of 35
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`before their investments, and that at least four of the declarations were knowingly
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`deceptive or forged. (Id. at 7-8.)
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`Specifically, Plaintiff contends that the declaration of an alleged Rosegold
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`investor, Christopher Russell, was filed with the Court with a forged signature of the
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`declarant and contained numerous false statements. (See id. at 5, 8-9.) Plaintiff further
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`states that Defendant Ringgold asked at least two supposed testers, Quintin Dorsey and
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`Jacqueline Wartanian, to sign false declarations, concealing that they had trusted
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`Ringgold with their money because they were his former Online Trading Academy
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`students, and expected a return from real Blockvest tokens that they purchased after
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`reviewing Blockvest’s promotional materials Ringgold provided. (Id. at 5-6.) Plaintiff
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`also contends that Ringgold directed his affiliate, Amanda Vaculik, to lie during her
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`interview with SEC, and to submit a false declaration to support a fabricated story about
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`a $147,000 payment allegedly made for Blockvest’s development. (Id. at 6.)
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`Plaintiff argues that because Defendants willfully misled the Court concerning a
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`central legal issue in this case through the submission of knowingly false and forged
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`declarations, the “false materials so tainted the credibility of any defense evidence, that
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`there is no reason for the Court to review this evidence for a triable issue of fact.” (Id.
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`at 6.) Plaintiff therefore asks the Court to impose terminating sanctions in the form of
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`default judgement against Defendants. (Id. at 13-14, 20.) If the Court is not willing to
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`impose terminating sanctions, Plaintiff seeks an order of preclusion and adverse
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`inference, precluding Defendants from relying on any of the investor declarations, and
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`to draw adverse inferences concerning whether Defendants sold those investors
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`Blockvest securities. (Id. at 6, 20.)
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`In his Opposition, Defendant Ringgold asks the Court to deny Plaintiff’s motion.
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`(Opp’n (“Opp’n”) 13, ECF No. 99-1.) Ringgold argues that terminating sanctions are not
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`warranted, because Defendants did not destroy or withhold evidence, and did not
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`disobey a discovery order; rather, Defendants acted under “intense time constraints”
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`imposed by this litigation, and Ringgold was not accountable for any alleged misconduct
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`of non-parties. (See id. at 6-8, 11-13).
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`Ringgold initially contends that Defendants were deprived of “due process” when
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`Plaintiff seized their cash, “depriv[ed] them of counsel, and order[ed] them to conduct
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`no further business.” (Id. at 5.) He further asserts that Plaintiff employed coercion
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`tactics to induce Dorsey, Wartanian, and Vaculik to perjure themselves. (Id. at 11.)
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`Ringgold states that his former counsel did their best to “draft the declarations correctly
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`under intense time constraints,” but acknowledges that “it is highly possible that the
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`[defense] counsel inaccurately carried over statements from the prior drafted
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`declarations to those of the Russell, Dorsey & Wartani[a]n[.]” (Id.) Ringgold maintains
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`that if the Court is inclined to impose sanctions, it should issue an order precluding him
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`from “offering the forged Declaration at trial.” (Id. at 12.) In the alternative, Ringgold
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`seeks an order allowing him to “resubmit the declarations in the form of Notarized
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`Affidavit of Facts form Quint[i]n Dorsey, Jackie Wartanian & Christopher Russel in lieu of
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`sanctions.” (Id. at 13.)
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`Plaintiff replies that Defendants submitted four knowingly forged or false
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`declarations to the District Court, and Judge Curiel relied on this false evidence when he
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`initially denied Plaintiff’s request for a preliminary injunction, which resulted in
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`protracted litigation, delayed relief for the victims of the Blockvest digital asset scheme,
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`and caused irreparable harm to the Court, Plaintiff, and Blockvest investors. (Pl.’s Reply
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`(“Reply”) 2, ECF No. 102.) Plaintiff asserts that Defendants have not submitted any
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`evidence to refute the falsity of the declarations at issue, admitted that “it is highly
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`possible that the [defense] counsel inaccurately carried over statements from the prior
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`drafted declarations,” and have not taken any steps to withdraw the false evidence. (Id.
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`(citing Opp’n at 11-12).) Plaintiff also contends that Defendants’ misconduct was willful,
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`and Defendants’ continued failure to accept responsibility for their actions warrants
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`terminating sanctions. (Reply at 2.) Plaintiff further argues that at this stage of the
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`proceedings, after discovery closed and its motion for summary judgment has been
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`filed, the only “meaningful sanction” is an order of default liability against Defendants
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`Blockvest and Ringgold. (Id. at 2, 10.)
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`I.
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`Declarations at Issue
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`A. Declaration of Christopher Russell
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`1. Version of the declaration filed by Defendants
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`On November 13, 2018, Defendants filed Christopher Russell’s declaration in
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`support of their opposition to Plaintiff’s motion for a preliminary injunction. (ECF No.
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`32-6 at 67-68; see also Decl. of Brent W. Wilner in Supp. of Pl.’s SEC’s Mot. for
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`Terminating Sanctions (“Wilner Decl.”) 2, ECF No. 93-2; id., Ex. 3.) Russell’s declaration
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`was signed under the penalty of perjury. (ECF No. 32-6 at 68.) The declaration stated,
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`inter alia, the following:
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`• Russell considers himself a “sophisticated investor.” (Id. at 67.)
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`• “Before I sent any money to Rosegold Investments LLP, I did not review or rely
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`on Rosegold Investments LLP’s website or any offering documents or anything on the
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`internet about Rosegold Investments LLP.” (Id.)
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`• “Before sending any money to Rosegold Investments LLP, I did not review or
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`rely on the Blockvest Website or Whitepaper or anything else on the internet about
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`Blockvest.” (Id.)
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`• “Before sending my money to Rosegold Investments, I did not review or rely
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`on Reginald Ringgold’s web page, LinkedIn page, or anything else on the internet having
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`to do with Mr. Ringgold.” (Id. at 68.)
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`• Russell sent his money to Rosegold based “solely” on his personal relationship
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`with his friend Michael Sheppard, and “not based on any specific representation about
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`anything specific on the internet or otherwise.” (Id.)
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`/ / /
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`/ / /
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`2. Evidence obtained during the course of discovery
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`On November 13, 2018, Russell’s friend, Blockvest sales agent Chase Pfohl, e-
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`mailed Russell a proposed version of his declaration drafted by Defendants. (Wilner
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`Decl. at 2, Ex. 4 at 100-02; Ex. 22 at 181-83.) On the same day, November 13, 2018,
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`Defendants filed a declaration with an electronic signature bearing Russell’s name. (See
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`ECF No. 32-6 at 67-68.) Russell testified that on November 14, 2018, one day after his
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`alleged declaration was filed with the Court, he sent Sheppard, Blockvest’s CFO, his
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`actual signed declaration. (See Wilner Decl. at 2-3; Ex. 5 at 104; Ex. 22 at 197-200.)
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`Russell sent the declaration as a PDF file so that nobody could change the declaration
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`afterwards. (Wilner Decl., Ex. 5 at 104; Ex. 22 at 197.)
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`The declaration Russel authorized and signed [ECF No. 93-2 at 106-107; see
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`also Wilner Decl. at 3, Ex. 4] drastically differed from the declaration Defendants filed on
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`his behalf:
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`• Russell omits the word “sophisticated” from “I consider myself a sophisticated
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`Investor.” (ECF No. 93-2 at 106.)
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`• Russell omits the statement that he did not review or rely on Rosegold’s
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`website, or anything on the internet or other documents about Rosegold. (See id. at
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`106-07.)
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`• Russell omits the statement that he did not rely on Blockvest’s website or
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`anything else on the internet about Blockvest. (See id.)
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`• Russell omits the statement that he did not review or rely on Reginal
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`Ringgold’s web page, LinkedIn page, or anything else on the internet concerning Mr.
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`Ringgold. (See id.)
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`• Russell omits the statement that he sent money to Rosegold based solely on
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`his personal relationship with his friend Michael Sheppard, and not based on any
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`specific representation about anything specific on the internet or otherwise; Russell says
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`it was the “primary reason” he invested. (See id. at 106.)
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`Accordingly, in his authorized declaration, Russell omitted the word
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`“sophisticated” from “I consider myself a sophisticated investor,” which appear in the
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`Court-filed version of the declaration. (Wilner Decl., Ex. 22 at 183-85, 204-05; see also
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`ECF No. 32-6 at 67.) Further, according to Russell’s deposition testimony, the
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`Defendants’ version of the declaration contained statements that Russell had never
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`seen, including the statement that he had never reviewed or relied on Blockvest’s
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`promotional materials or website. (Wilner Decl., Exs. 3, 4 & 6; Ex. 22 at 165-68; see also
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`ECF No. 32-6 at 67-68.) After his investment, Russell continued to believe he had
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`acquired BLV tokens based on his account statement available on Blockvest’s website.
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`(Wilner Decl., Ex. 22 at 176-78.) Based on Blockvest’s promotional materials and other
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`representations by the company’s personnel, Russell expected to profit from those
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`tokens based on the efforts of Ringgold and Blockvest’s management to make the
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`company successful. (Id. at 179-80, 192-94.)
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`With respect to the paragraph in the version of the declaration Defendants filed
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`with the Court, stating that Russell sent his money to Rosegold based solely on his
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`personal relationship with his friend Sheppard, “and not based on any specific
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`representation about anything specific on the Internet or otherwise,” Russell testified
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`that he did not authorize anybody to make that representation on his behalf because it
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`was false. (Id. at 209; see also ECF No. 32-6 at 68.) He testified that he reviewed
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`numerous marketing materials and information about Blockvest on the Internet, and
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`those materials and information influenced his decision to make the $3,000 purchase of
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`Blockvest tokens. (Id. at 191, 209.)
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`Russell also stated the following during his testimony:
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`Q. So someone under your name adds this paragraph that you had
`never reviewed the Blockvest website or white paper or anything else on
`the Internet about Blockvest, right?
`A. Correct.
`Q. That’s false, right?
`A. Yes.
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`Q. Because you did, in fact, review the Blockvest website before you
`decided to purchase, right?
`A. Yes.
`Q. And you did review other materials about Blockvest before you
`decided to purchase, right?
`A. Yes.
`Q. So someone added a completely fabricated statement under your
`name to the Court; is that right?
`A. Yes.
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`(Id. at 206-07 (emphasis added).) Russell also testified as follows:
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`Q. And, in fact, what you testified to earlier is that there was
`information about Mr. Ringgold in some of the materials you reviewed
`about Blockvest, right?
`A. Yes.
`Q. And you reviewed those in connection with—prior to your
`purchase of Blockvest tokens, correct?
`A. Yes.
`Q. So this paragraph’s false also, right?
`A. Yes.
`Q. And, again, somebody added a false paragraph under your name
`to the Court?
`A. Yes.
`Q. And it wasn’t you, right?
`A. Yes.
`Q. And you didn’t authorize them to do that, right?
`A. Correct.
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`(Id. at 208 (emphasis added).)
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`Russell testified that he did not authorize Blockvest or Ringgold to file his signed
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`declaration with the Court one day before he provided his actual signed declaration to
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`them. (Id. at 197, 201-05.) Russell also testified that no one from Blockvest told him
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`that they were going to make changes to his authorized declaration. (Id. at 200.) When
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`asked whether he has “ever seen a version of the declaration that Blockvest and Mr.
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`Ringgold filed on [Russell’s] behalf with the Court? Did they ever send you a copy of
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`that?,” Russell answered, “No.” (Id. (emphasis added).) Notably, Russell testified that
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`the version of the declaration filed with the Court is “false.” (Id. at 205 (emphasis
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`added).)
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`Defendant Ringgold testified that he did not personally forge Russell’s signature.
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`(Wilner Decl., Ex. 28 at 373-83.) When Ringgold was asked during his deposition
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`whether he “ha[d] a concern that the [Russell declaration] that was filed with the court
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`might have been a forgery,” Ringgold answered “Correct.” (Id. at 383.)
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`B. Declaration of Quintin Dorsey
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`1. Declaration filed by Defendants
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`On November 13, 2018, Defendants filed Quintin Dorsey’s declaration in support
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`of their opposition to Plaintiff’s motion for a preliminary injunction. (See Wilner Decl. at
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`3, Ex. 8 at 11; see also ECF No. 32-8 at 6.) The declaration, inter alia, contained the
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`following statements:
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`• “I never intended to make an investment and made no investment
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`decision, but wanted to help test the exchange for future use and believed I would get
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`my money back, less the transaction fees charged by third-parties.” (ECF No. 32-8 at 6.)
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`• “I knew I could not receive BLV token because they could not be removed
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`from the platform and had no value.” (Id.)
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`2. Evidence obtained during the course of discovery
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`On July 15, 2019, Dorsey was deposed and testified that he was a former student
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`of Ringgold at the Online Trading Academy. (Wilner Decl., Ex. 23 at 212, 214.) In a
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`March 1, 2018 e-mail, Sheppard sent Dorsey promotional materials providing “an
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`overview of the Blockvest cryptocurrency token,” which Sheppard claimed was a
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`“[g]reat investment opportunity to make a quick 100% return on your investment.”
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`(Wilner Decl., Ex. 10 at 115.) In an April 22, 2018 e-mail, Ringgold wrote to Dorsey, “I
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`want to thank personally for you investment interest in the project,” attaching links to
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`Blockvest’s materials, including the website, whitepaper, ICO video, and Form D notice
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`of exempt offering of securities filed with the SEC. (Wilner Decl., Ex. 11 at 117
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`(emphasis added).) Ringgold added, “[f]or your investment you will receive 10,000 BLV
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`Case 3:18-cv-02287-GPC-M