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`UNITED STATES DISTRICT COURT
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`SOUTHERN DISTRICT OF CALIFORNIA
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`SECURITIES AND EXCHANGE
`COMMISSION,
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`Plaintiff,
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`v.
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`BLOCKVEST, LLC and REGINALD
`BUDDY RINGGOLD, III a/k/a RASOOL
`ABDUL RAHIM EL,
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`Defendants.
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`
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` Case No.: 18CV2287-GPB(MSB)
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`ORDER ADOPTING REPORT AND
`RECOMMENDATION AND
`GRANTING PLAINTIFF’S MOTION
`FOR TERMINATING SANCTIONS
`AS TO DEFENDANT RINGGOLD
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`[Dkt. No. 93.]
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`Before the Court is Plaintiff Securities and Exchange Commission’s (“SEC” or
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`“Plaintiff”) motion for terminating sanctions seeking entry of default judgment against
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`Defendants Blockvest LLC and Reginald Buddy Ringgold (collectively “Defendants”) on
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`all claims in the complaint. (Dkt. No. 93.) Defendant Reginald Buddy Ringgold III
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`(“Ringgold” or “Defendant”) filed an opposition and the SEC filed its reply. (Dkt. Nos.
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`99, 102.)
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`On April 20, 2020, pursuant to 28 U.S.C. § 636(b)(1), the Honorable Michael S.
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`Berg, United States Magistrate Judge (“Magistrate Judge”), submitted a Report and
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`Recommendation (“R&R”) to this Court recommending that terminating sanctions be
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`18CV2287-GPB(MSB)
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`Case 3:18-cv-02287-GPC-MSB Document 117 Filed 05/29/20 PageID.6357 Page 2 of 29
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`imposed and default judgment entered against Defendants. (Dkt. No. 113.) Ringgold
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`filed an objection to the R&R and the SEC filed a reply. (Dkt. No. 1115, 116.)
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`The motion raises three questions: (1) whether Defendants submitted false
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`declarations to defend against the SEC’s case; (2) if so, were false declarations submitted
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`willfully; and (3) if so, whether a terminating sanction is the appropriate remedy for
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`presenting the false declarations in this litigation. The Court finds that the evidence
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`establishes that Defendants willfully filed false declarations to defend against the SEC
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`allegations, and, in so doing, willfully deceived the Court and adversely affected the
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`administration of justice. For the reasons stated below, the Court ADOPTS the R&R and
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`GRANTS the SEC’s motion for terminating sanctions as to Defendant Ringgold.
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`Procedural Background
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`On October 3, 2018, the SEC filed a Complaint against Defendants Blockvest,
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`LLC (“Blockvest”) and Reginald Buddy Ringgold, III a/k/a Rasool Abdul Rahim El
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`(“Ringgold” or “Defendant”) alleging violations of Section 10(b) of the Securities
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`Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5(b); violations under Section
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`10(b) of the Exchange Act and Rule 10b-5(a) and Rule 10b-5(c); fraud in violation of
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`Section 17(a)(2) of the Securities Act of 1933 (“Securities Act”); fraud in violation of
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`Sections 17(a)(1) and 17(a)(3) of the Securities Act; and violations of Sections 5(a) and
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`5(c) of the Securities Act for the offer and sale of unregistered securities. (Dkt. No. 1,
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`Compl.) Plaintiff also concurrently filed an ex parte motion for temporary restraining
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`order seeking to halt Defendants’ fraudulent conduct and freezing their assets, prohibiting
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`the destruction of documents, seeking expedited discovery and an accounting of
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`Defendants’ assets. (Dkt. No. 3.) On October 5, 2018, the Court granted Plaintiff’s ex
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`parte motion for temporary restraining order. (Dkt. Nos. 5, 6.) In compliance with the
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`temporary restraining order, Defendants filed Ringgold’s Declaration of Accounting on
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`October 26, 2018, and a First Supplemental Declaration of Ringgold on November 2,
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`2018. (Dkt. Nos. 18, 21.) Defendants also filed a response to the order to show cause on
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`November 2, 2018. (Dkt. Nos. 23, 24, 25.) On November 7, 2018, Plaintiff filed a reply.
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`(Dkt. Nos. 27, 28.) A hearing on the order to show cause was held on November 16,
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`2018, (Dkt. No. 37), and on November 27, 2018, the Court denied a preliminary
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`injunction. (Dkt. No. 41.)
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`On December 17, 2018, the SEC filed a motion for reconsideration. (Dkt. No. 44.)
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`Subsequently, defense counsel filed a motion to withdraw as counsel on December 27,
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`2018, and, among other things, cited attempts by defendants to file documents without
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`counsel’s knowledge or signature. (Dkt. No. 47 at 5-6.) On February 14, 2019, the Court
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`granted Plaintiff’s motion for partial reconsideration of the denial of a preliminary
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`injunction against Defendants for future violations of Section 17(a) of the Securities Act
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`and issued an order preliminarily enjoining Defendants from violating Section 17(a).
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`(Dkt. No. 61.) However, relying on the declarations filed by Defendants, the Court found
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`disputed issues of fact precluded the issuance of a preliminary injunction as to the 32 test
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`investors and 17 individual investors. On the same day, the Court also granted defense
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`counsel’s motion to withdraw as counsel. (Dkt. No. 62.) Although Blockvest, as an
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`LLC, was given leave to obtain substitute counsel until March 29, 2019, (Dkt. No. 64), it
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`has not retained counsel.1 Defendant Ringgold has been proceeding without counsel
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`since his counsel’s withdrawal.
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`1 The SEC has not sought default proceedings against Blockvest. Blockvest LLC was dissolved in
`Wyoming as of March 19, 2019. See
`https://wyobiz.wyo.gov/Business/FilingDetails.aspx?eFNum=2331060110190691821491662302031061
`93101100185208 (last visited 5/13/20). According to Ringgold, because it has no interests, no assets, no
`bank account, no EIN or TIN or employees, Blockvest does not need any representation and can answer
`on its own. Further, citing California law, Ringgold argues that because Blockvest, as a dissolved LLC,
`has no assets or shareholders, it does not need to respond. (Dkt. No. 99-1 at 5.) Despite its dissolution,
`Plaintiff seeks terminating sanctions against Blockvest LLC without providing legal authority as to its
`capacity to be sued. Under Federal Rule of Civil Procedure 17(b), the capacity to sue or be sued in
`federal court is determined by the law under which the corporation was organized. Fed. R. Civ. P.
`17(b). Whether an LLC is treated the same as a corporation is also subject to state law. See First
`American Mortg. Inc. v. First Home Builders of Fla, Civil Action No. 10–CV–0824–RBJ–MEH, 2011
`WL 4963924, at *12 (D. Colo. 2011) (while Michigan law gives limited liability companies “all powers
`granted to corporations”, such a provision is not provided in Colorado law). Ringgold’s reliance on
`California law is misplaced. Also, because the SEC has not provided legal authority whether Blockvest
`LLC can be sued in its capacity as a dissolved LLC, the Court declines to address the motion as it
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`Case 3:18-cv-02287-GPC-MSB Document 117 Filed 05/29/20 PageID.6359 Page 4 of 29
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`Factual Background
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`The Complaint alleges that Defendants offered and sold alleged unregistered
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`securities in the form of digital assets called BLV’s through an initial coin offering
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`(“ICO”). (Dkt. No. 1, Compl. ¶¶ 1-4, 6.) According to the Complaint, Blockvest
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`conducted pre-sales of BLVs in March 2018 in several stages: 1) a private sale (with a
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`50% bonus) that ran through April 30, 2018; 2) a “pre-sale” (with a 20% bonus) from
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`July 1, 2018 through October 6, 2018; and 3) the $100 million ICO launch on December
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`1, 2018. (Id. ¶ 30.) According to the SEC, Blockvest and Ringgold falsely claim their
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`ICO has been “registered” and/or “approved” by the SEC, the Commodity Futures
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`Trading Commission (“CFTC”) and the National Futures Association (“NFA”), when in
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`fact, it has not. (Id. ¶¶ 77-88.) Defendants further falsely assert they are “partnered”
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`with and “audited by” Deloitte Touche Tohmatsu Limited (“Deloitte) but that is also not
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`true. (Id. ¶¶ 89-93.) Finally, in order to create legitimacy and an impression that their
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`investment is safe, Defendants created a fictitious regulatory agency, the Blockchain
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`Exchange Commission (“BEC”), creating its own fake government seal, logo, and
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`mission statement that are nearly identical to the SEC’s seal, logo and mission statement.
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`(Id. ¶¶ 112-28.)
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`In response, Ringgold asserted that there had not been any actual investors in
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`Blockvest’s sale of digital “BLV” tokens. Instead, Defendants claimed that dozens of
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`“friends and family” paid money: (1) to an affiliated entity without expecting to receive
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`Blockvest tokens (the “Rosegold investors”), or (2) to help develop the Blockvest
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`platform without expecting to receive real tokens (the “testers”). Ringgold declared that
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`Blockvest had never sold any tokens to the public and had only one investor, Rosegold
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`Investments LLP, (“Rosegold”) which is run by him and in which he has invested more
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`than $175,000 of his own money. (Dkt. No. 24, Ringgold Decl. ¶ 5.) During the testing
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`concerns Blockvest. However, if legally supported, the SEC may seek default proceedings against
`Blockvest.
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`and development phase prior to the anticipated ICO, 32 testers put a total of less than
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`$10,000 of Bitcoin and Ethereum onto the Blockvest Exchange. (Id. ¶ 6.) Ringgold
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`further claimed that the BLV tokens were only designed for testing the platform and no
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`tokens were released to the 32 testing participants. (Id.) In addition, 17 individuals
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`loaned or invested money in Rosegold Investments who are Ringgold’s friends and
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`family and Michael Sheppard’s, Blockvest’s CFO, friends and family. (Id. ¶ 12.) These
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`investors loaned Ringgold or Sheppard money personally and they in turn, invested the
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`money into Rosegold as their personal investment. (Id. ¶ 11.) Declarations from nine
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`individuals affirm they did not buy BLV tokens or rely on any of the representations the
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`SEC has alleged were false. (Id. ¶ 13; Dkt. No. 24-2, Ringgold Decl., Ex. 2.) Each of the
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`individuals declared under oath that they did not rely on any specific representation when
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`investing. (Dkt. No. 24, Ringgold Decl. ¶ 13.)
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`At the preliminary injunction stage, Defendants solely challenged the SEC’s claims
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`arguing that the test BLV tokens were not “securities”. Under the Howey2 test defining a
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`security, the Court, relying on Ringgold’s declaration and nine investor declarations,
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`concluded there was a disputed issue of fact whether the BLV token offered and sold to
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`the 32 testers was a “security” and whether the 17 identified individuals who invested in
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`Rosegold purchased “securities.” (Dkt. No. 41 at 13-14.)
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`On November 13, 2018, Defendants filed the declarations of Christopher Russell
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`(“Russell”), Jacquelin Wartanian (“Wartanian”), Quintin Dorsey (“Dorsey”), and
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`Amanda Vaculik (“Vaculik”) in opposition to the motion for preliminary injunction.
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`(Dkt. Nos. 32-6; 32-8; 40-2.)
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`During discovery, it was revealed that the declaration of Russell was forged,
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`misrepresentations were made in Wartanian’s declaration, and false statements were
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`2 SEC v. W.J. Howey Co., 328 U.S. 293, 298-99 (1946). Howey’s three-part test requires “(1) an
`investment of money (2) in a common enterprise (3) with an expectation of profits produced by the
`efforts of others.” SEC v. Rubera, 350 F.3d 1084, 1090 (9th Cir. 2003) (internal quotation marks
`omitted).
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`made in Dorsey and Vaculik’s declarations. The SEC moves for terminating sanctions
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`seeking default judgment against Defendant for his fraudulent conduct in submitting
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`these forged and false declarations. Ringgold opposes without presenting any
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`contradicting evidence and does not dispute the evidence submitted by the SEC. Instead,
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`he presents denials and argument in his opposition and Objections.
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`A. Quintin Dorsey
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`On November 13, 2018, Defendants filed Quintin Dorsey’s declaration, as a tester,
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`in support of their opposition to Plaintiff’s motion for a preliminary injunction. (Dkt. No.
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`32-8 at 6; see also Dkt. No. 93-2, Wilner Decl., Ex. 8.) Dorsey was deposed on July 15,
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`2019 and testified he was a former student of Ringgold at the Online Trading Academy.
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`Wilner Decl., Ex. 23, Dorsey Depo. at 37:14-25.)
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`In conversations, Ringgold represented to Dorsey that he could double his money
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`within two to three months after the ICO. (Id. at 71:5-72:5.) Contrary to his declaration,
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`Ringgold never told Dorsey that the purchase of BLV tokens were fake or “test tokens.”
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`(Id. at 73:16-74:8.) He stated that he bought $5,000 of BLV tokens and hoped to profit
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`once the ICO was complete. (Id. at 71:8-74:8.) He additionally testified that he made the
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`investment decision relying on Ringgold’s representations and representations contained
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`in promotional materials, including the website, Whitepaper, promotional videos, the
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`pitch deck and Ringgold’s and Blockvest’s social media accounts. (Id. at 191:3-21; see
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`also Dkt. No. 93-2, Wilner Decl., Exs. 10, 11.)
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`Ringgold called Dorsey to ask about signing a declaration and emailed a draft
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`declaration through DocuSign. (Dkt. No. 93-2, Wilner Decl., Ex. 23, Dorsey Depo. at
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`169:16-170:4.) After persistent requests by Ringgold to sign the declaration, Dorsey
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`testified that he signed his declaration without reviewing it so he could get Ringgold “out
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`of [his] hair . . . because he was dealing with [his] family.” (Id. at 173:14-174:23.) At
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`that time, his wife had recently given birth to a baby, his wife was in serious medical
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`condition, and he was also working. (Id. at 172:4-173:6; see also Dkt. No. 93-2, Wilner
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`Decl., Exs. 13, 14.) Dorsey did not draft the declaration, did not read the declaration and
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`was given no information or explanation as to the purpose of the declaration or the
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`existence of the litigation. (Dkt. No. 93-2, Wilner Decl., Ex. 23, Dorsey Depo. at 170:2-
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`14.) Dorsey was not aware that his declaration had been filed for the SEC litigation until
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`June 2019 when he was served with a subpoena. (Id. at 177:22-178:8.) He testified that
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`his declaration is 100% false except for his signature. (Id. at 197:3-16.) He also testified
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`he did not know who drafted the declaration but assumed it was someone at Blockvest.
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`(Id. at 197:20-24.)
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`At his deposition, Ringgold stated that he did not solicit Dorsey to invest, did not
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`recall if Dorsey purchased $5,000 worth of BLVs in April 2018 through Blockvest’s
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`website, denied talking to Dorsey on the phone before he invested, and did not recall
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`whether Ringgold sent Dorsey the Whitepaper, the pitch deck and website by email.
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`(Dkt. No. 93-2, Wilner Decl., Ex. 28, Ringgold Depo. at 450:9-455:20.) He explained
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`that Dorsey dealt with Mike Sheppard. (Id. at 450:9-16; 453:17-25.)
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`B.
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`Jacqueline Wartanian
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`On November 13, 2018, Defendants filed Jacqueline Wartanian’s declaration, as a
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`tester, in support of their opposition to Plaintiff’s motion for a preliminary injunction.
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`(Dkt. No. 32-8 at 4; see also Dkt. No. 93-2, Wilner Decl., Ex. 9.) Wartanian was a
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`former student of Ringgold at the Online Trading Academy. (Dkt. No. 93-2, Wilner
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`Decl., Ex. 24, Wartanian Depo. at 27:4-16.)
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`She testified that she and her mother purchased $3,000 of Blockvest tokens in
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`2018. (Id. at 15:17-16:14.) She gave $3,000 for the Blockvest ICO presale with the
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`expectation that she would receive issued tokens once the ICO was complete and make
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`money from it. (Id. at 58:22-59:4.) She believed that she purchased Blockvest tokens
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`based on her account statement on the Blockvest Website. (Id. at 114:4-118:5; Dkt. No.
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`93-2, Wilner Decl., Ex. 16 at 130.) She also testified that she helped test the functionality
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`of the Blockvest platform but that was “separate” from her investment. (Id. at 59:5-20;
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`154:21-155:18.) She stated that the “Deloitte” account firm’s logo as well as SEC
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`approval gave her confidence to invest in Blockvest. (Id. at 85:20-87:5; 88:5-16.)
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`As to her declaration, she testified that she was asked to send a declaration which
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`she asked Ringgold to draft. (Id. at 149:12-22.) Ringgold did not go over what he wrote
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`in the declaration but she read it stating “I read it and, you know, I understood what I
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`understood.” (Id. at 150:1-2.) He emailed her the declaration and told her to look at it
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`and sign it. (Id. at 150:15-17.) Although Ringgold gave her an opportunity to make
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`changes to the declaration he drafted, she did not. (Id. at 151:4-8.) She had not read the
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`SEC’s complaint prior to signing her declaration. (Id. at 152:1-16.) As to the content of
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`her declaration, she testified that the contents were correct as to her role as tester but that
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`it omitted material information that she also invested in Blockvest. (Id. at 153:9-165:3.)
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`At his deposition, Ringgold testified he did not recall Wartanian, did not remember if she
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`invested in Blockvest and whether she was a tester. (Dkt. No. 93-2, Wilner Decl., Ex. 28,
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`Ringgold Depo. at 548:15-549:5.) He did not recall Wartanian’s declaration and whether
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`he had any involvement in obtaining her declaration. (Id. at 608:12-14; 609:4-6.) He
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`testified that if Wartanian invested money, she probably drafted another declaration as his
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`attorney wanted separate declarations from testers even if they were investors and testers.
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`(Id. at 608:19-609:3.) However, in stark contrast to his deposition, Ringgold states, in his
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`Objections, that even before Blockvest, he had a longstanding relationship with
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`Wartanian because her brother in-law, Munir Koja, was the Senior Network Developer.
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`(Dkt. No. 115-1 at 7.) Similarly, in a declaration filed in support of his opposition to
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`Plaintiff’s pending motion for summary judgment, Ringgold states that he was a close
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`friend and mentor to Wartanian. (Dkt. No. 109-1, Ringgold Decl. ¶ 24.) He also noted
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`that Wartanian’s brother-in-law, Munir Koja, worked for Blockvest as Senior Network
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`Developer. (Id.)
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`C. Christopher Russell Declaration
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`On November 13, 2018, Defendants filed Christopher Russell’s declaration, as a
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`Rosegold investor, in support of their opposition to Plaintiff’s motion for a preliminary
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`injunction. (Dkt. No. 32-6 at 67-683; see also Dkt. No. 93-2, Wilner Decl., Ex. 3 at 97-
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`98.) However, Russell did not submit his edited, final, approved version until November
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`14, 2018 which contains materially different statements than the one filed on November
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`13, 2018. The parties do not dispute that his declaration was forged but it is unknown
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`who forged Russell’s declaration.
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`On November 13, 2018, at 1:38 p.m., Russell’s friend, Blockvest sales agent Chase
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`Pfohl, emailed Russell a proposed version of his declaration drafted by Defendants in
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`Word format. (Dkt. No. 93-2, Wilner Decl., Ex. 4 at 100-02.) Russell reviewed the
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`declaration and made changes to it. (Dkt. No. 93-2, Wilner Decl., Ex. 22, Russell Depo.
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`at 118:5-14.) At his deposition, Russell stated he changed the statement that claimed he
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`was a sophisticated investor as he did not have the income nor the years of experience to
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`fall in the category of a sophisticated or accredited investor. (Id. at 118:12-119:1.) He
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`recalled telling Chase he would not sign the declaration as provided and Chase responded
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`that it was completely fine to make whatever changes he wanted. (Id. at 118:21-119:5.)
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`Later that evening on November 13, 2018 at 8:36 p.m., Mike Sheppard emailed Russell
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`requesting that he send in the investor declaration, stating “[o]ur defense attorney is
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`almost certain we will receive a settlement offer if we advise that we have 100% of all
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`investors with a signed declaration. The only one we need is yours to be 100% complete.
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`. . .We will get 100% of your investment back to you when this is over.” (Dkt. No. 93-2,
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`Wilner Decl., Ex. 5 at 104.) The next day, November 14, 2018 at 2:34 p.m., Russell
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`responded to Sheppard’s email apologizing for the delay and attached his actual signed
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`and edited investor declaration. (Id; see also Dkt. No. 93-2, Wilner Decl., Ex. 6 at 106-
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`07.) Russell testified that he sent his declaration in PDF format so that it could not be
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`changed by anyone. (Dkt. No. 93-2, Wilner Decl., Ex. 22, Russell Depo. at 156:2-19.)
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`3 Unless otherwise noted, page numbers are based on the CM/ECF pagination.
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`The version of Russell’s declaration filed with the Court on November 13, 2018
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`was not approved by him and his signature was forged. (Id. at 160:23-161:14; 162:13-
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`19.) The declaration Russell authorized and signed differed significantly from the
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`declaration Defendants filed on his behalf. (Compare Dkt. No. 93-2, Wilner Decl., Ex. 3
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`with Dkt. No. 93-2, Wilner Decl., Ex. 6.) For example, Russell omitted the word
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`“sophisticated” from “I consider myself a sophisticated investor,” which appears in the
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`Court-filed version of the declaration. (Dkt. No. 93-2, Wilner Decl., Ex. 22, Russell
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`Depo. at 126:18-128:1; 163:14-18.) Further, according to Russell’s deposition testimony,
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`Defendants’ version of the declaration contained statements that Russell had never seen,
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`including the statement that he had never reviewed or relied on Blockvest’s promotional
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`materials or website. (Id. at 164:14-168:22.) However, he testified that he had reviewed
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`numerous marketing materials and information about Blockvest on the Internet, and those
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`materials and information influenced his decision to make the $3,000 purchase of
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`Blockvest tokens. (Id. at 168:3-22.) After reviewing Blockvest’s promotional materials
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`and other representations by the company’s personnel, Russell expected to profit from
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`those tokens based on the efforts of Ringgold and Blockvest’s management to make the
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`company successful. (Id. at 77:6-78:4; 140:7-142:17.) After his investment, Russell
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`continued to believe he had acquired BLV tokens based on his account statement
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`available on Blockvest’s website. (Id. at 70:3-72:16.) He stated that the version of the
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`declaration filed with the Court is “false.” (Id. at 164:11-13.)
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`At his deposition, Ringgold testified that he did not forge Russell’s signature on
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`the declaration and he did not know who forged it. (Dkt. No. 93-2, Wilner Decl., Ex. 28,
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`Ringgold Depo. at 529:20-23.) When asked whether Russell had sent his signed
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`declaration after Ringgold had already filed one with the Court, Ringgold testified that he
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`had no idea about it until then. (Id. at 519:13-20.) Yet, when asked why he did not take
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`any steps to inform the Court after he received Russell’s signed declaration, he responded
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`that he did not know how to do so and was bombarded with numerous filings as he was
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`proceeding pro per. (Id. at 525:21-25; 529:20-530:5.) He also explained that there were
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`several signed versions of the declarations and each investor probably signed about two
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`or three different versions because there were corrections and errors. (Id. at 519:21-25;
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`520:13-17.) Then he testified that he was under the impression that Chase forged
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`Russell’s signature. (Id. at 520:1-6.) Ringgold explains that if Chase submitted the
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`Russell declaration, he would not have any way of knowing if Chase forged Russell’s
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`signature. (Id. at 525:8-16.) He has no idea what happened except that the declaration
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`came from Chase. (Id. at 525:17-20.) He further states that he had no way of knowing at
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`the time the declaration was sent to him whether it was accurate or not. (Id. at 529:14-
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`19.)
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`D. Amanda Vaculik Declaration
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`On November 19, 2018, the SEC filed a supplemental declaration of David S.
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`Brown regarding a $147,000 wire transfer. (Dkt. No. 39.) Ringgold was questioned
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`regarding this wire transfer and the source of the monies at his deposition on November
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`6, 2018. (Dkt. No. 39-8.) Thereafter, on November 20, 2018, Defendants filed Amanda
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`17.) In the declaration, Vaculik stated that, in April 2018, she entered into a lease for a
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`condo located on 5th Street in Santa Monica, California. (Dkt. No. 40-2 at 2.) She
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`claimed that her boyfriend, Christopher Black, paid rent on the 5th Street condo for a
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`year in advance. (Id.) Black worked in Blockchain exchange software development.
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`(Id.) Black told Vaculik that “Reginald Ringgold agreed to pay Mr. Black $147,000 in
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`exchange for Mr. Black’s software development services. Mr. Black told me that he
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`asked Mr. Ringgold to make payment for Mr. Black’s services to my landlord, ‘5th ST
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`LLC’” on April 18, 2018. (Id.) The contents of Vaculik’s declaration was later
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`4 As noted by the SEC, Vaculik’s declaration was stricken and not considered by the Court in its denial
`of preliminary injunction. (Dkt. No. 41 at 17.)
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`In line with Vaculik’s declaration, on November 6, 2018, Ringgold testified during
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`his initial deposition, which was conducted during the expedited discovery phase, that a
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`$147,000 payment from his personal account for a Santa Monica apartment for Vaculik
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`was compensation to “Chris” and his company for “development” of Blockvest’s
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`platform, and the source of funds was “my money that I had I just had in my safe.” (Dkt.
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`No. 93-2, Wilner Decl., Ex. 27, Ringgold Depo. at 357:17-361:16.)
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`On November 15, 2018, Plaintiff conducted a telephonic interview of Vaculik.
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`(Dkt. No. 93-2, Wilner Decl. ¶ 23.) Vaculik answered the call but asked the SEC
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`interviewers to call her back in thirty minutes. (Id.) During the subsequent call, Vaculik
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`told the SEC interviewers that Black was her boyfriend, that he was involved with
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`technology, and that the payment was for Black’s services for an apartment in which
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`Vaculik would live. (Id.) She then repeated the above statements in her declaration filed
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`with the District Court on November 20, 2018. (Dkt. No. 40-2 at 2.)
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`On April 24, 2019, Vaculik gave a proffer to the Department of Justice that was
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`attended by two SEC attorneys. (Dkt. No. 93-2, Wilner Decl. ¶ 25.) During the proffer,
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`Vaculik told the interviewers that: (1) Black was not her boyfriend; (2) she did not live in
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`the Santa Monica apartment; (3) she did not know the source or purpose of the funds for
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`the apartment, and (4) she became involved because Ringgold and his affiliates paid her
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`$10,000 to put the apartment application in her name. (Id.) Vaculik also stated that on
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`November 15, 2018, she spoke to Ringgold during the intervening thirty minutes between
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`phone calls with the SEC, and Ringgold instructed her to tell the false story about the
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`apartment transaction to the SEC staff. (Id.) During her subsequent deposition on
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`September 9, 2019, Vaculik asserted her Fifth Amendment right as to all questions
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`concerning the transaction, the declaration, and the SEC interview. (Dkt. No. 93-2,
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`Wilner Decl., Ex. 25, Vaculik Depo. at 18-61.)
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`At a later deposition on October 22, 2019, Ringgold testified that he did not know
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`or recall Vaculik or Black and did not recall any transaction with her or Black related to
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`supposed development services or the apartment. (Dkt. No. 93-2, Wilner Decl., Ex. 28,
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`Ringgold Depo. at 394:23-399:4; 611:21-631:12.)
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`Discussion
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`A.
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`Legal Standard of Magistrate Judge’s Report and Recommendation
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`In reviewing a magistrate judge’s report and recommendation, a district court
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`“must make a de novo determination of those portions of the report . . . to which
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`objection is made,” and “may accept, reject, or modify, in whole or in part, the findings
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`or recommendations made by the magistrate.” 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ.
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`P. 72(b). A district court is not required to review a magistrate judge's report and
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`recommendation where no objections have been filed. See United States v. Reyna–Tapia,
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`328 F.3d 1114 (9th Cir. 2003). While “the [§ 636(b)(1)(C)] does not require the judge to
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`review an issue de novo if no objections are filed, it does not preclude further review by
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`the district judge, sua sponte or at the request of a party, under a de novo or any other
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`standard.” Thomas v. Arn, 474 U.S. 140, 154 (1985).
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`Here, Defendant filed an Objection to the R&R; therefore, the Court conducts a de
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`novo review of the portions of the R&R that Defendant objects. Defendant objects
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`contending that the R&R fails to identify or apply a legal standard and the Magistrate
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`Judge substituted his own discretion for the Sheriff’s without identifying a violation of
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`law. (Dkt. No. 115 at 2.) Further, without legal authority, Ringgold argues that
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`terminating sanctions will violate his Seventh Amendment right to a jury trial. (Id.)
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`First, the Magistrate Judge correctly identified the legal standard for terminating
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`sanctions under federal law. In contrast, Ringgold improperly cites to state law cases
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`addressing sanctions for discovery violations. Second, courts may dismiss matters
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`through pretrial proceedings without violating the Seventh Amendment. See In re U.S.
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`Fin. Sec. Litig., 609 F.2d 411, 422 & n. 34 (9th Cir. 1979) (“Several procedural devices
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`developed and expanded since 1791 have infringed upon the civil jury’s historic role;
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`nevertheless, they have been found consistent with the Seventh Amendment.”); Newton v.
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`Poindexter, 578 F. Supp. 277, 283 (E.D. Cal. 1984) (motion to dismiss for lack of subject
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`matter jurisdiction did not violate right to jury trial) (quoting Gasoline Prods. Co. v.
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`Champlin Refining Co., 283 U.S. 494 (1931) (“[The Seventh Amendment] does not
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`prohibit the introduction of new methods for ascertaining what facts are in