A federal judge denied BK Boreyko's request to sell his 25% stake in AZPACK Properties LLC for $500,000, a transaction intended to inject capital into Vemma's operations. U.S. District Judge John J. Tuchi issued the denial on January 16, 2016, equating the sale of Boreyko's limited liability company interest to the sale of real estate, which is prohibited under an existing preliminary injunction against Vemma.
Boreyko, the owner of Vemma, had filed a motion on November 24, 2015, seeking court approval to sell his quarter share in AZPACK Properties. AZPACK Properties, an Arizona-based entity, owns real estate and was established in 2013. State records list Boreyko as one of four managers or members with a stake in the company. The $500,000 proceeds from this proposed sale were earmarked by Boreyko to fund Vemma's "ongoing company operations and expenses."
Vemma had been operating under a preliminary injunction since August 2015, following allegations by the Federal Trade Commission (FTC) that the company was operating an illegal pyramid scheme. The injunction specifically prohibited Boreyko from assigning, concealing, converting, disbursing, dissipating, encumbering, liquidating, loaning, pledging, selling, spending, transferring, or otherwise alienating any real estate asset. This measure aimed to preserve assets that could eventually be used for victim restitution if the FTC prevailed in its case.
Despite Boreyko's argument that his 25% stake in AZPACK Properties was not directly tied to a specific real estate offering and would not cause AZPACK Properties to sell any of its owned properties, the FTC raised concerns. Boreyko initially sought clarification from the FTC, citing an "abundance of caution." The regulator, however, declined to stipulate to the transaction, indicating its reservations about the proposed sale.
On December 11, 2015, the FTC formally filed an opposition to Boreyko's proposal. The commission argued that allowing Boreyko to sell his interest, particularly to inject funds into a company facing legal scrutiny, could undermine the purpose of the preliminary injunction. The FTC's opposition emphasized the need to prevent any action that might dissipate assets potentially recoverable for victims.
Judge Tuchi's final decision sided with the FTC, halting the transaction. The court's ruling reinforced the broad scope of the asset freeze, confirming that even indirect interests in real estate entities fall under the injunction's prohibitions. This decision prevented Boreyko from accessing the $500,000, leaving Vemma to manage its operational expenses without the planned capital infusion. The preliminary injunction remains in effect, continuing to restrict Boreyko's ability to alienate assets.