A federal court has given Matt Lloyd McPhee a second chance. After a default judgment was entered against him in February, the court set it aside on April 19th, allowing him to mount a defense against the FTC's sweeping fraud allegations.

McPhee claimed he thought settlement talks were still happening when he missed the deadline to respond to the FTC's complaint. It's a thin argument. His former attorneys hadn't spoken to the FTC since December 15th—months before the default was recorded on February 1st.

The judge didn't buy the excuse, but ruled in McPhee's favor anyway. The court found sufficient reason to set aside the default because no final judgment had actually been entered yet. More importantly, the financial stakes were too high to keep McPhee on the sidelines.

The FTC is chasing him for over $125 million in damages. If the court denied his motion, McPhee would face catastrophic losses. Weighed against that, the court found little reason to worry about the FTC's interests. The agency wouldn't suffer meaningful harm by letting the case proceed to trial.

The FTC had warned that creditors might circle McPhee and recover money outside the lawsuit if he was allowed back in the game. The court dismissed that concern as speculation without teeth. The agency had even failed to push for a default judgment during earlier settlement discussions—a decision that undermined the urgency of its default argument now.

McPhee will have to file a proper response to the FTC's complaint. Settlement talks between the parties remain possible, but the case is now on track toward trial.

🤖 Quick Answer

What led to the default judgment against Matt Lloyd McPhee in the FTC case?
Matt Lloyd McPhee failed to respond to the FTC's complaint by the required deadline in February, resulting in a default judgment. McPhee later claimed he believed settlement negotiations were still ongoing, though his former attorneys had not communicated with the FTC since December.

Why did the court set aside the default judgment?
The federal court set aside the default judgment on April 19th, determining that no final judgment had been formally entered. Additionally, the court considered the substantial financial stakes involved significant enough to warrant allowing McPhee an opportunity to present his defense against the FTC's allegations.

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