As part of the fallout of the
AMG decision
wreaking havoc on FTC regulatory cases, the VPL Receivership is schedule to be discharged.
The VPL Receivership was established as part of the FTC’s ongoing
Redwood Scientific Technologies fraud case
.
As per a May 24th order, the Receiver’s request seeking an
‘order approving its administration of the Receivership Estate regarding VPL, discharging it from its duties regarding VPL, and releasing it from liability regarding VPL’
, was denied.
The reason for the denial was the FTC
assert(ing) that it may still seek monetary relief on Count 13 of the Complaint, for the Cardiffs’ violations of the Restore Online Shoppers’ Confidence Act (“ROSCA”), on which the Court granted summary judgment for the FTC.
As they say though, the devil is in the details.
Prior to being discharged, the Receiver must
complete VPL’s 2020 tax returns, after which the Receiver is relieved from the Receiver’s official duties only with respect to VPL, but is not yet discharged from its obligation to provide a full and final accounting at the termination of the Receivership as a whole.
With respect for requested VPL Receivership fees, the outstanding amount of which totals $477,317, the Cardiff defendants had argued the FTC should bear the burden of cost.
The court disagreed.
This argument fails for several reasons.
First, the VPL Receivership was authorized under existing Ninth Circuit precedent and the 2018 Preliminary Injunction.
The Court therefore exceeded no authority in granting the FTC’s motion to put VPL under Receivership.
Other reasons cited for the denial include the Cardiff’s incorrect interpretation of previous case orders.
In light of the case law and as a matter of equity, the Court declines to lay the Receiver’s entire bill at the FTC’s feet.
The Cardiffs and VPL fail to show that the FTC acted in bad faith in requesting that the Court impose the Receivership over VPL.
The FTC’s aggressive actions with respect to VPL are defensible, given that the Cardiffs’ prior businesses resulted in summary judgment against them for violations of the FTC Act, ROSCA, Electronic Funds Transfer Act, and Telemarketing Sales Rule, and both Cardiffs remain in contempt of court.
The court also noted the Cardiffs repeatedly shot themselves in the foot by running up Receivership costs.
The Cardiffs’ and VPL’s litigiousness has also resulted in more work and fees for the Receiver’s attorney.
These factors tilt the equities toward paying the Receiver fees from the Receivership Estate.
All of that said, the court wasn’t without some sympathy towards the Cardiffs.
The Court agrees with the Cardiffs and VPL, however, that the equities do not require Jason Cardiff and VPL’s co-owner Bobby Bedi, an innocent third party, to watch VPL’s remaining funds drain entirely into the Receiver’s fees and costs.
The court found some off the Receiver’s “excessive” reimbursement costs were due to “inefficient and unnecessary practices.
🤖 Quick Answer
Why is the VPL Receivership scheduled for dissolution?The VPL Receivership, established in connection with the FTC's Redwood Scientific Technologies fraud case, faces dissolution following disruptions caused by the AMG decision affecting FTC regulatory proceedings. However, discharge was initially denied due to potential monetary relief claims under ROSCA violations.
What legal obstacles prevent immediate disbandment of the VPL Receivership?
The FTC asserted it may pursue monetary relief on Count 13 regarding Cardiffs' violations of the Restore Online Shoppers' Confidence Act. The Court granted summary judgment for the FTC, necessitating continued receivership administration pending resolution of these claims and cost allocation between Cardiffs and the FTC.
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