Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_18-cv-02287/USCOURTS-casd-3_18-cv-02287-6/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:0077 Securities Fraud

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE 

COMMISSION,

Plaintiff,

v.

BLOCKVEST, LLC, et al.,

Defendants.

Case No.: 18cv2287-GPC (MSB)

REPORT AND RECOMMENDATION FOR 

ORDER GRANTING PLAINTIFF’S MOTION 

FOR TERMINATING SANCTIONS 

[ECF No. 93]

Pending before the Court is Plaintiff’s Securities and Exchange Commission’s 

“Motion for Terminating Sanctions” [ECF No. 93], Defendants’ Opposition [ECF No. 99], 

and Plaintiff’s Reply in support of its motion for terminating sanction [ECF No. 102]. This 

Report and Recommendation is submitted to the United States District Judge Gonzalo P. 

Curiel pursuant to 28 U.S.C. § 636(b) and Civil Local Rule 72.1(c) of the United States 

District Court for the Southern District of California. For the reasons set forth below, the 

Court RECOMMENDS that Plaintiff’s motion for terminating sanctions be GRANTED. 

/ / /

/ / /

/ / /

/ / /

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I. RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

On October 3, 2018, Plaintiff Securities and Exchange Commission (“SEC”) filed a 

Complaint against Defendants Blockvest, LLC (“Blockvest”) and Reginald Buddy Ringgold, 

III a/k/a Rasool Abdul Rahim El (“Ringgold”). (Compl., ECF No. 1.) Plaintiff states that 

Defendant Blockvest, a limited liability company, and Defendant Ringgold, Blockvest’s 

founder and principal, offer and sell unregistered securities in the form of digital assets 

called “BLVs,” and seeks to stop investment fraud involving an initial coin offering 

(“ICO”)1 by Defendants. (See id.; see also id. at 2, 4-5.) The Complaint further alleges 

that Blockvest claims to be the “first [U.S.] licensed and regulated tokenized crypto 

currency exchange and index fund,” that it has already raised more than $2.5 million in 

pre-ICO sales of its BLVs, and it will raise $100 million during its ICO to fund Blockvest’s 

digital asset-related financial products and services. (Id. at 2.) Plaintiff contends that

Defendants falsely claim that their ICO has been “registered” and “approved” by the SEC 

and other regulators, and that Defendants have partnered with and are audited by

Deloitte Touche Tohmatsu Limited. (Id.) Plaintiff further alleges that Defendants 

created a fictitious regulatory agency, the Blockchain Exchange Commission (“BEC”), in 

order to create legitimacy and an impression that their investment is safe. (Id.)

Plaintiff claims that Defendants do not have the required regulatory approvals and 

the established business relationships they claim to have, because the BLV offering is not 

 

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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“U.S. SEC approved,” nor is it approved by any other U.S. financial regulator, the BEC is 

not affiliated with the SEC, and Blockvest is not affiliated with the name-brand 

companies whose logos appear in its marketing materials. (Id. at 2-3.) Plaintiff 

contends that investors’ assets therefore lack the safety and protections that 

Defendants are falsely portraying in their scheme to raise money through Blockvest’s 

planned ICO and ongoing pre-sales. (Id. at 3.)

Plaintiff asserts the following five causes of action: (1) fraud in connection with 

the purchase or sale of securities, in violation of Section 10(b) of the Securities Exchange 

Act of 1934 (“Exchange Act”) and Rule 10b-5(b); (2) fraud in connection with the 

purchase or sale of securities, in violation of Section 10(b) of the Exchange Act and Rules 

10b-5(a) and 10b-5(c); (3) fraud in the offer or sale of securities, in violation of Section 

17(a)(2) of the Securities Act of 1933 (“Securities Act”); (4) fraud in the offer or sale of 

securities, in violation of Sections 17(a)(1) and 17(a)(3) of the Securities Act; and 

(5) unregistered offer and sale of securities, in violation of Sections 5(a) and 5(c) of the 

Securities Act. (Id. at 2, 24-28.) Plaintiff’s Complaint seeks an order temporarily, 

preliminarily and permanently enjoining Defendants from violating the federal securities 

laws, and enjoining Defendant Ringgold from participating in an offer or sale of digital or 

other securities, or making misrepresentations regarding regulatory approval in 

connection with such offerings; a temporary restraining order and a preliminary 

injunction freezing Defendants’ assets, requiring accounting from each Defendant, and

prohibiting destruction of documents; disgorgement of Defendants’ ill-gotten gains; and

payment of civil monetary penalties. (Id. at 3, 29-30.)

On October 3, 2018, Plaintiff also filed an ex parte application for a temporary 

restraining order (“TRO”). (ECF No. 3.) On October 5, 2018, District Judge Curiel 

granted Plaintiff’s ex parte application for a TRO, freezing assets, prohibiting destruction 

of documents, granting expedited discovery, and requiring an accounting. (ECF Nos. 5 & 

6.) The District Judge found that Plaintiff had made a prima facie showing based on 

Defendants’ marketing and advertising through websites and media posts of Blockvest 

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and its ICO, that BLV tokens were “securities.” (ECF No. 5 at 8-9.) The District Judge also 

issued an “Order to Show Cause Re Preliminary Injunction and Orders: (1) Freezing 

Assets; (2) Prohibiting the Destruction of Documents; (3) Granting Expedited Discovery; 

and (4) Requiring Accountings” and set a hearing for October 18, 2018. (ECF No. 6 at 12-

13.) The District Judge subsequently granted the parties’ two joint motions to extend 

the TRO and the hearing on the order to show cause until November 16, 2018. (ECF Nos. 

15 & 17.)

In support of their opposition to Plaintiff’s motion for a preliminary injunction, on 

November 13, 2018, Defendants filed investor declarations, which included declarations 

from Chris Russell [ECF No. 32-6 at 67-68], Quintin Dorsey [ECF No. 32-8 at 6], and 

Jacqueline Wartanian [ECF No. 32-8 at 4]; and on November 20, 2020—a declaration 

from Amanda Vaculik [ECF No. 40-2 at 2]. On November 16, 2018, District Judge Curiel 

held a hearing on Plaintiff’s motion for a preliminary injunction [ECF No. 37], and on 

November 27, 2018—issued an order denying Plaintiff’s motion [ECF No. 41]. The order 

cited, among other documents, investor declarations that Defendants filed in support of 

their opposition to Plaintiff’s motion for a preliminary injunction. (See ECF No. 41.) The 

District Judge concluded that in light of the evidence presented by Defendants, there 

were disputed factual issues as to the nature of investments offered to the alleged 

investors, and without full discovery, the Court could not determine “whether the BLV 

token offered to the 32 test investors was a ‘security’” and “whether the 17 individuals 

who invested in Rosegold purchased ‘securities’ as defined under the federal securities 

law.” (Id. at 13-14.) The District Judge also found that Plaintiff failed to show a 

reasonable likelihood that Defendants would repeat their violations because “it is 

disputed whether there have been past violations.” (Id. at 15-16.)

Defendants filed an Answer on December 14, 2018. (ECF No. 43.) On 

December 17, 2018, Plaintiff moved for partial reconsideration of the District Court’s 

November 27, 2018 order. (ECF No. 44.) 

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On February 14, 2019, the District Judge granted in part Plaintiff’s motion and 

preliminarily enjoined Defendants’ violations of the antifraud provisions of the 

Securities Act. (ECF No. 61.) In the order, the District Judge cited Defendants’ evidence 

concerning the Rosegold investors and testers to conclude that there was a factual

dispute about whether those individuals purchased securities. (Id. at 13-14.) The 

District Judge “denie[d] Plaintiff’s motion for reconsideration as to the offers or 

promises made to the 32 test investors and 17 individual investors.” (Id. at 14.) 

On December 27, 2018, Corrigan & Morris LLP, moved to withdraw as counsel for 

Defendants Blockvest and Ringgold. (ECF No. 47.) District Judge Curiel granted defense 

counsel’s request to withdraw as counsel on February 14, 2019, and gave Defendants 

until March 15, 2019, to obtain substitute counsel. (ECF No. 62.) In the order, Judge 

Curiel noted that as a limited liability corporation, Defendant Blockvest could not 

proceed in federal court without counsel, and expressly cautioned Blockvest “that if it 

fails to obtain new counsel and have counsel file a notice of appearance, it may be 

subject to default proceedings.” (Id. at 3-4.) On March 18, 2019, Judge Curiel granted 

Defendants’ ex parte request for additional time to obtain counsel and continued the 

deadline until March 29, 2019. (ECF No. 64.) To date, no counsel has entered an 

appearance on behalf of Defendants. (See Docket.)

On February 11, 2019, this Court held an Early Neutral Evaluation Conference, and 

on April 22, 2019–a follow-up Settlement Conference. (ECF Nos. 59 & 71.) On April 24, 

2019, the Court issued a scheduling order that set, among other deadlines, 

September 9, 2019, as the deadline for fact discovery, December 26, 2019, as the 

deadline for expert discovery, and January 27, 2020, as the deadline to file pretrial 

motions. (ECF No. 72 at 1, 3.)

On January 10, 2020, Plaintiff filed the instant ex parte motion for terminating 

sanctions, which was referred to this Court. (ECF Nos. 93 & 94.) On January 24, 2020, 

Plaintiff filed a motion for summary judgement, which is currently pending before the 

District Judge. (ECF No. 96.)

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In the instant motion, Plaintiff SEC moves for terminating sanctions against 

Defendants Blockvest and Ringgold pursuant to the Court’s inherent authority. (Pl.’s 

Mot. for Terminating Sanctions (“Mot”) 13-14, 20, ECF No. 93-1.) 

II. APPLICABLE LAW

District courts have inherent power to impose sanctions for “conduct which 

abuses the judicial process.” Chambers v. NASCO, Inc., 501 U.S. 32, 44-45 (1991); see 

also Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006) (“There are two sources of 

authority under which a district court can sanction a party who has despoiled evidence: 

the inherent power of federal courts to levy sanctions in response to abusive litigation 

practices, and the availability of sanctions under Rule 37 . . . .”). District courts have 

inherent power to impose sanctions, including default or dismissal, when a party has 

“willfully deceived the court and engaged in conduct utterly inconsistent with the 

orderly administration of justice.” Fjelstad v. Am. Honda Motor Co., Inc., 762 F.2d 1334, 

1338 (9th Cir. 1985); see also TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 916 (9th 

Cir. 1987) (“Courts have inherent equitable powers to dismiss actions or enter default 

judgments[.]”). 

Terminating sanctions are a severe remedy, and should be imposed only in 

extreme circumstances, “where the violation is ‘due to willfulness, bad faith, or fault of 

the party.’” In re Exxon Valdez, 102 F.3d 429, 432 (9th Cir. 1996) (quotation omitted); 

see also Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir. 

1995) (terminating sanctions are warranted where “a party has engaged deliberately in 

deceptive practices that undermine the integrity of judicial proceedings.”). “The most 

critical criterion for the imposition of a dismissal sanction is that the misconduct 

penalized must relate to matters in controversy in such a way as to interfere with the 

rightful decision of the case. This rule is rooted in general due process concerns. There 

must be a nexus between the party’s actionable conduct and the merits of his case.” 

Tripati v. Corizon Inc., 713 F. App’x 710, 711 (9th Cir. 2018) (quoting Halaco Eng’g Co. v. 

Costle, 843 F.2d 376, 381 (9th Cir. 1988)). 

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In deciding whether to impose terminating sanctions, courts must weigh the 

following factors: “(1) the public’s interest in expeditious resolution of litigation; (2) the 

court’s need to manage its dockets; (3) the risk of prejudice to the party seeking 

sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the 

availability of less drastic sanctions.” Leon, 464 F.3d at 958 (quoting Anheuser–Busch, 

69 F.3d at 348). In most cases, the first two factors weigh in favor of the imposition of 

sanctions, and the fourth factor typically weighs against a default or dismissal sanction. 

Stars’ Desert Inn Hotel & Country Club, Inc. v. Hwang, 105 F.3d 521, 524 (9th Cir. 1997). 

“Thus the key factors are prejudice and availability of lesser sanctions.” Id. (quotation 

omitted); see also Valley Eng’rs Inc. v. Elec. Eng’g Co., 158 F.3d 1051, 1057 (9th Cir. 

1998) (when considering evidentiary, issue or terminating sanctions, factors three and 

five “are decisive.”).

While the district court need not make explicit findings regarding each of the five 

factors, a finding of “willfulness, fault, or bad faith” is required for dismissal or default 

judgment to be proper. See Leon, 464 F.3d at 958; Anheuser–Busch, 69 F.3d at 348. 

“Where a party so damages the integrity of the discovery process that there can never

be assurance of proceeding on the true facts, a case dispositive sanction may be 

appropriate.” Conn. Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091, 

1096 (9th Cir. 2007) (quoting Valley Eng’rs, 158 F.3d at 1058).

III. ANALYSIS

Plaintiff moves for terminating sanctions against Defendants pursuant to the 

Court’s inherent authority, arguing that Defendants willfully and in bad faith deceived

the Court by filing forged and false declarations in support of their opposition to 

Plaintiff’s motion for a preliminary injunction. (Mot. at 5, 13-14, 20.) Plaintiff asserts

that subsequent discovery revealed that the filed declarations “obscured critical details” 

that the declarants were unaffiliated individuals who were provided Blockvest’s 

fraudulent promotional materials by Defendants and their commissioned sales agents 

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before their investments, and that at least four of the declarations were knowingly 

deceptive or forged. (Id. at 7-8.) 

Specifically, Plaintiff contends that the declaration of an alleged Rosegold 

investor, Christopher Russell, was filed with the Court with a forged signature of the 

declarant and contained numerous false statements. (See id. at 5, 8-9.) Plaintiff further 

states that Defendant Ringgold asked at least two supposed testers, Quintin Dorsey and 

Jacqueline Wartanian, to sign false declarations, concealing that they had trusted 

Ringgold with their money because they were his former Online Trading Academy 

students, and expected a return from real Blockvest tokens that they purchased after 

reviewing Blockvest’s promotional materials Ringgold provided. (Id. at 5-6.) Plaintiff 

also contends that Ringgold directed his affiliate, Amanda Vaculik, to lie during her

interview with SEC, and to submit a false declaration to support a fabricated story about 

a $147,000 payment allegedly made for Blockvest’s development. (Id. at 6.) 

Plaintiff argues that because Defendants willfully misled the Court concerning a 

central legal issue in this case through the submission of knowingly false and forged 

declarations, the “false materials so tainted the credibility of any defense evidence, that 

there is no reason for the Court to review this evidence for a triable issue of fact.” (Id.

at 6.) Plaintiff therefore asks the Court to impose terminating sanctions in the form of 

default judgement against Defendants. (Id. at 13-14, 20.) If the Court is not willing to 

impose terminating sanctions, Plaintiff seeks an order of preclusion and adverse 

inference, precluding Defendants from relying on any of the investor declarations, and 

to draw adverse inferences concerning whether Defendants sold those investors 

Blockvest securities. (Id. at 6, 20.) 

In his Opposition, Defendant Ringgold asks the Court to deny Plaintiff’s motion. 

(Opp’n (“Opp’n”) 13, ECF No. 99-1.) Ringgold argues that terminating sanctions are not 

warranted, because Defendants did not destroy or withhold evidence, and did not 

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 

of non-parties. (See id. at 6-8, 11-13). 

Ringgold initially contends that Defendants were deprived of “due process” when 

Plaintiff seized their cash, “depriv[ed] them of counsel, and order[ed] them to conduct 

no further business.” (Id. at 5.) He further asserts that Plaintiff employed coercion 

tactics to induce Dorsey, Wartanian, and Vaculik to perjure themselves. (Id. at 11.) 

Ringgold states that his former counsel did their best to “draft the declarations correctly

under intense time constraints,” but acknowledges that “it is highly possible that the 

[defense] counsel inaccurately carried over statements from the prior drafted 

declarations to those of the Russell, Dorsey & Wartani[a]n[.]” (Id.) Ringgold maintains

that if the Court is inclined to impose sanctions, it should issue an order precluding him 

from “offering the forged Declaration at trial.” (Id. at 12.) In the alternative, Ringgold 

seeks an order allowing him to “resubmit the declarations in the form of Notarized 

Affidavit of Facts form Quint[i]n Dorsey, Jackie Wartanian & Christopher Russel in lieu of 

sanctions.” (Id. at 13.) 

Plaintiff replies that Defendants submitted four knowingly forged or false 

declarations to the District Court, and Judge Curiel relied on this false evidence when he 

initially denied Plaintiff’s request for a preliminary injunction, which resulted in 

protracted litigation, delayed relief for the victims of the Blockvest digital asset scheme, 

and caused irreparable harm to the Court, Plaintiff, and Blockvest investors. (Pl.’s Reply

(“Reply”) 2, ECF No. 102.) Plaintiff asserts that Defendants have not submitted any

evidence to refute the falsity of the declarations at issue, admitted that “it is highly 

possible that the [defense] counsel inaccurately carried over statements from the prior 

drafted declarations,” and have not taken any steps to withdraw the false evidence. (Id.

(citing Opp’n at 11-12).) Plaintiff also contends that Defendants’ misconduct was willful, 

and Defendants’ continued failure to accept responsibility for their actions warrants 

terminating sanctions. (Reply at 2.) Plaintiff further argues that at this stage of the 

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

Blockvest and Ringgold. (Id. at 2, 10.) 

I. Declarations at Issue

A. Declaration of Christopher Russell 

1. Version of the declaration filed by Defendants

On November 13, 2018, Defendants filed Christopher Russell’s declaration in 

support of their opposition to Plaintiff’s motion for a preliminary injunction. (ECF No. 

32-6 at 67-68; see also Decl. of Brent W. Wilner in Supp. of Pl.’s SEC’s Mot. for 

Terminating Sanctions (“Wilner Decl.”) 2, ECF No. 93-2; id., Ex. 3.) Russell’s declaration

was signed under the penalty of perjury. (ECF No. 32-6 at 68.) The declaration stated, 

inter alia, the following:

• Russell considers himself a “sophisticated investor.” (Id. at 67.) 

• “Before I sent any money to Rosegold Investments LLP, I did not review or rely 

on Rosegold Investments LLP’s website or any offering documents or anything on the 

internet about Rosegold Investments LLP.” (Id.)

• “Before sending any money to Rosegold Investments LLP, I did not review or 

rely on the Blockvest Website or Whitepaper or anything else on the internet about 

Blockvest.” (Id.)

• “Before sending my money to Rosegold Investments, I did not review or rely 

on Reginald Ringgold’s web page, LinkedIn page, or anything else on the internet having 

to do with Mr. Ringgold.” (Id. at 68.) 

• Russell sent his money to Rosegold based “solely” on his personal relationship 

with his friend Michael Sheppard, and “not based on any specific representation about 

anything specific on the internet or otherwise.” (Id.)

/ / /

/ / /

/ / /

/ / /

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2. Evidence obtained during the course of discovery

On November 13, 2018, Russell’s friend, Blockvest sales agent Chase Pfohl, emailed Russell a proposed version of his declaration drafted by Defendants. (Wilner 

Decl. at 2, Ex. 4 at 100-02; Ex. 22 at 181-83.) On the same day, November 13, 2018, 

Defendants filed a declaration with an electronic signature bearing Russell’s name. (See

ECF No. 32-6 at 67-68.) Russell testified that on November 14, 2018, one day after his 

alleged declaration was filed with the Court, he sent Sheppard, Blockvest’s CFO, his 

actual signed declaration. (See Wilner Decl. at 2-3; Ex. 5 at 104; Ex. 22 at 197-200.)

Russell sent the declaration as a PDF file so that nobody could change the declaration 

afterwards. (Wilner Decl., Ex. 5 at 104; Ex. 22 at 197.) 

The declaration Russel authorized and signed [ECF No. 93-2 at 106-107; see 

also Wilner Decl. at 3, Ex. 4] drastically differed from the declaration Defendants filed on 

his behalf:

• Russell omits the word “sophisticated” from “I consider myself a sophisticated 

Investor.” (ECF No. 93-2 at 106.)

• Russell omits the statement that he did not review or rely on Rosegold’s 

website, or anything on the internet or other documents about Rosegold. (See id. at 

106-07.)

• Russell omits the statement that he did not rely on Blockvest’s website or 

anything else on the internet about Blockvest. (See id.)

• Russell omits the statement that he did not review or rely on Reginal 

Ringgold’s web page, LinkedIn page, or anything else on the internet concerning Mr. 

Ringgold. (See id.)

• Russell omits the statement that he sent money to Rosegold based solely on 

his personal relationship with his friend Michael Sheppard, and not based on any 

specific representation about anything specific on the internet or otherwise; Russell says 

it was the “primary reason” he invested. (See id. at 106.)

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Accordingly, in his authorized declaration, Russell omitted the word 

“sophisticated” from “I consider myself a sophisticated investor,” which appear in the 

Court-filed version of the declaration. (Wilner Decl., Ex. 22 at 183-85, 204-05; see also

ECF No. 32-6 at 67.) Further, according to Russell’s deposition testimony, the 

Defendants’ version of the declaration contained statements that Russell had never 

seen, including the statement that he had never reviewed or relied on Blockvest’s 

promotional materials or website. (Wilner Decl., Exs. 3, 4 & 6; Ex. 22 at 165-68; see also

ECF No. 32-6 at 67-68.) After his investment, Russell continued to believe he had 

acquired BLV tokens based on his account statement available on Blockvest’s website.

(Wilner Decl., Ex. 22 at 176-78.) Based on Blockvest’s promotional materials and other 

representations by the company’s personnel, Russell expected to profit from those 

tokens based on the efforts of Ringgold and Blockvest’s management to make the 

company successful. (Id. at 179-80, 192-94.)

With respect to the paragraph in the version of the declaration Defendants filed 

with the Court, stating that Russell sent his money to Rosegold based solely on his 

personal relationship with his friend Sheppard, “and not based on any specific 

representation about anything specific on the Internet or otherwise,” Russell testified 

that he did not authorize anybody to make that representation on his behalf because it 

was false. (Id. at 209; see also ECF No. 32-6 at 68.) He testified that he reviewed 

numerous marketing materials and information about Blockvest on the Internet, and 

those materials and information influenced his decision to make the $3,000 purchase of 

Blockvest tokens. (Id. at 191, 209.) 

Russell also stated the following during his testimony:

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.

(Id. at 206-07 (emphasis added).) Russell also testified as follows:

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.

(Id. at 208 (emphasis added).)

Russell testified that he did not authorize Blockvest or Ringgold to file his signed 

declaration with the Court one day before he provided his actual signed declaration to 

them. (Id. at 197, 201-05.) Russell also testified that no one from Blockvest told him 

that they were going to make changes to his authorized declaration. (Id. at 200.) When 

asked whether he has “ever seen a version of the declaration that Blockvest and Mr. 

Ringgold filed on [Russell’s] behalf with the Court? Did they ever send you a copy of 

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 

added).) 

Defendant Ringgold testified that he did not personally forge Russell’s signature. 

(Wilner Decl., Ex. 28 at 373-83.) When Ringgold was asked during his deposition 

whether he “ha[d] a concern that the [Russell declaration] that was filed with the court 

might have been a forgery,” Ringgold answered “Correct.” (Id. at 383.)

B. Declaration of Quintin Dorsey

1. Declaration filed by Defendants

On November 13, 2018, Defendants filed Quintin Dorsey’s declaration in support 

of their opposition to Plaintiff’s motion for a preliminary injunction. (See Wilner Decl. at 

3, Ex. 8 at 11; see also ECF No. 32-8 at 6.) The declaration, inter alia, contained the 

following statements:

• “I never intended to make an investment and made no investment 

decision, but wanted to help test the exchange for future use and believed I would get 

my money back, less the transaction fees charged by third-parties.” (ECF No. 32-8 at 6.)

• “I knew I could not receive BLV token because they could not be removed 

from the platform and had no value.” (Id.)

2. Evidence obtained during the course of discovery

On July 15, 2019, Dorsey was deposed and testified that he was a former student

of Ringgold at the Online Trading Academy. (Wilner Decl., Ex. 23 at 212, 214.) In a 

March 1, 2018 e-mail, Sheppard sent Dorsey promotional materials providing “an 

overview of the Blockvest cryptocurrency token,” which Sheppard claimed was a 

“[g]reat investment opportunity to make a quick 100% return on your investment.” 

(Wilner Decl., Ex. 10 at 115.) In an April 22, 2018 e-mail, Ringgold wrote to Dorsey, “I 

want to thank personally for you investment interest in the project,” attaching links to 

Blockvest’s materials, including the website, whitepaper, ICO video, and Form D notice 

of exempt offering of securities filed with the SEC. (Wilner Decl., Ex. 11 at 117

(emphasis added).) Ringgold added, “[f]or your investment you will receive 10,000 BLV 

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tokens.” (Id.) Four days later, Dorsey made a $5,000 credit card purchase for a 

“BlockVest ICO-Order.” (Wilner Decl., Ex. 23 at 121, 213.) 

Dorsey testified that Ringgold told him he could easily double or triple Dorsey’s

money within two to three months after the ICO opened. (Id. at 215.) Dorsey believed 

that he could then take his initial capital out “in real money” and leave whatever was 

left over to continue gain profit. (Id.) According to Dorsey’s deposition testimony, 

Ringgold never stated that the BLV tokens Dorsey invested in were just “test” tokens; 

the first time Dorsey heard the word “test” was when he read the declaration 

Defendants submitted on his behalf. (Id. at 218, 228-29.) Dorsey further testified that 

he made the purchase expecting to receive BLV tokens from which he would profit, and 

that he was not giving his $5,000 just to make a contribution to Blockvest. (Id. at 215-

21, 223-24.) Dorsey also testified that he made his “investment decision” relying on 

representations from Ringgold, as well as representations in Blockvest promotional 

materials, including the website, white paper, pitch deck, promotional video, and 

Ringgold’s and Blockvest’s social medial account. (Id. at 242.)

Dorsey agreed to sign the declaration drafted on his behalf after “pressure” from 

Ringgold, including numerous text messages and e-mails sent during Dorsey’s wife’s 

recovery from life-threatening pregnancy complications and Dorsey taking care of a 

three-week old baby. (Wilner Decl., Exs. 13 & 14; Ex. 23 at 169-75, 232-35.) Dorsey 

testified that Ringgold “called me . . . to ask me to sign [the declaration].” (Wilner Decl., 

Ex. 23 at 230.) Dorsey was neither aware of the purpose of the declaration, nor of the 

instant lawsuit. (Id. at 234-39.) Dorsey testified that he did not write the declaration 

and did not have any discussions with Ringgold regarding what Dorsey would state if he 

were to draft the declaration. (Id. at 231.) Ringgold did not give Dorsey an opportunity 

to edit the declaration he sent to Dorsey, and Dorsey did not read or look at the 

declaration; he just hit “sign” button on the DocuSign document. (Id. at 230-31; see also

id. at 237 (containing Dorsey’s explanation that “when you hit the button on the 

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DocuSign, it takes you straight to where they want you to sign.”). Notably, Dorsey 

testified as follows:

Q. During any of those text messages, one or two phone calls, and 

the DocuSign link, did Mr. Ringgold ever ask you what you would want to 

say to a court?

A. Not at all.

Q. [] And what did Mr. Ringgold say was the purpose of the 

declaration?

A. He wasn’t specific at all. He just said, “This would help me out. I 

need you to sign it. This would really help me out. This is—this will blow 

over very quickly.”

Basically, minimizing the seriousness of it, and he caught me at a very 

good time where I—good time in the sense of, like, I was completely 

distracted. My focus, like I said, was strictly on the very new baby, my very 

sick wife, and just all the life events that had happened that had gotten 

me—I, basically, was very stressed and completely unfocused.

(Id. at 232-33 (emphasis added).) 

Dorsey further testified that he did not know that his declaration had been filed 

in court before June 2019, when he was served with a subpoena in connection with this 

litigation. (Id. at 239.) Dorsey added that “[p]rior to June ’19, I didn’t even know what a 

declaration was.” (Id.) When Dorsey read the document Defendants filed on his behalf, 

he realized it was entirely false: “it’s basically all a complete lie except for my name. 

That’s—I mean, that’s the only thing that’s true is my name. Otherwise, almost every 

word on here is a lie.” (Id. at 244 (emphasis added).) 

During his deposition, Ringgold claimed that he did not solicit Dorsey to invest, 

did not send the April 22, 2018 e-mail, and stated that Dorsey was a “sophisticated” 

“Rosegold” investor, not merely a “tester.” (Wilner Decl., Ex. 28 at 367-72, 385-91.) 

Additionally, in a declaration filed in support of Defendants’ opposition to Plaintiff’s 

pending motion for summary judgment, Ringgold stated under the penalty of perjury 

that “[e]ach investor or associate of Blockvest that was provided a declaration to sign 

was instructed to read the declaration carefully and make sure that it was true and 

correct and to make any changes needed before signing and sending the declarations 

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back.” (Decl. of Reginald Buddy Ringgold, III (“Ringgold Decl. in Opp’n of MSJ”) 7, ECF 

No. 109-1.)

C. Declaration of Jacqueline Wartanian

1. Declaration filed by Defendants 

On November 13, 2018, Defendants filed with the District Court Jacqueline 

Wartanian’s declaration. (See Wilner Decl. at 3, Ex. 9; see also ECF No. 32-8 at 4.) The 

declaration, inter alia, contained the following statements:

• “I never intended to make an investment and made no investment 

decision, but wanted to help test the exchange for future use and believed I would get 

my money back, less the transaction fee charged by third-parties.” (ECF No. 32-8 at 4.)

• “I knew I could not receive BLV token because they could not be removed 

from the platform and had no value.” (Id.) 

2. Evidence obtained during the course of discovery

Wartanian testified on August 22, 2019, that she was a former student of 

Ringgold at the Online Trading Academy, and that Ringgold was her “mentor.” (Wilner 

Decl., Ex. 24 at 248, 251, 260.) According to Wartanian’s deposition testimony, prior to 

her initial investment, she discussed Blockvest with Ringgold and reviewed the 

company’s website, videos about Blockvest posted on YouTube, and social media 

accounts. (Id. at 252-55, 261.) Wartanian stated that the “Deloitte” accounting firm’s 

logo, as well as SEC’s logo, on the Blockvest website gave her the confidence to invest in 

Blockvest. (Id. at 262-64.) 

Wartanian further testified that she believed that her $3,000 investment was for 

a purchase of Blockvest tokens. (Id. at 250.) She expected that once the company had 

its ICO, she would actually receive BLV tokens, hoped to make a profit off of the $3,000

investment in the future, and considered herself to be a “presale investor.” (Id. at 256-

58.) Wartanian invested on behalf of her mother “[f]or her medical bills and she’s 79. 

So [Wartanian] figured, you know, the investment will help pay for that.” (Id. at 259-

60.) 

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Wartanian also testified that she helped test the functionality of the Blockvest 

platform, but that was “separate” from her investment. (Id. at 257-58; see also id. at 

283-84.) Wartanian believed that she had purchased Blockvest tokens based on her 

account statement on the Blockvest website. (See id. at 270-75; see also Wilner Decl., 

Ex. 16.) 

When questioned during her deposition about the declaration Defendants 

submitted on her behalf to the Court, Wartanian testified that Ringgold drafted the 

declaration, that Ringgold chose the specific wording used in the declaration, and told

her the following: “I will send [the declaration] to you. Just look at it, and all you need 

to do is sign it.” (Wilner Decl., Ex. 24 at 276-77.) Wartanian testified that she only 

“skimm[ed]” the declaration drafted by Ringgold, and did not make any changes or 

review Plaintiff’s Complaint filed in this case before signing the declaration. (Id. at 276-

79.) She further testified that the declaration had numerous false statements, including 

the statement that she only performed testing services, because she made investments 

expecting to profit from the purchase of BLV tokens. (Id. at 279-92.)

When confronted with Wartanian’s testimony during his deposition, Ringgold 

denied any role in drafting Wartanian’s declaration and testified that he did not 

remember who Wartanian was. (Wilner Decl., Ex. 28 at 392-97.) In a declaration filed in 

support of Defendants’ opposition to Plaintiff’s pending motion for summary judgment, 

Ringgold stated that he “ha[s] been close friend and mentor to Dorsey and Wartanian

for years.” (Ringgold Decl. in Opp’n of MSJ at 7 (emphasis added).) 

D. Declaration of Amanda Vaculik

1. Declaration filed by Defendants

On November 20, 2018, Defendants filed Amanda Vaculik’s declaration.

2

(Wilner 

 

2

 The Court notes that Vaculik’s declaration was subsequently stricken by the District Court in its order 

denying Plaintiff’s motion for a preliminary injunction. (ECF No. 41 at 17.) 

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Decl. at 4, Ex. 17; see also ECF No. 40-2 at 2.) In her declaration, Vaculik made the 

following statements:

• In April 2018, Vaculik entered into a lease for a condo on 5th street in Santa 

Monica. (ECF No. 40-2 at 2.)

• Vaculik’s boyfriend, Christopher Black, paid rent on the condo that she leased 

for one year in advance. (Id.) 

• Black worked in Blockchain exchange software development area. (Id.) 

• Black told Vaculik that “Reginald Ringgold agreed to pay Mr. Black $147,000 in 

exchange for Mr. Black’s software development services. Mr. Black told me that he 

asked Mr. Ringgold to make payment for Mr. Black’s services to my landlord, ‘5th ST 

LLC’” on April 18, 2018. (Id.) 

2. Evidence obtained during the course of discovery

On November 6, 2018, Ringgold testified during his initial deposition, which was

conducted during the expedited discovery phase, that a $147,000 payment from his 

personal account for a Santa Monica apartment for Vaculik was compensation to “Chris” 

and his company for “development” of Blockvest’s platform, and the source of funds 

was “my money that I had I just had in my safe.” (Wilner Decl. at 6, Ex. 27 at 351-57.) 

On November 15, 2018, Plaintiff conducted a telephonic interview of Vaculik. (Wilner 

Decl. at 4-5; see also id., Ex. 21.) Vaculik answered the call, but asked the SEC 

interviewers to call her back in thirty minutes. (Id.) During the subsequent call, Vaculik 

told the SEC interviewers that Black was her boyfriend, that he was involved with 

technology, and that the payment was for Black’s services for an apartment in which 

Vaculik would live. (Id. at 5.) She then repeated the above statements in her 

declaration filed with the District Court on November 20, 2018. (ECF No. 40-2 at 2.) 

On April 24, 2019, Vaculik gave a proffer to the Department of Justice that was 

attended by two SEC attorneys, Amy Longo and Brent Wilner. During the proffer, 

Vaculik told interviewers that: (1) Black was not her boyfriend; (2) she did not live in 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 

$10,000 to put the apartment application in her name. (Wilner Decl. at 5.) Vaculik also 

stated that on November 15, 2018, she spoke to Ringgold during the intervening thirty 

minutes between phone calls with the SEC, and Ringgold instructed her to tell the false 

story about the apartment transaction to the SEC staff. (Id.) During her subsequent 

deposition on September 9, 2019, Vaculik asserted her Fifth Amendment right as to all 

questions concerning the transaction, the declaration, and the SEC interview. (Wilner 

Decl. at 6, Ex. 25 at 259-339.) 

Ringgold was deposed on October 22, 2019, and testified that he did not know 

Vaculik or Black, and did not recall any transaction with her or Black related to supposed 

development services or the apartment. (Wilner Decl. at 6, Ex. 28 at 361-66, 398-418.)

Defendants were served notices of depositions of each of the above declarants, 

but Defendants did not attend any of those depositions. (Supplemental Decl. of Brent 

W. Wilner (“Supp. Wilner Decl.”) 2-3, ECF No. 102-1; id., Exs. 29-32.) In his opposition to 

the instant motion for terminating sanctions, Defendant Ringgold has not provided any 

declarations or any other evidence contradicting the evidence presented by Plaintiff. 

(See Opp’n.)

II. Plaintiff’s Motion for Terminating Sanctions

A. Bad faith, willfulness, or fault 

Plaintiff argues that Defendants’ misconduct was willful and in bad faith because 

they knew the declarations at issue were false and forged, but Defendants did not 

correct the declarations and attempted to conceal the wrongdoing with further false 

deposition testimony. (Mot. at 15.) Ringgold asserts that Defendants did not act in bad 

faith because they did not intentionally destroy or withhold evidence; rather, they might 

have made mistakes while acting under “intense time constraints” imposed by this 

litigation. (See Opp’n at 10-13). He states that “it is highly possible that the [defense] 

counsel inaccurately carried over statements from the prior drafted declarations to 

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those of [] Russell, Dorsey & Wartani[a]n.” (Id. at 11.) Ringgold also claims that he is 

not accountable for any alleged misconduct of non-parties. (See id. at 11-13.) 

The imposition of terminating sanctions requires a finding that a litigant’s conduct 

was the result of “willfulness, bad faith, or fault.” See Leon, 464 F.3d at 958 (quoting 

Anheuser-Busch, Inc., 69 F.3d at 348). It is well-established that fabricating and 

submitting knowingly false evidence amounts to willful and bad faith conduct. See

Englebrick v. Worthington Indus., Inc., 944 F. Supp. 2d 899, 910 (C.D. Cal. 2013) (finding 

that plaintiffs acted willfully and in bad faith, where they lied during depositions and 

discovery, did not file any corrections to the deposition transcripts, and did not file any 

amended discovery responses); Sun World, Inc. v. Lizarazu Olivarria, 144 F.R.D. 384, 389-

91 (E.D. Cal. 1992) (finding that plaintiff acted in bad faith by submitting a forged 

document and committed perjury in furtherance of the fraud on the court). 

Plaintiff brought this action alleging that Defendants were offering and selling

unregistered securities in the form of digital assets (BLVs), and sought to stop 

investment fraud involving ICO by Defendants. (See Compl., ECF No. 1.) In their 

opposition to Plaintiff’s motion for a preliminary injunction, Defendants argued that 

there were no actual investors in Blockvest’s sale of digital BLV tokens. (See i.e., ECF 

Nos. 23 & 32.) Defendants alleged that various “friends and family” paid money to an 

entity affiliated with Ringgold without expecting to receive Blockvest tokens (the 

“Rosegold investors”), or to help develop the Blockvest platform without expecting to 

receive real Blockvest tokens (the “testers”). (See id.) To support these contentions, 

Defendants submitted a declaration under the penalty of perjury from Defendant 

Ringgold, and as exhibits to Ringgold’s declaration—declarations from individuals 

supposedly in both categories. (See ECF No. 32; ECF Nos. 32-6 & 32-8; see also Wilner 

Decl. at 2, Exs. 1 & 2.)

In his declaration, Ringgold stated that the Rosegold investors “attested under 

penalty of perjury that before [] they sent money to Rosegold Investments LLP, they did 

not review or rely on Rosegold Investments LLP’s website or any offering documents or 

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anything on the internet about Rosegold Investments.” (Decl. of Reginald Buddy 

Ringgold, III (“Ringgold Decl.”) 5, ECF No. 32.) Ringgold also declared that:

[e]ach of the Rosegold Investors also attested under penalty of perjury that 

before sending any money to Rosegold Investments LLP, they never 

listened to any webinar or video, or attended any seminars on Blockvest 

LLC. They did not review or rely on the Blockvest website[,] Whitepaper, 

Facebook page, and or LinkedIn page referencing Blockvest or anything else 

on the internet about Blockvest.

(Id. at 5-6.) The declarations Defendants filed in support of their opposition to Plaintiff’s 

motion for a preliminary injunction included the declarations from Russell [ECF No. 32-6 

at 67-68], Dorsey [ECF No. 32-8 at 6], Wartanian [ECF No. 32-8 at 4], and Vaculik [ECF 

No. 40-2 at 2].

As detailed above, discovery has revealed that Defendants filed Russell’s 

declaration one day before they received Russell’s actual signed declaration, and the 

version of Russell’s declaration Defendants filed with the Court contained numerous 

false statements and a forged signature of the declarant. Defendant Ringgold does not 

dispute that the declaration was forged. (See Opp’n at 12 (containing Ringgold’s 

argument that if the Court is inclined to impose sanctions, it should issue an order 

precluding him from “offering the forged Declaration at trial.”). Despite receiving 

Russell’s authorized declaration, Defendants neither withdrew the forged declaration, 

nor filed the actual signed version of Russell’s authorized declaration. (See Docket.) 

Defendant Ringgold, nevertheless, continues to cite the forged declaration in his 

opposition to Plaintiff’s pending motion for summary judgement. (See ECF No. 109.)

Discovery also established that Defendant Ringgold had direct communications, 

including e-mail communications, with Wartanian and Dorsey, his former Online Trading 

Academy students, and sent them numerous Blockvest’s promotional materials. 

Ringgold directed Dorsey and Wartanian to sign declarations he drafted on their behalf 

containing false statements. Notably, although Dorsey and Wartanian were expecting 

to profit from their BLV purchases, Ringgold directed them to sign declarations 

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containing the false “testing” narrative. Ringgold also coached Vaculik what to tell

Plaintiff about her relationship with a supposed developer and a $147,000 payment for 

an apartment she never lived in. Defendants subsequently filed Vaculik’s declaration 

repeating those falsehoods. Ringgold later testified that he neither recalled the 

transaction, nor who Vaculik or her boyfriend were. 

As an initial matter, Ringgold’s argument that Defendants did not act in bad faith 

because they did not destroy or withhold evidence lacks merit. The misconduct at issue 

concerns Defendants’ fabrication of evidence material to the key issues in this case and 

the submission of that evidence to the Court. Further, the testimony of the declarants, 

the documentary evidence produced during the course of discovery, the fact that the 

declarations were filed as exhibits to Ringgold’s declaration, the sheer volume of false 

statements in the declarations at issue, and Ringgold’s conduct, contradict his assertion 

that he was not responsible for the misconduct. 

Although Defendant Ringgold is now litigating pro se, Defendants were 

represented by counsel at the time they filed the declarations at issue on November 13, 

2018. (See Docket.) The District Judge granted defense counsel’s motion to withdraw 

on February 14, 2019. (ECF No. 62.) More than sixteen months have elapsed since 

Defendants filed the false and forged declarations at issue. Nevertheless, Defendants 

did not correct or withdraw the declarations during the three-month period after the 

filing of the declarations while Defendants were represented by counsel, and during the 

period exceeding one year following defense counsel’s withdrawal from the case. (See

Docket.) 

The declarations at issue that Defendants filed with the Court contained 

numerous false statements, and one declaration was forged. The declarations were 

filed in support of Defendants’ opposition to Plaintiff’s motion for a preliminary 

injunction and concerned key issues in this case. “When a party falsifies evidence of 

central importance to a case, this shows bad faith, willfulness, or fault[.]” Vogel v. 

Tulaphorn, Inc., CV 13-464 PSG (PLAx), 2013 WL 12166212, at *4 (C.D. Cal. Nov. 15, 

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2013) (citing Anheuser-Busch, Inc., 69 F.3d at 352) (“It is well settled that dismissal is 

warranted where . . . a party has engaged deliberately in deceptive practices that 

undermine the integrity of judicial proceedings[.]”). The Court finds that Defendants’ 

submission and reliance on the false and fraudulent declarations at issue was willful and 

constitutes bad faith. The filing of the forged declaration, the breadth of the falsehoods 

in the declarations, Defendants’ failure to correct or withdraw the declarations, and 

Ringgold’s attempt to conceal the wrongdoing, demonstrate that Defendants 

intentionally presented false evidence to the District Court. 

While Defendant Ringgold asserts that his prior counsel might have made 

mistakes to respond to Plaintiff’s motion for a preliminary injunction, defense counsel’s 

declaration filed in support of his motion to withdraw,3 as well as Defendants’ 

continuous reliance on the declarations containing false evidence, demonstrate that 

Defendants did not merely made a mistake, but rather, intended to deceive the Court. 

See Coulter v. Baca, CASE NO. 13-cv-6090-CBM (AGRx), 2014 WL 12589652, at *3-4 (C.D. 

Cal. May 23, 2014) (finding bad faith, where the party knowingly submitted a document 

with a forged signature to the court; reasoning that the “conduct cannot be attributed 

to mere inadvertence, and [the party’s] filing of documents and behavior were within 

[the party’s] control.”); Newman v. Brandon, No. 1:10–CV–00687 AWI JLT (PC), 2012 WL 

4933478, at *3-5 (E.D. Cal. Oct. 16, 2012) (finding that plaintiff acted willfully and 

in bad faith, where the plaintiff submitted falsified declarations to the court, which

 

3

 Defense counsel, Stanley C. Morris, stated the following in his declaration filed on December 27, 

2018, in support of his motion to withdraw:

Defendants have instructed counsel to file certain documents that such clients prepared 

without the benefit of counsel, and that, upon review, fall far short of the professional 

standards required by the Court of my firm. I have not and would not sign and file these 

papers with the Court and could not certify them as appropriate papers in compliance 

with my duties under Rule 11. 

(ECF No. 47-1 at 4.)

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concerned material issues in the case); Uribe v. McKesson, No. 08-cv-01285-SMS PC, 

2011 WL 3925077, at *4 (E.D. Cal. Sep. 7, 2011) (finding bad faith, where the declarant 

“never saw or read the declaration” before plaintiff forged the declarant’s signature and 

“attempted to ‘teach’ [the declarant] what to say to help [p]laintiff win his lawsuit”). As 

a result, the Court RECOMMENDS finding that Defendants Blockvest and Ringgold acted 

willfully and in bad faith.

B. Five-factor test

The Court next evaluates the five factors considered in this circuit in determining 

whether to impose terminating sanctions. For the reasons described below, the Court 

finds that nearly every factor weighs in favor of imposing terminating sanctions.

1. The public’s interest in expeditious resolution of litigation

Plaintiff alleges that the false declarations “influenced the Court’s evaluation of 

the SEC’s request for a preliminary injunction,” which “resulted in the need for a 

reconsideration motion, and has necessitated protracted litigation to adjudicate 

whether defendants sold Blockvest securities to presale investors—an issue that was 

only in dispute due to defendants’ fraud on the Court.” (Mot. at 16.) Defendants do not 

address this factor. (See Opp’n.)

The public has an overriding interest in securing “the just, speedy, and 

inexpensive determination of every action.” In re Phenylpropanolamine (PPA) Prods. 

Liab. Litig., 460 F.3d 1217, 1227 (9th Cir. 2006); see also Fed. R. Civ. P. 1. “The public’s 

interest in expeditious resolution of litigation always favors dismissal.” Nourish v. Cal. 

Amplifier, 191 F.3d 983, 990 (9th Cir. 2002). 

This action has been pending since October 3, 2018, and Plaintiff SEC and the 

Court dedicated substantial public resources to this case. Defendants’ misconduct 

caused unnecessary delay and expense for Plaintiff, and the public it seeks to protect. 

The Court thus finds that this factor weighs in favor of imposing terminating sanctions.

/ / /

/ / /

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2. The Court’s need to manage its docket

Plaintiff argues that Defendants’ misconduct “undermined the integrity of these 

proceedings, and any remedy short of default would not adequately deter future 

fraudsters from producing false declarations to manufacture contested issues in 

litigation.” (Mot. at 17.) Defendants do not address this factor. (See Opp’n.)

“District courts have an inherent power to control their dockets,” and “dismissal 

must be available to the district court in appropriate cases, not merely to penalize those 

whose conduct may be deemed to warrant such a sanction, but to deter those who 

might be tempted to such conduct in the absence of such a deterrent.” In re 

Phenylpropanolamine, 460 F.3d at 1227 (quoting Nat’l Hockey League v. Metro. Hockey 

Club, Inc., 427 U.S. 639, 643 (1976)); see also Fed. R. Civ. P. 16 (authorizing district 

courts to manage cases so that disposition is expedited, wasteful pretrial activities are 

discouraged, and the quality of the trial is improved).

The Court initially notes that pursuant to Civil Local Rule 83.3(j) “[o]nly natural 

persons representing their individual interests in propria persona may appear in court 

without representation by an attorney permitted to practice pursuant to Civil Local Rule 

83.3,” and that “[a]ll other parties, including corporations, partnerships and other legal 

entities, may appear in court only through an attorney permitted to practice pursuant to 

Civil Local Rule 83.3.” The District Court gave Blockvest ample time to obtain substitute 

counsel and have counsel file a notice of appearance in light of the withdrawal of 

Defendants’ counsel on February 14, 2019. (See ECF No. 62.) The District Court also 

explicitly warned Blockvest that “if it fails to obtain new counsel and have counsel file a 

notice of appearance, it may be subject default proceedings.” (Id. at 3-4.). To date, no

counsel has appeared on Defendant Blockvest’s behalf. (See Docket.) As a limited 

liability corporation, Blockvest “may not proceed in federal court without counsel.” (ECF 

No. 62 at 3 (citing Rowland v. California Men’s Colony, Unit II Men’s Advisory Council, 

506 U.S. 194, 201-02 (1993); United States v. High Country Broadcasting Co., Inc., 3 F.3d 

1244, 1245 (9th Cir. 1993); Civil Local Rule 83.3).)

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The District Court has expended tremendous amount of resources on this 

litigation that could have been devoted to other cases on its docket. (See Docket.) 

Further, Defendants have not withdrawn or corrected the false and forged declarations

since they were filed over a year-and-a-half ago, and Ringgold continues to cite the 

declarations in his opposition to Plaintiff’s motion for summary judgement. (See ECF 

No. 109.) Defendants’ misconduct has greatly impeded the resolution of the case by 

obscuring critical facts, and Plaintiff expended a substantial amount of time and 

resources obtaining discovery relating to the false declarations at issue. “As such, 

Defendant[s’] obstructive conduct poses a genuine threat to the expeditious resolution 

of this litigation and the Court’s need to manage its docket.” Bump Babies Inc. v. Baby 

The Bump, Inc., No. CV 09–06747 GHK (SSx), 2011 WL 5037070, at *6 (C.D. Cal. Sept. 7, 

2011). This factor therefore also weighs in favor of imposing terminating sanctions.

3. The risk of prejudice to Plaintiff

Plaintiff contends that the fraudulent evidence Defendants filed with the Court 

“has exacted meaningful and lasting prejudice on the SEC and the investors it seeks to 

protect.” (Mot. at 17.) Plaintiff argues that the declarations at issue created factual 

disputes that precluded the District Court from finding that there had been presale 

investors in the Blockvest offering. (Id.) Plaintiff claims that, as a result, Defendants 

have not been enjoined from all of the charged misconduct (including Exchange Act 

antifraud violations and Securities Act registration violations), thereby exposing 

investors to an ongoing risk of harm, and Defendants’ assets have not been frozen, 

making any recovery of lost investor funds unlikely. (Id.) Plaintiff further maintains that 

given the scope of Defendants’ misconduct, any evidence they present in response to 

Plaintiff’s summary judgment motion or at trial will not be credible. (Id.) Defendants do 

not address this factor. (See Opp’n.)

When assessing prejudice, courts consider whether the other party’s actions 

“impair” the ability of the party seeking sanctions “to go to trial or threaten to interfere 

with the rightful decision of the case.” In re Phenylpropanolamine, 460 F.3d at 1227

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(quotations omitted). In examining this factor, courts consider whether the party’s 

misconduct “make[s] it impossible for a court to be confident that the parties will ever 

have access to the true facts.” Conn. Gen. Life Ins. Co., 482 F.3d at 1097; see also

Whitewater West Indus., Ltd. v. Pacific Surf Designs, Inc., Case No: 17cv1118-BEN (BLM), 

2018 WL 4199232, at *6 (S.D. Cal. Aug. 31, 2018) (quoting Leon, 464 F.3d at 959)

(“When the spoiling party’s actions force the non-spoiling party ‘to rely on incomplete 

and spotty evidence’ at trial, dismissal is proper.”).

The false evidence produced by Defendants precluded Plaintiff from timely 

ascertaining evidence central to its claims, and forced Plaintiff to engage in extensive,

costly, and lengthy discovery to uncover key facts and the extent of Defendants’ deceit. 

Defendants’ misconduct therefore “threaten[s] to interfere with the rightful decision of 

the case,” and may force Plaintiff “to rely on incomplete and spotty evidence at trial.” 

See Leon, 464 F.3d at 959 (quotation omitted). Accordingly, the Court finds that Plaintiff 

has been prejudiced by Defendants’ misconduct, and this factor weighs in favor of 

imposing terminating sanctions. See CrossFit, Inc. v. Nat’l Strength and Conditioning 

Ass’n, Case No.: 14-CV-1191 JLS (KSC), 2019 WL 6527951, at *19 (S.D. Cal. Dec. 4, 2019) 

(finding prejudice and imposing terminating sanctions pursuant to the court’s inherent 

power; reasoning, inter alia, that “[g]iven the extensive perjury to date, the evidence 

supplied by the [party to be sanctioned] will also be inherently untrustworthy.”).

4. The public policy favoring disposition of cases on their merits

Plaintiff argues that the presumption is outweighed in this case because 

Defendants engaged in a pattern of fraud. (Mot. at 17.) Defendants do not address this

factor. (See Opp’n.)

The public policy in favor of disposition of cases on their merits always weighs 

against dismissal. See Pagtalunan v. Galaza, 291 F.3d 639, 643 (9th 2002).

Nevertheless, this factor “lends little support” to a party whose conduct impeded 

progress toward disposition on the merits. In re Phenylpropanolamine, 460 F.3d at 

1228.

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Defendants filed the false and forged declarations at the outset of this case, did 

not withdraw or correct the declarations, impeded Plaintiff’s efforts to timely ascertain 

critical facts, and Defendant Ringgold continues to cite the declarations in his opposition 

to a case dispositive motion. Because of Defendants’ extensive misconduct and 

deception concerning key issues in this litigation, this factor is neutral. See id. at 1237 

(the party whose misconduct is at issue “bear[s] responsibility for halting movement 

toward a merits resolution,” which “neutralizes the negative effect of this factor.”).

5. Efficacy of lesser sanctions

Plaintiff argues that Defendants’ deception directly relates to the legal issues 

central to this litigation, pro se Defendant Ringgold will likely not pay monetary 

sanctions, and evidence preclusion sanctions will merely place Ringgold in the same 

position in which he was before filing the false and forged declarations, and will not 

deter him from further deception. (Mot. at 18.) Plaintiff also asserts that at this stage 

of the proceedings, after discovery closed and its motion for summary judgment was 

filed, only a terminating sanction will provide a meaningful remedy. (Reply at 17.) 

Defendant Ringgold argues that terminating sanctions are not appropriate in this case 

because there was no “disobedience of a prior court order compelling a response to the 

discovery request.” (Opp’n at 6-8.) Ringgold asks the Court to allow him to “resubmit 

the declarations in the form of Notarized Affidavit of Facts from Quint[i]n Dorsey, Jackie 

Wartanian & Christopher Russel in lieu of sanctions.” (Id. at 13.) Alternatively, 

Defendant asks the Court to issue an order precluding him from “offering the forged

Declaration at trial.” (Id. at 12 (emphasis added).)

A district court is generally required to consider whether a lesser sanction could 

adequately address a party’s misconduct. Malone v. U.S. Postal Serv., 833 F.2d 128, 131 

(9th Cir. 1987). Reviewing courts consider whether the district court (1) discussed the 

feasibility of less severe sanctions, (2) imposed alternative sanctions prior to ordering 

dismissal, or (3) warned the party that dismissal was a potential sanction prior to 

ordering the same. Anheuser-Busch, Inc., 69 F.3d at 352. In egregious circumstances,

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however, “it is unnecessary (although still helpful) for a district court to discuss why 

alternatives to dismissal are infeasible.” Dreith v. Nu Image, Inc., 648 F.3d 779, 788-89 

(9th Cir. 2011) (quoting Malone, 833 F.2d at 132). “[B]ecause bad faith behavior poses 

such a serious threat to the authority of a district court, the existence of bad faith 

constitutes egregious circumstances which can warrant dismissal even without the 

explicit consideration of alternative sanctions and relative fault.” In re Fitzsimmons, 920 

F.2d 1468, 1474 (9th Cir. 1990). 

The Ninth Circuit has recognized that “dismissal is appropriate where a ‘pattern of

deception and discovery abuse made it impossible’ for the district court to conduct a 

trial ‘with any reasonable assurance that the truth would be available.” Valley Eng’rs 

Inc., 158 F.3d at 1057 (quoting Anheuser-Busch, Inc., 69 F.3d at 352). Terminating 

sanctions may also be applied when lesser sanctions would not deter future 

wrongdoing. See Computer Task Group, Inc. v. Brotby, 364 F.3d 1112, 1116-17 (9th Cir. 

2004) (“[I]t is appropriate to reject lesser sanctions where the court anticipates 

continued deceptive misconduct.”); see also Sun World Inc., 144 F.R.D. at 391 (imposing 

terminating sanctions because plaintiff’s track record indicated that any lesser sanction 

would be an exercise in futility).

As an initial matter, Ringgold’s argument that terminating sanctions are not 

available in this case because Defendants have not disobeyed any discovery orders is

unavailing. Plaintiff moves for terminating sanctions for Defendants’ willful deceit of 

the Court pursuant to the Court’s inherent powers, and not for discovery violations 

pursuant to Federal Rule of Civil Procedure 37. (See Mot.) 

Turning to monetary sanctions, Defendant Blockvest has not been represented by 

counsel for over a year, and Defendant Ringgold is proceeding pro se and does not 

appear to have the financial resources to pay monetary sanctions. (See Opp’n at 5 

(stating that due to “extreme financial hardship, [Defendants] could no longer afford 

counsel” and that “Blockvest LLC has no assets”). The Court therefore finds that 

monetary sanctions will not be effective in this case.

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Discovery has closed and deponents whose declarations are at issue have been 

deposed. Defendants had an opportunity to cross-examine those dependents during 

their depositions, but chose not to do so. Defendants’ proposals to resubmit the

declarations of Russell, Dorsey, and Wartanian,

4 or not “offer the forged Declaration at 

trial” [see Opp’n at 12-13 (emphasis added)] do not provide an adequate remedy. The 

Court “need not order [a party] to refrain from submitting false documents or perjuring 

himself in order for those acts to be punishable by dismissal and the entry of default 

judgment. The legal obligation to refrain from committing such acts is imposed upon 

every party to a lawsuit.” Sun World, Inc., 144 F.R.D. at 389-90; see also Am. Rena Int’l 

Corp. v. Sis–Joyce Int’l Co., Ltd., Case No. CV 12–6972 FMO (JEMx), 2015 WL 12732433, 

at *30 (C.D. Cal. Dec. 14, 2015) (“a party has no right to simply abandon false evidence 

and promise to be honest going forward.”). 

The Court also finds that evidentiary and issue preclusion sanctions would not be 

appropriate in this case. “The most critical factor to be considered in case-dispositive 

sanctions is whether ‘a party’s [misconduct] make[s] it impossible for a court to be 

confident that the parties will ever have access to the true facts.’” Conn. Gen. Life Ins. 

Co., 482 F.3d at 1097 (quotation omitted). Terminating sanctions are warranted where 

the party’s deception is directly pertinent to the legal issues being litigated. TeleVideo

Sys., Inc., 826 F.2d at 917 (affirming terminating sanctions, where the party’s perjury 

“infected all of the pretrial procedures and interfered egregiously with the court’s 

administration of justice.”).

In this case, evidence preclusion sanctions would not deter Defendants’ 

misconduct and would place Defendants in the same position they were in before filing 

the false and forged declarations. See Anheuser-Busch, Inc., 69 F.3d at 354 (9th Cir.

1995) (affirming terminating sanctions imposed by the district court where “the court 

 

4

 Notably, Ringgold is not asking to “resubmit” Vaculik’s declaration. (See Opp’n.)

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anticipate[d] continued deceptive misconduct” and there was no “reasonable assurance 

that the truth would be available.”); Sun World, Inc., 144 F.R.D. at 390-91 (concluding 

that a non-case dispositive sanction “would be an exercise in futility and operate as an 

ill-gotten reward for [defendant’s] despicable behavior,” where defendant committed a 

fraud on the court by submitting a fraudulent document); see also CrossFit, Inc. v. Nat’l 

Strength and Conditioning Ass’n, Case No.: 14cv1191 JLS (KSC), 2017 WL 2298473, at *5 

(S.D. Cal. May 26, 2017) (imposing terminating sanctions; reasoning that “the sheer 

breadth of the misconduct means that terminating the case would essentially be a 

cleaner and more expedient disposal given the high number of issue and evidentiary 

sanctions the Court [would need to] award.”). 

As discussed above, the false and forged declarations filed by Defendants concern 

key issues in this litigation. Further, Defendants’ misconduct was willful and in bad faith, 

and Defendant Ringgold continues to cite the false and forged declarations in opposition 

to Plaintiff’s motion for summary judgement. Ringgold’s conduct throughout the course 

of discovery, as well as his numerous filings under the penalty of perjury, demonstrate 

that he has no sense or remorse for the gravity of his misconduct, and does “not take 

[his] oath to tell the truth seriously and . . . will say anything at any time in order to 

[advance his agenda] in this litigation[.]” See Anheuser–Busch, 69 F.3d at 352. The 

Ninth Circuit has repeatedly stated “[t]here is no point to a lawsuit, if it merely applies 

law to lies. True facts must be the foundation for any just result.” Valley Eng’rs Inc., 158 

F.3d at 1058 (emphasis added); Conn. Gen. Life Ins. Co., 482 F.3d at 1097 (same). Less 

drastic sanctions would not be appropriate here because Defendants have “willfully 

deceived the court and engaged in conduct utterly inconsistent with the orderly 

administration of justice.” Anheuser-Busch, 69 F.3d at 348. 

Further, “it is not always necessary for the court to impose less serious sanctions 

first, or to give any explicit warning.” Valley Eng’rs Inc., 158 F.3d at 1057. Here, 

Defendants filed the declarations at issue before the Court had any opportunity to 

impose lesser sanctions. See Leon, 464 F.3d at 960 (“The second [Anheuser–Busch] 

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criterion is inapplicable here because [the party’s misconduct occurred] before the 

district court had an opportunity to . . . order ‘lesser sanctions.’”). Additionally, because 

Defendants filed the forged and false declarations at the outset of this litigation, the 

Court could not have warned Defendants that such misconduct may result in the 

imposition of terminating sanctions. See Leon, 464 F.3d at 960 (“[T]he third criterion, 

which examines whether the district court warned the party, is inapplicable here 

because the [party’s misconduct] occurred before the court had any opportunity to 

warn [the party].”); see also Am. Rena Int’l Corp., 2015 WL 12732433, at *32 (“A court 

should not have to warn a party to refrain from inventing phantom witnesses [], forging 

declarations [], falsifying and fraudulently procuring declarations[, and] filing false 

declarations with various federal courts[.]”). Notably, Defendant Ringgold was put on 

notice of the possibility of terminating sanctions when Plaintiff filed its motion for 

terminating sanctions; nevertheless, Ringgold continues to cite the false and forged 

declarations in his subsequent court filing. 

The Court has considered alternative monetary, evidentiary, and issue preclusion 

sanctions, and concludes that, under the facts of this case, even broad sanctions would 

not adequately redress Defendants’ egregious misconduct and deceit. See Conn. Gen. 

Life Ins. Co., 482 F.3d at 1097 (rejecting lesser sanctions, where defendants’ “pattern of 

deception and discovery abuse made it impossible for the district court to conduct [a] 

trial with any reasonable assurance that the truth would be available. It is appropriate 

to reject lesser sanctions where the court anticipates continued deceptive misconduct.”) 

(emphasis added); Greenburg v. Roberts Props., Ltd., No. CV–04–0001–PHX–SRB, 2006 

WL 7345628, at *1, *7 (D. Ariz. Feb. 21, 2006) (imposing terminating sanctions pursuant 

to the court’s inherent authority, where a pro se litigant forged material documents, 

submitted them to the court, and repeatedly lied to the court about whether he had 

committed forgery; reasoning that “[a]n attempt to excise the fraudulent aspects of 

Plaintiff’s case from the non-fraudulent ones through some lesser sanction is an 

impossibility,” because “even assuming there are non-fraudulent ones (a fact about 

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which the Court has considerable doubt), those aspects are premised upon and 

hopelessly bound up with the fraudulent aspects.”). The Court therefore finds that this 

factor weighs in favor of imposing terminating sanctions. 

6. Conclusion

In sum, four factors considered by courts in deciding whether to impose 

terminating sanctions, including the third and fifth “determinative” factors, weigh in 

favor of imposing terminating sanctions; and one factor is neutral. Additionally, the 

Court’s bad faith determination also supports the imposition of terminating sanctions. 

The Court is mindful that terminating sanctions are a hash remedy, however, 

Defendants’ egregious misconduct and willful deception concerning key issues in this 

litigation justifies the imposition of terminating sanctions requested by Plaintiff. See

Conn. Gen. Life Ins. Co., 482 F.3d at 1094, 1097 (upholding the district court’s imposition 

of default judgment as a terminating sanction, where defendants “knowingly deceived 

the [district] court and acted in bad faith” by submitting “perjured declarations, 

fabricated evidence and frivolous pleadings”); Anheuser–Busch, 69 F.3d at 352 

(terminating sanction is appropriate where a “pattern of deception and discovery abuse 

ma[kes] it impossible” for a district court to conduct a trial “with any reasonable 

assurance that the truth would be available.”); TeleVideo Sys., Inc., 826 F.2d at 916-17 

(affirming the entry of default judgment as a sanction for the defendant’s perjury during 

depositions and filing of false pleadings; finding that default judgment was warranted 

despite defendant’s admission of perjury because such a recantation would only be a 

mitigating factor where the falsehoods “have not tainted the entire pretrial process.”); 

Sun World, Inc., 144 F.R.D. at 389 (concluding that where “fraud has been committed 

upon the court, both Rule 11 and the inherent powers of the court support the sanction 

of dismissal and the entry of default judgment.”); see also Sec. & Exch. Comm’n v. Lee, 

CASE NO. 14cv347-LAB (BGS), 2017 WL 127977, at *2 (S.D. Cal. Jan. 12, 2017) (imposing 

terminating sanctions of default against defendants in the case arising out of fraudulent 

investment scheme by defendants; noting that defendants’ “bad faith and willful 

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misbehavior have successfully delayed the SEC’s recovery, and imposed costs on the 

SEC. Denying relief or giving them another chance would simply reward [defendants’] 

misconduct. The interests of justice forbid granting [defendants] any more 

opportunities to engage in any more of the same misbehavior.”); Am. Rena Int’l Corp., 

2015 WL 12732433, at *1-34 (imposing terminating sanctions pursuant to the court’s 

inherent powers, where defendants, inter alia, filed false and fabricated declarations, 

did not withdraw the declarations, and continued to rely on those declarations in their 

subsequent filings). The Court therefore RECOMMENDS that the District Court find that 

the five factors considered in this circuit in determining whether to impose terminating 

sanctions weigh in favor of imposing terminating sanctions.

IV. CONCLUSION AND RECOMMENDATION

For the reasons set forth above, the Court RECOMMENDS that Plaintiff’s motion 

for terminating sanctions be GRANTED.

IT IS ORDERED that no later than April 30, 2020, any party to this action may file 

written objections with the Court and serve a copy on all parties. The document should 

be captioned “Objections to Report and Recommendation.” 

IT IS FURTHER ORDERED that any reply to the objections shall be filed with the 

Court and served on all parties no later than May 7, 2020. The parties are advised that 

failure to file objections within the specified time may waive the right to raise those 

objections on appeal of the Court’s order. See Turner v. Duncan, 158 F.3d 449, 455 (9th 

Cir. 1998). 

IT IS SO ORDERED.

Dated: April 17, 2020

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