Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_18-cv-02287/USCOURTS-casd-3_18-cv-02287-7/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 and REGINALD 

BUDDY RINGGOLD, III a/k/a RASOOL 

ABDUL RAHIM EL,

Defendants.

Case No.: 18CV2287-GPB(MSB)

ORDER ADOPTING REPORT AND

RECOMMENDATION AND 

GRANTING PLAINTIFF’S MOTION 

FOR TERMINATING SANCTIONS

AS TO DEFENDANT RINGGOLD

[Dkt. No. 93.]

Before the Court is Plaintiff Securities and Exchange Commission’s (“SEC” or 

“Plaintiff”) motion for terminating sanctions seeking entry of default judgment against 

Defendants Blockvest LLC and Reginald Buddy Ringgold (collectively “Defendants”) on 

all claims in the complaint. (Dkt. No. 93.) Defendant Reginald Buddy Ringgold III 

(“Ringgold” or “Defendant”) filed an opposition and the SEC filed its reply. (Dkt. Nos. 

99, 102.) 

On April 20, 2020, pursuant to 28 U.S.C. § 636(b)(1), the Honorable Michael S. 

Berg, United States Magistrate Judge (“Magistrate Judge”), submitted a Report and 

Recommendation (“R&R”) to this Court recommending that terminating sanctions be 

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imposed and default judgment entered against Defendants. (Dkt. No. 113.) Ringgold 

filed an objection to the R&R and the SEC filed a reply. (Dkt. No. 1115, 116.) 

The motion raises three questions: (1) whether Defendants submitted false 

declarations to defend against the SEC’s case; (2) if so, were false declarations submitted 

willfully; and (3) if so, whether a terminating sanction is the appropriate remedy for 

presenting the false declarations in this litigation. The Court finds that the evidence 

establishes that Defendants willfully filed false declarations to defend against the SEC 

allegations, and, in so doing, willfully deceived the Court and adversely affected the 

administration of justice. For the reasons stated below, the Court ADOPTS the R&R and 

GRANTS the SEC’s motion for terminating sanctions as to Defendant Ringgold. 

Procedural Background

On October 3, 2018, the SEC filed a Complaint against Defendants Blockvest, 

LLC (“Blockvest”) and Reginald Buddy Ringgold, III a/k/a Rasool Abdul Rahim El 

(“Ringgold” or “Defendant”) alleging violations of Section 10(b) of the Securities 

Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5(b); violations under Section 

10(b) of the Exchange Act and Rule 10b-5(a) and Rule 10b-5(c); fraud in violation of 

Section 17(a)(2) of the Securities Act of 1933 (“Securities Act”); fraud in violation of 

Sections 17(a)(1) and 17(a)(3) of the Securities Act; and violations of Sections 5(a) and 

5(c) of the Securities Act for the offer and sale of unregistered securities. (Dkt. No. 1, 

Compl.) Plaintiff also concurrently filed an ex parte motion for temporary restraining 

order seeking to halt Defendants’ fraudulent conduct and freezing their assets, prohibiting 

the destruction of documents, seeking expedited discovery and an accounting of 

Defendants’ assets. (Dkt. No. 3.) On October 5, 2018, the Court granted Plaintiff’s ex 

parte motion for temporary restraining order. (Dkt. Nos. 5, 6.) In compliance with the 

temporary restraining order, Defendants filed Ringgold’s Declaration of Accounting on 

October 26, 2018, and a First Supplemental Declaration of Ringgold on November 2, 

2018. (Dkt. Nos. 18, 21.) Defendants also filed a response to the order to show cause on 

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, 

2018, (Dkt. No. 37), and on November 27, 2018, the Court denied a preliminary

injunction. (Dkt. No. 41.) 

On December 17, 2018, the SEC filed a motion for reconsideration. (Dkt. No. 44.) 

Subsequently, defense counsel filed a motion to withdraw as counsel on December 27, 

2018, and, among other things, cited attempts by defendants to file documents without 

counsel’s knowledge or signature. (Dkt. No. 47 at 5-6.) On February 14, 2019, the Court 

granted Plaintiff’s motion for partial reconsideration of the denial of a preliminary 

injunction against Defendants for future violations of Section 17(a) of the Securities Act 

and issued an order preliminarily enjoining Defendants from violating Section 17(a). 

(Dkt. No. 61.) However, relying on the declarations filed by Defendants, the Court found 

disputed issues of fact precluded the issuance of a preliminary injunction as to the 32 test 

investors and 17 individual investors. On the same day, the Court also granted defense 

counsel’s motion to withdraw as counsel. (Dkt. No. 62.) Although Blockvest, as an 

LLC, was given leave to obtain substitute counsel until March 29, 2019, (Dkt. No. 64), it 

has not retained counsel.1 Defendant Ringgold has been proceeding without counsel 

since his counsel’s withdrawal.

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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Factual Background

The Complaint alleges that Defendants offered and sold alleged unregistered 

securities in the form of digital assets called BLV’s through an initial coin offering 

(“ICO”). (Dkt. No. 1, Compl. ¶¶ 1-4, 6.) According to the Complaint, Blockvest 

conducted pre-sales of BLVs in March 2018 in several stages: 1) a private sale (with a 

50% bonus) that ran through April 30, 2018; 2) a “pre-sale” (with a 20% bonus) from 

July 1, 2018 through October 6, 2018; and 3) the $100 million ICO launch on December 

1, 2018. (Id. ¶ 30.) According to the SEC, Blockvest and Ringgold falsely claim their 

ICO has been “registered” and/or “approved” by the SEC, the Commodity Futures 

Trading Commission (“CFTC”) and the National Futures Association (“NFA”), when in 

fact, it has not. (Id. ¶¶ 77-88.) Defendants further falsely assert they are “partnered” 

with and “audited by” Deloitte Touche Tohmatsu Limited (“Deloitte) but that is also not 

true. (Id. ¶¶ 89-93.) Finally, in order to create legitimacy and an impression that their 

investment is safe, Defendants created a fictitious regulatory agency, the Blockchain 

Exchange Commission (“BEC”), creating its own fake government seal, logo, and 

mission statement that are nearly identical to the SEC’s seal, logo and mission statement. 

(Id. ¶¶ 112-28.) 

In response, Ringgold asserted that there had not been any actual investors in 

Blockvest’s sale of digital “BLV” tokens. Instead, Defendants claimed that dozens of 

“friends and family” paid money: (1) to an affiliated entity without expecting to receive 

Blockvest tokens (the “Rosegold investors”), or (2) to help develop the Blockvest 

platform without expecting to receive real tokens (the “testers”). Ringgold declared that 

Blockvest had never sold any tokens to the public and had only one investor, Rosegold 

Investments LLP, (“Rosegold”) which is run by him and in which he has invested more 

than $175,000 of his own money. (Dkt. No. 24, Ringgold Decl. ¶ 5.) During the testing 

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 

$10,000 of Bitcoin and Ethereum onto the Blockvest Exchange. (Id. ¶ 6.) Ringgold 

further claimed that the BLV tokens were only designed for testing the platform and no 

tokens were released to the 32 testing participants. (Id.) In addition, 17 individuals 

loaned or invested money in Rosegold Investments who are Ringgold’s friends and 

family and Michael Sheppard’s, Blockvest’s CFO, friends and family. (Id. ¶ 12.) These 

investors loaned Ringgold or Sheppard money personally and they in turn, invested the 

money into Rosegold as their personal investment. (Id. ¶ 11.) Declarations from nine 

individuals affirm they did not buy BLV tokens or rely on any of the representations the 

SEC has alleged were false. (Id. ¶ 13; Dkt. No. 24-2, Ringgold Decl., Ex. 2.) Each of the 

individuals declared under oath that they did not rely on any specific representation when 

investing. (Dkt. No. 24, Ringgold Decl. ¶ 13.)

At the preliminary injunction stage, Defendants solely challenged the SEC’s claims 

arguing that the test BLV tokens were not “securities”. Under the Howey2test defining a 

security, the Court, relying on Ringgold’s declaration and nine investor declarations,

concluded there was a disputed issue of fact whether the BLV token offered and sold to 

the 32 testers was a “security” and whether the 17 identified individuals who invested in 

Rosegold purchased “securities.” (Dkt. No. 41 at 13-14.) 

On November 13, 2018, Defendants filed the declarations of Christopher Russell

(“Russell”), Jacquelin Wartanian (“Wartanian”), Quintin Dorsey (“Dorsey”), and 

Amanda Vaculik (“Vaculik”) in opposition to the motion for preliminary injunction. 

(Dkt. Nos. 32-6; 32-8; 40-2.) 

During discovery, it was revealed that the declaration of Russell was forged, 

misrepresentations were made in Wartanian’s declaration, and false statements were 

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 

seeking default judgment against Defendant for his fraudulent conduct in submitting 

these forged and false declarations. Ringgold opposes without presenting any 

contradicting evidence and does not dispute the evidence submitted by the SEC. Instead, 

he presents denials and argument in his opposition and Objections. 

A. Quintin Dorsey

On November 13, 2018, Defendants filed Quintin Dorsey’s declaration, as a tester, 

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

32-8 at 6; see also Dkt. No. 93-2, Wilner Decl., Ex. 8.) Dorsey was deposed on July 15, 

2019 and testified he was a former student of Ringgold at the Online Trading Academy. 

Wilner Decl., Ex. 23, Dorsey Depo. at 37:14-25.) 

In conversations, Ringgold represented to Dorsey that he could double his money 

within two to three months after the ICO. (Id. at 71:5-72:5.) Contrary to his declaration, 

Ringgold never told Dorsey that the purchase of BLV tokens were fake or “test tokens.” 

(Id. at 73:16-74:8.) He stated that he bought $5,000 of BLV tokens and hoped to profit 

once the ICO was complete. (Id. at 71:8-74:8.) He additionally testified that he made the 

investment decision relying on Ringgold’s representations and representations contained 

in promotional materials, including the website, Whitepaper, promotional videos, the 

pitch deck and Ringgold’s and Blockvest’s social media accounts. (Id. at 191:3-21; see 

also Dkt. No. 93-2, Wilner Decl., Exs. 10, 11.) 

Ringgold called Dorsey to ask about signing a declaration and emailed a draft 

declaration through DocuSign. (Dkt. No. 93-2, Wilner Decl., Ex. 23, Dorsey Depo. at 

169:16-170:4.) After persistent requests by Ringgold to sign the declaration, Dorsey 

testified that he signed his declaration without reviewing it so he could get Ringgold “out 

of [his] hair . . . because he was dealing with [his] family.” (Id. at 173:14-174:23.) At 

that time, his wife had recently given birth to a baby, his wife was in serious medical 

condition, and he was also working. (Id. at 172:4-173:6; see also Dkt. No. 93-2, Wilner 

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 

existence of the litigation. (Dkt. No. 93-2, Wilner Decl., Ex. 23, Dorsey Depo. at 170:2-

14.) Dorsey was not aware that his declaration had been filed for the SEC litigation until 

June 2019 when he was served with a subpoena. (Id. at 177:22-178:8.) He testified that 

his declaration is 100% false except for his signature. (Id. at 197:3-16.) He also testified 

he did not know who drafted the declaration but assumed it was someone at Blockvest. 

(Id. at 197:20-24.) 

At his deposition, Ringgold stated that he did not solicit Dorsey to invest, did not 

recall if Dorsey purchased $5,000 worth of BLVs in April 2018 through Blockvest’s 

website, denied talking to Dorsey on the phone before he invested, and did not recall 

whether Ringgold sent Dorsey the Whitepaper, the pitch deck and website by email. 

(Dkt. No. 93-2, Wilner Decl., Ex. 28, Ringgold Depo. at 450:9-455:20.) He explained 

that Dorsey dealt with Mike Sheppard. (Id. at 450:9-16; 453:17-25.) 

B. Jacqueline Wartanian 

On November 13, 2018, Defendants filed Jacqueline Wartanian’s declaration, as a 

tester, in support of their opposition to Plaintiff’s motion for a preliminary injunction. 

(Dkt. No. 32-8 at 4; see also Dkt. No. 93-2, Wilner Decl., Ex. 9.) Wartanian was a 

former student of Ringgold at the Online Trading Academy. (Dkt. No. 93-2, Wilner 

Decl., Ex. 24, Wartanian Depo. at 27:4-16.) 

She testified that she and her mother purchased $3,000 of Blockvest tokens in 

2018. (Id. at 15:17-16:14.) She gave $3,000 for the Blockvest ICO presale with the 

expectation that she would receive issued tokens once the ICO was complete and make 

money from it. (Id. at 58:22-59:4.) She believed that she purchased Blockvest tokens 

based on her account statement on the Blockvest Website. (Id. at 114:4-118:5; Dkt. No. 

93-2, Wilner Decl., Ex. 16 at 130.) She also testified that she helped test the functionality 

of the Blockvest platform but that was “separate” from her investment. (Id. at 59:5-20; 

154:21-155:18.) She stated that the “Deloitte” account firm’s logo as well as SEC 

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 

she asked Ringgold to draft. (Id. at 149:12-22.) Ringgold did not go over what he wrote 

in the declaration but she read it stating “I read it and, you know, I understood what I 

understood.” (Id. at 150:1-2.) He emailed her the declaration and told her to look at it 

and sign it. (Id. at 150:15-17.) Although Ringgold gave her an opportunity to make 

changes to the declaration he drafted, she did not. (Id. at 151:4-8.) She had not read the 

SEC’s complaint prior to signing her declaration. (Id. at 152:1-16.) As to the content of 

her declaration, she testified that the contents were correct as to her role as tester but that 

it omitted material information that she also invested in Blockvest. (Id. at 153:9-165:3.) 

At his deposition, Ringgold testified he did not recall Wartanian, did not remember if she 

invested in Blockvest and whether she was a tester. (Dkt. No. 93-2, Wilner Decl., Ex. 28, 

Ringgold Depo. at 548:15-549:5.) He did not recall Wartanian’s declaration and whether 

he had any involvement in obtaining her declaration. (Id. at 608:12-14; 609:4-6.) He 

testified that if Wartanian invested money, she probably drafted another declaration as his 

attorney wanted separate declarations from testers even if they were investors and testers. 

(Id. at 608:19-609:3.) However, in stark contrast to his deposition, Ringgold states, in his 

Objections, that even before Blockvest, he had a longstanding relationship with 

Wartanian because her brother in-law, Munir Koja, was the Senior Network Developer. 

(Dkt. No. 115-1 at 7.) Similarly, in a declaration filed in support of his opposition to 

Plaintiff’s pending motion for summary judgment, Ringgold states that he was a close 

friend and mentor to Wartanian. (Dkt. No. 109-1, Ringgold Decl. ¶ 24.) He also noted 

that Wartanian’s brother-in-law, Munir Koja, worked for Blockvest as Senior Network 

Developer. (Id.) 

C. Christopher Russell Declaration

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

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-

98.) However, Russell did not submit his edited, final, approved version until November 

14, 2018 which contains materially different statements than the one filed on November 

13, 2018. The parties do not dispute that his declaration was forged but it is unknown

who forged Russell’s declaration. 

On November 13, 2018, at 1:38 p.m., Russell’s friend, Blockvest sales agent Chase 

Pfohl, emailed Russell a proposed version of his declaration drafted by Defendants in 

Word format. (Dkt. No. 93-2, Wilner Decl., Ex. 4 at 100-02.) Russell reviewed the 

declaration and made changes to it. (Dkt. No. 93-2, Wilner Decl., Ex. 22, Russell Depo. 

at 118:5-14.) At his deposition, Russell stated he changed the statement that claimed he 

was a sophisticated investor as he did not have the income nor the years of experience to 

fall in the category of a sophisticated or accredited investor. (Id. at 118:12-119:1.) He

recalled telling Chase he would not sign the declaration as provided and Chase responded 

that it was completely fine to make whatever changes he wanted. (Id. at 118:21-119:5.)

Later that evening on November 13, 2018 at 8:36 p.m., Mike Sheppard emailed Russell 

requesting that he send in the investor declaration, stating “[o]ur defense attorney is 

almost certain we will receive a settlement offer if we advise that we have 100% of all 

investors with a signed declaration. The only one we need is yours to be 100% complete. 

. . .We will get 100% of your investment back to you when this is over.” (Dkt. No. 93-2, 

Wilner Decl., Ex. 5 at 104.) The next day, November 14, 2018 at 2:34 p.m., Russell 

responded to Sheppard’s email apologizing for the delay and attached his actual signed 

and edited investor declaration. (Id; see also Dkt. No. 93-2, Wilner Decl., Ex. 6 at 106-

07.) Russell testified that he sent his declaration in PDF format so that it could not be 

changed by anyone. (Dkt. No. 93-2, Wilner Decl., Ex. 22, Russell Depo. at 156:2-19.) 

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 

was not approved by him and his signature was forged. (Id. at 160:23-161:14; 162:13-

19.) The declaration Russell authorized and signed differed significantly from the 

declaration Defendants filed on his behalf. (Compare Dkt. No. 93-2, Wilner Decl., Ex. 3 

with Dkt. No. 93-2, Wilner Decl., Ex. 6.) For example, Russell omitted the word 

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

Court-filed version of the declaration. (Dkt. No. 93-2, Wilner Decl., Ex. 22, Russell 

Depo. at 126:18-128:1; 163:14-18.) Further, according to Russell’s deposition testimony, 

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. (Id. at 164:14-168:22.) However, he testified that he had 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 168:3-22.) After reviewing 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 77:6-78:4; 140:7-142:17.) After his investment, Russell 

continued to believe he had acquired BLV tokens based on his account statement 

available on Blockvest’s website. (Id. at 70:3-72:16.) He stated that the version of the 

declaration filed with the Court is “false.” (Id. at 164:11-13.) 

At his deposition, Ringgold testified that he did not forge Russell’s signature on 

the declaration and he did not know who forged it. (Dkt. No. 93-2, Wilner Decl., Ex. 28, 

Ringgold Depo. at 529:20-23.) When asked whether Russell had sent his signed 

declaration after Ringgold had already filed one with the Court, Ringgold testified that he 

had no idea about it until then. (Id. at 519:13-20.) Yet, when asked why he did not take 

any steps to inform the Court after he received Russell’s signed declaration, he responded 

that he did not know how to do so and was bombarded with numerous filings as he was 

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 

or three different versions because there were corrections and errors. (Id. at 519:21-25; 

520:13-17.) Then he testified that he was under the impression that Chase forged 

Russell’s signature. (Id. at 520:1-6.) Ringgold explains that if Chase submitted the 

Russell declaration, he would not have any way of knowing if Chase forged Russell’s 

signature. (Id. at 525:8-16.) He has no idea what happened except that the declaration 

came from Chase. (Id. at 525:17-20.) He further states that he had no way of knowing at 

the time the declaration was sent to him whether it was accurate or not. (Id. at 529:14-

19.)

D. Amanda Vaculik Declaration

On November 19, 2018, the SEC filed a supplemental declaration of David S. 

Brown regarding a $147,000 wire transfer. (Dkt. No. 39.) Ringgold was questioned 

regarding this wire transfer and the source of the monies at his deposition on November 

6, 2018. (Dkt. No. 39-8.) Thereafter, on November 20, 2018, Defendants filed Amanda 

Vaculik’s declaration.4 (Dkt. No. 40-2 at 2; see also Dkt. No. 93-2, Wilner Decl., Ex. 

17.) In the declaration, Vaculik stated that, in April 2018, she entered into a lease for a 

condo located on 5th Street in Santa Monica, California. (Dkt. No. 40-2 at 2.) She 

claimed that her boyfriend, Christopher Black, paid rent on the 5th Street condo for a 

year in advance. (Id.) Black worked in Blockchain exchange software development. 

(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.) The contents of Vaculik’s declaration was later 

discovered to be false. 

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 

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.” (Dkt. 

No. 93-2, Wilner Decl., Ex. 27, Ringgold Depo. at 357:17-361:16.) 

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

(Dkt. No. 93-2, Wilner Decl. ¶ 23.) 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.) She then repeated the above statements in her declaration filed 

with the District Court on November 20, 2018. (Dkt. 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. (Dkt. No. 93-2, Wilner Decl. ¶ 25.) During the proffer,

Vaculik told the 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

the apartment, and (4) she became involved because Ringgold and his affiliates paid her

$10,000 to put the apartment application in her name. (Id.) 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. (Dkt. No. 93-2, 

Wilner Decl., Ex. 25, Vaculik Depo. at 18-61.) 

At a later deposition on October 22, 2019, Ringgold testified that he did not know 

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, 

Ringgold Depo. at 394:23-399:4; 611:21-631:12.) 

Discussion

A. Legal Standard of Magistrate Judge’s Report and Recommendation

In reviewing a magistrate judge’s report and recommendation, a district court

“must make a de novo determination of those portions of the report . . . to which

objection is made,” and “may accept, reject, or modify, in whole or in part, the findings

or recommendations made by the magistrate.” 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ.

P. 72(b). A district court is not required to review a magistrate judge's report and 

recommendation where no objections have been filed. See United States v. Reyna–Tapia, 

328 F.3d 1114 (9th Cir. 2003). While “the [§ 636(b)(1)(C)] does not require the judge to 

review an issue de novo if no objections are filed, it does not preclude further review by 

the district judge, sua sponte or at the request of a party, under a de novo or any other 

standard.” Thomas v. Arn, 474 U.S. 140, 154 (1985).

Here, Defendant filed an Objection to the R&R; therefore, the Court conducts a de 

novo review of the portions of the R&R that Defendant objects. Defendant objects

contending that the R&R fails to identify or apply a legal standard and the Magistrate 

Judge substituted his own discretion for the Sheriff’s without identifying a violation of 

law. (Dkt. No. 115 at 2.) Further, without legal authority, Ringgold argues that 

terminating sanctions will violate his Seventh Amendment right to a jury trial. (Id.)

First, the Magistrate Judge correctly identified the legal standard for terminating 

sanctions under federal law. In contrast, Ringgold improperly cites to state law cases 

addressing sanctions for discovery violations. Second, courts may dismiss matters 

through pretrial proceedings without violating the Seventh Amendment. See In re U.S. 

Fin. Sec. Litig., 609 F.2d 411, 422 & n. 34 (9th Cir. 1979) (“Several procedural devices 

developed and expanded since 1791 have infringed upon the civil jury’s historic role; 

nevertheless, they have been found consistent with the Seventh Amendment.”); Newton v. 

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. 

Champlin Refining Co., 283 U.S. 494 (1931) (“[The Seventh Amendment] does not 

prohibit the introduction of new methods for ascertaining what facts are in issue . . . .”). 

Therefore, Ringgold’s Objections are without merit. Nonetheless, the Court conducts a 

review of the R&R on the merits. 

B. Legal Standard on Terminating Sanctions

A court has the inherent authority to issue sanctions in response to abusive 

litigation practices. Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006). One such 

sanction is the authority to dismiss a case when “a party has engaged deliberately in 

deceptive practices that undermine the integrity of judicial proceedings” because “courts 

have inherent power to dismiss an action when a party has willfully deceived the court 

and engaged in conduct utterly inconsistent with the orderly administration of justice.” Id.

(quoting Anheuser–Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir.

1995)). “It is firmly established that the courts have inherent power to dismiss an action 

or enter a default judgment to ensure the orderly administration of justice and the 

integrity of their orders.” Phoceene Sous-Marine, S.A. v. U.S. Phosmarine, Inc. 682 F.2d 

802, 806 (9th Cir. 1982) (citations omitted). “Because of their very potency, inherent 

powers must be exercised with restraint and discretion.” Chambers v. NASCO, Inc., 501 

U.S. 32, 44 (1991); Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir. 1983) 

(“[B]ecause dismissal is so harsh a penalty, it should be imposed only in extreme 

circumstances.”). Terminating sanctions may issue only upon a finding of willful 

disobedience or bad faith. In re Exxon Valdez, 102 F.3d 429, 432 (9th Cir. 1996); Wyle,

709 F.2d at 589 (the violations must be “due to willfulness, bad faith, or fault of the 

party”). In addition, the Ninth Circuit has identified five factors that a court must

consider before dismissing an action as a sanction:

(1) the public’s interest in expeditious resolution of litigation;

(2) the court’s need to manage its docket;

(3) the risk of prejudice to the other party;

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

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(5) the availability of less drastic sanctions.

Malone v. U.S. Postal Serv., 833 F.2d 128, 130 (9th Cir. 1987) (quoting Thompson v.

Housing Auth. of City of Los Angeles, 782 F.2d 829, 831 (9th Cir. 1986)). “The first two 

of these factors favor the imposition of sanctions in most cases, while the fourth cuts 

against a . . . dismissal sanction. Thus the key factors are prejudice and the availability of 

lesser sanctions.” Wanderer v. Johnston, 910 F.2d 652, 656 (9th Cir. 1990). This five 

factor test is not a rigid, mechanical test but “a way for a district judge to think about 

what to do, not a series of conditions precedent before the judge can do anything, and not 

a script for making what the district judge does appeal-proof.” Valley Engineers Inc. v. 

Elec. Eng’g Co., 158 F.3d 1051, 1057 (9th Cir. 1998). 

C. Bad Faith, Willfulness or Fault 

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

he knew the declarations were forged or false and yet took no action to correct them and 

he further attempted to conceal the wrongdoing with false deposition testimony. (Dkt. 

No. 93-1 at 11.) Ringgold responds with numerous explanations. Ringgold claims his 

retained counsel “carefully drafted” each declaration and each declarant was instructed to 

read it carefully and make sure it was true and correct and to make any corrections before 

sending it back. (Dkt. No. 99-1 at 11; Dkt. No. 115 at 7.) Moreover, his counsel drafted 

the declarations under intense time constraints opposing the motion for preliminary 

injunction and “it is highly possible that the defendants counsel inaccurately carried over 

statements from the prior drafted declarations to those of the Russell, Dorsey & 

Wartanian . . . .” (Dkt. No. 99-1 at 11.) Ringgold claims he never pressured the 

investors, or testers to sign the declarations and they were signed of their own free will. 

(Dkt. No. 115 at 7.) He states that the SEC used coercion tactics employed by FBI agents 

and DOJ to get Dorsey, Wartanian and Vaculik to perjure themselves. (Dkt. No. 99-1 at 

11; Dkt. No 115 at 7.) Finally, since he is proceeding pro se and unschooled in the law, 

he was unable or did not know how to correct the forged declaration that was filed with 

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the Court. (Dkt. No. 115 at 7.) Ringgold argues that he did not destroy any evidence in 

bad faith and did not alter or hide evidence; therefore, terminating sanctions are not 

warranted. 

Terminating sanctions may issue only upon a finding of willful disobedience or 

bad faith. In re Exxon Valdez, 102 F.3d 429, 432 (9th Cir. 1996); Wyle, 709 F.2d at 589 

(the violations must be “due to willfulness, bad faith, or fault of the party”). In Combs

the Ninth Circuit held that “dismissal is an appropriate sanction for falsifying a 

deposition.” Combs v. Rockwell Int’l Corp., 927 F.2d 486 (9th Cir.) cert. denied 502 

U.S. 859 (1991). In Combs, after the deposition of the plaintiff, the parties agreed that 

the transcript would be forwarded to plaintiff’s counsel in order to have the plaintiff 

review it and make any changes to correct transcribing errors. Id. at 488. The plaintiff 

stated he was satisfied that his testimony was correct and truthful, but he gave counsel 

permission to alter any of his responses. Id. Counsel made thirty-six changes many of 

which materially altered the substance of the plaintiff’s testimony. Id. Despite Plaintiff’s 

sworn statement, he never reviewed either the original or the altered deposition 

transcripts. Id. The Ninth Circuit affirmed the district court's dismissal of the complaint 

for falsifying a deposition by authorizing counsel to alter a deposition in material respects 

and then signing the revised deposition and swearing, under penalty of perjury, that the 

plaintiff had reviewed the transcript and made the changes personally. Id. at 488-89 

(“[t]he mendacity of the client and the combined fraud and incompetence of his counsel 

are so egregious that there is no need to reach the merits of the motion for summary 

judgment. The case was properly dismissed.”). 

In Vogel, the district court granted dismissal of the case where an ADA plaintiff 

and his attorney were sanctioned for acting in bad faith and making material 

misrepresentations to the court about when he encountered barriers at the defendant’s 

place of business. Vogel v. Tulaphorn, No. CV 13-464 PSG (PLAX), 2014 WL 

12629679, at *6 (C.D. Cal. Jan. 30, 2014) (“Only one thing matters at this late date: 

Plaintiff and Counsel falsely represented to this Court and Defendant, over many months 

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of litigation, that Plaintiff encountered access barriers during a prefiling visit to the 

restaurant that he never actually made.”). 

“To permit the fabrication of spurious corroborating evidence without the 

imposition of a harsh responsive sanction would constitute an open invitation to abuse of 

the judicial system of the most egregious kind.” Asia Pac. Agr. & Forestry Co. v. Sester 

Farms, No. 3:12–cv–00936–PK, 2013 WL 4742934, *11 (D. Or. Sept. 3, 2013); see also 

Arnold v. Cnty. of El Dorado, No. 2:10–cv–3119 KJM GGH PS, 2012 WL 3276979, at 

*4 (E.D. Cal. Aug. 9, 2012) (“[P]erjury on any material fact strikes at the core of the 

judicial function and warrants a dismissal of one's right to participate at all in the truth 

seeking process . . . . If one can be punished for perjury with up to five years 

imprisonment, 18 U.S.C. § 1621, it should not seem out of place that a civil action might 

be dismissed for the same conduct.”). 

Based upon its review of the subject declarations, subsequent deposition testimony 

of the declarants, and Ringgold’s declarations and deposition testimony, the Court 

concludes that Ringgold willfully deceived the Court in defending against the SEC 

allegations. The deception, which began shortly after this litigation commenced in 2018, 

has impacted the Court’s rulings to date and resulted in the abuse and corruption of the 

judicial process. 

The R&R found that Ringgold’s conduct was willful and in bad faith and the Court 

agrees. (Dkt. No. 113 at 20-25.) Early in the litigation, Ringgold filed a declaration in 

opposition to the motion for preliminary injunction and stated there were a total of 17 

individuals that had loaned or invested money in Rosegold Investments but did not 

purchase securities. These 17 investor individuals attested under oath that they did not 

buy BLV tokens and did not rely on any specific representations when investing. (Dkt. 

No. 24, Ringgold Decl. ¶ 12.) In addition, Ringgold stated there were 32 testers involved 

in the Blockvest testing and development phase where they put a total of less than 

$10,000 of Bitcoin and Ethereum onto the Blockvest Exchange. (Id. ¶¶ 5-6.) BLV 

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Tokens were never released from the BlockVest platform to the 32 testing participants 

because they were only designed for testing the platform. (Id. ¶ 6.) 

In a supplemental declaration filed in opposition to the motion, Ringgold declared 

that the “165 Private Rosegold Investors Have Attested Under Oath that They Did Not 

Rely on Any of the Alleged Misrepresentations or Omissions and Their Purchases were 

Not in Connection with Those Alleged Misrepresentations and Omissions.” (Dkt. No. 

32, Ringgold Decl. at 5.) These 16 investors “also attested that they authorized Michael 

Sheppard to use his unfettered discretion to us the money in any good manner, provided 

that he exercises reasonable business judgment. . . that before that they sent money to 

Rosegold Investments LLP, they did not review or rely on Rosegold Investments LLP’s 

website or any offering documents or anything on the internet about Rosegold 

Investments . . . that before sending any money to Rosegold Investments LLP, they never 

listened to any webinar or video, or attended any seminar on Blockvest LLC . . . [and] 

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. ¶¶ 18-20.) He also attached “true and correct copies of declarations from nine of the 

[32] Blockvest authorized testers that the SEC falsely presented to this Court as an 

investor.” (Id. ¶ 28.) The Blockvest Exchange was never operational and was a work-in

progress, as was its website, White Paper and entire exchange platform itself. (Id. ¶ 32.) 

The supplemental declarations included the declarations of Russell as a Rosegold 

investor, and Dorsey and Wartanian, as testers. 

Dorsey Declaration 

Discovery has revealed that Ringgold’s declarations filed in opposition to the 

preliminary injunction contain false statements. Dorsey was not a tester, as stated in his 

5 While the initial declaration states there were 17 Rosegold investors, the supplemental declaration 

states there are technically 18 Rosegold investors but 2 of them are minors and not involved in the 

investment decision. (Dkt. No. 32. Ringgold Decl. ¶ 16.) 

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declaration, and believed he was investing in Blockvest. Contrary to Ringgold’s 

supplemental declaration, Dorsey testified that he invested $5,000 to purchase BLV 

tokens and hoped to profit once the ICO was complete. (Dkt. No. 93-2, Wilner Decl., Ex. 

23, Dorsey Depo. at 71:8-14:8.) He relied on representations made by Ringgold as well 

as representations made in Blockvest’s promotional materials, which included the 

website, Whitepaper, promotional videos, the pitch deck and Ringgold’s and Blockvest’s 

social media accounts. (Id. at 191:3-21.) In an email dated April 22, 2018, Ringgold 

personally thanked Dorsey for his investment interest and provided document links on the 

Blockvest project and private sale. (Dkt. No. 93-2, Wilner Decl., Ex. 11 at 117.) The 

email also stated “For your $5,000 investment you will receive 10,000 BLV Tokens at 

$.50 per. This offer is only valid through May 1, 2018.” (Id.) Dorsey believed the BLV 

tokens were real and not test tokens. (Dkt. No. 93-2, Wilner Decl., Ex. 23, Dorsey Depo. 

at 161:13-17.) 

Dorsey also testified that Ringgold contacted him asking him to sign a declaration 

and emailed a draft declaration. (Id. at 169:16-170:4.) Ringgold directed Dorsey to sign 

the declaration without providing an explanation as to the purpose of the declaration, the 

contents of the declaration or the pending SEC litigation. Dorsey regrettably testified that 

he did not read the declaration and wished he had not signed the declaration. (Id. at 

170:10-11; 197:9-19.)

Later, at his deposition, Ringgold stated that he did not solicit Dorsey to invest, did 

not recall if Dorsey purchased $5,000 worth of BLVs in April 2018 through Blockvest’s 

website, denied talking to Dorsey on the phone before he invested, and did not recall 

whether Ringgold sent Dorsey the Whitepaper, the pitch deck and website by email. 

(Dkt. No. 93-2, Wilner Decl., Ex. 28, Ringgold Depo. at 450:9-455:20.) 

Dorsey’s undisputed testimony and the emails sent by Ringgold to Dorsey reveal 

that Ringgold solicited Dorsey to invest, was aware of the $5,000 investment and emailed 

Dorsey promotional materials about the BLV tokens. Dorsey’s declaration stating that he 

was a tester is false. Thus, Ringgold’s declaration stating the testers did not purchase 

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BLV tokens because the Blockvest platform was not operational is false. Ringgold’s 

subsequent deposition testimony misrepresenting that Dorsey did not invest and that he 

had no knowledge about his communications with Dorsey reveals Ringgold’s willful 

conduct in an attempt to obscure and conceal the facts surrounding the offer and sale of 

BLV tokens to Dorsey.

Wartanian Declaration

Next, Wartanian was also described as a tester in Ringgold’s initial declarations 

filed with the Court. Wartanian testified she was both a tester and also an investor of 

Blockvest. (Dkt. No. 93-2, Wilner Decl., Ex. 24, Wartanian Depo. at 58:22-59:4; 59:5-

20; 154:21-155:18.) Yet, her declaration omits the investment part of her relationship 

with Blockvest. At his deposition, Ringgold testified that he did not recall who 

Wartanian was and whether she invested in Blockvest or whether she was a tester. (Dkt. 

No. 93-2, Wilner Decl., Ex. 28, Ringgold Depo. at 548:15-549:5.) He also had no 

recollection whether he was involved in procuring her declaration. (Id. at 608:12-14; 

609:4-6.) However, in his Objections and also in his declaration in opposition to motion 

for summary judgment, he declares that he is a close friend and mentor to Wartanian that 

pre-dates Blockvest, and her brother-in-law was the Senior Network Developer at 

Blockvest. (Dkt. No. 115-1 at 7; Dkt. No. 109-1, Ringgold Decl. ¶ 24.) 

While Wartanian was a tester of the Blockvest website, she also invested $3,000 in 

purchasing BLV tokens. She believed she would make money from the investment and 

she was able to see her account statement on the Blockvest website. Again, Ringgold hid 

the truth by testifying that he does not recall who Waratanian is and what role she played 

with Blockvest even though, in fact, he is a close friend and mentor of Wartanian. 

The Court agrees with the R&R that the evidence surrounding the false declaration 

of Dorsey and misrepresentations in Wartanian’s declarations reveal that Ringgold was 

involved in drafting these declarations that were submitted to the Court and, as such, his 

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conduct was willful and in bad faith.6 Moreover, review of the evidence concerning these 

declarations reveals that Ringgold also provided false statements in his own declarations 

with the Court. 

Vaculik Declaration

Next, Ringgold coached Vaculik to provide false statements to the SEC in a 

telephonic interview on November 15, 2018. The false statements related to Vaculik’s

relationship with Chris Black, a supposed developer, and a $147,000 payment for an 

apartment she never lived in. Ringgold included the false statements in a declaration 

filed on November 20, 2018, (Dkt. No. 93-2, Wilner Decl. ¶ 23; Dkt. No. 93-2, Wilner 

Decl., Ex. 17), and testified to similar facts at his initial deposition on November 6, 2018. 

(Dkt. No. 93-2, Wilner Decl., Ex. 27, Ringgold Depo. at 357:17-361:16.) However, on 

April 24, 2019, Vaculik gave a proffer to Plaintiff’s attorney and essentially stated that 

Ringgold paid her $10,000 to make statements in her declaration. (Dkt. No. 93-2, Wilner 

Decl. ¶ 25.) Then, on October 22, 2019, Ringgold testified he did not have any 

recollection of Vaculik or Black, or any transaction related with her or Black. (Dkt. No. 

93-2, Wilner Decl., Ex. 28, Ringgold Depo. at 394:23-399:4; 611:21-631:12.) Again, 

Ringgold’s conflicting accounts as to Vaculik’s role further demonstrates that his conduct 

was dishonest and willful. 

Russell Declaration 

Finally, Ringgold does not dispute that the signature on the Russell declaration was 

forged but there is an issue of fact whether Ringgold was responsible or involved in the 

6 Sanctions without an evidentiary hearing is warranted where Ringgold does not “argue or provide 

evidence challenging the authenticity of [SEC’s] evidence, particularly the falsified evidence at issue.” 

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

WL 12732433 at*7 n. 6 (C.D. Cal. Dec. 14, 2015) (citing Prof'l Seminar Consultants, Inc. v. Sino Am. 

Tech. Exch. Council, Inc., 727 F.2d 1470, 1472-73 (9th Cir. 1984) (no abuse of discretion in ordering 

sanctions without an evidentiary hearing where district court ruled such a hearing was unnecessary; 

party did not contest the authenticity of falsified evidence, and district court made findings of fact on the 

record when ordering sanctions)).

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forgery of Russell’s signature. However, despite learning about the forged declaration 

prior to his deposition in October 2019, (Dkt. No. 93-2, Wilner Decl., Ex. 28, Ringgold 

Depo. at 526:6-21), Defendant has not withdrawn the forged declaration and continues to 

cite the declaration in opposition to his pending motion for summary judgment. (See Dkt. 

No. 109.) This is some evidence of Ringgold’s bad faith.

Ringgold’s misconduct concerns the fabrication of evidence material to key issues 

in this case. Having suborned perjury and coached witnesses to lie, Defendant denies 

responsibility and, instead, blames the SEC investigators for coercing these witnesses to 

lie. Ringgold’s conduct as to procuring Vaculik, Wartanian and Dorsey’s declarations 

and subsequent testimonies denying knowledge about his relationship and/or 

communications with them demonstrate bad faith and willful misconduct in order to 

conceal and obscure the truth and has resulted in protracted litigation by SEC to arrive at 

the truth. Even now, Ringgold continues his willful misconduct by relying on false 

declarations in opposing the pending summary judgment motion. (See Dkt. No. 109.) 

Given the above facts, the Court does not have the confidence that “it can accept 

defendant[‘]s[] account of either the law or the facts in this matter” as to the remaining 7 

tester declarations. See American Rena Int’l Corp., 2015 WL 12732433 at *32. (citing

Newman v. Brandon, No. 1:10–cv–00687 AWI JLT (PC), 2012 WL 4933478, at *4 (E.D. 

Cal. Oct. 16, 2012) (submission of perjured testimony going to material issues in the case 

“was an act of bad faith which undermines the confidence placed in our system of 

justice”)). The Court agrees with the R&R and finds that Ringgold’s misconduct was 

willful and in bad faith. 

D. Malone’s Five Factor Test

1. Public’s Interest in Expeditious Resolution of Litigation 

The SEC contends that the false declarations has necessitated protracted litigation 

to resolve whether Defendant sold Blockvest securities to presale investors which was the 

only issue in dispute at the motion for preliminary injunction. (Dkt. No. 92-1 at 16.) 

Defendant did not address this factor. The Magistrate Judge concluded that the 

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misconduct caused unnecessary delay and expense for the SEC and the public it seeks to 

protect and is a factor that supports sanctions. (Dkt. No. 113 at 25.) 

“The public’s interest in expeditious resolution of litigation always favors 

dismissal.” Nourish v. Cal. Amplifier, 191 F.3d 983, 990 (9th Cir. 2002). 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 Court agrees that the false declarations submitted created additional and 

unnecessary expense for the SEC in discovery in order to obtain the truth. This factor 

favors dismissal. 

2. The Court’s Need to Manage Its Docket

Plaintiff argues that Defendant’s conduct undermined the integrity of the 

proceedings and if default judgment is not entered, it would not deter future fraudulent 

conduct. (Dkt. No. 93-1 at 16-17.) Ringgold did not address this factor. The Magistrate 

Judge concluded that the Court expended an enormous amount of resources on this case; 

Defendant has 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 them in his 

opposition of Plaintiff’s pending motion for summary judgment. (Dkt. No. 113 at 27.) 

Moreover, Defendant’s conduct has impeded the resolution of the case by obscuring 

critical facts and Plaintiff has expended a substantial amount of time and resources 

obtaining discovery relating to the false declarations. (Id.) 

“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 

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

The Court recognizes that submitting false declarations has needlessly protracted 

litigation and impeded prompt resolution of this case; thus, this factor weighs in favor of 

dismissal. 

3. Risk of Prejudice to the Other Party 

Plaintiff argues that Defendant’s fraudulent conduct has caused meaningful and 

lasting prejudice to the SEC and the investors it seeks to protect because the investor 

declarations were the primary evidence cited by the Court in deciding if there were 

factual disputes as to whether investors were offered securities. Initially, the Court 

denied the preliminary injunction, and, on reconsideration, only imposed a subset of the 

relief requested by the SEC. (Dkt. No. 93-1 at 17.) Further, Plaintiff asserts that given 

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

summary judgment or at trial will not be credible. (Id.) Defendant does not specifically 

address this factor but argues that he was not aware of the false declarations of Dorsey 

and Wartanian until the instant motion was filed. (Dkt. No. 115-1 at 5.) He claims he did 

not engage in bad faith conduct, did not alter or hide evidence and the extraordinary 

sanction of terminating sanctions is not warranted. The R&R concluded that the false 

evidence precluded the SEC from timely assessing evidence central to its claims and 

forced it to engage in extensive, costly and lengthy discovery to uncover key facts and the 

extent of Ringgold’s deceit. (Dkt. No. 113 at 28.) As a result, the SEC has been 

prejudiced by Defendant’s misconduct and this factor supports terminating sanctions. 

(Id.) 

A plaintiff “suffers prejudice if [a party’s] actions impair the [opposing party’s]

ability to go to trial or threaten to interfere with the rightful decision of the case.” 

Adriana Int’l Corp v. Thoren, 913 F.2d 1406, 1412 (9th Cir. 1990). For example, a 

failure to produce documents as ordered establishes sufficient prejudice. Id. (citing SEC 

v. Seaboard Corp., 666 F.2d 414, 417 (9th Cir. 1982)). In Adriana, the Ninth Circuit 

concluded that “the repeated failure of Adriana to appear at scheduled dispositions 

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compounded by their continuing refusal to comply with court-ordered production of 

documents constitutes an interference with the rightful decision of the case.” Id. “The 

law also presumes prejudice from unreasonable delay.” In re Phenylpropanolamine, 460 

F.3d at 1227. But “[d]elay alone, without a focus on its effects, will not justify dismissal 

or default.” Wanderer, 910 F. 2d at 656. In Wanderer, prejudice was satisfied “due to 

failure of the defendants to appear at their depositions and repeated noncompliance with 

court orders to produce documents [and] constituted a clear interference with the 

plaintiffs’ ability to prove the claims and to obtain a decision in the case.” Id. at 656. 

The Court agrees with the R&R that Plaintiff has suffered prejudice in its ability to 

ascertain facts to support its claims. The false declarations have protracted the length of 

discovery as the SEC has had to unpack the extent of the false statements committed by 

Ringgold. 

However, the Court notes that the four declarations of Russell, Dorsey, Wartanian 

and Vaculik did not impact the Court’s original ruling on the motion for preliminary 

injunction. (See Dkt. No. 41.) Because the four declarations were submitted in 

supplemental filings outside the Court ordered briefing schedule, the Court specifically 

denied Defendants’ request for leave to file supplemental declarations, that include 

Dorsey, Wartanian and Russell’s declaration, as moot. (Dkt. No. 41 at 17.) The Court 

also struck Plaintiff’s supplemental declaration which included Vaculik’s declaration. 

(Id.) Instead, the Court relied on Ringgold’s declaration and the 9 Rosegold investor 

declarations attached to Ringgold’s declaration filed in opposition to the motion for 

preliminary injunction filed on November 2, 2018. (Dkt. No. 24-2.) None of the four 

false declarations were included in this declaration. (See id.) On reconsideration, 

however, the Court relied on the additional 9 tester declarations which included Jackie 

Wartanian and Quentin Dorsey’s declarations. (Dkt. No. 61 at 13 (citing Dkt. No. 32-8).) 

In addition, these declarations have been employed to oppose the SEC’s case and are 

being used to oppose the motion for summary judgment by Ringgold. As a result, these 

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declarations have and would interfere with “the rightful decision of the case.” See

Adriana Int’l Corp, 913 F.2d at 1412. 

As to Vaculik’s declaration, the SEC asserts that it is pertinent as to the issue of 

disgorgement as a remedy for a securities violation. (Dkt. No. 116 at 7.) Accordingly, 

the declaration is not peripheral to the merits of the case. Cf. Phoceene Sous–Marine, 

S.A., 682 F.2d at 806 (noting “[i]t is firmly established that the courts have inherent 

power to dismiss an action or enter a default judgment to ensure the orderly 

administration of justice and the integrity of their orders [,]” but reversing entry of default 

because the deception was “peripheral” to the merits of the controversy). Moreover, the 

content of the Vaculik declaration and its creation is relevant in demonstrating the extent 

of Defendant’s efforts to defeat the SEC action through artifice. It further proves that 

Defendant’s actions in presenting false declarations was willful. 

The Court concludes the SEC has suffered prejudice as the subject declarations 

have or will impact and affect key issues in this case.

4. Public Policy Favoring Disposition of Cases on their Merits

Plaintiff argues that this factor is outweighed because Defendant engaged in 

fraudulent conduct. (Dkt. No. 93-1 at 17-18.) Defendant does not address this factor. 

The R&R found that this factor was neutral because Defendants, by filing false

declarations, impeded the SEC’s efforts to ascertain critical facts. (Dkt. No. 113 at 28-

29.) 

The factor “resolution of cases on their merits, always weighs against dismissal.” 

Dreith v. Nu Image, Inc., 648 F.3d 779, 788 (9th Cir. 2011) (citing Adriana, 913 F.2d at 

1412). However, this factor “lends little support” to a party that unreasonably delays or 

impedes progress toward disposition of the case on the merits. See In re 

Phenylpropanolamine, 460 F.3d at 1227. Accordingly, the Court agrees with the 

Magistrate Judge that Ringgold’s willful conduct causing delays and impeding progress 

makes this factor neutral. 

5. Availability of Less Drastic Sanction

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The SEC argues that because Defendant’s fraud relates to the legal issues central to 

this litigation, Ringgold will not likely pay monetary sanctions and evidence preclusion 

will only place him in the same position in which he was before he filed the false and 

forged declarations and will not deter him from further deception. (Dkt. No. 93-1 at 18.) 

Ringgold responds that terminating sanctions are not appropriate because he has not

disobeyed any prior court orders requiring a response and cites to numerous state court 

cases and well as statutory provisions. (Dkt. No. 99-1 at 6.) Ringgold is amenable to 

alternative relief where the court could order that he be precluded from “offering the 

forged Declaration at trial . . . and should be allowed to submit the declaration that has 

been confirmed as signed by Christopher Russell.” (Id. at 12-13.) Ringgold is also 

amenable to alternative relief of allowing him to “resubmit the declarations in the form of 

Notarized Affidavit of Facts from Quinten Dorsey, Jackie Wartanian & Christopher 

Russell in lieu of sanctions.” (Id. at 13.) The Magistrate Judge considered alternative 

sanctions in lieu of dismissal but concluded that alternative sanctions would not 

adequately redress Defendant’s egregious misconduct and deceit. (Dkt. No. 113 at 33.) 

The R&R explained that monetary sanctions would not be effective because Ringgold 

does not appear to have financial resources to pay monetary sanctions. (Id. at 30.) 

Evidentiary and issue preclusion sanctions would not deter Ringgold’s misconduct but 

would place him in the same position he was in before filing the false and forged 

declarations. (Id. at 31.) 

The fifth Malone factor asks the Court to determine the viability of less drastic 

sanctions by considering three sub-factors: (1) the availability of lesser sanctions; (2) the 

use of lesser sanctions before termination; and (3) the adequate warning of the possibility 

of termination. See Conn. Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 

1091, 1096 (9th Cir. 2007). To satisfy this factor, a court should consider lesser 

sanctions, order them, and give adequate warning of impending termination. Id. 

However, in egregious cases such an inquiry is not necessary. Malone, 833 F.2d at 132;

Hester v. Vision Airlines, Inc., 687 F.3d 1162, 1170 (9th Cir. 2012) (if the court 

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anticipates continued deceptive misconduct and lesser sanctions would be useless, the 

district court need not consider them) (citing Computer Task Grp., Inc. v. Brotby, 364 

F.3d 1112, 1116–17 (9th Cir. 2004)). “What is most critical for case-dispositive 

sanctions, regarding risk of prejudice and of less drastic sanctions, is whether the 

discovery violations ‘threaten to interfere with the rightful decision of the case.’” Valley

Engineers Inc., 158 F.3d at 1057 (quoting Adriana, 913 F.2d at 1412). In other words, 

“[d]ismissal 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.” Id. at 1057-58 (quoting Anheuser–Busch, Inc., 69 F.3d at

352); Conn. Gen. Life Ins. Co., 482 F.3d at 1097 (“It is appropriate to reject lesser 

sanctions where the court anticipates continued deceptive conduct.”). Further, where

lesser sanctions would not deter a defendant’s repetition of misconduct and lesser 

sanctions would simply place defendants back in the same position they were in prior to 

submitting the false declarations and false complaints, alternative sanctions are not 

warranted. See Uribe v McKesson, No. 1:08–cv–01285–SMS PC, 2011 WL 3925077, at 

*5 (E.D Cal. Sept. 7, 2011) (“[T]o continue this action would not deter repetition of such 

conduct or comparable conduct. Such a course would simply place [party] back in the 

same position he was in, without the false declaration.”).

Here, there was not an opportunity to impose less drastic sanctions because the 

fraudulent conduct occurred early in the litigation and was not discovered until the parties 

were engaged in discovery. However, given his pattern of artifice, the Court anticipates 

that Ringgold will not be truthful in upcoming court proceedings as he has failed to 

explain the inconsistencies in his deposition testimony and declarations as well as the 

inconsistencies in Wartanian and Dorsey’s declaration and their deposition testimonies. 

He also continues to cite to their declarations in opposing the SEC’s summary judgment 

motion. Moreover, alternative sanctions of evidence preclusion as suggested by the SEC 

or resubmitting the declarations in a “Notarized Affidavit”, as Ringgold suggests, will 

only place Ringgold in the same position in which he was before he filed the false 

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declarations. Therefore, having considered less drastic sanctions, the Court concludes 

that none will deter Defendant’s continued misconduct. 

In conclusion, the Court finds that terminating sanctions in the form of default 

judgment is warranted as Defendant has engaged in willful misconduct and the five 

Malone factors support such sanctions. Thus, the Court GRANTS Plaintiff’s motion for 

terminating sanctions as to Defendant Ringgold. 

Conclusion

Based the reasoning above, the Court ADOPTS the report and recommendation 

and GRANTS the SEC’s motion for terminating sanctions as to Defendant Ringgold and 

default judgment shall be entered against Defendant Ringgold as to all claims in the 

Complaint. 

IT IS SO ORDERED.

Dated: May 29, 2020

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