No. 20-55858

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

–––––––––––––––––––––––––––––––––––––––––––––

FEDERAL TRADE COMMISSION,

Plaintiff-Appellee,

v.

JASON CARDIFF and EUNJUNG CARDIFF, et al.,

Defendants-Appellants, 

and

VPL MEDICAL, INC.,

Intervenor-Appellant.

–––––––––––––––––––––––––––––––––––––––––––––

Appeal from the United States District Court

for the Central District of California

No. 5:18-cv-02104-DMG-PLA

–––––––––––––––––––––––––––––––––––––––––––––

OPPOSITION OF THE FEDERAL TRADE COMMISSION TO

MOTION FOR SUMMARY REVERSAL

–––––––––––––––––––––––––––––––––––––––––––––

ALDEN F. ABBOTT

General Counsel

JOEL MARCUS

Deputy General Counsel

MARK S. HEGEDUS

Attorney

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

(202) 326-2115

mhegedus@ftc.gov

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TABLE OF CONTENTS

Table of Authorities.................................................................................................. ii

Background ................................................................................................................1

1. The FTC’s Complaint, the District Court’s Original TRO 

and PI, and Subsequent Contempt Orders..................................................1

2. VPL Medical, Inc. ......................................................................................5

3. Ex Parte TRO and Entry of PI ...................................................................7

Argument....................................................................................................................8

I. Summary Reversal Standard...............................................................................8

II. The Supreme Court’s Liu Decision Does Not Clearly Require 

Reversal of the Asset Freeze...............................................................................9

III. The “Public Interest” Does Not Support Summary Reversal...........................13

Conclusion ...............................................................................................................14

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TABLE OF AUTHORITIES

CASES

FTC v. Commerce Planet, Inc., 815 F.3d 593, (9th Cir. 

2016).............................................................................................................. 10, 12

FTC v. H.N. Singer, 668 F.2d 1107 (9th Cir. 1982)................................................10

Liu v. SEC, 140 S. Ct. 1936 (2020)......................................................................9, 11

SEC v. Banner Fund Int’l, 211 F.3d 602 (D.C. Cir. 2000)......................................12

United States v. Hooten, 693 F.2d 857 (9th Cir. 1982).............................................8

STATUTES

15 U.S.C. § 1693o(c) .................................................................................................1

15 U.S.C. § 45(a) .......................................................................................................1

15 U.S.C. § 52............................................................................................................1

15 U.S.C. § 53(b).....................................................................................................10

15 U.S.C. § 6105........................................................................................................1

15 U.S.C. § 78u(d)(5)...............................................................................................10

15 U.S.C. § 8404........................................................................................................1

RULES

Ninth Circuit Rule 3-6(a)(1) ......................................................................................8

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Appellants Jason Cardiff and a company he owns and/or controls, VPL 

Medical, Inc., have appealed a district court order entering a Preliminary 

Injunction with an asset freeze and Receivership over VPL. Hoping to short circuit 

the ordinary appeal process, Cardiff now asks this Court to summarily reverse the 

district court’s order. The Court should reject Cardiff’s motion, which does not 

nearly meet the strict standards for such unusual relief.

BACKGROUND

1. The FTC’s Complaint, the District Court’s Original TRO 

and PI, and Subsequent Contempt Orders

In October 2018, the FTC sued Jason and Enjung Cardiff and others for 

violating the FTC Act, 15 U.S.C. §§ 45(a), 52, the Restore Online Shoppers’ 

Confidence Act, 15 U.S.C. § 8404, the Electronic Fund Transfer Act, 15 U.S.C. 

§ 1693o(c), and the Telemarketing and Consumer Fraud and Abuse Prevention 

Act, 15 U.S.C. § 6105, through a wide-ranging scheme of fraud and deception.1

ECF 1. The complaint alleges that the Cardiffs and their co-defendants made false 

and unsubstantiated claims that their products would help people quit smoking, 

lose weight, and improve their sexual performance. It also charged a related 

 1 The other defendants are Danielle Cadiz, a/k/a Danielle Walker; Redwood 

Scientific Technologies, Inc. (California); Redwood Scientific Technologies, Inc. 

(Nevada); Redwood Scientific Technologies, Inc. (Delaware); Identify, LLC; 

Advanced Men’s Institute Prolongz LLC; Run Away Products, LLC; and Carols 

Place Limited Partnership. ECF 1.

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unlawful auto-ship continuity program that resulted in unauthorized shipments and 

charges, abusive telemarketing through robocalls, and unsubstantiated claims 

regarding a multi-level marketing scheme.

On October 10, 2018, the district court entered a temporary restraining order 

against Defendants, ECF 29, which it extended two weeks later, ECF 48. On 

November 7, 2018, the court entered a preliminary injunction against them. 

ECF 59. The TRO and PI froze Defendants’ assets and appointed a Receiver who 

is directed and authorized to, among other things, “[c]onserve, hold, manage, and 

prevent the loss of all Receivership Property, and perform all acts necessary or 

advisable to preserve the value of those Assets ... .” ECF 59 at 23-24, Section 

XVI.D. The PI grants the Receiver “full power to sue for, collect, and receive, all 

Receivership Property[.]” Id. As pertinent here, it defines “Receivership Property” 

as: “any Assets, wherever located, that are: (1) owned, controlled, or held by or for 

the benefit of ... Jason Cardiff, ... in whole or in part; (2) in the actual or 

constructive possess of ... Jason Cardiff ...; or (3) owned, controlled, or held by, 

or in the actual or constructive possession of, or otherwise held for the benefit of, 

any corporation, partnership, trust, or other entity directly or indirectly owned or 

controlled by ... Jason Cardiff ... .” ECF 59 at 9, Definition. M. 

The Asset Freeze is designed to preserve funds so that they remain available 

for consumer redress if a monetary judgment is entered at the conclusion of the 

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case. Paralleling the definition of Receivership Property, it covers all assets (1) 

owned or controlled, directly or indirectly, (2) held, in part or in whole, for the 

benefit of, or (3) in the actual or constructive possession of any Defendant. It also 

covers all assets (4) owned or controlled by, in the actual or constructive 

possession of, or otherwise held for the benefit of any corporation, partnership, 

asset protection trust, or other entity that is directly or indirectly owned, managed, 

or controlled by any Defendant. ECF 59 at 14-15, Section VII.A.

Importantly for this motion, the TRO and PI’s Asset Freeze and 

Receivership cover all Cardiff assets, personal and business, whenever acquired, 

not simply assets held when the TRO was entered. ECF 59, Section VII.D. at 15. 

Other defendants did not face such a broad freeze. That differential treatment 

(including placing the Cardiffs’ individual assets under receivership) was justified 

by evidence showing that the Cardiffs used elaborate asset protection vehicles 

designed to shield their assets from creditors and potential creditors. ECF 5 at 62. 

Subsequent events have proven the prescience of such provisions. The FTC 

has documented the Cardiffs’ violations of the TRO, such as Jason Cardiff’s 

attempt to wire more than $200,000 to third parties, including parties outside the 

United States. ECF 206. Indeed, since entry of the PI, the district court has twice 

found the Cardiffs in contempt for failing to disclose assets, failing to turn assets 

over to the Receiver, and dissipating and wasting assets covered by the PI. ECF 

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238, 315. The first contempt involved an elaborate scheme, aided by their friend 

Jacques Poujade, to hide the Cardiffs’ control of a Canadian company, while 

maintaining that Jason Cardiff was merely an unpaid consultant to the operation. 

Cardiff used the company to transfer $1.56 million (Canadian or CAD) from a 

company bank account (for which the Cardiffs were the only signatories) to a 

subsidiary account. At a contempt hearing, the district court rejected the Cardiffs’

explantion for the transfer, stating:

I would say of the 16 years I’ve been on the federal court, I’ve never 

presided over a matter where the fraud committed by the defendants 

was so clear, the deception so extreme. I’m astounded.

ECF 188-1, Tr. 389:3-6. It continued:

I’ve heard carefully from the Cardiffs. Their stories are totally 

unbelievable. It’s pretty clear to the Court that they’ve lied, that they 

worked in concert with each other and with others to avoid, violate the 

conditions of the orders of the Court.

ECF 188-1, Tr. 390:3-7. The district court found the Cardiffs and Poujade in 

contempt of the asset freeze. ECF 238 at 2.

The second contempt involved the Cardiffs’ refusal to pay their mortgage, 

thereby dissipating the value of their residence (also a frozen asset)—while at the 

same time spending freely on nonessential living expenses, such as multiple luxury 

car leases using money from an unknown source. ECF 300-1 at 6-9. The district 

court ordered the Cardiffs to reimburse the Receivership Estate for their unpaid 

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mortgage and truthfully and completely account for all of their assets (ECF 315 at 

5), but they have not done so.2

2. VPL Medical, Inc.

VPL, the corporate appellant here, appears to be the Cardiffs’ latest attempt 

to conceal their assets and income. On March 2, 2020, the Cardiffs’ counsel 

reported (as required by the PI) Jason Cardiff’s intent to create a “business entity 

that will manufacture and market disposable sanitary masks to be marketed and 

sold wholly to distributors and wholesalers of the mask. Jason will be the owner, 

principal, and agent of the business ... .” ECF 374 at 2, ¶ 3. On April 27, Cardiff 

submitted to the FTC and the Receiver a report concerning his involvement in 

VPL. The report outlined a byzantine but not fully formed structure for multiple 

entities to carry out this mask business. As in the past, Cardiff downplayed his role, 

referring to himself as merely a “consultant,” although he served as the CEO, cofounded the company, and called it “my biggest company to date.” ECF 365 at 10. 

The Cardiffs’ report provided no details about his role at VPL, which later secured

millions of dollars in government contracts. 

Although Cardiff told the court that no one associated with defendant 

Redwood was involved in the new company, in fact, Cardiff chose someone with 

 2 The district court held Jason Cardiff in contempt a third time for obtaining a 

new Irish passport in violation of an order requiring him to surrender his passports 

to the Receiver. ECF 190-1 at 151-55. 

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long-term ties to Cardiff and Redwood, Bobby Bedi, as a front man for VPL. Bedi

worked for Cardiff at Redwood, served on Redwood’s Board and as its head of 

technology, wrote blog posts touting Redwood products, provided search-engine 

optimization services, helped launch a multi-level marketing scheme, and helped 

apply for merchant accounts. ECF 373 at 4, 8-101.

Third-party documents confirm Cardiff’s control over VPL. In mid-April, 

2020, the Veterans Administration (VA) and the Department of Health and Human 

Services (HHS) awarded VPL contracts for up to $6.3 million and $14.5 million, 

respectively, to supply those agencies with surgical masks. ECF 372 at 2 (¶ 3), 4-

17. VPL received another protective equipment contract from the Federal 

Emergency Management Agency (FEMA) at the end of April. ECF 372 at 2 (¶ 5), 

27-28. In correspondence between Stacey Barker, the head of VPL’s enterprise 

sales, and the VA, Cardiff was the only person copied. ECF 370 at 10. Similarly, 

an email from Barker to FEMA stated that she was copying Cardiff, “my CEO.”

Id. VPL phone records show approximately 600 calls totaling nearly 2,000 minutes 

between Barker and Cardiff between March 25 and the end of May. Id.

Cardiff also served as the public face of VPL. A mid-March Twitter post 

directed to the U.S. President listed jc@vplmedical.com as VPL’s contact person. 

ECF 370 at 10-11. Investigative reporting by ProPublica referred to Cardiff as 

VPL’s representative. ECF 370 at 11.

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3. Ex Parte TRO and Entry of PI

As described above, Cardiff’s control over VPL makes its assets 

Receivership Assets subject to the Asset Freeze. Because of Cardiff’s proven 

history of concealing his assets, on June 24, 2020, the FTC sought an ex parte

TRO imposing an asset freeze and appointing a Receiver over VPL. ECF 370. The 

district court entered it the same day. ECF 352. The court found that the FTC 

would likely succeed in showing that Cardiff controls VPL and its assets, which 

therefore are Receivership Property. ECF 352 at 5. The court also found that, given 

Cardiff’s past contemptuous conduct, he was likely to conceal or dissipate the VPL 

assets and destroy evidence of his ownership of VPL absent the ex parte TRO.

ECF 352 at 6. That would irreparably harm the FTC’s ability to obtain monetary 

relief for Cardiff’s consumer victims. Id.

The district court also issued an order to show cause why it should not enter 

a PI. In response, Cardiff and Bedi maintained that Cardiff was only a consultant to 

VPL, and not its CEO. ECF 388 at 5. Yet documents found by the Receiver in 

VPL’s office referred to Cardiff variously as a director (along with Bedi), founder, 

CEO, COO, and president of VPL. Id. The Receiver found emails in which Cardiff 

described VPL as “my biggest company to date” and expressing his desire to own 

“super-majority shares” and to have the ability to call all of Bedi’s stock at any 

time and at minimal cost. Id.

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Following a hearing, the district court entered the PI. It noted that the 

original asset freeze provisions had no temporal limitation and applied to any 

“[a]ssets owned or controlled, directly or indirectly,” by Cardiff. Id. at 4, 6. It 

rejected Cardiff’s claim that he was merely a consultant. “Given inconsistencies in 

how Bedi described Cardiff’s position; [others’] belief that Cardiff acted as the 

CEO; Cardiff’s history of dishonesty before this Court; and the undisputed facts 

that Cardiff helped to found VPL and wields final authority over many crucial 

business decisions, the Court concludes that the preponderance of the evidence 

supports the FTC’s argument that Cardiff owns or controls VPL, whether directly 

or indirectly, even if he is not technically VPL’s CEO.” Id. at 6. It thus held that 

VPL belonged in the receivership and its assets frozen under the original PI. Id.

ARGUMENT

I. SUMMARY REVERSAL STANDARD

Cardiff’s motion omits any mention of the strict standard for summary 

reversal. Such relief is appropriate only if the movant shows “clear error or an 

intervening court decision” that “requires ... reversal” of the decision on review. 

See Ninth Circuit Rule 3-6(a)(1). The outcome of the case must be “beyond 

dispute.” United States v. Hooten, 693 F.2d 857, 858 (9th Cir. 1982). For the 

reasons discussed below, Cardiff comes nowhere close to meeting that exacting 

standard.

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II. THE SUPREME COURT’S LIU DECISION DOES NOT CLEARLY 

REQUIRE REVERSAL OF THE ASSET FREEZE

The asset freeze serves to preserve assets owned or controlled by Jason 

Cardiff that could be used to satisfy any monetary judgment that may ultimately be 

rendered in this case. Cardiff claims that the Supreme Court’s decision in Liu v. 

SEC, 140 S. Ct. 1936 (2020), changed the law of monetary relief so substantially 

that the freeze on VPL’s assets is now plainly unlawful. His contentions fall far

short of proving the matter beyond dispute.

First, Cardiff asserts that under Liu, any ultimate monetary remedy must be 

limited to the net profits of his scheme, and since his scheme (he claims) has been 

unprofitable, no asset freeze can be justified “where ... there were no unlawful net 

profits.” Mot. at 8. That issue is not suitable for summary disposition. For one 

thing, this case involves a preliminary proceeding to preserve assets, not a final 

judgment and calculation of remedies that permanently forfeits assets. In that 

posture, protection of consumer interests requires ensuring that the maximum 

possible assets will be available to cover the ultimate judgment. Liu, which 

concerned only a final judgment, does not address the situation presented here.

Indeed, the record to date shows that the possible future judgment could 

dwarf the total amount of frozen assets, including the VPL assets. The Cardiffs’ 

unjust gains from the Redwood scheme amounted to $18.2 million from January 1, 

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2015, through October 12, 2018. ECF 53 at 9; ECF 381 at 3. Cardiff has not 

refuted this calculation. ECF 368 at 5. The frozen assets total less than $5 million.

3

Beyond that, whether and how Liu even applies to this case is a question 

plainly inappropriate for disposition without briefing and argument. Cardiff 

contends that Liu clearly overruled FTC v. Commerce Planet, Inc., 815 F.3d 593, 

601-02 (9th Cir. 2016), FTC v. H.N. Singer, 668 F.2d 1107 (9th Cir. 1982), and 

other precedents holding that Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), 

empowers courts to award restitution of unjust gains in FTC enforcement cases.

Mot. at 7. But the cases interpreted different statutes. Liu interpreted a provision in 

the securities laws that allows a court to order “equitable relief.” 15 U.S.C. 

§ 78u(d)(5). The FTC Act, by contrast, authorizes a “permanent injunction.” 15 

U.S.C. § 53(b). As this Court has held, “equitable relief” serves as “a limitation on 

the relief available” from a court of equity, whereas “permanent injunction”

conveys a broader power “to award complete relief,” including legal remedies. 

Commerce Planet, 815 F.3d at 602. Liu did not address that matter, so the 

interpretation of the FTC Act set forth in Commerce Planet remains binding.

 3 Prior to the freeze of VPL assets, the FTC had frozen approximately $560,000 

USD and $1.56 million CAD (equivalent to about $1.2 million USD). ECF 388 at 

9. VPL assets may total nearly $3 million. ECF 365 at 7.

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Cardiff is therefore wrong that the district court erred in declining to apply 

Liu. In keeping with Commerce Planet, the district court concluded that Liu

involved the narrower understanding of equitable relief, not the broader one 

implicated by the phrase “permanent injunction.” ECF 388 at 8-9.

Even if Liu applies here, how it does so can be determined only after factual 

findings that have yet to be rendered. As Cardiff acknowledges, Mot. at 15, Liu

established that “when the entire profit of a business ... results from the 

wrongdoing, a defendant may be denied inequitable deductions.” 140 S. Ct. at 

1950 (cleaned up). That determination in turn “requires ascertaining whether 

expenses are legitimate.” Id. At this preliminary point in the case, it is not possible 

to determine which of Cardiff’s claimed expenses will be deemed “legitimate” and 

which will not. This Court cannot resolve that question now.

At this point, however, Redwood’s own records reveal millions of dollar 

spent on media and advertising to promote and broadcast false and unsubstantiated 

claims. ECF 381 at 17. The Cardiffs also spent hundreds of thousands of dollars on 

luxury vehicles, cruises, resorts, and private air charter travel. ECF 381 at 18. 

Expenditures for worthless, deceptive products and lavish personal expenses are 

classic “inequitable deductions.” Liu, 140 S. Ct. at 1945.

Second, Cardiff appears to argue that the district court could not properly 

freeze the assets of VPL because VPL itself is not a party to this case and has not 

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been accused of wrongdoing. Mot. at 6-7. The district court, however, froze the 

VPL assets not because they were derived from the Redwood scheme but because 

they were “Assets owned or controlled, directly or indirectly, by Defendant Jason 

Cardiff or Defendant Eunjung Cardiff.” ECF 388 at 4.4 In other words, the VPL 

assets are equivalent to a bank account or a house or any other thing of value. And 

Cardiff does not challenge the district court’s factual determination that Cardiff 

controlled VPL. ECF 388 at 6. Even if he had, such a factual dispute would be 

unfit for summary reversal. 

In any event, the freeze is not inconsistent with Liu. There, the Supreme 

Court held that the amount of a final disgorgement judgment should reflect the 

defendant’s wrongdoing. Nothing in Liu, however, requires that frozen assets be 

“only the actual property obtained by” unlawful means. See SEC v. Banner Fund 

Int’l, 211 F.3d 602, 617 (D.C. Cir. 2000). Cardiff asks in effect for a tracing 

requirement, but Liu did not address such a requirement, and this Court rejected it 

under the FTC Act. Commerce Planet, 815 F.3d at 601. The district court correctly 

rejected Cardiff’s position as well. ECF 388 at 5 n.4.

 4 Cardiff stipulated to the original PI, ECF 58, so cannot challenge the provision 

now.

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III. THE “PUBLIC INTEREST” DOES NOT SUPPORT SUMMARY REVERSAL

Finally, Cardiff suggests that the public interest in a U.S.-based supply of 

surgical masks during the Covid-19 pandemic outweighs the FTC’s interest in 

freezing funds that may be needed to provide equitable monetary relief at the 

conclusion of the case. Mot. at 8-11. Such equitable balancing is plainly 

inappropriate for summary disposition, but even if it were, the record does not 

support Cardiff’s claim.

Cardiff says that the PI prevented VPL from fulfilling an HHS order for 

20,000,000 facemasks, thus frustrating the goal of having such masks produced in 

the United States. Mot. at 9. The Receiver, however, concluded that VPL was not 

in a position to fulfill the HHS contract; he characterized it as “doomed to fail.” 

ECF 403 at 3. Rejecting Cardiff’s motion to remove the Receiver, ECF 391, the 

district court declined to second-guess the Receiver’s conclusion. ECF 403 at 3.

Instead, the court found that removing the Receiver (which is what summary 

reversal here would do) “would cause the estate irreparable harm” due to the real 

risk of asset dissipation. ECF 403 at 4. In any event, the district court on August 29 

approved a plan for ongoing VPL operations to which the Receiver and the 

Cardiffs agreed. ECF 470.

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CONCLUSION

For the foregoing reasons, this Court should deny the Motion for Summary 

Reversal.

Respectfully submitted,

Alden F. Abbott

General Counsel

Joel Marcus

Deputy General Counsel

/s/ Mark S. Hegedus

MARK S. HEGEDUS

Attorney

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

August 31, 2020

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CERTIFICATE OF SERVICE

I certify that on the 31st day of August, 2020, an electronic copy of the 

foregoing Reply of the Federal Trade Commission was filed with the Clerk of the 

Court for the United States Court of Appeals for the Ninth Circuit using the 

appellate CM/ECF system and that service will be accomplished via that system.

/s/ Mark S. Hegedus

Mark S. Hegedus

Attorney 

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

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