Matt Lloyd refuses to give up luxury condos, private island & resort
A fortnight ago we reported that Matt Lloyd McPhee had filed an answer to the FTC’s MOBE lawsuit.
Lloyd’s answer was filed well past the deadline, in addition to the FTC having already filed for and being given an entry of default.
On the basis of his having now filed an answer, Lloyd also filed a motion requesting the entry of default be set aside.
This left me unclear on what would happen next;
I’m unclear on whether Lloyd’s answer after the fact has any bearing on the recorded entry of default.
Turns out it’s at the court’s discretion to accept Lloyd’s answer.
In the meantime, the FTC has filed an opposition to the entry of default being set aside.
The FTC raises two primary arguments in its opposition filing.
Firstly that Lloyd (right)
provided no excuse for ignoring his deadline to file an answer and has not raised any defense to the FTC’s suit.
And secondly, that
vacating the default at this late stage and delaying the entry of a final judgment would prejudice the FTC and consumers.
The FTC’s filing also provides insight into why settlement negotiations between the two parties broke down.
Settlement negotiations between Lloyd and FTC saw the deadline for Lloyd to answer the complaint repeatedly extended.
Settlement negotiations also saw the release of $50,000 to Lloyd, for the explicit purpose of ‘pay(ing) his attorneys to assist in settlement negotiations‘.
According to the FTC, settlement negotiations with Lloyd progressed until the prospect of Lloyd giving up his ‘luxury condominiums in Malaysia, his Fijian island, and his Costa Rican resort‘ came up.
The FTC allege Lloyd acquired these assets with “ill-gotten consumer money”.
Judging that settlement negotiations had effectively stalled by November 2018, the FTC
informed McPhee’s counsel that the FTC would not agree to an extension of the November 5, 2018 deadline to file an answer, but the FTC would continue working towards a settlement and not move for entry of default as long as the parties were making progress.
During the month negotiations continued.
- the FTC demanded Lloyd transfer his rights and interests in the aforementioned property assets to the MOBE Receiver
- Lloyd would only agree if the Receiver was limited in his capacity to liquidate the assets
- the FTC countered that if Lloyd allowed the Receiver to liquidate, they’d ‘agree to partially suspend the monetary judgment’ against him
- McPhee asked for additional funds from the Receiver
- the FTC responded that Receivership funds should be “preserved for consumer victims”, they would not release any additional funds unless “the release would result in a net surplus” for the Receivership
By the end of November 2018, the parties reached an impasse.
On December 10th, Lloyd’s attorneys “withdrew and terminated their services.”
Despite having been told previously no additional funds would be released, on December 15th Lloyd demanded the FTC release a $35,000 “to pay his attorney fees”.
FTC counsel reiterated that the FTC could not agree to a further release of attorney’s fees for McPhee unless the release came from the sale of McPhee’s offshore real estate interests.
The FTC’s response to Lloyd’s $35,000 request was made on December 18th.
There was then no further communication between Lloyd and the FTC, until earlier this month entry of default was recorded and Lloyd only then filed his answer.
The FTC argues that Lloyd’s motion to set aside the entry of default should be denied, on the basis ‘the default results from McPhee’s own willful conduct’.
Despite receiving multiple extensions and numerous opportunities to respond, McPhee waited until he was served a copy of the FTC’s request for default to serve his written answer.
McPhee’s answer was filed almost three months after it was due.
Furthermore, if granted,
vacating the default would prejudice and delay the FTC’s ability to obtain effective relief and redress for consumers.
Any further delay here clearly implicates the broader public interest by prolonging the finality of this lawsuit and delaying possible redress for consumer victims.
There will be significant costs and expenditure of resources by the FTC and the Receiver.
The FTC and the Receiver have already incurred significant expense and resources—including releasing $50,000 from the Receivership to pay McPhee’s attorneys—so that McPhee can be advised on his compliance with the TRO and the preliminary injunction order.
Vacating the default at this time will effectively reward McPhee’s disregard of the Court’s deadline to answer and encourage litigants like McPhee to delay and magnify their opponents’ litigation expense to the detriment of consumers.
Two examples provided are
- the Malaysian government hounding McPhee for $50,000 in unpaid taxes; and
- American Express retaining a law firm in Australia over $200,000 in credit card debt.
The FTC is concerned that these parties might beat them to the punch, so to speak, and seize and liquidate Lloyd’s assets before the Receivership.
As it stands the FTC alleges Matt Lloyd caused $318.5 million dollars in consumer losses through MOBE.
This figure is supported by over 4500 pages of evidence and 98 exhibits, none of which Lloyd has contested.
A decision on Lloyd’s motion to set aside entry of default remains pending. Stay tuned…