Jay Noland unlikely to get Enhanced Capital Funding funds
A tentative ruling has signaled it is unlikely Jay Noland will gain access to ~$450,000 tied up in Enhanced Capital Funding.
Enhanced Capital Funding (ECF) appears to be a shell company partially owned by Noland.
The FTC asserts Noland owns 80% of ECF, with the remaining 20% owned by his wife Lina.
Rather than keep everything in house, Noland created ECF to receive royalty payments from Success By Home.
Under that agreement, ECF granted Success By Home permission to use
Recipes and Formulations for Nutraceuticals, Rights to Manufacture and Sell, Trademark license for Coffees, Teas, and other Health Products.
In exchange Success By Health paid ECF $500,000 plus fifteen percent of its net profits.
The Royalty agreement was signed off on by Noland from ECF’s side. Lina Noland signed the agreement on behalf of Success By Health.
Jay Noland processed payments between the companies, owing to him owning and controlling both corporate bank accounts.
To date Success By Health has transferred between $443,000 to $448,000 to ECF.
Those funds are currently under the control of the court-appointed Success By Health Receiver.
On June 26th ECF filed a motion requesting the company and its assets be released from Receivership control. Noland wants to use ECF funds to pay legal fees.
In anticipation of an upcoming hearing on the matter, on July 29th the court issued a tentative ruling.
In the ruling the court cites ECF’s motion arguments as being presented
in somewhat (of a) shotgun fashion and in often colorful and hyperbolic language.
The court’s analysis of ECF’s arguments revealed them to be “unclear”.
Upon weighing the balance of equities between the two parties, the court concluded “they do not support ECF’s request”.
Even though ECF is a non-party that didn’t transact directly with any of SBH’s customers, the undisputed fact that ECF is owned and controlled by Noland (and may be owned by Lina Noland, too) makes the freezing of its assets permissible.
The facts and equities of this case support the freeze.
Noland being able to raise $150,000 after the preliminary injunction was granted earlier this year was also a consideration.
One amusing argument raised by ECF (that neither the FTC or Receiver bothered addressing), is that the FTC’s lawsuit was the result of a former Success By Health employee “exact(ing) revenge for getting caught committing adultery”.
Not surprisingly, the court found “these arguments are largely unencumbered by legal citation and authority.”
The Court’s best guess as to their intended significance is that they bear on the “balancing of equities” addressed … above.
To the extent this was ECF’s intention, the Court is not persuaded that these arguments show its prior analysis in the order granting the preliminary injunction was wrong.
Consequently, the tentative ruling denies ECF’s request to be released from the Receivership.
A hearing on the matter is scheduled for August 4th. Unless Noland’s legal team pulls a rabbit out of their hat, it seems unlikely ECF will be released.
Update 20th August 2020 – The motion requesting ECF be released from the Success By Health Receivership was denied on August 6th.