Blandford v. McClafferty

• Court: District Court, Virgin Islands
• Decided: February 24, 2025
• Docket: 3:24-cv-00023
• Status: Unknown

Opinion

IN THE DISTRICT COURT OF THE VIRGIN ISLANDS DIVISION OF ST. THOMAS AND ST. JOHN

GLENN BLANDFORD, VICTORIA ) BLANDFORD, AND TERMINAL ) PERFORMANCE ASSOCIATES, LLC, ) ) Plaintiffs, ) Case No. 3:24-cv-0023 ) v. ) ) B. MATTHEW MCCLAFFERTY, MAC ) PRIVATE EQUITY, INC. AND MPE CLEARING ) & HOLDINGS, INC., ) ) Defendants. ) )

APPEARANCES:

MICHAEL L. SHEESLEY, ESQ. MichaeFl oLr. SPhlaeienstlieffys LGLleCn n Blandford, Victoria Blandford, and Terminal Performance San JuaAns, sPouceiartteos R, LicLoC

CHRISTOPHER ALLEN KROBLIN, ESQ. MARJORIE B. WHALEN, ESQ. KellerhFaolsr FDeerfgeunsdoann tKs rBo.b Mliant, tPhLeLwC M cClafferty, MAC Private Equity, Inc., and MPE Clearing & St. ThomHoalsd, iUn.gSs. , VInircg. in Islands MEMORANDUM OPINION Robert A. Molloy, Chief Judge. BEFORE THE COURT is Plaintiffs’ Emergency Motion for Temporary Restraining Order and Preliminary Injunction, (ECF No. 68), filed on December 13, 2024. Plaintiffs Glenn Blandford, Victoria Blandford, and Terminal Performance Associates, LLC, (“Plaintiffs”) seek to enjoin Defendants B. Matthew McClafferty, Mac Private Equity, Inc. and MPE Clearing & Case No. 3:24-cv-00023 M emorandum Opinion Page 2 of 10 membership interests, and/or ownership interest in any way.” ECF No. 68 at 1. Defendants did not file a response. For reasonsI .d iscusBseAdC bKeGloRwO,U thNeD C ourt will deny Plaintiffs’ motion.

This case centers primarily on purportedly failed obligations concerning promissory notes and lending agreements. Plaintiffs allege that Defendants are involved in a “Ponzi 1 Scheme” and have purposely misled Plaintiffs with hollow attempts to resolve the parties’ disputes. Defendant MPE Clearing & Holdings, Inc. is a U.S. Virgin Islands corporation and Defendant Mac Private Equity, Inc, is a Delaware corporation. ECF No. 11 ¶¶4, 5; ECF No. 67 ¶¶ 5, 6. Plaintiff Glenn Blandford is a resident of Virginia and Plaintiff Victoria Blandford is a resident of Florida. ECF No. 67 ¶1, 2. On March 15, 2023, Defendant B. Matthew McCafferty, a U.S. Virgin Islands resident and president of Mac Private Equity, Inc., signeSde ae pgeronmeriaslslyory note for $25,000 with Victoria Blandford on behalf of Mac Private Equity, Inc. ECF No. 1-1. The note provides for a flat interest rate of 25% and repayment in the th sum of $31,375.00 on the 90 day following the transfer of the principal sum. ECF No. 1-1 ¶¶ 1, 2. It also entitles Blandford to 15% of “all pro�its derived from the utilization of the funds.” ECF 1-1 ¶3; ECF 11 ¶21. In addition, the note provides for two ninety-day extension options at the same interest rate. In June 2023, notice was given to Blandford that the option would be exercised. ECF 1-1, ¶12; ECF 1-3.

1 Black’s Law Dictionary de�ines Ponzi scheme as a “fraudulent investment scheme in which money contributed by later investors generates artificially high dividends or returns for the original investors, whose example attracts even larger investments. Money from the new investors is used directly to repay or pay interest to earlier investors, usually without any operation or revenue-producing activity other than the continual raising Case No. 3:24-cv-00023 M emorandum Opinion Page 3 of 10 On April 5, 2023, Victoria Blandford signed Sae see gceonnedr aplrlyomissory note for $30,000 with McClafferty as president of Mac Private Equity, Inc. ECF No. 1-2. Blandford asserts that part of these funds was provided by codefendants Glenn Blandford and Terminal Performance Associates, LLC. ECF No. 67 ¶27. For the most part, this secondS neoete contained the same provisions as the �irst note with an increased interest rate of 36.25%. ECF No. 1-2 Plaintiffs contend that all principal and interest under both notes were due in December 2023, and that despite repeated demands, Plaintiffs have not been paid. ECF No. 67 ¶¶35-37. According to Plaintiffs, McClafferty continually made pIdromises of payment from January through April 2024 and consistently failed to follow through. . at ¶44. Plaintiffs allege that McClafferty claimed to have sent payment to Plaintiffs, but intentionally sent it “to an incorrect and incomplete address and the. n I dplaced stop payment on the check” with no genuine intent of ever making the actual payment . at ¶43 On April 12, 2024, Plaintiffs commenced this action for damages against Defendants alleging seven causes of action, namely, breach of agreement, breach of contract, debt, fraudulent misrepresentation, breach of covenant of good faith and fair dealing, intentional infliction of emotional distress, and negligent infliction of emotional distress. ECF No. 1. On

November 25, 2024, Plaintiffs filed their first amended complaint alleging the sSaeme e seven causes of action and adding Terminal Performance Associates, LLC as a Plaintiff. ECF No. 67. Plaintiffs assert that the parties “preliminarily negotiated a settlement agreement . . . which Defendants refused to execute.” ECF No. 68 at 7. According to Plaintiffs: It was agreed that the parties would �ile a �irst amended complaint (which they did on November 25, 2024) and the Defendants would sign a settlement Case No. 3:24-cv-00023 M emorandum Opinion Page 4 of 10 settlement agreement, although the Defendants asserted in an email (Exhibit 3) that the consent judgment was signed and sent to Attorney Kroblin. The consent judgment is in the total amount of $125,000.00. The �irst payment under the settlement agreement is to be due on January 3, 2025. There is no Id. reason to believe that the Defendants will make a timely payment. ( at 9.) Plaintiffs allege Defendants are currently embroiled in at least five other lawsuits in Virgin Islands Courts that carry similar causes of actions against Defendants, and that Defendants “maintain a completely fraudulent façade” to operate their business activities. ECF No. 68 at 2. Plaintiffs maintain that Defendants do not dispute owing money to Plaintiffs, and that Defendants have “thumbed their noses at the court and the justice system.” ECF No. 68 at 2, 3. Plainti fIfds seek to freeze Defendants’ “assets and property until their creditors are made whole.” . at 2. Alternatively, Plaintiffs petition the Court tIod issue an Order requiring Defendants to make a monetary dIIe.p ositL iEntGoA tLh eS TCAoNurDt’As RreDg istry. . at 11. Rule 65 of the Federal Rules of Civil ProceSdeuere governs the issuance of temporary restraining orders and preliminary injunctions. Fed. R. Civ. P. 65. The standard for granting a temporary rPeisltergagiin vin. Ag icohredleer under Rule 65 is the same as that for issuing a preliminary injunction. , 843 F. Supp. 2d 584, 592 (E.D. Pa. 2012). “[O]ne of the goals of the preliminary injunction analysis is to mKaoisn Ptahianr mthse., sItnact.u vs. qAunod,r xd eCfoinrepd. as the last, peaceable, noncontested status of tOhpet ipcaiarntise sA.”s s'n of Am. v. Indep. Opticians of ,A 3m6.9 F.3d 700, 708 (3d Cir. 2004)) (quoting , 920 F.2d 187, 197 (3d Cir. 1990) (citation and quotation omitted)). Courts Case No. 3:24-cv-00023 M emorandum Opinion Page 5 of 10 See Kos Pharms. at apply a four-factor test. 708. Specifically, a movant must demonstrate: (1) a likelihood of success on the merits; (2) that it will suffer irreparable harm if the injunction is denied; (3) that granting preliminary relief will not result inI de.ven greaAtleler ghhaernmy tEon ethrge yn, oInncm. vo.v DinQgE p, Ianrcty. ; and (4) that public interest favors such relief. (citing , 171 F.3d 153, 158 (3d CirB. o1y9n9e9s) v. .“ LTihmee ftirreset Banady Vseencotunrde sf,a LcLtoCrs are ‘gateway factors’ that the movant must establish.” , Civil Action No. 2021-0253, 2023 U.AS.m Dailsgta. LmEaXtIeSd 7T4ra2n6s6i,t aUtn *i1on0 L(Doc.V. 8.I5. Avp. Pr.o 2rt8 A, 2u0th2.3 o)f aAflfle'dg,h 1e1n0y FC.n4ttyh. 604 (3d Cir. 2024) (citing , 39 F.4th 95, 103 (3d Cir. 2022). If these two gateway factors are satisfied, a court then determines whether “all fourI df;a sceteo rasl,s ot aDkeelna wtaorgee tShteart,e bSpaolarntscme einn' sf Aavsso'rn , oInf cg. rva. nDteilnagw athree rDeeqpu'te ostf eSda fpertey l&im Hinoamreyl arenldie Sfe.”c

., 108 F.4th 194, 202 (3d Cir. 2024) (“The first two factors are the ‘most critical.’ If both are present, a court then balances all four factors.”) (citation omitted). III. DISCUSSION

Preliminary injunctive reAlTie&f Tis v “.a Wn ienxbtaracko r&d iCnoanrsye rrevem Perdoyg”r aanmd, “should be granted only in limited circumstances.” 42 F.3d 1421, 1426- 27 (3d Cir.1994) (citations omitted). [A] movant for preliminary equitable relief must meet the threshold for the first two “most critical” factors: it must demonstrate that it can win on the merits (which requires a showing significantly better than negligible but not necessarily more likely than not) and that it is more likely than not to suffer irreparable harm in the absence of preliminary relief. If these gateway factors are met, a court then considers the remaining two factors and determines in its sound discretion if all four factors, taken together, balance in favor of Case No. 3:24-cv-00023 M emorandum Opinion Page 6 of 10 Easterbrook's observation bears repeating: “How strong a claim on the merits is enough depends on the balance of the ha rms: the more net harm an injunction can prevent, the weaker the plaintiff's claim on the merits can be Reilly vw. Chitiyle o sft Hilla sruripspbuorrgting some preliminary relief.” as amended , 858 F.3d 173, 179 (3d Cir. 2017), (June 26, 2017). At this stage, Plaintiffs fail to demonstrate both a likelihood of success on the merits andA a. pLroikbealbihiliotoy do fo ifr rSeupcacreasbsl eo nh atrhme .M erits

Plaintiffs do not argue or address likelihood of success on the merits of any of their seven causes of action. Plaintiffs assert only that the parties S“epereliminarily neg otiated a 2 settlement agreement,” which Defendants refused to execute. ECF 68-2 ¶11. Plaintiffs

2 By offering compromise offers and settlement negotiations as evidence, Plaintiffs draw close to the no-go zone as to admissibility pursuant to Federal Rule ofS Eeve iWdeensctwe i4d0e8 W. Tinheer yp,o Ilniccy. vb. eShMinTd A Rcquuleis 4it0io8n iss, LtoL Cencourage the compromise and settlement of d(i“sputes. Fed. R. Evid. 408. Notwithstanding, the Court notes that such evidence may be introduced within proper parameters. , 511 F. Supp. 3d 256, 266 (E.D.N.Y. 2021) Where parties’ prior negotiations resulted in an agreement which was subsequently repudiated by [a defendant] ... permitting [that defendant] to exclude the settlement evidence on Rule 408 grounds would flout the policy of promoting compromisseees a. OlstohSewrw. Nisuer, sReurliees 4, 0L8L Cw vo. uFlldo rsihsites lMd au tp. aInrtsy., fIrnocm., liability for breaching an agreement entered during settlement negotiations, disincentivizing settlement altogether.”) (citations and internal quotation marks omitted); 266 F. Supp. 2d 1253 (D. Colo. 2003) (“[Rule 408] . . . does not impose absolute ban on admission of statements Mmaardtein dvu. rFiinngle ysettlement negotiations, e.g., evidence oonf rseectotlnesmideenrta toifofne,rs may be admissible to challenge claim of undue delay, to prove defendant's knowledge and intent, or for purposes of impeachment or rebuttal.”); , 349 F. Supp. 3d 391 (M.D. Pa. 2018), No. 3:15-CV-1620, 2019 WL 1473421 (M.D. Pa. Apr. 3, 2019) (�inding settlement negotiations between the chairman of the board of directors of a corporation and its shareholders— with respect to chairman's resignation during criminal investigation into his alleged misuse of corporate funds— were admSitsasiinbtloen i nv. cThaariarnmtianno's abuse of process action against shareholders since the crux of the chairman's claim was that shareholders improperly conducted and used settlement talks and offers as unlawful threats against him); , 637 F. Supp. 1051 (E.D. Pa. 1986) (�inding that an offer letter from plaintiff partner to defendant managing partner in which the plaintiff offered to sell his interest in three of the partnerships in question to the Ldaerfseonnd Manfgt .w Caos. onfo St . bDaarkreodta b vy. RCounlen 4ec0t8ic; urta tGhreere, nthstea dr,o Icnucm.,ent was admissible to impeach plaintiff's testimony as to material fact of how many of his partnership interests he was interested in selling at the time in question); 929 F. Supp. 2d 924 (D.S.D. 2013) (�inding evidence relating to parties' efforts to resolve their dispute were admissible under [Rule 408] to show that seller made a fraudulent statement— that Case No. 3:24-cv-00023 M emorandum Opinion Page 7 of 10 rely on an unsigned Sceoensent judgment and counsel’s declaration as supporting evidence, whiBch. iIsr irnespuaffricaibelnet .H ar mEC F Nos. 68-1 and 69-2. This factor weighs against injunctive relief.

“In order to obtain an ex parte restraining order, the applicant must show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition.” Section 2951 Temporary Restraining Orders—In General, 11A Fed. Prac. & Proc. Civ. § 2951 (3d ed.). A plaintiff "must demonstrate that in the absence of a preliminary injunction, 'the [plain tWiffi]n itse lri kve. lNy RtoD sCu, fIfnecr .i,rreparable harm before a decision on the merits can be rendered.'" Federal Practice a5n5d5 P Uro.Sc.e 7d,u r2e2, (2008) (quoting 11A Charles Alan Wright & Arthur R. Miller, § 2948.1 (2d ed. 1995)). A demonstration of irreparable injury by the party seeking relief is an

essential prerequisite to a temporary restraining order or preliminary injunction; the movant “must show that, without a preliminary injuncti oDne, l.t hSteayt ew Silpl omrtosmree lnik'se Alys st'nh,a Inn cn. ovt. sDueflf. eDre iprr'te opfa Sraabfeltey i &nj uHroym welhainled p Sreocceedings are pending.” ., 108 F.4th 194, 204 (3d Cir. 2024). "The law ... is clear in this Circuit: In order to demonstrate irreparable harm, the plaintiff must demonstrate potential harm which ca nnot be redressed by a legal or an equitable remedy followinSgi aem treianls. TUhneit epdr eSlitmatiensa rHy o[lrdeilniegfs] mInucs. tv b. eG tehiese onnbleyr wgeary of protecting the plaintiff from harm." , 17 F.4th 393, 407 (3d Cir. 2021) (internal

quotation marks and citation omitted). To satisfy their burden, Plaintiffs present unverified assertions that Defendants will attempt to flee the U.S. Virgin Islands, and that Defendants may not be able to satisfy what Case No. 3:24-cv-00023 M emorandum Opinion Page 8 of 10 Plaintiffs allege is owed to them. ECF No. 2 ¶¶15, 16. Plaintiffs argue that Defendants are currently embroiled in at least five other lawsuits in Virgin Islands Courts with similar causes of actions. Plaintiffs also contend that Defendants have “repeatedly refused and/or failed to pay their debts when due,” “engaged in a ‘shell game’ of bank accounts,” and “threatened 3 bankruptcy.” ECF 68 at 9, 10. Assertions, anticipatory risks, and the introduction of unrelated cases do not meet the bar for Plaintiffs’ burden here. It is not enough simply sthoo awssert that defendants will take the opportuSneiety F fiorrs td eTceecpht. ivSea fceotyn dSuycst. . v T. hDee pminoevtant must that the adverse party is likely to do so. , 11 F.3d 641, 652 (6th Cir. 1993) (finding it inappropriate to consider assertions against defensdeaen atlss ob EeCcaRuI sve. MtchGerraew h-Hadil l, bIneec.n no determination as to the accuracy of those assertions); , 809 F.2d 223, 225 (3d Cir.1987) (“A risk of irreparable harm is not enough. A plaintiff has the burden of proving a 'clear showing of immediate irreparable injury."') (citation omitted). Courts recognize that “[s]ometimes, harm threatens to moot a case, as when one party's conduct could destroy the property under dispute, kill the other party, or drDiveel. itS itnattoe bSpaonrktrsumpetncy's, Afossr' no tvh. eDrewl. iDsee pa' t foafv oSarafebtlye &fi nHaolm jueldagnmd eSnetc .might well be useless.’" , 108 F.4th 194, 201 (3d Cir. 2024) (citation omitted). And there is no question that a court may grant aS epereHliomxwinoarrtyh ivn.j uBnlicntdioern, to prevent the dissipation of assets that would satisfy a judgment.

3 Plaintiffs also point out that Mac Private Equity’s website states that it is in pending EDC status, but that The Virgin Islands Economic Development Authority (VIEDA) issued a press release stating that the representation on Mac Private Equity’s website regarding EDC status “is false and misleading. Based on EDC records, neither Mac Private Equity Inc. nor MPE Clearing & Holdings, Inc. has applied for tax incentives and neither has been a Case No. 3:24-cv-00023 M emorandum Opinion RPaogbei 9n soof n10 & Co. , 903 F.2d 186, 198 (3d Cir. 1990). Plaintiffs provide plenty of case law on this point. To obtain such relief, however, “the plaintiff must show not only that it is likely to become entitled to the encumbered funds upon final judgment, but also that witJhaocuotb sthone pv.r eKliimm i(nIanr rye i nLjeuvn)c,tion, the plaintiff will probably be unable to recover those funds." Nos. 05-35c8i4ti7n g( DHHoSxw), o0r8th-02980 (DHeSe )a, l2so0 0E9ll iBotatn vk. rK. iLesEeXwISe t9te9r7, at *12 (Bankr. D.N.J. Mar. 31, 2009) ( at 197); s , 98 F.3d 47, 58 (3d Cir. 1996) (holding that a court may find that a party seeskhionwg ianng atshsaett t fhree efrzeee ztoe pisr neesecersvsea ary money judgment may demonstrate irreparable injury by to prevent the consumption, dissipation or fraudulent conveyance of the assets that the party pursuing the asset freeze seeks to recover in the underlying litigation.) (emphasis added).

In the cases Plaintiffs rely upon, movants p rovided significant and sufficient verified 4 evidence that met their burden before the court. Here, Plaintiffs have no court judgment in

Hoxworth v. Blinder, Robinson & Co. 4 For example, in , 903 F.2d 186, 205 (3d Cir. 1990), the district court found that the irreparable injury showing was met by plaintiffs' evidence of substantial transfers of assets "beyond the power of this court," and of defendant ’PsN eYs cTaelcahtisn., gI nfcin. va.n Scaialhl idifficulties. Therefore, the district court reasoned, "failure to grant the injunction may leave the injured plaintiffs and the class without a remedy or with a judgment that has no more funds." In , Civil Action No. 12-4916, 2016 U.S. Dist. LEXIS 105956, at *2-3 (D.N.J. Aug. 10, 2016, evidence showed that the defendant continued to relocate to various residences in California as well as between the United States and Dubai, giving reason to suspect he was transferring his assets so they could not be reached to enforce a judgment; defendant could not give the Court an answer as to a single address where he resided; defendant represented to the PCrooussret rthat he did not have the funds to pay a potential judgment and movant identified numerous pieces of evidence indicating that defendant actually did have sufficient funds—or had recently sSoelde— alvsoalJuuaubl lLea absss,e Itnsc. . Ivn. 4X PODS, No. BR 2006- 30009, 2017 WL 5614901, at *9 (D.V.I. Nov. 20, 2017), defendants were already in bankruptcy and had previously violated court orders prohibiting the sale of assets. , 439 F. Supp. 3d 341, 347 (D.N.J. 2020) (finding evidence of irreparable harm where a number of documents produced in discovery included Skype messages in which defendants expressed in no uncertain terms that they would never Case No. 3:24-cv-00023 M emorandum Opinion Page 10 of 10 hand, and at this juncture, the Court is not convinced that Plaintiffs will not be able to recover funds —without preliminary relief —if awarded. Although Plaintiffs legitimately call into question what appears to be a pattern of behavior for dodging financial responsibility and accountability on behalf of Defendants, the Court cannot issue a temporary restraining order or preliminary injunction without clear evidence of imminent, irreparable harm to the Plaintiffs. Plaintiffs fail to make a clear showing that they will more likely than not suffer irreparable injury while proceedings are pending or that any injury cannot be remedied monetarily. Accordingly, the Court finds this factCo.r wBeailgahnsc aeg oaifn Esqt upirteileims ainnadr yP ureblliiecf . I n terest

Because Plaintiffs fail to adequately address likelihood of success on the merits or

demonstrate that they will suffer irreparable harm absent preliminary relief, the Court need not address balancing of equities or public interest—the two factors remaining in the analysis for granting such relief. IV. CONCLUSION

This Court does not take Plaintiffs’ concerns lightly; however, anticipatory preliminary relief is not permitted. The record before the Court does not meet the standard necessary for the “extraordinary remedy” of temporary restraining order or preliminary injunction. Accordingly, Plaintiffs’ request for preliminary injunctive relief will be denied. An

a ppropriate Order follows. Dated: Robert A. Molloy ROBERT A. MOLLOY Februa ry 24, 2 025 /Csh/ief Judge