$9.4m fraud verdict exposes COVID glove trade chaos
Jury finds Wyoming logistics broker liable for misrepresenting $800m PPE contract in failed $9.5m glove shipment
A California jury has delivered a $9.4 million fraud verdict against a Wyoming-based logistics broker and its managing member, finding them liable for misrepresentations that derailed a multimillion-dollar medical glove shipment during the COVID-19 pandemic.
The dispute involved Ashtel Studios Inc., a California medical supply distributor, and Oak Sourcing & Logistics LLC, along with its managing member, Matthew John Sandvig. The case centered on two transactions for nitrile examination gloves totaling $14.7 million, sourced from China and shipped through the Port of Long Beach.
Fraudulent claims unravel $14.7 million deal: logistics fraud
In March 2021, Sandvig allegedly assured Ashtel executives that Oak Sourcing held an $800 million personal protective equipment contract, maintained long-term supply agreements with hospitals, and had access to substantial financing. These representations convinced Ashtel to proceed with the purchases.
The first shipment, dated July 2, 2021, consisted of 500,000 boxes of gloves valued at $5.2 million. The products arrived in 14 shipping containers and were transported to Ashtel’s Ontario warehouse. Oak Sourcing paid for this order in August 2021, though Ashtel claimed some transportation and warehousing costs remained unpaid.
The second order, placed on July 7, 2021, called for 1 million boxes at $9.50 per box, totaling $9.5 million. The gloves arrived in 27 containers, but Oak Sourcing failed to complete payment or take possession. Ashtel accused the broker of repeatedly delaying inspections, requesting unnecessary documentation, and promising payment upon receiving funds from its downstream customer. The company later discovered that Oak Sourcing’s claimed end customer was another intermediary, not a hospital or direct purchaser.
Jury awards damages, exposes financial misconduct
On October 9, the Los Angeles County Superior Court jury ruled that Oak Sourcing and Sandvig engaged in intentional misrepresentation. Jurors determined that the defendants made false statements, knew they were untrue or acted recklessly, and intended for Ashtel to rely on them. The verdict awarded Ashtel $9.397 million in economic damages, including $6.43 million in out-of-pocket expenditures and $2.97 million in additional losses.
The jury also found Oak Sourcing liable for $4.27 million in unpaid debts under an open book account claim. A separate trial will address allegations that Oak Insurance Group LLC, a related entity, should be held accountable under alter ego claims. No ruling against Oak Insurance Group has been issued to date.
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