Federal Court Finds Factual Misrepresentations Made to Fourth Circuit in Williams v. Big Picture Loans LLC

Here are the materials in Williams v. Big Picture Loans LLC (E.D. Va.) (this case is on remand from the Fourth Circuit):

599 DCT Order

601 DCT Order

613 Martorello Statement of Position

624 Williams Response to 613

784 Williams Statement of Position

910 Williams Supplemental Memorandum

944 DCT Order

Excerpts:

In Williams, et al. v. Big Picture Loans, LLC, et al., 3:17cv461 (E.D. Va.) (“Williams”), Renee Galloway, et al. v. Big Picture Loans, LLC, et al., 3:18cv406 (E.D. Va.) (“Galloway I”) and Renee Galloway, et al. v. Martorello, et al., 3:19cv314 (E.D. Va.) (“Galloway II“), the Plaintiffs filed three similar, but in some respects substantively quite different, actions arising out of a so-called “Rent A Tribe” scheme allegedly orchestrated by Matt Martorello (“Martorello”), members of his family, companies that he controls, and investors who allegedly funded the scheme (the “Martorello Defendants”). Big Picture Loans, LLC (“Big Picture”) and Ascension Technologies, Inc. (“Ascension”) (collectively sometimes referred to as the “Tribal Defendants”) are entities formed under the tribal laws of the Lac View Band of Lake Superior Chippewa Indians (“LVD”). Big Picture and Ascension are also defendants in Williams and Galloway I, and both entities are alleged to be implicated in the Rent A Tribe scheme that lies at the core of the Plaintiffs’ claims on those cases.

In Williams, Big Picture and Ascension claimed to share LVD’s sovereign immunity and, on that basis, those entities sought dismissal of the case against them. This Court rejected that argument. On appeal, the United States Circuit Court of Appeals for the Fourth Circuit held that Big Picture and Ascension were entitled to the protection of LVD’s sovereign immunity.

Following the decision of the Fourth Circuit in Williams, the Court directed that the parties file Statements of Position explaining, how, if at all, the decision of the Fourth Circuit affected these proceedings and pending motions (ECF Nos. 599 and 601). In his Statement of Position, Martorello argued that the holding that Big Picture and Ascension are protected from suit by LVD’s sovereign immunity has substantive and procedural consequences that necessitate dismissal of the case against them. MARTORELLO’S STATEMENT OF POSITION PURSUANT TO ECH NOS. 599 & 601 (ECF No. 613). In their response to MARTORELLO’S STATEMENT OF POSITION PURSUANT TO ECH NOS. 599 & 601, the Plaintiffs asserted, inter alia, that Martorello and others made material misrepresentations to this Court and to the Fourth Circuit about the facts pertaining to sovereign immunity and that, as a result, the Fourth Circuit’s decision on that issue cannot be relied on by Martorello. PLAINTIFFS’ RESPONSE TO MATT MARTORELLO’S STATEMENT OF POSITION (ECF No. 624). This Memorandum Opinion addresses the alleged misrepresentations and their effect in these proceedings.

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The record thus proves the falsity of the assertions made in Martorello’s declaration that “neither I nor any company I owned, managed, directed or controlled the creation of Big Picture” and “neither I, nor Bellicose, helped form Big Picture.” (ECF No. 106-1, Martorello Decl. ¶¶ 67 and 102). And, the record shows convincingly that Big Picture was not created by LVD as the result of the Tribe’s years of knowledge and business acumen related to online lending. In fact, Big Picture was created by Martorello for use with a different tribe and, when that fell through, Big Picture, at Martorello’s instruction, was used to rebrand Red Rock. In other words, the record shows convincingly that Martorello was the driving force in the creation of Big Picture and Ascension, just as he was in the creation of Red Rock.

In sum, the record convincingly confirms that misrepresentations respecting the genesis of Big Picture were made by Martorello and Hazen. Those misrepresentations were presented to, and relied on, by this Court in making its factual findings which were undisturbed by the Court of Appeals.

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The established misrepresentations strongly suggest that the Fourth Circuit’s decision on the Tribal Defendants’ entitlement to share LVD’s sovereign immunity is open to question. But, that is not a matter for this Court to decide.

However, in analyzing all pending and future motions in which Martorello argues that his position is supported by the Fourth Circuit’s decision, this Court will now be required to take into account the record about the misrepresentations and the findings about them that are made herein. And, now that the record on the misrepresentations has been made, the Court will turn to the various pending motions and this record is available to help resolve those motions.