A Los Angeles County Superior Court jury awarded $9.397 million on Oct. 9 to a California medical supply distributor, finding Wyoming-based Oak Sourcing & Logistics LLC and its managing member, Matthew John Sandvig, liable for intentional misrepresentation in a failed $9.5 million nitrile glove deal.

The verdict breaks down into $6.43 million in out-of-pocket expenditures and nearly $2.97 million in other economic losses for Ashtel Studios Inc., which imported examination gloves from China during the COVID-19 pandemic. The jury also found Oak Sourcing owed $4,272,252 on a separate open book account claim — an amount the court will have to reconcile against the fraud award before final judgment, since the damages overlap.

At its core, this was a case about representations. Not freight rates, not capacity. Claims about who a counterparty actually was.

What did the broker actually claim?

According to Ashtel's original complaint, Sandvig told company executives in March 2021 that Oak Sourcing held an $800 million personal protective equipment contract, carried long-term supply commitments with hospitals, and had access to substantial financing.

Those claims persuaded Ashtel into two glove transactions totaling $14.7 million. The mechanics that followed are worth tracing, because they show exactly how a big deal unravels.

• First order, July 2, 2021: 500,000 boxes of nitrile gloves worth $5.2 million, imported from China through the Port of Long Beach in 14 containers, then moved to Ashtel's warehouse in Ontario, California. Oak Sourcing paid in August 2021 — roughly three weeks after arrival — though Ashtel said some transportation and warehousing costs stayed unpaid.
• Second order, July 7, 2021: 1 million boxes at $9.50 per box, $9.5 million total, arriving in 27 containers. Oak Sourcing never completed payment and never took possession.

Ashtel alleged the broker stalled repeatedly. It delayed inspections, kept requesting more shipping documentation, and said payment would arrive once funds came through from its downstream customer. That customer, Ashtel later learned, was another intermediary — not a hospital, not a direct purchaser.

Meanwhile the gloves sat. Ashtel absorbed extra drayage, warehousing and storage costs while trying to salvage the deal, and eventually resold the gloves to cut its losses. All told, the two purchase orders moved 1.5 million boxes in 41 ocean containers.

Fraud, not just a broken contract

The jury found both Oak Sourcing and Sandvig made false statements, knew they were false or acted recklessly about their truth, and intended Ashtel to rely on them. Jurors also found Ashtel's reliance was reasonable and caused it financial harm. On top of that, they rejected every one of Oak Sourcing's counterclaims — intentional misrepresentation, negligent misrepresentation, concealment and breach of the covenant of good faith and fair dealing.

Eugene Rome, founding partner of Rome LLP, which represented Ashtel, drew the line that matters commercially. "A fraud verdict is a finding that the representations about the company and the volume of business it had were knowingly false when they were made," Rome said in an Oct. 13 statement. "That goes well beyond a breach of contract."

Jurors further found Sandvig engaged in conduct involving malice, oppression or fraud — findings that normally open the door to punitive damages. That door closed by agreement. Ashtel gave up punitive damages in exchange for the defendants waiving rights to challenge the judgment through post-trial motions or appeals, Rome said. He clarified the arrangement carried no additional monetary settlement.

What does this change for shippers and intermediaries?

The practical question is counterparty risk. Rome put it bluntly: "While large transactions create the prospects of substantial profits, they equally entail traps for the unwary." A broker's stated contract backlog and financing claims are not verified facts. In a nine-figure PPE pitch, they were fiction, the jury decided — and the seller, not the broker, ate the storage and drayage costs while 27 containers of gloves waited for a buyer.

One caveat on the label: court records identify Oak Sourcing as a Wyoming-based intermediary in medical supply transactions, but they don't establish that it operated as a federally licensed freight broker.

The case isn't finished

Litigation began in March 2022 in federal court, in the U.S. District Court for the Central District of California, against Sandvig, Oak Sourcing and Oak Insurance Group LLC. Defendants moved to dismiss for lack of jurisdiction; Ashtel voluntarily dismissed without prejudice, and a federal judge closed the case in May 2022 without ruling on the merits.

The fight continued in state court, where Judge Nicole M. Heeseman presided over the trial. Next, Ashtel intends to submit a proposed judgment for court approval, and a separate bench trial on alter ego allegations involving Oak Insurance Group will proceed at a future date. Those allegations ask whether the related entities should be treated as legally separate for liability purposes — and no finding against Oak Insurance Group exists yet. How the court allocates the overlapping awards will determine what Ashtel actually collects.