Ashtel’s $9.4 Million Fraud Verdict: When Can an LLC Member Be Personally Liable?

According to published reporting and plaintiff’s counsel, a Los Angeles County jury awarded Ashtel Studios, Inc. $9,397,000 in economic damages on October 9, 2026, after finding Oak Sourcing & Logistics, LLC and its managing member, Matthew John Sandvig, liable for fraud. ^{1 2}

The dispute involved pandemic-era purchases of medical examination gloves. Ashtel’s counsel reports that representations about customer contracts and financing induced Ashtel to supply merchandise, including a shipment that Oak Sourcing did not pay for or collect. ²

The case illustrates an important distinction: a company’s failure to pay and an individual’s fraudulent representations involve different legal questions.

Under California’s intentional-misrepresentation framework, a plaintiff must establish a false factual representation, knowledge of falsity or reckless disregard for the truth, intent to induce reliance, reasonable reliance, harm, and that the reliance substantially caused the harm. ³

An unpaid invoice alone does not establish those elements. Relevant evidence may include communications about existing financing or customer commitments, what the speaker knew, and whether the supplier relied on those statements when committing inventory or funds.

California Corporations Code section 17703.04 generally separates an LLC’s obligations from those of its members and managers. A person does not become responsible for company debts solely because of that role. However, subdivision (c) preserves a member’s potential liability for personally participating in tortious conduct. ⁴

That is different from alter-ego liability, which concerns circumstances permitting liability despite the entity’s separate existence. The statute addresses alter ego separately in subdivision (b). ⁴

These California provisions are general background, not a statement of the law applied at this trial. Reporting identifies Oak Sourcing as a Wyoming company, and California’s statute directs certain questions about members’ and managers’ liability for a foreign LLC’s obligations to the law of its formation jurisdiction. ^{1 5}

FreightWaves reported on October 16 that Ashtel intended to submit a proposed judgment and that separate alter-ego proceedings involving Oak Insurance Group remained ahead. The article also reported an open-book-account finding whose amount should not simply be added to the fraud award without resolving overlapping damages. ⁶

The materials reviewed do not establish a final collectible total or that Oak Insurance Group has been held liable.

Before committing substantial inventory or financing, verify material claims about purchasing authority, financing, and customer commitments. Preserve the representations, purchase orders, payment records, and evidence of resulting losses.

If a transaction fails, evaluate the company’s contractual obligations and each individual’s conduct separately.

Learn more about Mahrouyan Law’s business litigation practice, or read the unpaid-invoice guide.