OPPOSITION to NOTICE OF MOTION AND MOTION… — United States ex rel. Quesenberry v. JMG Investments, Inc., et… (Dkt. 78)

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Defendants' Response in Opposition to Plaintiff's Motion for Summary Judgment in United States ex rel. Quesenberry v. JMG Investments, Inc., No. 2:20-cv-08497-MWF-AS, in the U.S. District Court for the Central District of California, filed December 2, 2025 as Doc. 78. Defendants JMG Investments, Inc. and Jeffrey Schwartz respond under Fed. R. Civ. P. 56 and Local Rule 56-1 ahead of a December 15, 2025 hearing. The opposition addresses the certification on the PPP loan application dated 5/7/2020 that the applicant would not receive another PPP loan, and discusses the scienter standard of 31 U.S.C. § 3729 as described in United States ex rel. Schutte v. SuperValu Inc. It argues the plaintiff's separate statement does not show actual knowledge, deliberate ignorance or reckless disregard when the application was signed, and asks the court to deny the motion.

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Case 2:20-cv-08497-MWF-AS     Document 78    Filed 12/02/25   Page 1 of 5 Page ID
                                    #:717


  1 Richard A. Rodgers, Esq., SBN 210196
    SHANE, DIGIUSEPPE & RODGERS, LLP
  2 3125 Old Conejo Road
    Thousand Oaks, CA 91320
  3 Telephone: (805) 230-2525
    Facsimile: (805) 230-2530
  4 Email: rar@lawsdr.com
  5 Attorneys for Defendants,
    JMG INVESTMENTS, INC.
  6 and JEFFREY SCHWARTZ
  7
  8
                          UNITED STATES DISTRICT COURT
  9
                  FOR THE CENTRAL DISTRICT OF CALIFORNIA
 10
 11   UNITED STATES OF AMERICA, ex ) CASE NO. 2:20-cv-08497 MWF-AS
      rel. BRYAN QUESENBERRY,      )
 12                                )
             Plaintiff,            ) DEFENDANTS’ RESPONSE IN
 13                                ) OPPOSITION TO PLAINTIFF’S
                    v.             ) MOTION FOR SUMMARY
 14                                ) JUDGMENT
      JMG INVESTMENTS, INC., AND   )
 15   JEFFREY SCHWARTZ,            ) [Fed. R. Civ. P. 56]
                                   )
 16          Defendants.           ) [Separate Statement of Disputed Facts,
                                   ) Declaration, filed concurrently
 17                                ) herewith]
                                   )
 18                                )
                                   ) Hearing Date: December 15, 2025
 19                                ) Hearing Time: 10:00 AM
                                   ) Courtroom: 5A
 20                                )
 21
            Pursuant to Federal Rule of Civil Procedure 56 and Local Rule 56-1,
 22
      defendants JMG INVESTMENTS, INC., and JEFFREY SCHWARTZ,
 23
      ("Defendants”) submit this Response in Opposition to Plaintiff’s Motion for
 24
      Summary Judgment.
 25
 26
      ///
 27
 28
                                              -1-
       DEFENDANTS' RESPONSE IN OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
Case 2:20-cv-08497-MWF-AS       Document 78      Filed 12/02/25    Page 2 of 5 Page ID
                                      #:718


  1         1.     GENUINE TRIABLE ISSUES OF MATERIAL FACTS
  2         Under FRCP Rule 56, the movant on a Motion for Summary Judgment must
  3   identify each claim or defense — or the part of each claim or defense — on which
  4   summary judgment is sought. The court shall grant summary judgment if the
  5   movant shows that there is no genuine dispute as to any material fact and the
  6   movant is entitled to judgment as a matter of law.
  7         The central pivotal piece of evidence being used against Defendants in this
  8   False Claims Act (“FCA”) action is found on Page 2 of the SBA PPP Loan
  9   Application, dated 5/7/2020 (See Plaintiff’s Sep. Stmt. No. 16, and Exhibit A) -
 10   The check box certification stating, “During the period beginning February 15,
 11   2020 and ending on December 31, 2020, the Applicant has not and will not
 12   receive another loan under the Paycheck Protection Program.”
 13         Plaintiff argues that the FCA imposes liability on any person who
 14   “knowingly presents, or causes to be presented, a false or fraudulent claim for
 15   payment or approval” and who “knowingly makes, uses, or causes to be made or
 16   used, a false record or statement material to a false or fraudulent claim. (31 U.S.C.
 17   § 3729(a)(1)(A) and (B). See MSJ, pg. 10:21-28.)
 18         In United States ex rel. Schutte v. SuperValu Inc. (2023) 598 U.S. 739,

 19   749-752, the Court held the FCA defines the term "knowingly" as encompassing

 20   three mental states: First, that the person "has actual knowledge of the

 21   information," § 3729(b)(1)(A)(i)]. Second, that the person "acts in deliberate

 22   ignorance of the truth or falsity of the information," § 3729(b)(1)(A)(ii). And,

 23   third, that the person "acts in reckless disregard of the truth or falsity of the

 24   information," § 3729(b)(1)(A)(iii). In short, either actual knowledge, deliberate

 25   ignorance, or recklessness will suffice. Id at 750.

 26         The Court explained that this three-part test largely tracks the traditional

 27   common-law scienter requirement for claims of fraud, and on their face and at

 28   common law, the FCA’s standards focus primarily on what [defendant] thought
                                               -2-
        DEFENDANTS' RESPONSE IN OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
Case 2:20-cv-08497-MWF-AS      Document 78      Filed 12/02/25   Page 3 of 5 Page ID
                                     #:719


  1   and believed.
  2         The FCA is largely a fraud statute, first enacted in 1863 to stop the massive
  3   frauds perpetrated by large contractors during the Civil War. To this day, the FCA
  4   refers to "‘false or fraudulent'" claims, pointing directly to "the common-law
  5   meaning of fraud." On their face and at common law, the FCA's standards focus
  6   primarily on what [defendants] thought and believed. Id. at 750.
  7          First, the term “actual knowledge” refers to whether a person is “aware of”
  8   the information. Second, the term “deliberate ignorance” encompasses defendants
  9   who are aware of a substantial risk that their statements are false, but intentionally
 10   avoid taking steps to confirm the statement’s truth or falsity, and, third, the term
 11   "reckless disregard" similarly captures defendants who are conscious of a
 12   substantial and unjustifiable risk that their claims are false, but submit the claims
 13   anyway. [Internal citations omitted here] Id at 751.
 14         “Both the text and the common law also point to what the defendant thought
 15   when submitting the false claim—not what the defendant may have thought after
 16   submitting it. As noted above, the text encompasses those who “knowingly
 17   presen[t] . . . a false or fraudulent claim”; the term “knowingly” thus modifies
 18   present-tense verbs like “presents.” § 3729(a)(1)(A). As such, the focus is not, as
 19   [plaintiff] would have it, on post hoc interpretations that might have rendered their
 20   claims accurate. It is instead on what the defendant knew when presenting the
 21   claim. Culpability is generally measured against the knowledge of the actor at the
 22   time of the challenged conduct. (Internal citations omitted here) Id at 751.
 23         (In other words, the measure of scienter for fraud is subjective, not
 24   objective)
 25         To obtain a summary judgment under Fed. R. Civ. P. 56, Plaintiff must
 26   present supporting factual positions showing that its assertion (claim of fraud)
 27   cannot be genuinely disputed by: (A) citing to particular parts of materials in the
 28   record, including depositions, documents, electronically stored information,

                                               -3-
        DEFENDANTS' RESPONSE IN OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
Case 2:20-cv-08497-MWF-AS      Document 78     Filed 12/02/25   Page 4 of 5 Page ID
                                     #:720


  1   affidavits or declarations, stipulations (including those made for purposes of the
  2   motion only), admissions, interrogatory answers, or other materials; or (B)
  3   showing that the materials cited do not establish the absence or presence of a
  4   genuine dispute, or that an adverse party cannot produce admissible evidence to
  5   support the fact.
  6         Plaintiff’s Separate Statement does not present any supporting factual
  7   positions showing that at the time Schwartz signed the PPP loan application with
  8   Fountainhead (5/7/20), he had actual knowledge that JMG would receive more
  9   than one PPP loan during the time period stated in the application.
 10         And Plaintiff’s Separate Statement does not present any supporting factual
 11   positions showing that at the time Schwartz signed the PPP loan application with
 12   Fountainhead (5/7/20), he acted in deliberate ignorance of the truth or falsity of
 13   his representations on the loan application.
 14         And Plaintiff’s Separate Statement does not present any supporting factual
 15   positions showing that at the time Schwartz signed the PPP loan application with
 16   Fountainhead (5/7/20), he acted in reckless disregard of the truth or falsity of the
 17   information on the loan application.
 18         In summary, Plaintiff did not present any supporting factual positions
 19   showing that Plaintiff is entitled to a Summary Judgment under Fed. R. Civ. P. 56,
 20   for fraud (actual knowledge, deliberate ignorance, or recklessness).
 21         On the other hand, Defendants did present supporting factual positions
 22   showing a genuine dispute as to whether defendant Schwartz had the requisite
 23   scienter for fraud at the time he signed the PPP loan application, 5/7/2020. (See
 24   Def. Sep. Stmt. No. 16 and Declaration of Schwartz, pg. 2:7-8.)
 25
 26         2.     CONCLUSION
 27         Based on the facts, law, and arguments made herein, Defendants
 28   respectfully request the Court deny Plaintiff’s Motion for Summary Judgment.
                                               -4-
        DEFENDANTS' RESPONSE IN OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
Case 2:20-cv-08497-MWF-AS    Document 78    Filed 12/02/25   Page 5 of 5 Page ID
                                   #:721


  1   Dated: December 2, 2025              SHANE & DIGIUSEPPE & RODGERS LLP
  2
  3                                        By:
                                           Richard A. Rodgers, Attorneys of Record
  4                                        for JMG INVESTMENTS, INC.
                                           and JEFFREY SCHWARTZ
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       DEFENDANTS' RESPONSE IN OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT


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