On September 5, 2025, Justice Borrok of the New York County Commercial Division issued a decision in Oasis Invs. II Master Fund Ltd. v. Mo, 2025 NY Slip Op. 33342(U), striking the defendants’ answers as a sanction for discovery misconduct, explaining:
A party seeking spoliation sanctions must show (i) the party having control over the evidence possessed an obligation to preserve at the time of its destruction, (ii) the evidence was destroyed with a culpable state of mind, and (iii) that the destroyed evidence was relevant to the party’s claim or defenses. When the destruction of evidence is intentional, willful, or the result of gross negligence, the relevance of the documents is presumed. In addition, a court has inherent power to address actions which are meant to undermine the truth-seeking function of the judicial system and place in question the integrity of the courts and our system of justice. A court may also strike an answer as a sanction where the moving party establishes that the failure to comply was willful, contumacious or in bad faith, and upon such showing, the burden shifts to the nonmoving party to demonstrate a reasonable excuse.
In an email dated December 18, 2019, the Chief Investment Officer of Fang Holdings Limited (Fang) indicated that he reasonably anticipated litigation in connection with the transaction at issue in this case and by the minority interest holders:
2) As with any capital market transaction, especially a related party transaction, potential risks exist. More specifically, minority shareholders of Fang may complain that they are not allowed to participate in the transaction whether bad or good and they may not happy with the transaction and they may even file legal actions against the company. There may also be tax risks as our last spin off of CIH is only six months away which was tax free to all shareholders.
This is the latest point in time when a litigation hold should have been put in place. It simply was not done and the record before the Court establishes spoliation from this moment forward as to troves of documents from the mere nine custodians involved in this case. In fact, even if this were not the moment in time when a litigation hold should have been put in place and the Court were to accept the defendants’ untenable position that a litigation hold did not attach until the lawsuit was filed, the record before the Court unequivocally establishes intentional and willful destruction of documents even after the lawsuit was filed.
The defendants’ conduct also demonstrates flagrant and blatant disregard of numerous court orders with respect to discovery and their intentional and deliberate attempts to frustrate the plaintiff’s right to seek relevant discovery and to conceal their conduct. Defendant Dai did not even provide the appropriate code to access his devices to the forensic provider, after defendants had initially misled the plaintiffs about the location of Mr. Dai and his mobile device claiming it and he was in China when this was simply not true. No effort was made at all to preserve data stored by certain employees who have resigned (including defendant Peng Cui, the former Chief Financial Officer of Fang, who resigned over a year into this case) and whose electronic devices and accounts the defendants never preserved and who he has now refused to provide for forensic review.
Unquestionably there is clear and convincing evidence of multiple violations of Court orders as to how discovery must proceed in this case given the substantial evidence of spoliation. As discussed, and without reviewing the entire sordid history of the defendants’ active frustration of the discovery process since the case’s inception, the defendants knowingly and intentionally ignored this Court’s April 17, 2025, Order rejecting their request to have discovery proceed in two stages. They had no right to do that. They asked for discovery to proceed in two stages – i.e., having their previous inadequate document production by A&M reviewed by BRG and only then proceeding as to the forensic examination ordered by this Court. The Court rejected this position. Nonetheless, and undeterred, they frivolously marked up the engagement letter of BRG asking for that which the Court expressly told them they could not do (discovery in the staged approach they had requested) given their previous multiple discovery order violations. They moved to stay discovery and to reargue, and the Court indicated that discovery was not stayed (when the Court signed the OSC). They asked for a stay from the Appellate Division. This was not granted either. Nonetheless, they did not, and still have not, complied with this Court’s order.
BRG’s August 29, 2025, Forensic Report also establishes that the defendants actively manipulated the devices and accounts that they provided to BRG or withheld them entirely. Additionally, and as discussed above, the Court notes that substantial misrepresentations have been made as to whether documents were located on servers or solely in China. The location of over $81 million dollars from the CIH purchase option transaction remains concealed and must be disclosed. The plaintiffs have been substantially prejudiced and will indisputably never be afforded the universe of documents which they are entitled to.
Although a drastic remedy, it is the only appropriate remedy under the facts and circumstances of this case. Indeed, when the Court queried as to another remedy, the defendants offered none.
(Internal quotations and citations omitted).