Bankruptcy, lawsuit for company claiming to make FDA-approved mask

A face mask company started by the former CEO of an automotive supplier that imploded under shady circumstances in Detroit two years ago appears to be suffering the same fate.

Southfield, Mich.-based Redcliffe Medical Devices Inc., launched by Lalit Kumar at the height of the COVID-19 pandemic, filed for Chapter 7 bankruptcy last week in U.S. District Court for the Eastern District of Michigan.

The bankruptcy petition follows a class action lawsuit filed against the company earlier this year alleging it "sought to capitalize on the human suffering" of the pandemic after raising $4.3 million through crowdfunding for masks that were either defective or never delivered.

The company, which does business under the name Leaf Wellness Inc., marketed its Leaf mask as the "world's first FDA, UV-C N99, clear mask." It raised funds through the online crowdfunding platform Indiegogo with investment levels ranging from $49 for a single pack to $9,999 for a reseller pack. Other options included a "corporate pack" for $799 and a "Mom's Luxe pack" for $499 which was said to include carbon cartridges, color kits and masks that were self-sanitizing with UV-C light.

"In reality, Redcliffe advertised these alleged virtues of its Leaf masks as a way to obtain free money from thousands of customers," the lawsuit said.

In the bankruptcy filing, Redcliffe's assets are listed as being less than $50,000, while its liabilities are between $1 million and $10 million and its number of creditors is between 5,000 and 10,000.

The company had said that it produced 6 million masks per month at a 220,000-square-foot plant in Detroit — a false claim, according to crowdfunding backers who say they were ripped off.

Kumar, who also uses the last name Verma, did at one point operate a manufacturing plant in Detroit. He was CEO of Sakthi Automotive Group, an automotive supplier in southwest Detroit that received millions of dollars in incentives from the state and garnered praise from politicians for its ambitious expansion plans and hiring goals.

The project ended in unkept promises and financial ruin.

Kumar could not be reached for comment. Crain's Detroit Business left a message with Joseph Siciliano, of Bloomfield Hills-based Siciliano Mychalowych & Van Dusen PLC, representing Redcliffe in the lawsuit.

Mike Wernette, of Southfield-based Wernette Heilman PLLC, which is representing Redcliffe in the bankruptcy, said he was "not authorized to make any statement or to connect [Kumar[ with anyone."

On Oct. 18, U.S. District Court Judge Stephen J. Murphy issued an order and opinion denying Redcliffe's motion to compel arbitration in the lawsuit against the company. The order sites the lawsuit involving Sakthi and Huntington National Bank.

"The timing and substance of Redcliffe's bankruptcy filing is a ham-handedly questionable effort to delay justice," the order said. "The court is more than familiar with Redcliffe's CEO, Lalit Kumar, and his established, shady business practices. ... It appears that [Kumar] is likely again engaging in shady business dealings like those in Sakthi."

It remains to be seen whether those who invested through the crowdfunding platform will receive refunds, though at least some have already been reimbursed, including Silvia Lazo — but it wasn't easy.

Lazo, who is named as a plaintiff in the class-action lawsuit against Redcliffe, told CDB that she spent more than $1,600 on Leaf masks and that it took months of haggling before her credit card company refunded the money.

In the meantime, Lazo created a website and Facebook group called Lost Leaf Backers, where she began posting advice on getting refunds when she first suspected the company was not going to deliver.

"I was shocked and dismayed," Lazo said.