CHU de Quebec–Universite Laval, the largest university hospital network in the Canadian province of Quebec, wired $5.25 million in April 2020 to Dreamscape Development Group, Inc. as a 50-percent deposit on three million 3M model 1860 N95 masks. The Quebec government had tasked CHU with sourcing masks for the provincial healthcare system. CHU used a New York intermediary, R Negotiations, to place the order, and the deposit was transferred from R Negotiations' escrow attorney, Gregory Kuczinski, to DDGI's Morgan Stanley account. A signed letter dated April 16, 2020 required DDGI to deliver at least a partial order within two weeks or return the deposit in full. DDGI's president, CEO, and primary shareholder Darrel Fritz countersigned that letter. DDGI never delivered a single mask and never returned the money.
Bank records showed that Fritz began moving the deposit out of DDGI's Morgan Stanley account almost immediately. He sent $1.25 million to reimburse a different DDGI client, used $531,463.78 to buy back his personal residence in McKinney, Texas, which had previously been foreclosed on, and routed additional sums to unrelated business transactions. By July 2020, nearly nothing remained. In a May 8, 2020 email to Robert Werner of R Negotiations, Fritz had falsely represented that the balance of the deposit — minus the $2.269 million he had already sent to a mask supplier called Primex Clinical Laboratories — was still in DDGI's Morgan Stanley account, fully accounted for and proper.
Judge Sean D. Jordan of the Eastern District of Texas held on April 22, 2026 that DDGI breached the mask-purchase contract and is liable for the full $5.25 million deposit. The court held that the purchase order, DDGI's confirmatory invoice, and the April 16 letter together formed an enforceable contract under Texas's UCC, and that CHU had standing to sue as the disclosed principal behind R Negotiations' agency. Because all three defendants — DDGI, Fritz, and related holding company Dreamscape Development Group Holdings, Inc. — had stipulated to joint and several liability, the breach-of-contract judgment runs against all three.
On conversion and theft under the Texas Theft Liability Act, the court granted summary judgment as to $2,980,425 of the deposit — the $5.25 million minus the $2,269,575 sent to Primex. The court held that the deposit was delivered for safekeeping and intended to be kept segregated as an intact escrow fund, satisfying the requirements for conversion of money under Texas law. Fritz's deceptive May 8 email and his subsequent transfers — including the purchase of his foreclosed home — established the intent-to-deprive element of civil theft. The court left the Primex transfer for trial, finding a genuine dispute over whether R Negotiations' authorization to proceed with the Primex order also authorized DDGI to spend the escrowed funds on that transaction.
The court dismissed CHU's unjust enrichment claim as precluded by the express contract, denied summary judgment on fraud because Fritz and Kuczinski gave conflicting sworn accounts of whether Fritz claimed to be an authorized 3M distributor, and denied summary judgment on exemplary damages and interest as premature pending final resolution of the remaining tort claims.