Federal Trade Commission v. Asset and Capital Management Group et al
Filing
51
ORDER re STIPULATED PRELIMINARY INJUNCTION AS TO DEFENDANTS THAI HAN, JIM TRAN PHELPS, KEITH HUA, ASSET & CAPITAL MANAGEMENT GROUP, CROWN FUNDING COMPANY, LLC, WESTERN CAPITAL GROUP, INC., CREDIT MP, LLC, AND ONE FC, LLC by Judge Dale S. Fischer. Asset Freeze: It is further Ordered that: Bank of America shall transfer the amount of $3,102.85 from account number xxxx5118 in the name of Thai Han and Sarah Han to account number xxxx5264 in the name of Crown Funding Company, LLC. Bank of America shall transfer the amount of $10,490.84 from account number xxxx0485 in the name of Jim Tran Phelps to account number xxxx5264 in the name of Crown Funding Company, LLC. Bank of America shall transfer the amount of $8,625.16 from account number xxxx7232 in the name of AFK Solutions, LLC to account number xxxx5264 in the name of Crown Funding Company, LLC. Thereafter, the asset freeze provisions of this Order shall not apply to Bank of America account number xxxx5118 in th e name of Thai Han and Sarah Han, Bank of America account number xxxx0485 in the name of Jim Tran Phelps, Bank of America account number xxxx7232 in the name of AFK Solutions, LLC, Citibank account number xxxx8587 in the name of Keith Hua, and Cit ibank account number xxxx9869 in the name of Keith Hua and Samantha Hua. IT IS FURTHER ORDERED that the bond in the sum of $5,000 previously filed by the Receiver with the Clerk of this Court shall remain in effect. IT IS FURTHER ORDERED tha t: Except by leave of this Court, during pendency of the Receivership ordered herein, the Stipulating Defendants and all other persons and entities be and hereby are stayed from taking any action to establish or enforce any claim,etc. (Refer to attached document for details.) (lom)
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cc: Fiscal
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
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FEDERAL TRADE COMMISSION,
Plaintiff,
[proposed] STIPULATED
PRELIMINARY INJUNCTION AS
TO DEFENDANTS THAI HAN, JIM
TRAN PHELPS, KEITH HUA,
ASSET & CAPITAL
MANAGEMENT GROUP, CROWN
FUNDING COMPANY, LLC,
WESTERN CAPITAL GROUP,
INC., CREDIT MP, LLC, AND ONE
FC, LLC
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Case No. 8:13-cv-01107-DSF-JC
v.
ASSET & CAPITAL
MANAGEMENT GROUP, et al.,
Defendants.
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Plaintiff, Federal Trade Commission (“FTC”), commenced this civil action
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on July 23, 2013, pursuant to Section 13(b) of the Federal Trade Commission Act
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(“FTC Act”), 15 U.S.C. § 53(b), and Section 814(a) of the Fair Debt Collection
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Practices Act (“FDCPA”), 15 U.S.C. § 1692l(a). On motion by the FTC, on
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July 24, 2013, this Court entered an ex parte temporary restraining order (“TRO”)
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with asset freeze, appointment of receiver, and other equitable relief against
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Defendants Asset and Capital Management Group, Crown Funding Company,
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LLC, One FC, LLC, Credit MP, LLC, Western Capital Group, Inc., SJ Capitol,
LLC, Green Fidelity Allegiance, Inc., Thai Han, Jim Tran Phelps, Keith Hua, and
James Novella. The FTC, defendants Thai Han, Jim Tran Phelps, Keith Hua,
Asset & Capital Management Group, Crown Funding Company, LLC, Western
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Capital Group, Inc., Credit MP, LLC, and One FC, LLC (“Stipulating
Defendants”), and the Receiver have stipulated and agreed to entry of a
preliminary injunction order (“Order”).
FINDINGS OF FACT
By stipulation of the parties, the Court finds as follows:
Page 1 of 30
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1.
The FTC and the Stipulating Defendants have stipulated and agreed to the
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entry of this preliminary injunction order without any admission of
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wrongdoing or violation of law, and without a finding by the Court of law or
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fact other than stated below.
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2.
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The Stipulating Defendants waive all rights to seek judicial review or
otherwise challenge or contest the validity of this Order.
3.
This Court has jurisdiction over the subject matter of this case, there is good
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cause to believe it will have jurisdiction over all the parties hereto, and
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venue in this district is proper.
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4.
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engaged and are likely to continue to engage in acts or practices that violate
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Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the FDCPA, 15 U.S.C.
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§§ 1692-1692p, and that the FTC is therefore likely to prevail on the merits
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of this action.
5.
The FTC asserts that there is good cause to believe that consumers will
suffer immediate and continuing harm unless the Defendants are restrained
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and enjoined by Order of this Court.
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The FTC asserts that there is good cause to believe that the Defendants have
6.
The Stipulating Defendants assert that on or around June 2012, they ceased
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any debt collection activities in which they initiated contact with debtors or
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third parties associated with such debtors.
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7.
preliminary injunction, Fed. R. Civ. P. 65(c).
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8.
The entry of this Preliminary Injunction is in the public interest.
DEFINITIONS
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No security is required of any agency of the United States for issuance of a
A.
“Assets” means any legal or equitable interest in, right to, or claim to, any
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real or personal property, including, without limitation, chattels, goods,
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instruments, equipment, fixtures, general intangibles, leaseholds, mail or
Page 2 of 30
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other deliveries, inventory, checks, notes, accounts, credits, contracts,
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receivables, shares of stock, and all cash, wherever located.
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B.
“Consumer” means any person.
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C.
“Corporate Defendants” means Asset and Capital Management Group,
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Crown Funding Company, LLC, One FC, LLC, Credit MP, LLC, Western
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Capital Group, Inc., SJ Capitol, LLC, Green Fidelity Allegiance, Inc., and
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their successors, assigns, affiliates, or subsidiaries, and each of them by
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whatever names each might be known.
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D.
“Debt” means any obligation or alleged obligation to pay money arising out
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of a transaction, whether or not such obligation has been reduced to
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judgment.
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E.
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Defendants, individually, collectively, or in any combination, and each of
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“Defendants” means the individual defendants and the Corporate
them by whatever names each might be known.
F.
“Document” is synonymous in meaning and equal in scope to the usage of
the term in Federal Rule of Civil Procedure 34(a), and includes writings,
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drawings, graphs, charts, photographs, audio and video recordings, computer
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records, and other data compilations from which the information can be
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obtained and translated, if necessary, through detection devices into
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reasonably usable form. A draft or non-identical copy is a separate
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document within the meaning of the term.
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G.
“Financial Institution” means any bank, savings and loan institution, credit
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union, or any financial depository of any kind, including, but not limited to,
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any brokerage house, trustee, broker-dealer, escrow agent, title company,
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commodity trading company, or precious metal dealer.
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H.
“Stipulating Individual Defendants” means Thai Han, Jim Tran Phelps,
and Keith Hua.
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I.
“Stipulating Corporate Defendants” means Asset and Capital
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Management Group, Crown Funding Company, LLC, One FC, LLC, Credit
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MP, LLC, and Western Capital Group, Inc., and their successors, assigns,
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affiliates, or subsidiaries, and each of them by whatever names each might
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be known.
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J.
“Stipulating Defendants” means the Stipulating Individual Defendants and
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the Stipulating Corporate Defendants, individually, collectively, or in any
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combination, and each of them by whatever names each might be known.
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K.
“Person” means a natural person, an organization or other legal entity,
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including a corporation, partnership, sole proprietorship, limited liability
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company, association, cooperative, or any other group or combination acting
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as an entity.
L.
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Alhambra Enterprises, LLC; Asset Portfolio Partners, LLC; BIT, Inc.;
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Bureau of Asset Management, LLC; First Franklin Holdings, Inc.; Han
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Dynasty, Inc.; Hush Lah, Inc.; Individual Security & Holdings, Inc.; JTIG,
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Inc.; and Web Audict, LLC.
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“Related Entities” means 77 DKS Capital, LLC; 88 SAT Capital, LLC;
M.
“Receivership Entities” means the Stipulating Corporate Defendants,
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American FP, LLC; American PG, LLC; Capital FC, LLC; Capital FP, LLC;
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Capital IG, LLC; First FF, LLC; First FG, LLC; First FS, LLC; First
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Planners United, LLC; Freeman United Holdings, LLC; Global AG, LLC;
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Global Holding Services, LLC; Grant Services Management, LLC; Heinz
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Capital Funding, LLC; Las Vegas Funding & Financial; Leon Solutions
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Services, LLC; National FC, LLC; National IG, LLC; National Service
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Partners, LLC; New Capital Holdings, Inc.; Pacific Holding Partners, LLC;
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Portfolio MG, LLC; Premiere PG, LLC; Revere Recovery Group, LLC;
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United CC Holdings, LLC; and United Services Partnership, LLC; as well as
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any successors, assigns, affiliates, and subsidiaries that conduct any business
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related to the Defendants’ debt collection business and that the Receiver has
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reason to believe are owned or controlled in whole or in part by any of the
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Stipulating Defendants.
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N.
The terms “and” and “or” shall be construed conjunctively or disjunctively
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as necessary to make the applicable phrase or sentence inclusive rather than
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exclusive.
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ORDER
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PROHIBITED REPRESENTATIONS
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I.
IT IS THEREFORE ORDERED that in connection with the collection or
the attempted collection of any debt, the Stipulating Defendants and their
successors, assigns, officers, agents, servants, employees, and attorneys, and
those persons or entities in active concert or participation with any of them
who receive actual notice of this Order by personal service or otherwise,
whether acting directly or through any corporation, subsidiary, division, or
other device, are hereby restrained and enjoined from:
A.
Misrepresenting, or assisting others who are misrepresenting,
expressly or by implication, orally or in writing, any of the following:
1.
that any Defendant or any other person is a process server, or
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working with a process server, and seeking to serve a consumer
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with legal papers pertaining to a lawsuit against such consumer;
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2.
that any Defendant or any other person is employed by, or
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working with, a lawyer who has reviewed a consumer’s case
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and is preparing a lawsuit against the consumer;
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3.
that non-payment of a purported debt will result in a
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consumer’s arrest, or in seizure, garnishment, or attachment of a
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consumer’s property or wages;
Page 5 of 30
4.
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imminently, a lawsuit against a consumer; or
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5.
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that Defendants or any other person has filed, or intends to file
B.
the character, amount, or legal status of a debt;
Communicating with third parties for purposes other than acquiring
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location information about a consumer, without having obtained
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directly the prior consent of the consumer or the express permission of
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a court of competent jurisdiction, and when not reasonably necessary
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to effectuate a postjudgment judicial remedy;
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C.
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identity;
D.
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collector attempting to collect a debt and that any information
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obtained will be used for that purpose;
E.
F.
Using any false representation or deceptive means to collect or
attempt to collect a debt, or to obtain information concerning a
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consumer;
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Threatening to take action that is not lawful or that any Defendant or
any other person does not intend to take;
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Failing to disclose or disclose adequately in the initial communication
with a consumer that any Defendant or any other person is a debt
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Placing telephone calls without meaningfully disclosing the caller’s
G.
Failing to provide consumers, within five days after the initial
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communication with a consumer, a written notice containing: (1) the
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amount of the debt; (2) the name of the creditor to whom the debt is
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owed; (3) a statement that unless the consumer, within thirty days
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after receipt of the notice, disputes the validity of the debt, or any
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portion thereof, the debt will be assumed to be valid by the Stipulating
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Defendants; (4) a statement that if the consumer notifies the
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Stipulating Defendants in writing within the thirty-day period that the
Page 6 of 30
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debt, or any portion thereof, is disputed, the Stipulating Defendants
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will obtain verification of the debt or a copy of a judgment against the
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consumer and a copy of such verification or judgment will be mailed
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to the consumer by the Stipulating Defendants; and (5) a statement
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that, upon the consumer’s written request within the thirty-day period,
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the Stipulating Defendants will provide the consumer with the name
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and address of the original creditor, if different from the current
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creditor; and
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H.
Engaging in conduct the natural consequence of which is to harass,
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oppress, or abuse a person, including but not limited to: (1) using or
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threatening to use violence or other criminal means to harm the
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physical person, reputation, or property of any person; (2) using
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obscene or profane language or language the natural consequence of
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which is to abuse the hearer; or (3) causing a telephone to ring or
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engaging a person in telephone conversation repeatedly or
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continuously with the intent to annoy, abuse, or harass any person at
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the called number.
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ASSET FREEZE
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II.
IT IS FURTHER ORDERED that:
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A.
Except as set forth in Section II.B-D of this Order, the Stipulating
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Defendants are hereby restrained and enjoined from directly or indirectly:
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1.
Transferring, liquidating, converting, encumbering, pledging, loaning,
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selling, concealing, dissipating, disbursing, assigning, spending,
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withdrawing, granting a lien or security interest or other interest in, or
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otherwise disposing of any funds, real or personal property, accounts,
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contracts, consumer lists, or any other assets, or any interest therein,
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wherever located, including outside the United States, that are:
Page 7 of 30
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(1) owned or controlled, directly or indirectly, by any Defendant(s),
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in whole or in part, or held, in whole or in part, for the benefit of any
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Defendant(s); (2) in the actual or constructive possession of any
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Defendant(s); or (3) owned, controlled by, or in the actual or
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constructive possession of any corporation, partnership, or other entity
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directly or indirectly owned, managed, or controlled by, or under
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common control with any Defendant(s), including but not limited to,
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any assets of the Receivership Entities and the Related Entities, and
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any assets held by, for, or under the name of any Defendant(s) at any
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bank, savings and loan institution, or bank of any Defendant(s), or
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with any broker-dealer, escrow agent, title company, commodity
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trading company, precious metal dealer, or other financial institution
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or depository of any kind;
2.
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name of any Defendant(s), or subject to access by any Defendant(s);
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3.
Defendant(s);
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4.
5.
Cashing any checks from consumers, clients, or customers of any
Defendant(s).
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Incurring liens or encumbrances on real property, personal property or
other assets in the name, singly or jointly, of any Defendant(s); and
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Incurring charges or cash advances on any credit card, debit card, or
checking card issued in the name, singly or jointly, of any
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Opening or causing to be opened any safe deposit boxes titled in the
6.
The funds, property, and assets affected by this Order shall include:
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(a) all assets of each Stipulating Defendant as of the time this Order is
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entered, and (b) those assets obtained after entry of this Order that are
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obtained from any debt collection activities that predate the entry of
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this Order.
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B.
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number xxxx5118 in the name of Thai Han and Sarah Han to account number
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xxxx5264 in the name of Crown Funding Company, LLC. Bank of America
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shall transfer the amount of $10,490.84 from account number xxxx0485 in
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the name of Jim Tran Phelps to account number xxxx5264 in the name of
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Crown Funding Company, LLC. Bank of America shall transfer the amount
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of $8,625.16 from account number xxxx7232 in the name of AFK Solutions,
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LLC to account number xxxx5264 in the name of Crown Funding Company,
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LLC. Thereafter, the asset freeze provisions of this Order shall not apply to
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Bank of America account number xxxx5118 in the name of Thai Han and
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Sarah Han, Bank of America account number xxxx0485 in the name of Jim
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Bank of America shall transfer the amount of $3,102.85 from account
Tran Phelps, Bank of America account number xxxx7232 in the name of
AFK Solutions, LLC, Citibank account number xxxx8587 in the name of
Keith Hua, and Citibank account number xxxx9869 in the name of Keith Hua
and Samantha Hua.
C.
The Stipulating Individual Defendants may retain and spend income
received from employment performed after the date of entry of this Order,
provided, however, that they shall first deposit such income into one of the
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accounts identified in sub-section B above. In particular, defendant Hua shall
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be permitted to continue the operation and accounts of KPT Enterprises, a
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retail electronic cigarette business located in Rosemead, California.
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D.
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acquired by loan or gift after the date of entry of this Order only after
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identifying such assets to FTC counsel. This notice provision does not apply
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to loans or gifts valued at less than $500.
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E.
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future motions or stipulations with the Court for releases of additional funds
Stipulating Individual Defendants may retain and spend assets
Nothing herein shall preclude the Stipulating Defendants from filing
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for the payment of reasonable and necessary living expenses or attorney’s
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fees. Nothing herein shall preclude the FTC or the Receiver from filing
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objections to any such future motion for release of funds.
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RETENTION OF ASSETS AND RECORDS BY FINANCIAL
INSTITUTIONS AND OTHER THIRD PARTIES
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III.
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depository, escrow agent, title company, commodity trading company, trust, entity,
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or person that holds, controls, or maintains custody of any account or asset owned
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or controlled, directly or indirectly, by any Stipulating Defendant or Related
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Entity, or has held, controlled, or maintained any account or asset of, or on behalf
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of, any Stipulating Defendant, Receivership Entity, or Related Entity, upon service
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IT IS FURTHER ORDERED that any financial or brokerage institution or
with a copy of this Order, shall:
A.
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Hold and retain within its control and prohibit any Stipulating
Defendant from withdrawing, removing, assigning, transferring,
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pledging, encumbering, disbursing, dissipating, converting, selling,
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gifting, or otherwise disposing of any of the assets, funds, or other
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property held by or on behalf of any Stipulating Defendant in any
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account maintained in the name of or for the benefit of any Stipulating
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Defendant, in whole or in part, except for those identified in
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Sections II.B of this Order or as directed by further order of the Court
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or as directed in writing by the Receiver regarding accounts,
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documents, or assets held in the name of or benefit of any
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Receivership Entity.
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B.
Deny the Stipulating Defendants access to any safe deposit box titled
in the name of any Stipulating Defendant(s), individually or jointly, or
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subject to access by any Stipulating Defendant(s), whether directly or
2
indirectly.
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C.
Provide counsel for Plaintiff and the Receiver, within three (3)
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business days after being served with a copy of this Order, a certified
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statement setting forth:
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1.
the identification number of each such account or asset
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(1) titled in the name, individually or jointly, of any Stipulating
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Defendant(s); (2) held on behalf of, or for the benefit of, any
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Stipulating Defendant(s); (3) owned or controlled by any
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Stipulating Defendant(s); or (4) otherwise subject to access by
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any Stipulating Defendant(s), directly or indirectly;
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2.
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and value of such asset as of the close of business on the day on
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which this Order is served, and, if the account or other asset has
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been closed or removed, the date closed or removed, the total
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funds removed in order to close the account, and the name of
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the person or entity to whom such account or other asset was
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remitted;
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the balance of each such account, or a description of the nature
3.
the identification of any safe deposit box that is either titled in
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the name of any Stipulating Defendant(s), or is otherwise
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subject to access by any Stipulating Defendant(s); and
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4.
if an account, safe deposit box, or other asset has been closed or
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removed, the date closed or removed, the balance on such date,
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and the manner in which such account or asset was closed or
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removed.
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5.
Provide counsel for Plaintiff and the Receiver, within three (3)
business days after being served with a request, copies of all
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documents pertaining to such account or asset, including but
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not limited to originals or copies of account applications,
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account statements, signature cards, checks, drafts, deposit
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tickets, transfers to and from the accounts, all other debit and
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credit instruments or slips, currency transaction reports, 1099
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forms, and safe deposit box logs; provided that such institution
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or custodian may charge a reasonable fee.
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6.
Provided, that a financial institution does not have to provide
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the information required in this sub-section if (1) the financial
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institution has complied with the similar provision set forth in
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the TRO; and (2) the information provided has not changed.
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FINANCIAL REPORTS AND ACCOUNTING
IV.
IT IS FURTHER ORDERED that each Stipulating Defendant, within three
(3) business days of service of this Order, shall prepare and deliver to
counsel for the FTC:
A.
For the Stipulating Individual Defendants, a completed financial
statement accurate as of the date of service of this Order upon each
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such Stipulating Individual Defendant (unless otherwise agreed upon
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with FTC counsel) on the form of Attachment A to this Order
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captioned, “Form Re: Financial Statement for Individual Defendant.”
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B.
For the Stipulating Corporate Defendants, a completed financial
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statement accurate as of the date of service of this Order upon each
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such Stipulating Corporate Defendant (unless otherwise agreed upon
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with FTC counsel) in the form of Attachment B to this Order
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captioned, “Form Re: Financial Statement for Business Entity
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Defendant.”
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C.
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For each Stipulating Defendant, a completed statement, to the best of
2
such Stipulating Defendant’s knowledge, verified under oath, of all
3
payments, transfers or assignments of funds, assets, or property worth
4
$1,000 or more since January 1, 2009. Such statement shall include:
5
(a) the amount transferred or assigned; (b) the name of each transferee
6
or assignee; (c) the date of the transfer or assignment; and (d) the type
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and amount of consideration paid the Stipulating Defendant. Each
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statement shall specify the name and address of each financial
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institution and brokerage firm at which the Stipulating Defendant has
10
accounts or safe deposit boxes. Said statements shall include assets
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held in foreign as well as domestic accounts.
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D.
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financial reports or statement if (1) they have complied with the
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similar provision set forth in the TRO; and (2) the information
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provided has not changed.
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CONSUMER CREDIT REPORTS
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Provided, that the Stipulating Defendants do not have to provide such
V.
IT IS FURTHER ORDERED that Plaintiff may obtain credit reports
concerning any Stipulating Defendant pursuant to Section 604(a)(1) of the
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Fair Credit Reporting Act, 15 U.S.C. § 1681b(a)(1), and that, upon written
21
request, any credit reporting agency from which such reports are requested
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shall provide them to Plaintiff.
REPATRIATION OF FOREIGN ASSETS
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VI.
IT IS FURTHER ORDERED that, within five (5) business days following
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the service of this Order, each Stipulating Defendant shall:
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A.
Provide counsel for the FTC with a full accounting of all assets,
27
accounts, funds, and documents outside of the territory of the United
28
States that are held either: (1) by them; (2) for their benefit; (3) in
Page 13 of 30
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trust by or for them, individually or jointly; or (4) under their direct or
2
indirect control, individually or jointly;
3
B.
Take all reasonable steps to transfer to the territory of the United
4
States all assets, accounts, funds, and documents in foreign countries
5
held either: (1) by them; (2) for their benefit; (3) in trust by or for
6
them, individually or jointly; or (4) under their direct or indirect
7
control, individually or jointly;
8
C.
Hold and retain all repatriated assets, accounts, funds, and documents,
9
and prevent any transfer, disposition, or dissipation whatsoever of any
10
such assets, accounts, funds, or documents; and
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D.
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Stipulating Defendants held by financial institutions located outside
13
the territorial United States by signing the Consent to Release of
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Provide the FTC access to all records of accounts or assets of the
Financial Records attached to this Order as Attachment C.
E.
Provided, that the Stipulating Defendants do not have to provide such
financial reports if (1) they have complied with the similar provision
set forth in the TRO; and (2) the information provided has not
changed.
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NON-INTERFERENCE WITH REPATRIATION
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VII. IT IS FURTHER ORDERED that the Stipulating Defendants, and each of
22
their successors, assigns, members, officers, agents, servants, employees,
23
and attorneys, and those persons in active concert or participation with them
24
who receive actual notice of this Order by personal service or otherwise,
25
whether acting directly or through any entity, corporation, subsidiary,
26
division, affiliate or other device, are hereby restrained and enjoined from
27
taking any action, directly or indirectly, which may result in the
28
encumbrance or dissipation of foreign assets, or in the hindrance of the
Page 14 of 30
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repatriation required by Section VI of this Order, including but not limited
2
to:
3
A.
Sending any statement, letter, fax, e-mail or wire transmission,
4
telephoning or engaging in any other act, directly or indirectly, that
5
results in a determination by a foreign trustee or other entity that a
6
“duress” event has occurred under the terms of a foreign trust
7
agreement, until such time that all assets have been fully repatriated
8
pursuant to Section VI of this Order; and
9
B.
Notifying any trustee, protector or other agent of any foreign trust or
10
other related entities of either the existence of this Order, or of the fact
11
that repatriation is required pursuant to a Court Order, until such time
12
that all assets have been fully repatriated pursuant to Section VI.
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CONTINUATION OF RECEIVERSHIP
VIII. IT IS FURTHER ORDERED that Thomas W. McNamara shall continue
15
to serve as Receiver for the business activities of the Receivership Entities,
16
with the full power of an equity receiver. The Receiver shall be the agent of
17
this Court and solely the agent of this Court in acting as Receiver under this
18
Order. The Receiver shall be accountable directly to this Court. The
19
20
Receiver shall comply with any laws and Local Rules of this Court
21
governing receivers, including but not limited to Local Rules 66-1 through
22
66-5.1 and Local Rule 66-8.
DUTIES OF RECEIVER
23
24
IX.
IT IS FURTHER ORDERED that the Receiver is directed and authorized
25
to accomplish the following:
26
A.
Assume full control of the Receivership Entities by removing, as the
27
Receiver deems necessary or advisable, any director, officer,
28
independent contractor, employee, or agent of any of the Receivership
Page 15 of 30
1
Entities, including any named Defendant, from control of,
2
management of, or participation in, the affairs of the Receivership
3
Entities;
4
B.
Take exclusive custody, control, and possession of all assets,
5
documents, and electronically stored information of, or in the
6
possession, custody, or under the control of, the Receivership Entities,
7
wherever situated. The Receiver shall have full power to divert mail
8
and to sue for, collect, receive, take in possession, hold, and manage
9
all assets and documents of the Receivership Entities and other
10
persons or entities whose interests are now held by or under the
11
direction, possession, custody, or control of the Receivership Entities.
12
Provided, however, that the Receiver shall not attempt to collect or
13
receive any amount from a consumer if the Receiver believes the
14
consumer was a victim of the unlawful conduct alleged in the
15
complaint in this matter;
16
17
18
19
C.
Take all steps necessary to secure the business premises of the
Receivership Entities. Such steps may include, but are not limited to,
the following, as the Receiver deems necessary or advisable:
20
1.
serving and filing this Order;
21
2.
completing a written inventory of all Receivership assets;
22
3.
obtaining pertinent information from all employees and other
23
agents of the Receivership Entities, including, but not limited
24
to, the name, home address, social security number, job
25
description, method of compensation, and all accrued and
26
unpaid commissions and compensation of each such employee
27
or agent, and all computer hardware and software passwords;
28
4.
videotaping all portions of the location;
Page 16 of 30
5.
1
securing the location by changing the locks and disconnecting
2
any computer modems or other means of access to the
3
computer or other records maintained at that location;
6.
4
requiring any persons present on the premises at the time this
5
Order is served to leave the premises, to provide the Receiver
6
with proof of identification, or to demonstrate to the satisfaction
7
of the Receiver that such persons are not removing from the
8
premises documents or assets of the Receivership Entities; and
9
7.
requiring all employees, independent contractors, and
10
consultants of the Receivership Entities to complete a
11
questionnaire submitted by the Receiver;
12
D.
13
acts necessary or advisable to preserve the value of those assets, in
14
order to prevent any irreparable loss, damage, or injury to consumers
15
or to creditors of the Receivership Entities, including, but not limited
16
to, obtaining an accounting of the assets and preventing transfer,
17
withdrawal, or misapplication of assets;
18
19
Conserve, hold, and manage all Receivership assets, and perform all
E.
Liquidate any and all securities or commodities owned by or for the
20
benefit of the Receivership Entities that the Receiver deems to be
21
advisable or necessary;
22
F.
be advisable or necessary;
23
24
Enter into contracts and purchase insurance as the Receiver deems to
G.
Prevent the inequitable distribution of assets and determine, adjust,
25
and protect the interests of consumers and creditors who have
26
transacted business with the Receivership Entities;
27
28
H.
Manage and administer the business of the Receivership Entities until
further order of this Court by performing all incidental acts that the
Page 17 of 30
1
Receiver deems to be advisable or necessary, which includes
2
retaining, hiring, or dismissing any employees, independent
3
contractors, or agents;
4
I.
Choose, engage, and employ attorneys, accountants, appraisers, and
5
other independent contractors and technical specialists as the Receiver
6
deems advisable or necessary in the performance of duties and
7
responsibilities under the authority granted by this Order;
8
J.
Make payments and disbursements from the Receivership estate that
9
are necessary or advisable for carrying out the directions of, or
10
exercising the authority granted by, this Order. The Receiver shall
11
apply to the Court for prior approval of any payment of any debt or
12
obligation incurred by the Receivership Entities prior to the date of
13
entry of this Order, except payments that the Receiver deems
14
necessary or advisable to secure assets of the Receivership Entities,
15
such as rental payments;
16
17
K.
Entities will comply with, and prevent violations of, this Order and all
18
other applicable laws, including, but not limited to, revising sales
19
materials and implementing monitoring procedures;
20
21
Determine and implement the manner in which the Receivership
L.
Institute, compromise, adjust, appear in, intervene in, or become party
22
to such actions or proceedings in state, federal, or foreign courts that
23
the Receiver deems necessary and advisable to preserve or recover the
24
assets of the Receivership Entities, or that the Receiver deems
25
necessary and advisable to carry out the Receiver’s mandate under
26
this Order;
27
28
M.
Defend, compromise, adjust, or otherwise dispose of any or all actions
or proceedings instituted in the past or in the future against the
Page 18 of 30
1
Receiver in his role as Receiver, or against the Receivership Entities,
2
that the Receiver deems necessary and advisable to preserve the assets
3
of the Receivership Entities or that the Receiver deems necessary and
4
advisable to carry out the Receiver’s mandate under this Order;
5
N.
Continue and conduct the business of the Receivership Entities in
6
such manner, to such extent, and for such duration as the Receiver
7
may in good faith deem to be necessary or appropriate to operate the
8
business profitably and lawfully, if at all; provided, however, that the
9
continuation and conduct of the business shall be conditioned upon
10
the Receiver’s good faith determination that the businesses can be
11
lawfully operated at a profit using the assets of the receivership estate;
12
O.
13
records pertaining to the receivership estate and compliance with this
14
Order. Subpoenas may be served by agents or attorneys of the
15
Receiver and by agents of any process server retained by the
16
Receiver;
17
18
Take depositions and issue subpoenas to obtain documents and
P.
Open one or more bank accounts in the Central or Southern District of
California as designated depositories for funds of the Receivership
19
20
Entities. The Receiver shall deposit all funds of the Receivership
21
Defendants in such a designated account and shall make all payments
22
and disbursements from the receivership estate from such account(s);
23
Q.
Receiver makes as Receiver;
24
25
26
Maintain accurate records of all receipts and expenditures that the
R.
Cooperate with reasonable requests for information or assistance from
any state or federal law enforcement agency; and
27
28
Page 19 of 30
S.
1
Be responsible for maintaining the chain of custody of all of
2
Defendants’ records in his possession, pursuant to procedures to be
3
established in writing with the approval of the FTC.
COOPERATION WITH RECEIVER
4
5
6
X.
IT IS FURTHER ORDERED that:
A.
The Stipulating Defendants, and their officers, agents, directors,
7
servants, employees, salespersons, independent contractors, attorneys,
8
corporations, subsidiaries, affiliates, successors, and assigns, all other
9
persons or entities in active concert or participation with them, who
10
receive actual notice of this Order by personal service or otherwise,
11
whether acting directly or through any trust, corporation, subsidiary,
12
13
14
15
16
division, or other device, or any of them, shall fully cooperate with
and assist the Receiver. The Stipulating Defendants’ cooperation and
assistance shall include, but not be limited to:
1.
deems necessary to exercising the authority and discharging the
17
responsibilities of the Receiver under this Order, including but
18
not limited to allowing the Receiver to inspect documents and
19
assets and to partition office space;
20
21
Providing any information to the Receiver that the Receiver
2.
Providing any password and executing any documents required
22
to access any computer or electronic files in any medium,
23
including but not limited to electronically stored information
24
stored, hosted or otherwise maintained by an electronic data
25
host; and
26
27
3.
Advising all persons who owe money to the Receivership
Entities that all debts should be paid directly to the Receiver.
28
Page 20 of 30
1
B.
The Stipulating Defendants and their officers, directors, agents,
2
servants, employees, attorneys, successors, assigns, and all other
3
persons or entities directly or indirectly, in whole or in part, under
4
their control, and all other persons in active concert or participation
5
with them who receive actual notice of this Order by personal service
6
or otherwise, are hereby restrained and enjoined from directly or
7
indirectly:
8
1.
Transacting any of the business of the Receivership Entities;
9
2.
Destroying, secreting, erasing, mutilating, defacing, concealing,
10
altering, transferring or otherwise disposing of, in any manner,
11
directly or indirectly, any documents, electronically stored
12
13
14
15
16
17
18
19
information, or equipment of the Receivership Entities,
including but not limited to contracts, agreements, consumer
files, consumer lists, consumer addresses and telephone
numbers, correspondence, advertisements, brochures, sales
material, sales presentations, documents evidencing or referring
to Defendants’ services, debt collection training materials, debt
collection scripts, data, computer tapes, disks, or other
20
computerized records, books, written or printed records,
21
handwritten notes, telephone logs, “verification” or
22
“compliance” tapes or other audio or video tape recordings,
23
receipt books, invoices, postal receipts, ledgers, personal and
24
business canceled checks and check registers, bank statements,
25
appointment books, copies of federal, state or local business or
26
personal income or property tax returns, photographs, mobile
27
devices, electronic storage media, accessories, and any other
28
documents, records or equipment of any kind that relate to the
Page 21 of 30
1
business practices or business or personal finances of the
2
Receivership Entities or any other entity directly or indirectly
3
under the control of the Stipulating Defendants;
4
3.
Transferring, receiving, altering, selling, encumbering,
5
pledging, assigning, liquidating, or otherwise disposing of any
6
assets owned, controlled, or in the possession or custody of, or
7
in which an interest is held or claimed by, the Receivership
8
Entities, or the Receiver;
9
4.
Excusing debts owed to the Receivership Entities;
10
5.
Failing to notify the Receiver of any asset, including accounts,
11
of a Stipulating Receivership Defendant held in any name other
12
than the name of the Stipulating Receivership Defendant, or by
13
any person or entity other than the Stipulating Receivership
14
Defendant, or failing to provide any assistance or information
15
requested by the Receiver in connection with obtaining
16
possession, custody, or control of such assets;
17
18
6.
Failing to create and maintain books, records, and accounts
which, in reasonable detail, accurately, fairly, and completely
19
20
reflect the incomes, assets, disbursements, transactions and use
21
of monies by the Stipulating Defendants or any other entity
22
directly or indirectly under the control of the Stipulating
23
Defendants;
24
7.
Doing any act or refraining from any act whatsoever to interfere
25
with the Receiver’s taking custody, control, possession, or
26
managing of the assets or documents subject to this
27
Receivership; or to harass or to interfere with the Receiver in
28
any way; or to interfere in any manner with the exclusive
Page 22 of 30
1
jurisdiction of this Court over the assets or documents of the
2
Receivership Entities; or to refuse to cooperate with the
3
Receiver or the Receiver’s duly authorized agents in the
4
exercise of their duties or authority under any Order of this
5
Court;
6
8.
Filing, or causing to be filed, any petition on behalf of the
7
Receivership Entities for relief under the United States
8
Bankruptcy Code, 11 U.S.C. § 101 et seq., without prior
9
permission from this Court; and
10
11
12
13
14
15
16
17
18
19
9.
Creating, operating, exercising any control over, becoming
employed by or affiliated with, or performing any work for any
business entity, including but not limited to any partnership,
limited partnership, joint venture, sole proprietorship, or
corporation without first providing the FTC with a sworn
written statement at least seven (7) calendar days prior to such
creation, operation, exercise, employment, affiliation, or
performance of work disclosing:
a.
entity;
20
21
The name, address and telephone number of the business
b.
To the extent reasonably practicable, the names of the
22
business entity’s officers, directors, principals, managers,
23
and employees; and
24
c.
A detailed description of the business entity’s intended
25
activities and the nature of the duties or responsibilities
26
of the Receivership Entities.
27
28
Page 23 of 30
1
DELIVERY OF RECEIVERSHIP PROPERTY
2
3
4
XI.
IT IS FURTHER ORDERED that:
A.
Immediately upon service of this Order upon them or upon obtaining
5
actual knowledge of this Order, or within a period permitted by the
6
Receiver, the Stipulating Defendants or any other person or entity,
7
including but not limited to financial institutions and electronic data
8
hosts, shall transfer or deliver access to, possession, custody, and
9
control of the following to the Receiver:
10
1.
All assets of the Receivership Entities;
11
2.
All documents and electronically stored information of the
12
Receivership Entities, including, but not limited to, books and
13
records of accounts, all financial and accounting records,
14
balance sheets, income statements, bank records (including
15
monthly statements, canceled checks, records of wire transfers,
16
records of ACH transactions, and check registers), client or
17
customer lists, title documents and other papers;
18
19
3.
Receivership Entities;
20
21
All assets belonging to members of the public now held by the
4.
All keys, computer and other passwords, entry codes,
22
combinations to locks required to open or gain or secure access
23
to any assets or documents of the Receivership Entities,
24
wherever located, including, but not limited to, access to their
25
business premises, means of communication, accounts,
26
computer systems, or other property; and
27
28
5.
Information identifying the accounts, employees, properties, or
other assets or obligations of the Receivership Entities.
Page 24 of 30
1
B.
In the event any person or entity fails to deliver or transfer
2
immediately any asset or otherwise fails to comply with any provision
3
of this Section XI, the Receiver may file ex parte with the Court an
4
Affidavit of Non-Compliance regarding the failure. Upon filing of the
5
affidavit, the Court may authorize, without additional process or
6
demand, Writs of Possession or Sequestration or other equitable writs
7
requested by the Receiver. The writs shall authorize and direct the
8
United States Marshal or any sheriff or deputy sheriff of any county
9
(pursuant to Fed. R. Civ. P. 4(c)(1)) to seize the asset, document, or
10
other thing and to deliver it to the Receiver.
11
12
13
14
15
16
17
18
19
COMPENSATION FOR RECEIVER
XII. IT IS FURTHER ORDERED that the Receiver and all personnel hired by
the Receiver as herein authorized, including counsel to the Receiver and
accountants, are entitled to reasonable compensation for the performance of
duties pursuant to this Order, and for the cost of actual out-of-pocket
expenses incurred by them, from the assets now held by or in the possession
or control of, or which may be received by, the Receivership Entities. The
Receiver shall file with the Court and serve on the parties periodic requests
20
for the payment of such reasonable compensation, with the first such request
21
filed no more than sixty (60) days after the date of this Order. The Receiver
22
shall not increase the hourly rates used as the bases for such fee applications
23
without prior approval of the Court.
24
RECEIVER’S REPORTS
25
XIII. IT IS FURTHER ORDERED that the Receiver shall periodically report to
26
this Court regarding: (1) the steps taken by the Receiver to implement the
27
terms of this Order; (2) the value of all liquidated and unliquidated assets of
28
the Receivership Entities; (3) the sum of all liabilities of the Receivership
Page 25 of 30
1
Defendants; (4) the steps the Receiver intends to take in the future to: (a)
2
prevent any diminution in the value of assets of the Receivership Entities,
3
(b) pursue receivership assets from third parties, and (c) adjust the liabilities
4
of the Receivership Entities, if appropriate; (5) whether the business of the
5
Receivership Entities can be operated lawfully and profitably; and (6) any
6
other matters which the Receiver believes should be brought to the Court’s
7
attention. Provided, however, if any of the required information would
8
hinder the Receiver’s ability to pursue receivership assets, the portions of the
9
Receiver’s report containing such information may be filed under seal and
10
not served on the parties.
11
12
13
14
15
16
17
18
19
RECEIVER’S BOND
XIV. IT IS FURTHER ORDERED that the bond in the sum of $5,000
previously filed by the Receiver with the Clerk of this Court shall remain in
effect, conditioned that the Receiver will well and truly perform the duties of
the office and abide by and perform all acts the Court directs.
PROHIBITION ON RELEASE OF CONSUMER INFORMATION
XV. IT IS FURTHER ORDERED that, except as required by a law
enforcement agency, law, regulation or court order, the Stipulating
20
Defendants, and their officers, agents, servants, employees, and attorneys,
21
and all other persons in active concert or participation with any of them who
22
receive actual notice of this Order by personal service or otherwise, are
23
restrained and enjoined from disclosing, using, or benefitting from consumer
24
information, including the name, address, telephone number, email address,
25
social security number, other identifying information, or any data that
26
enables access to a consumer’s account (including a credit card, bank
27
account, or other financial account), of any person which any Stipulating
28
Page 26 of 30
1
Defendant obtained prior to entry of this Order in connection with any debt
2
collection service.
STAY OF ACTIONS
3
4
5
XVI. IT IS FURTHER ORDERED that:
A.
Except by leave of this Court, during pendency of the Receivership
6
ordered herein, the Stipulating Defendants and all other persons and
7
entities be and hereby are stayed from taking any action to establish or
8
enforce any claim, right, or interest for, against, on behalf of, in, or in
9
the name of, the Receivership Entities, any of their subsidiaries,
10
affiliates, partnerships, assets, documents, or the Receiver or the
11
Receiver’s duly authorized agents acting in their capacities as such,
12
13
including, but not limited to, the following actions:
1.
14
any suit or proceeding, except that such actions may be filed to
15
toll any applicable statute of limitations;
16
17
Commencing, prosecuting, continuing, entering, or enforcing
2.
Accelerating the due date of any obligation or claimed
obligation; filing or enforcing any lien; taking or attempting to
18
take possession, custody, or control of any asset; attempting to
19
20
foreclose, forfeit, alter, or terminate any interest in any asset,
21
whether such acts are part of a judicial proceeding, are acts of
22
self-help, or otherwise;
23
3.
Executing, issuing, serving, or causing the execution, issuance
24
or service of, any legal process, including, but not limited to,
25
attachments, garnishments, subpoenas, writs of replevin, writs
26
of execution, or any other form of process whether specified in
27
this Order or not; or
28
4.
Doing any act or thing whatsoever to interfere with the
Page 27 of 30
1
Receiver taking custody, control, possession, or management of
2
the assets or documents subject to this Receivership, or to
3
harass or interfere with the Receiver in any way, or to interfere
4
in any manner with the exclusive jurisdiction of this Court over
5
the assets or documents of the Receivership Entities;
6
B.
7
This Section XVI does not stay:
1.
8
The commencement or continuation of a criminal action or
proceeding;
9
2.
The commencement or continuation of an action or proceeding
10
by a governmental unit to enforce such governmental unit’s
11
police or regulatory power;
12
3.
13
obtained in an action or proceeding by a governmental unit to
14
enforce such governmental unit’s police or regulatory power; or
15
4.
16
19
The issuance to a Stipulating Receivership Defendant of a
notice of tax deficiency; and
17
18
The enforcement of a judgment, other than a money judgment,
C.
Except as otherwise provided in this Order, all persons and entities in
need of documentation from the Receiver shall in all instances first
20
attempt to secure such information by submitting a formal written
21
request to the Receiver, and, if such request has not been responded to
22
within thirty (30) days of receipt by the Receiver, any such person or
23
entity may thereafter seek an Order of this Court with regard to the
24
relief requested.
25
26
SERVICE OF THIS ORDER
XVII. IT IS FURTHER ORDERED that copies of this Order may be served by
27
facsimile transmission, personal or overnight delivery, or U.S. Express Mail,
28
by agents and employees of the FTC or any state or federal law enforcement
Page 28 of 30
1
agency or by private process server, on the Stipulating Defendants or any
2
other persons or entities that may be subject to any provision of this Order.
DISTRIBUTION OF ORDER BY DEFENDANTS
3
4
XVIII.
IT IS FURTHER ORDERED that within three (3) calendar days
5
after service of this Order, the Stipulating Defendants shall provide a copy of
6
this Order to each of their agents, employees, directors, officers,
7
subsidiaries, affiliates, attorneys, independent contractors, representatives,
8
franchisees, and all persons in active concert or participation with the
9
Stipulating Defendants. Within five (5) calendar days following this Order,
10
the Stipulating Defendants shall provide the FTC with an affidavit
11
identifying the names, titles, addresses, and telephone numbers of the
12
13
14
15
16
17
18
19
persons that the Stipulating Defendants have served with a copy of this
Order in compliance with this provision.
CORRESPONDENCE WITH PLAINTIFF
XIX. IT IS FURTHER ORDERED that, for the purposes of this Order, because
mail addressed to the FTC is subject to delay due to heightened security
screening, all correspondence and service of pleadings on Plaintiff shall be
sent either via electronic transmission or via Federal Express to: Gregory A.
20
Ashe, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Room
21
NJ-3158, Washington, DC 20580. Email: gashe@ftc.gov; Telephone: (202)
22
326-3719; Facsimile: (202) 326-3768.
23
24
25
26
27
28
Page 29 of 30
JURISDICTION
1
2
3
XX.
IT IS FURTHER ORDERED that this Court shall retain jurisdiction of
this matter for all purposes.
4
5
6
IT IS SO ORDERED, this 19th day of August 2013.
7
8
9
______________________________
DALE S. FISCHER
UNITED STATES DISTRICT JUDGE
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Page 30 of 30
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