-GWF Federal Trade Commission v. Ivy Capital, Inc. et al, No. 2:2011cv00283 - Document 371 (D. Nev. 2012)
Court Description: STIPULATED FINAL JUDGMENT and ORDER for MONETARY RELIEF in favor of Federal Trade Commission against Kierston Kirschbaum, Cherrytree Holdings, LLC.. Signed by Judge James C. Mahan on 12/20/12. (Copies have been distributed pursuant to the NEF - MMM)
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-GWF Federal Trade Commission v. Ivy Capital, Inc. et al UNITED STATES DISTRICT COURT DISTRICT OF NEVADA 2 3 Doc. 371 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) FEDERAL TRADE COMMISSION, Plaintiff, 4 5 v. 6 IVY CAPITAL, INC., etal., 7 8 .9 Defendants, and CHERRYTREE HOLDINGS, LLC, et al., Relief Defendants. 10 11 12 Case No. 2:11-cv-00283-JCMGWF STIPULATED FINAL JUDGMENT AND ORDER FOR MONETARY RELIEF Plaintiff, the Federal Trade Commission (the "FTC" or the "commission") filed a 13 complaint for permanent injunction and other equitable relief, including redress to consumers 14 and disgorgement of ill-gotten gains (the "complaint"), pursuant to Sections 13(b) and 19 of the 15 Federal Trade Commission Act (the "FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and the 16 Telemarketing and Consumer Fraud Abuse Prevention Act (the "Telemarketing Act"), 15 U.S.C. 17 §§ 6101-6108. The FTC and relief defendants Cherrytree Holdings, LLC ("Cherrytree") and 18 Kierston Kirschbaum ("Mrs. Kirschbaum"), by and through their counsel, hereby stipulate to the 19 entry of, and request the court to enter, tbis stipulated final judgment and order for monetary 20 relief ("order"), to resolve all matters of dispute between them in this action. 21 22 23 24 25 1 Dockets.Justia.com Case 2:11-cv-00283-JCM -GWF Document 360 Filed 12/18/12 Page 2 of 17 THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as 2 follows: FINDINGS 3 4 1. This is an action by the commission instituted under Sections 13(b) and 19 of the 5 FTC Act, 15 U.S.C. §§ 53(b) and 57b, and the Telemarketing Act, 15 U.S.C. §§ 6 6101-6108. The commission has authority to seek the relief contained herein; 7 2. The complaint states a claim upon which relief may be granted under Section 5(a) of 8 the FTC Act, 15 U.S.C. § 45(a), and the FTC's trade regulation rule entitled the 9 Telemarketing Sales Rule (the "TSR"), 16 C.F .R. Part 310; 10 11 12 13 14 3. This court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), and 1345, 15 U.S.C. §§ 45(a), 53(b), 57b, 6102(c), and 6105(b); 4. Venue is proper in this district under 28 U.S.C. § 1391(b) and (c), and 15 U.S.C. § 53(b); 5. The activities of defendants Ivy Capital, Inc., Fortune Learning System, LLC, 15 Vianet, Inc., 3 Day MBA, LLC, Global Finance Group, LLC, Virtual Profit, LLC , 16 ICI Development, LLC, Ivy Capital, LLC, Logic Solutions, LLC, Oxford Debt 17 Holdings, LLC, Revsynergy, LLC, Sell It Vizions, LLC, Kyle G. Kirschbaum, John 18 H. Harrison, and Steve E. Lyman, as alleged in the complaint are in or affecting 19 commerce, as "commerce" is defmed in Section 4 of the FTC Act, 15 U.S.C. § 44; 20 6. Relief defendants Cherrytree and Mrs. Kirschbaum.(collectively the "settling-- 21 defendants") have entered into this order freely and without coercion, and they 22 acknowledge that they have read the provisions of this order, understand them, and 23 are prepared to abide by them; 24 25 2 Case 2:11-cv-00283-JCM -GWF Document 360 Filed 12/18/12 Page 3 of 17 7. The FTC and the settling defendants, by and through their counsel, have agreed that 2 the entry of this order resolves all matters in dispute between them arising from the 3 complaint in this action up to the date of entry of this order; 4 8. This order is for settlement purposes only and does not constitute and shall not be 5 interpreted to constitute an admission by the settling defendants or a finding that the 6 law has been violated as alleged in the complaint or that the facts alleged in the 7 complaint, other than the jurisdictional facts, are true; 8 9. The settling defendants waive all rights to seek appellate review or otherwise 9 challenge or contest the validity of this order. The settling defendants further waive 10 and release any claim they may have against the FTC, its employees, representatives, 11 or agents concerning the prosecution of this action to the date of this order; 12 10. The settling defendants agree that this order does not entitle them to seek or obtain 13 attorneys' fees as a prevailing party under the Equal Access to Justice Act, 28 U.S.C. 14 § 2412, concerning the prosecution of this action to the date of this order. Each 15 settling party shall bear its own costs and attorneys' fees; and 16 11. Entry of this order is in the public interest. DEFINITIONS 17 18 For the purpose of this order, the following definitions shall apply: 19 1. "And" and "or" shall be understood to have both conjunctive and disjunctive 20 21 meanings. 2. "Asset" means any legal or equitable interest in, right to, or claim to, any real, 22 personal, or intellectual property including, but not limited to, chattel, goods, 23 instruments, equipment, fixtures, general intangibles, effects, leaseholds, contracts, 24 mail or other deliveries, shares or stock, securities, inventory, checks, notes, accounts, 25 credits, receivables (as those tenns are defined in the Unifonn Commercial Code), 3 Case 2:11-cv-00283-JCM -GWF Document 360 Filed 12/18/12 Page 4 of 17 cash, trusts, including but not limited to asset protection trusts, and reserve funds or 2 other accounts associated with any payments processed on behalf of any defendant, 3 including, but not limited to, such reserve funds held by a payment processor, credit 4 card processor, or balik. 5 3. "Commission" or "FTC" means the Federal Trade Commission. 6 4. "Corporate defendants" mean Ivy Capital, Inc., Fortune Learning System, LLC, 7 Vianet, Inc., 3 Day MBA, LLC, Global Finance Group, LLC, Virtual Profit, LLC , 8 ICI Development, LLC, Ivy Capital, LLC, Logic Solutions, LLC, Oxford Debt 9 Holdings, LLC, Revsynergy, LLC, and Sell It Vizions, LLC; and their successors, 10 11 assigns, affiliates or subsidiaries. 5. "Defendants" mean the individual defendants and the corporate defendants, 12 individually, collectively, or in any combination. The relief defendants are expressly 13 excluded from this definition. 14 6. "Document" is synonymous in meaning and equal in scope to the usage of the term 15 in the Federal Rules of Civil Procedure 34(a), and includes writing, drawings, graphs, 16 charts, Internet sites, Web pages, Web sites, electronic correspondence, including e- 17 mail and instant messages, photographs, audio and video recordings,· contracts, 18 accounting data, advertisements (including, but not limited to, advertisements placed 19 on the World Wide Web), FTP Logs, Server Access Logs, USENET Newsgroup 20 postings, World Wide Web· pages, books, written or printed records, handwrfften 21 notes, telephone logs, telephone scripts, receipt books, ledgers, personal and business 22 canceled checks and check registers, bank statements, appointment books, computer 23 records, and other data compilations from which information can be obtained and 24 translated, if necessary, through detection devices into reasonably usable form. A 25 draft or non-identical copy is a separate document within the meaning of the term. 4 Case 2:11-cv-00283-JCM -GWF Document 360 1 2 3 4 Filed 12/18/12 Page 5 of 17 7. "Individual defendants" mean Kyle G. Kirschbaum, John H. Harrison, and Steven E. Lyman. 8. "Material" means likely to affect a person's choice of, or conduct regarding, goods or services. 5 9. "Person" means a natural person, organization, or other legal entity, including a 6 corporation, partnership, proprietorship, association, cooperative, government or 7 governmental subdivision or agency, or any other group or combination acting as an 8 entity. 9 10 II 10. "Relief defendants" mean Cherrytree Holdings, LLC, S&T Time, LLC, Virtucon LLC, Kierston Kirschbaum, Melyna Harrison, and Tracy Lyman. 11. "Settling defendants" mean Cherrytree Holdings, LLC and Kierston Kirschbaum. 12 ORDER 13 I. COOPERATION PROVISION 14 IS 16 17 18 19 20 21 IT IS ORDERED that the settling defendants shall, in connection with this action or any subsequent investigations related to, or associated with, the transactions or the occurrences that are the subject of the complaint, cooperate in good faith with the FTC and any other governmental agency or entity, and appear at such places and times as the FTC or any other governmental agency or entity shall reasonably request, after written notice, for interviews, conferences, pretrial discovery, review of documents, and for such other matters as may be reasonably requested by the FTC or any other governmental agency or entity. If requested in 22 writing by the FTC or any other governmental agency or entity, the settling defendants shall 23 appear and provide truthful testimony in any trial, deposition, or other proceeding related to, or 24 25 associated with, the transactions or the occurrences that are the subject of the complaint, without the service of a subpoena upon them. 5 Case 2:11-cv-00283-JCM -GWF Document 360 Filed 12/18/12 Page 6 of 17 II. MONETARY RELIEF 2 3 4 IT IS FURTHER ORDERED that judgment is hereby entered in favor of the commission and against Mrs. Kirschbaum in the amount of six hundred eighty-one thousand, 5 eight hundred dollars ($681 ,800); 6 IIi, this judgment shall be suspended upon Mrs. Kirschbaum's completion of the requirements 7 8 9 10 hoyvever, that subject to the provisions of Section stated in subsections A, C and E of this section. Judgment is further entered in favor of the commission and against Cherrytree in amount of six hundred seventy-four thousand, six hundred seventy-eight dollars, and seventyseven cents ($674,678.77); provided, however, that subject to the provisions of Section III, this II . judgment shall be suspended upon Cherrytree's completion, by and through Kyle Kirschbaum 12 13 14 15 16 17 18 19 20 21 22 23 24 and Mrs. Kirschbaum as the owners and managing members of Cherry1ree, of the requirements stated in subsections B, C and E of this section. A. Effective upon the entry of this order, Mrs. Kirschbaum shall surrender to the FTC all control, title, dominion, and interest in the following assets: 1. All funds held by Bank of America, N.A., including the account ending in 9390, in the name of Kyle and/or Kierston Kirschbaum, individually or jointly; 2. The 2007 Cadillac Escalade [VIN Igyfk63867r118434] registered to Mrs. Kirschbaum identified in Item 21 of the individual financial by Mrs. Kirschbaum, dated March 14, 2011; and 3. The 2006 BMW 750Li [VIN wbahn83546dt60428] registered to Kyle Kirschbaum identified in Item 21 of the individual financial statement signed by Kyle Kirschbaum, dated March 11,2011. 25 6 . Case 2:11-cv-00283-JCM -GWF Document 360 Filed 12/18/12 Page 7 of 17 B. Effective upon the entry of this order, Cherrytree shall surrender to the FTC all 2 3 4 control, title, dominion, and interest in the following assets: 1. All funds held by Bank of America, N.A., including the accounts ending in 6232, 4576, and 4589, in the name of Cherrytree; 5 2. The residential property located at· 1025 Coronado Peak Avenue, Las Vegas, 6 Nevada 89183, identified in Attachment 2 to Mr. Kirschbaum's responses to 7 supplemental fmancial questions, signed by Mr. Kirschbaum, dated July 11, g 2011; 9 C. To effect the surrender of the funds identified in subsections II.A.l and II.B.l, the 10 court directs that the entities holding the funds or their successors shall, within ten II (10) business days of the date of entry of this order, remit the funds to the 12 commission by certified check(s) or other guaranteed funds payable to the FTC, 13 Financial Management Office, or by wire transfer in accordance with directions 14 provided by counsel for the commission. To the extent any identified nonparty 15 cannot comply with this subsection without the assistance of one or more of the 16 settling defendants; such party must, within three (3) business days of receiving this 17 order, notify the settling defendant(s) and counsel for the commission of its inability 18 to comply. Such notification shall specify the actions by the settling defendant(s) that 19 are necessary to comply with this order. The settling defendant(s) shall immediately 20 complete any action necessary to facilitate the identified nonparty's ability to timely 21 comply with this subsection, and the failure of the settling defendant(s) to complete 22 such action within ten (10) days shall be deemed a violation of the order and interest 23 at the rate prescribed in 28 U.S.C. § 1961(a) shall il11l11ediately begin to accrue. 24 D. In the event of default on any obligation to make payment under this order, interest, 25 computed pursuant to 28 U.S.C. § 1961(a), shall accrue from the date of default to the 7 Case 2:11-cv-00283-JCM -GWF Document 360 Filed 12/18/12 Page 8 of 17 1 date of payment. In the event such default continues for ten (10) calendar days 2 beyond the date the payment is due, the entire amount of the judgment, less any 3 amounts previously paid pursuant to this order, together with interest, shall 4 immediately become due and payable. The settling defendants shall be liable for all 5 payments required by this order and any interest on such payments. 6 E. Immediately upon entry of this order, the settling defendants shall deliver possession 7 to the receiver of the assets identified in subsections II.A.2-3 and II.B.2 (the 8 "KirschbaumlCherrytree assets"). The receiver is hereby directed to market and sell 9 the Kirschbaum/Cherrytree assets. The settling defendants shall take all steps 10 necessary to assist the receiver in the sale of the KirschbaumlCherrytreeassets and II shall not add any encumbrances on the Kirschbaum/Cherrytree assets. Any transfer 12 fees, taxes, or other payments mandated from the transferor under law shall be paid 13 from the proceeds of each sale at the time such asset is sold. 14 F. All funds paid pursuant to this order shall be deposited into a fund administered by 15 the commission or its agents to be used for equitable relief, including, but not limited 16 to, redress to consumers, and any attendant expenses for the. administration of such 17 equitable relief. In the event that direct redress to consumers is wholly or partially 18 impracticable or funds remain after the redress is completed, the commission may 19 apply any remaining funds for such other equitable relief (including consumer 20 infonnation remedies) as it detennines to be reasonably related to the defendants' 21 practices alleged in the complaint. Any funds not used for such equitable relief shall 22 be deposited to the United States Treasury as disgorgement. The settling defendants 23 shall have no right to challenge the commission's choice of remedies or the manner 0 24 distribution under this subsection. 25 8 Case 2:11-cv-00283-JCM -GWF Document 360 1 2 3 Filed 12/18/12 Page 9 of 17 G. No portion of any payment under the judgment herein shall be deemed a payment of any penalty, or punitive assessment. H. The settling defendants relinquish all control, and title to the funds paid to 4 the fullest extent permitted by law. The settling defendants shall make no claim to or 5 demand for return of the funds, directly 6 through counselor otherwise. I. The settling defendants agree that the facts as alleged in the complaint filed in this 7 action shall be taken as true without further proof in any bankruptcy case or 8 subsequent civil litigation pursued by the commission to enforce its rights to any 9 payment or money judgment pursuant to this order, including, but not limited to, a 10 nondischargeability complaint in any bankruptcy case. The settling defendants 11 further stipulate and agree that the facts alleged in the complaint establish all 12 elements necessary to sustain an action pursuant to Section S23(a)(2)(A) of the 13 Bankruptcy Code, 11 U.S.C. § S23(a)(2)(A), and this order shall have collateral 14 estoppel effect for such purposes. 15 J. In accordance with 31 U.S.C. § 7701, the settling defendants are hereby required, 16 unless they have done so already, to furnish to the commission their taxpayer 17 identifying number and social security number, which shall be used for the purposes 18 of collecting and reporting on any delinquent amount arising out of the settling 19 defendants' relationship with the government. 20 K. The settling defendants agree that they will not, wh.ether acting directly or through 21 any corporation, partnership, subsidiary, 22 any federal or state tax authority any return, amended return, or other official 23 document that takes a deduction for, or seeks a tax refund or other favorable 24 treatment for, any payment made by the settling defendants pursuant to this order. 25 9 agent, or other device, submit to Case 2:11-cv-00283-JCM -GWF Document 360 J Filed 12/18/12 Page 10 of 17 III. RIGHT TO REOPEN 2 IT IS FURTHER ORDERED that: 3 A. The commission's agreement to and the court's approval order are expressly 4 premised upon the truthfulness, accuracy, and completeness of the settling 5 defendants' financial statements dated March to, 2011, and March 14, 2011, (the 6 "financial statements"), all of which the settling defendants assert are truthful, 7 accurate, and complete.. The settling defendants and the commission stipulate that the 8 settling defendants' financial statements provide the basis for the monetary judgment 9 in Section II of this order and that the commission has relied on the truthfulness, 10 accuracy, and completeness of the settling defendants' financial statements. Il B. If, upon motion by the comniission. this court finds that the settling defendants have: 12 (1) materially misstated in their fmancial statements, the value of any asset; (2) made 13 any material misrepresentation or omitted material information concerning their 14 financial condition by failing to disclose any asset that should have been disclosed in 15 their financial statements; or (3) made any other 16 their financial statements, the court shall terminate the suspension of the monetary 17 judgment entered in Section II. The court, without further adjudication, shall enter a 18 modified judgment holding the settling defendants liable to the commission in the 19 amount of one million, three hundred fifty-six thousand, four hundred seventy-eight 20 dollars, and seventy cents ($1,356,478.70) for equitable monetary relief, less any 21 amounts turned over to the FTC pursuant to Section II of this order. Upon such 22 reinstatement of the monetary judgment, the court shall make an express 23 determination that the judgment shall become immediately due and payable by the 24 settling defendants and the commission shall be entitled to interest computed from the 25 day of entry of this order at the rate prescribed under 28 U.S.C. § 1961, as amended, 10 misstatement or omission in • Case 2:11-cv-00283-JCM -GWF Document 360 Filed 12/18/12 Page 11 of 17 on the unpaid balance. The commission shall be permitted to execute on the 2 judgment immediately after the suspension is lifted and engage in discovery in aid of 3 execution. 4 C. The settling defendants acknowledge and agree that: (1) this monetary judgment is 5 equitable monetary relief; solely remedial in nature, and not a fme, penalty, punitive 6 assessment, or forfeiture; (2) any proceedings instituted under this section would be 7 in addition to, and not in lieu of, any other civil or criminal remedies as may be 8 provided by law, including any other proceedings that the FTC may initiate to enforce· 9 this order; and (3) all money paid to satisfy the monetary judgment is irrevocably pai 10 11 for purposes of settlement between the parties. D. Should this order be modified pursuant to this section, this order, in all other respects, 12 shall remain in full force and effect unless otherwise ordered by the court. 13 IV. LIFTING OF ASSET FREEZE 14 15 16 17 18 19 IT IS FURTHER ORDERED that the freeze of settling defendants' assets setforth in the preliminary injunction, entered by this court on March 25,2011, shall be lifted to the extent necessary to tum over the settling defendants' assets as required by Section II of this order, and, shall be lifted permanently immediately upon completion of the tum-over. V. APPOINTMENT OF RECEIVER TO LIQUIDATE ASSETS 20 IT IS FURTHER ORDERED that Robb Evans & Associates, LLC, the receiver 21 appointed by prior orders of this court, is·hereby appointed receiver for the purpose of taking the 22 necessary steps to liquidate the assets of the settling defendants turned over pursuant to Section 23 II of this order, and pay any net proceeds to the FTC to satisfy the monetary judgment in this 24 order. In carrying out these duties, the receiver shall be the agent of this court, shall be 25 accountable directly to this court, and is authorized and directed to: 11 Case 2:11-cv-00283-JCM -GWF Document 360 Filed 12/18/12 Page 12 of 17 A. Perform all acts necessary to protect, conserve, preserve, and prevent waste or 2 dissipation of the KirschbaumlCherrytree assets until their sale; 3 B. Sell the KirschbaumlCherrytree assets without further order of the court; 4 C. Enter into agreements in connection with the reasonable and necessary performance 5 of the receiver's duty to sell the Kirschbaum/Cherrytree assets,including, but not 6 limited to, the retention of assistants, agents, or other professionals to assist in the sal 7 of these assets; and 8 D. Distribute to the commission, without further order ofthe court, the funds received from the sale of the Kirschbaum/Cherrytree assets. 9 10 VI. COMPENSATION OF RECEIVER 11 12 IT IS FURTHER ORDERED that the receiver and all personnel hired by the receiver, 13 including counsel to the receiver and accountants, are entitled to reasonable compensation for the 14 performance of duties pursuant to this order from the assets now held by, in the possession or 15 control of, or which may be received by, the corporate defendants. The receiver shall apply to 16 the court for approval of specific amounts of compensation and expenses and must not increase 17 the hourly rates used as the bases for such fee applications without prior approval of the court .. VII. 18 ORDER ACKNOWLEDGMENTS 19 IT IS FURTHER ORDERED that the settling defendants obtain of 20 receipt ofthis order. Within seven (7) days of entry of this order, each settling defendant must 21 submit to the commission an acknowledgment of receipt of this order sworn under penalty of 22 pelJury· 23 24 25 12 Case 2:11-cv-00283-JCM -GWF Document 360 Filed 12/18/12 Page 13 of 17 VIII. COMPLIANCE MONITORING 2 IT IS FURTHER ORDERED that, for the purpose of monitoring the settling 3 defendants' compliance with this order, including the financial representations upon which part 4 of the judgment was suspended and any failure to transfer any assets as required by this order: 5 A. Within fourteen (14) days ofreceipfofa Written request from a representative ofthe 6 commission, each settling defendant must: submit additional compliance reports or 7 other requested information, which must be sworn under penalty of perjury; appear 8 for depositions; and produce documents, for inspection and copying. The 9 commission is also authorized to obtain discovery, without further leave of court, to using any of the procedures prescribed by Federal Rules of Civil Procedure 29, 30 11 (including telephonic depositions), 31, 33, 34, 36, 45, and 69, provided that the 12 settling defendants, after attempting to resolve a dispute without court action and for 13 good cause shown, may file a motion with this court seeking an order including one 14 or more of the protections set forth in Rule 26(c). 15 B. For matters concerning this order, the commission is authorized to communicate 16 directly with each settling defendant. The settling defendants must permit 17 representatives of the commission to interview any employee or other person 18 affiliated with any settling defendant who has agreed to such an interview. The 19 person interviewed may have counsel present. 20 21 22 23 24 25 13 Case 2:11-cv-00283-JCM -GWF Document 360 Filed 12/18/12 Page 14 of 17 IX. RETENTION OF JURISDICTION 2 3 IT IS FURTHER ORDERED that this court retains jwisdiction of this matter for purposes of construction, modification, and enforcement of this order. 4 5 iT IS SO ORDERED: 6 7 8 9 10 The Honorable James C. Mahan 11 UNITED STATES DISTRICT JUDGE December ________ DATED: __ __ 20, 2012 12 13 14 15 16 17 18 19 20 21 22 23 24 25 14 Case 2:11-cv-00283-JCM -GWF Document 360 Filed 12/18/12 Page 15 of 17 Case 2:11-cv-00283-JCM -GWF Document 360 Filed 12/18/12 Page 16 of 17 FOR THE RELIEF DEFENDANTS: 2 Cherrytree Holdings, LLC 3 4 5 Kierston Kirschbaum, Managing Member 10 11 12 13 Kierston Kirschbaum 14 15 16 17 Dated: . 18 19 JEFFREY WILLIS, EsQ. 20 CHAD R. FEARS, ESQ. 21 CASEY G. PERKINS, ESQ. SNELL & WILMER L.L.P. 3883 HOWARD HUGHES PARKWAY, 22 LAS VEGAS, NEVADA 89169 23 7/2..5ho) z- Attorneys for Defendants SUITE 1100 24 25 16 Case 2:11-cv-00283-JCM -GWF Document 360 Filed 12/18/12 Page 17 of 17 Certificate of Service I hereby certify that on December 18, 2012, I electronically filed the foregoing document with the clerk of the court using CM/ECF, which will send a notice of electronic filing to all counsel of record. /s/ Shameka L. Gainey Shameka L. Gainey
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