-GWF Federal Trade Commission v. Ivy Capital, Inc. et al, No. 2:2011cv00283 - Document 373 (D. Nev. 2012)
Court Description: STIPULATED FINAL JUDGMENT and ORDER for MONETARY RELIEF in favor of Federal Trade Commission against Melyna Harrison, Virtucon, 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 FEDERAL TRADE COMMISSION, Plaintiff, 4 5 v. 6 IVY CAPITAL, INC., et al., 7 8 9 Defendants, and CHERRYTREE HOLDINGS, LLC, et al., Relief Defendants. 10 II 12 Doc. 373 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 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"), p&suant 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 Virtucon, LLC ('·Virtucon") and Melyna Harrison 18 ("Mrs. Harrison"), by and through their counsel, hereby stipulate to the entry of, and request the 19 court to enter, this stipulated final judgment and order for monetary relief ("order"), to resolve all 20 matters of dispute between them in this action. 21 22 23 24 25 Dockets.Justia.com Case 2:11-cv-00283-JCM -GWF Document 358 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. § 4S(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 pursuantto 28 U.s.C. §§ 1331, 1337(a), and 1345, 15 U,S.C. §§ 45(a), S'3(b), 57b, 6102(c), and 6105(b); 4. Venue is proper in this district under 28 § 1391(b) and (c), and 15 U.S.C. § S3(b); 5. The activities of defendants Ivy Capital, Inc., Fortune Learning System, LLC, Vianet, 15 Inc.,3 Day MBA, LLC, Global Finance Group, LLC, Virtual Profit, LLC ,rCI 16 Development, LLC, Ivy Capital, LLC, Logic Solutions, LLC, Oxford Debt Holdings, 17 LLC, Revsynergy, LLC, Sell It Vizions, LLC, Kyle O. Kirschbaum, John H. 18 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 Virtucon and Mrs. Harrison (collectively the "settling defendants")' 21 have entered into this order freely and without coercion, and they acknowledge that 22 they have read the provisions of this order, understand them, and are prepared to 23 abide by them; 24 25 2 Case 2:11-cv-00283-JCM -GWF Document 358 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 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 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, II 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 IS 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 terms are defined in the Uniform Commercial Code), 3 Case 2:11-cv-00283-JCM -GWF Document 358 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 barue 5 3. "Commission" or "FTC" meaps the_federal Trade Commission. 6 4. "Corporate defendants" means 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" means the individual defendants and the corporate defendants, 12 individually, collectively, or in any combination. The relief defendants are expressly 13 excluded from this defmitioll . 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, USENETNewsgroup 20 postings, World Wide Web pages, books, written or printed records, handwritten 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 358 7. 8. "Material" means likely to affect a person's choice of, or. conduct regarding, goods or services. 4 5 "Individual defendants" mean Kyle G. Kirschbaum, John H. Harrison, and Steven E. Lyman. 2 3 Filed 12/18/12 Page 5 of 17 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. "Relief defendants" mean Cherrytree Holdings, LLC, S&T Time, LLC, Virtucon 10 LLC, Kierston Kirschbaum, Melyna Harrison, and Tracy Lyman.. II 11. "Settling defendants" mean Virtucon, LLC and Melyna Harrison. ORDER 12 13 14 I. COOPERATIONPROVISION IT IS ORDERED that the settling defendants shall, in connection with this action or any 15 subsequent investigations related to, or associated with, the transactions or the occurrences that 16 are the subject of the complaint, cooperate in good faith with the FTC and any other 17 governmental agency or entity, and appear at such places and times as the FTC or any other 18 governmental agency or entity shall reasonably request, after written notice, for interviews, 19 conferences, pretrial discovery, review of documents, and for such other matters as may be 20 reasonably requested by the FTC or any other governmental agency or entity. If requested in 21 writing by the FTC or any other governmental agency or entity, the settling defendants shall 22 appear and provide truthful testimony in any trial, deposition, or other proceeding related to, or 23 associated with, the transactions or the occurrences that are the subject of the complaint, without 24 the service of a subpoena upon them. 25 5 Case 2:11-cv-00283-JCM -GWF Document 358 Filed 12/18/12 Page 6 of 17 II. MONETARY RELIEF 2 3 , 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 IT IS FURTHER ORDERED that judgment is hereby entered in favor of the commission and against Mrs. Harrison in the amount of eight hundred twelve thousand, three hundred one dollars, and sixty cents provided, however, that subject to the provisions of Section III, this judgment shall be suspended upon Mrs. Harrison's completion of the requirements stated in subsections A, C and E of this section. Judgment is further entered in favor of the commission and against Virtucon in the amount of one hundred thirteen thousand, eight hundred thirty-nine dollars, and eighty cents ($113,839.80); provided, however, that subject to the provisions of Section III, this judgment shall be suspended upon Virtucon's completion, by and through John Harrison and Mrs. Harrison as the owners and managing members of Virtucon, of the requirements stated in subsections B, C and E of this section. A. Effective upon the entry ofthis order, Mrs. Harrison shall surrender to the FTC all control, title, dominion, and interest in the following assets: 1. All funds held in the Credit Union 1 account ending in 8822, in the name of John Harrison and/or Mrs. Harrison, individually or jointly; 2. All funds held in the PayPal accounts ending in 700361,25279 and 69188, in the name of John Harrison or Mrs. Harrison; 3. The 2007 Infiniti 035 [YIN JNKBV61E27 rvt 720506] registered to John Harrison identified in Item 21 of the individual financial statement signed by John Harrison, dated March 10,2011; 4. The 2007 Land Rover Range Rover Sport [YIN SALSH23417A990780] registered to John Harrison identified in Item 21 of the individual financial· statement signed by John Harrison, dated March 10,2011; and 6 Case 2:11-cv-00283-JCM -GWF Document 358 1 Filed 12/18/12 Page 7 of 17 5. The 2008 Chevrolet Van [YIN IGAHG39K881116372] registered to John 2 Harrison identified in Item 21 of the individual financial statement signed by 3 John Harrison, dated March 10,2011. 4 B. Effective upon the entry of this order, Virtucon shall surrender to the FTC all control, 5 title,- dominion, and interest in all funds held by Credit Union 1, including the account 6 ending in 2308, in the name of Virtucon. 7 C. To effect the surrender of the funds identified in subsections II.A.1-2 and ILB, the 8 court directs that the entities holding the funds or their successors shall, within ten 9 (10) business days of the date of entry of thIs order, remit the funds to the 10 commission by certified check(s) or other guaranteed funds payable to the FTC, 1I Financial Management Office, or by wire transfer in accordance with directions 12 provided by counsel for the commission. To the extent any identified nonparty 13 cannot comply with this subsection without the assistance of one or more of the 14 settling defendants, such party must, within three (3) business days of receiving this 15 order, notify the settling defendant(s) and counsel for the commission of its inability 16 to comply. Such notification shall specify the actions by the settling defendant(s) that 17 are necessary to comply with this order. The settling defendant(s) shall immediately 18 complete any action necessary to facilitate the identified nonparty's ability to timely 19 comply with this subsection, and the failure of the settling defendant(s) to complete 20 such action within ten (10) days shall be deemed ayiolation of the order and interest' 21 at the rate prescribed in 28 U.S.C. § 1961(a) shall immediately begin to accrue. 22 D. In the event of default on any obligation to make payment under this order, interest, 23 computed pursuant to 28 U.S.C. § 1961(a), shall accrue from the date of default to the 24 date of payment. In the event such default continues for ten (10) calendar days 25 beyond the date the payment is due, the entire amount of the judgment, less any 7 Case 2:11-cv-00283-JCM -GWF Document 358 Filed 12/18/12 Page 8 of 17 1 amounts previously paid pursuant to this order, together with interest, shall 2 immediately become due and payable. The settling defendants shall be liable for all 3 payments required by this order and any interest on such payments. 4 E. Immediately upon entry of this order, the settling defendants shall deliver possession 5 to the receiver of the assets identified in subsections II.A.3-5 (the "HarrisoniVirtucon 6 assets"). The receiver is hereby directed to market and sell the HarrisonlVirtucon 7 assets. The settling defendants shall take all steps necessary to assist the receiver in 8 the sale of the HarrisonlVirtucon assets and shall not add any encumbrances on the 9 HarrisonIVirtucon assets. Any transfer fees, taxes, or other payments mandated from 10 the transferor under law shall be paid from the proceeds of each sale at the time such 11 asset is sold. 12 F. All funds paid pursuant to this order shall be deposited into a fund administered by 13 the commission or its agents to be used for equitable relief, including, but not limited 14 to, redress to consumers, and any attendant expenses for the administration of such 15 equitable relief. In the event that direct redress to consumers is wholly or partially 16 impracticable or funds remain after the redress is 17 apply any remaining funds for such other equitable relief (including consumer 18 information remedies) as it determines to be reasonably related to the defendants' 19 practices alleged in the complaint. Any funds not used for such equitable relief shall 20 be deposited to the United States Treasury as disgorgement. The settling defendants' 21 shall have no right to challenge the commission's choice of remedies or the manner 0 22 distribution under this subsection. 23 24 25 the commission may G. No portion of any payment under the judgment herein shall be deemed a payment of any fine, penalty, or punitive assessment. Case 2:11-cv-00283-JCM -GWF Document 358 Filed 12/18/12 Page 9 of 17 l H. The settling defendants relinquish all dominion, control, and title to the funds paid to 2 the fullest extent permitted by law. The settling defendartts shall make no claim to or 3 demand for return of the funds, directly or indirectly, through counselor otherwise. 4 I. The settling defendants agree that the facts as alleged in the complaint filed in this 5 action shall be taken as true witholit-further proof in any bankruptcy case or 6 subsequent civil litigation pursued by the commission to enforce its rights to any 7 payment or money judgment pursuant to this order, including, but not limited to, a 8 nondischargeability complaint in any bankruptcy case. The settling defendants 9 further stipulate and agree that the facts alleged in the complaint establish all 10 elements necessary to sustain an action pursuant to Section 523(a)(2)(A) of the II Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and this order shall have collateral 12 estoppel effect for such purposes. 13 J. In accordance with 31 U.S.C. § 7701, the settling defendants are hereby required, 14 unless they have done so already, to furnish to the commission their taxpayer 15 identifying number and social security number, which shall be used for the purposes 16 of collecting and reporting on any delinquent amount arising out of the settling 17 defendartts' relationship with the government. 18 K. The settling defendants agree that they will not, whether acting directly or through 19 any corporation, partnership, subsidiary, division, agent, or other device, submit to 20 any federal or state tax authority any return, amended return, or other official 21 document that takes a deduction for, or seeks a tax refund or other favorable 22 treatment for, any payment made by the settling defendants pursuant to this order. 23 24 25 9 Case 2:11-cv-00283-JCM -GWF Document 358 Filed 12/18/12 Page 10 of 17 III. RIGHT TO REOPEN J 2 IT IS FURTHER ORDERED that: 3 A. The commission's agreement to and the court's approval of this order are 4 expressly premised upon the trut1!fulness, accuracy, and completeness of the 5 settling defendants' financial statements dated March 18,2011, ("financial 6 statements"), all of which the settling defendants assert are truthful, accurate, and 7 complete. The settling defendants and the commission stipulate that the settling 8 defendants' financial statements provide the basis for the monetary judgment in 9 Section II of this order and that the commission has relied on the truthfulness, 10 II accuracy, and completeness of the settling defendants' financial statements. B. If, upon motion by the commission, this court finds that settling defendants have: 12 (1) materially misstated in their fmancial statements, the value of any asset; (2) 13 made any material misrepresentation or omitted material information concerning 14 their financial condition by failing to disclose any asset that should have been 15 disclosed in their financial statements; or (3) made any other material 16 misstatement or omission in their financial statements, the court shall terminate 17 the suspension of the monetary judgment entered in Section II. The court, 18 without further adjudication, shall enter a modified judgment holding the settling 19 defendants liable to the commission in the amount of nine hundred twenty-six 20 thousand, one hundred forty-one dollars, and forty cents ($926,141.40) for 21 equitable monetary relief, less any amounts turned over to the FTC pursuant to 22 Section II of this order. Upon such reinstatement of the monetary judgment, the 23 court shall make an express determination that the judgment shall become 24 25 be entitled to interest computed from the day of entry of this order at the rate due and payable by the settling defendants and the commission shall 10 Case 2:11-cv-00283-JCM -GWF Document 358 Filed 12/18/12 Page 11 of 17 prescribed under 28 U.S.C. § 1961, as amended, on the unpaid balance. The 2 commission shall be pennitted to execute on the judgment immediately after the 3 suspension is lifted and engage in discovery in aid of execution. 4 c. The settling defendants acknowledge and agree that: (1) this monetary judgment 5 is equitable monetary relief, solely remedial in nature, and not a fine, penalty, 6 punitive assessment, or forfeiture; (2) any proceedings instituted under this 7 section would be in addition to, and not in lieu of, any other civil or criminal 8 remedies as may be provided by law, including any other proceedings that the 9 FTC may initiate to enforce this order; and (3) all money paid to satisfY the IO monetary judgment is irrevocably paid for purposes of settlement between the II parties. 12 D. Should this order be modified pursuant to this section, this order, in all other 13 respects, shall remain in full force and effect unless otherwise ordered by the 14 court. 15 16 IV. LIFTING OF ASSET FREEZE IT IS FURTHER ORDERED that the freeze of the settling defendants' assets set forth 17 in the preliminary injunction, entered by this court on March 25, 2011, shall be lifted to the 18 extent necessary to tum over settling defendants' assets as required by Section II of this order, 19 and, shall be lifted pennanently immediately upon completion of the turn-over. 20 V. 21 APPOINTMENT OF RECEIVER TO LIQUIDATE ASSETS 22 IT IS FURTHER ORDERED that Robb Evans & Associates, LLC, the receiver 23 appointed by prior orders of this court, is hereby appointed receiver for the purpose of taking the 24 necessary steps liquidate the assets of the settling defendants turned over pursuant to Section II 25 of this order, and pay any net proceeds to the FTC to satisfY the monetary judgment in this order. 11 Case 2:11-cv-00283-JCM -GWF Document 358 Filed 12/18/12 Page 12 of 17 In carrying out these duties, the receiver shall be the agent of this court, shall be accountable 2 directly to this court, and is authorized and directed to: 3 A. Perform all acts necessary to protect, conserve, preserve, and prevent waste or dissipation of the HarrisonlVirtucon assets until their sale; 4 5 B. Sell the HarrisonlVirtuconassets without further order of the court; 6 C. Enter into agreements in connection with the reasonable and necessary performance 7 of the receiver's duty to sell the HarrisonIVirtucon assets, including, but not linrited 8 to, the retention of assistants, agents, or other professionals to assist in the sale of 9 these assets; and 10 D. Distribute to the commission, without further order of the court, the funds received 11 from the sale of the HarrisonlVirtucon assets. 12 VI. COMPENSATION OF RECEIVER 13 14 IT IS FURTHER ORDERED that the receiver and all personnel hired by the receiver, 15 including counsel to the receiver and accountants, are entitled to reasonable compensation for the 16 performance of duties pursuant to this order from the assets now held by, in the possession or 17 control of, or which may be received by, the corporate defendants. The receiver shall apply to 18 the court for approval of specific amounts of compensation and expenses and must not increase 19 the hourly rates used as the baSes for such fee applications without prior approval of the court. VII. 20 ORDER ACKNOWLEDGMENTS 21 IT IS FURTHER ORDERED that settling defendants obtain acknowledgments of 22 receipt of this order. Within seven (7) days of entry of this order, each settling defendant must 23 submit to the commission an acknowledgment of receipt of this order sworn under penalty of 24 peIjury. 25 12 Case 2:11-cv-00283-JCM -GWF Document 358 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 ofreceipf of a Written request from a representative of the 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, 10 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 ]8 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 358 Filed 12/18/12 Page 14 of 17 IX. RETENTION OF JURISDICTION 2 3 IT IS FURTHER ORDERED that this court retains jurisdiction of this matter for purposes of construction, modification, and enforcement of this order. 4 5 6 IT IS SO ORDERED: 7 8 9 10 The Honorable James C. Mahan II UNITED STATES DISTRICT JUDGE December 20, 2012 DATED: ____ 12 13 14 15 16 17 18 19 20 21 22 23 24 25 14 Case 2:11-cv-00283-JCM -GWF Document 358 Filed 12/18/12 Page 15 of 17 Case 2:11-cv-00283-JCM -GWF Document 358 1 FOR THE RELIEF DEFENDANTS: 2 Filed 12/18/12 Page 16 of 17 Virtucon, LLC 3 . Da1OO: r I .. 6 __ ·mtiiisQrt. Managing Member 9 10 11 7/242612 13 . . yna Ham n 14 15 16 17 13 til- 18 . ---:::; 19 20 22 JEFFREY WILLIS, ESQ. CHAD R. FEARS, ESQ. CASEY G. PERKINS, ESQ. SNELL & WILMER L.L.P. 3883 HOWARD HUGHES PARKWAY, SUITE 1100 LAS VEGAS, NEVADA 89169 23 Attorneys for Defendants 21 24 25 16 Case 2:11-cv-00283-JCM -GWF Document 358 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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