Federal Trade Commission v. AMG Services, Inc. et al - Document 296

Court Description:

ORDER Granting 293 Motion for Preliminary Injunction and Bifurcation. Signed by Judge Gloria M. Navarro on 12/27/2012. (Copies have been distributed pursuant to the NEF - AC)

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Case 2:12-cv-00536-GMN-VCF Document 293-1 Filed 12/27/12 Page 1 of 10 1 UNITED STATES DISTRICT COURT DISTRICT OF NEVADA 2 3 4 FEDERAL TRADE COMMISSION, 5 6 7 Plaintiff, v. [PROPOSED] ORDER ENTERING STIPULATED PRELIMINARY INJUNCTION AND BIFURCATION AMG Services, Inc., et al., 8 9 Case No.: 2:12-cv-536-GMN-VCF Defendants, and Park 269 LLC, et al., 10 Relief Defendants. 11 12 13 THIS MATTER comes before the Court upon the stipulation of Plaintiff Federal Trade 14 Commission (“FTC”) and Defendants AMG Services, Inc., SFS, Inc., Red Cedar Services, 15 Inc., MNE Services, Inc., Scott A. Tucker, Blaine A. Tucker, AMG Capital Management, 16 LLC, Level 5 Motorsports, LLC, LeadFlash Consulting, LLC, Black Creek Capital 17 Corporation, Broadmoor Capital Partners, LLC, Don E. Brady, Robert D. Campbell, and Troy 18 19 20 L. LittleAxe (collectively, “Defendants”) for the entry of a stipulated preliminary injunction and bifurcation. Having considered the Complaint and other filings in this action, and now being 21 22 23 advised in the premises, the Court finds that: 1. This Court has jurisdiction over the subject matter of this case, there is good cause 24 to believe that it will have jurisdiction over all parties pursuant to 28 U.S.C. §§ 1331, 1337(a) 25 and 1345, and venue in the District of Nevada is proper under 28 U.S.C. §§ 1391(b) and (c). 26 27 28 1 Case 2:12-cv-00536-GMN-VCF Document 293-1 1 2 2. Filed 12/27/12 Page 2 of 10 The FTC and Defendants agree that this Preliminary Injunction and Bifurcation Agreement is binding in form and scope pursuant to Federal Rule of Civil Procedure 65(d). 3 3. This Preliminary Injunction and Bifurcation Agreement is in the best interests of 4 5 all parties to this action and is in the public interest. 4. 6 This Preliminary Injunction and Bifurcation Agreement does not constitute, and 7 shall not be interpreted to constitute, an admission by Defendants that they have engaged in 8 violations of any law or regulation. The stipulation and entry of this Preliminary Injunction is 9 not to be construed or deemed a waiver of any claims or defenses that may be raised in this 10 action. This Stipulation is inadmissible in any court, arbitration, mediation, or other legal 11 proceeding as evidence against Defendants. 12 5. 13 14 No security is required of any agency of the United States for issuance of a preliminary injunction. Fed. R. Civ. P. 65(c). DEFINITIONS 15 16 17 For purposes of this Preliminary Injunction and Bifurcation Agreement only, the following definitions shall apply: 18 19 1. “Collection of debts” means any activity the principal purpose of which is to collect or attempt to collect, directly or indirectly, debts owed or due or asserted to be owed or 20 21 due. 22 2. “Consumer” means an actual or potential purchaser, customer, or borrower. 23 3. “Debt” means any obligation or alleged obligation of a consumer to pay money 24 arising out of a transaction in which the money, property, or services that are the subject of the 25 transaction are primarily for personal, family, or household purposes, whether or not such 26 obligation has been reduced to judgment. 27 28 2 Case 2:12-cv-00536-GMN-VCF Document 293-1 1 2 3 4. Filed 12/27/12 Page 3 of 10 “Defendants” means AMG Services, Inc., SFS, Inc., Red Cedar Services, Inc., MNE Services, Inc., Scott A. Tucker, Blaine A. Tucker, AMG Capital Management, LLC, Level 5 Motorsports, LLC, LeadFlash Consulting, LLC, Black Creek Capital Corporation, 4 5 Broadmoor Capital Partners, LLC, Don E. Brady, Robert D. Campbell, and Troy L. LittleAxe. 5. 6 “Document” is equal in scope and synonymous in meaning to the usage of the 7 term in Federal Rule of Civil Procedure 34(a), and includes writings, drawings, graphs, charts, 8 photographs, audio and video recordings, computer records, and any other data compilations 9 from which information can be obtained. A draft or non-identical copy is a separate document 10 within the meaning of the term. 11 6. “Person” means a natural person, organization, or other legal entity, including a 12 13 corporation, partnership, proprietorship, association, cooperative, or any other group or 14 combination acting as an entity. Defendants do not, by virtue of their agreement to this 15 definition, waive any defense they may raise with respect to the meaning or scope of the term 16 “person” as used in the Federal Trade Commission Act, 15 U.S.C. §§ 41, et seq. 17 / / / 18 / / / 19 / / / 20 / / / 21 / / / 22 / / / 23 / / / 24 / / / 25 / / / 26 / / / 27 / / / 28 / / / 3 Case 2:12-cv-00536-GMN-VCF Document 293-1 1 Filed 12/27/12 Page 4 of 10 STIPULATED INJUNCTION 2 I. PROHIBITED LENDING PRACTICES 3 IT IS THEREFORE ORDERED that Defendants and their successors, assigns, 4 officers, agents, servants, employees, and attorneys, and those persons or entities in active 5 concert or participation with any of them who receive actual notice of this Order by personal 6 7 service, facsimile transmission, email, or otherwise, whether acting directly or through any 8 corporation, subsidiary, division, or other device, in connection with the advertising, 9 marketing, promotion, or offering of any loan or other extension of credit to consumers, are 10 11 12 hereby preliminarily restrained and enjoined from: A. Misrepresenting, or assisting others who are misrepresenting: 1. That Defendants will automatically withdraw the full amount owed, 13 including applicable fees, from a consumer’s bank account on one 14 specific date; 15 16 2. That a consumer’s total of payments will be equal to the amount 17 18 financed plus a stated finance charge; and 3. Whether, and the extent to which, a consumer’s payment will be applied 19 20 to principal repayment, finance charges, interest, and/or other fees. B. Advertising or assisting others in advertising credit terms other than those terms 21 22 23 24 25 that actually are or will be arranged or offered by a creditor or lender. II. PROHIBITED COLLECTION PRACTICES IT IS FURTHER ORDERED that Defendants and their successors, assigns, officers, agents, servants, employees and attorneys, and those persons or entities in active concert or 26 27 participation with any of them who receive actual notice of this Order by personal service, 28 4 Case 2:12-cv-00536-GMN-VCF Document 293-1 Filed 12/27/12 Page 5 of 10 1 facsimile transmission, email, or otherwise, whether acting directly or through any corporation, 2 subsidiary, division, or other device, in connection with the collection of debts, are hereby 3 preliminarily restrained and enjoined from misrepresenting, or assisting others in 4 5 misrepresenting: 6 A. That consumers can be arrested or imprisoned for failing to pay Defendants; 7 B. That if consumers do not pay Defendants, Defendants will or can take formal legal 8 9 action against consumers, including but not limited to, filing suit; and C. Any other material fact. 10 III. 11 TRUTH IN LENDING REQUIREMENTS 12 IT IS FURTHER ORDERED that Defendants and their successors, assigns, officers, 13 agents, servants, employees, and attorneys, and those persons or entities in active concert or 14 participation with any of them who receive actual notice of this Order by personal service, 15 facsimile transmission, email, or otherwise, whether acting directly or through any corporation, 16 subsidiary, division, or other device, are hereby preliminarily restrained and enjoined from 17 18 19 failing, or assisting others who fail, to disclose in writing before extending credit the following information in a manner reflecting the terms of the legal obligation between the parties: 20 A. the finance charge; 21 B. the annual percentage rate; 22 C. the payment schedule; and 23 D. the total of payments. 24 25 IV. PROHIBITED ELECTRONIC FUND TRANSFER PRACTICES 26 IT IS FURTHER ORDERED that Defendants and their successors, assigns, officers, 27 agents, servants, employees, and attorneys, and those persons or entities in active concert or 28 5 Case 2:12-cv-00536-GMN-VCF Document 293-1 Filed 12/27/12 Page 6 of 10 1 participation with any of them who receive actual notice of this Order by personal service, 2 facsimile transmission, email, or otherwise, whether acting directly or through any corporation, 3 subsidiary, division, or other device, are hereby are prohibited from conditioning the extension 4 5 6 7 8 of credit on preauthorized electronic fund transfers. V. PROHIBITION AGAINST DISCLOSURE OF CONSUMER INFORMATION IT IS FURTHER ORDERED that Defendants and their successors, assigns, officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or 9 participation with any of them who receive actual notice of this Order by personal service, 10 11 facsimile transmission, email, or otherwise, whether acting directly or through any corporation, 12 subsidiary, division, or other device, are hereby preliminarily restrained and enjoined from 13 disclosing to any third party the name, address, telephone number, Social Security number, 14 credit card number, bank account number, email address, or other identifying information of 15 any person who applied for and/or obtained a loan from any Defendant, except as follows: 16 a) Defendants may disclose such information to a law enforcement agency or as 17 required by any law, regulation, or other court order; 18 19 b) Defendants may disclose such information to third parties for any lawful purpose 20 related to extending loans issued by Defendants, receiving or processing loan 21 payments owed to Defendants, or collecting debt owed to Defendants; 22 c) 23 24 Defendants may disclose such information for purposes of selling debt owed to Defendants; and d) Defendants may disclose such information for purposes of selling the lending 25 26 27 business (in whole or in part), provided that before any such disclosure: (i) the purchaser must first agree in writing to be bound by the terms of Articles I to IV 28 6 Case 2:12-cv-00536-GMN-VCF Document 293-1 Filed 12/27/12 Page 7 of 10 1 of this Stipulated Injunction, and (ii) Defendants must provide a copy of such 2 agreement to the FTC. 3 VI. 4 PRESERVATION OF RECORDS AND TANGIBLE THINGS 5 IT IS FURTHER ORDERED that Defendants and their successors, assigns, officers, 6 agents, servants, employees, and attorneys, and those persons or entities in active concert or 7 participation with any of them who receive actual notice of this Order by personal service, 8 facsimile transmission, email, or otherwise, whether acting directly or through any corporation, 9 subsidiary, division, or other device, are hereby enjoined from: destroying, erasing, mutilating, 10 11 concealing, altering, transferring, or otherwise disposing of, in any manner, directly or 12 indirectly, any documents or records that relate to the business practices, or business or 13 personal finances, of Defendants or any other entity directly or indirectly under the control of 14 any Defendant. 15 VII. 16 CONSUMER REPORTS 17 IT IS FURTHER ORDERED that pursuant to Section 604(1) of the Fair Credit 18 Reporting Act, 15 U.S.C. § 1681b(1), any consumer reporting agency may furnish a consumer 19 report concerning any Defendant to the FTC. 20 VIII. MONITORING COMPLIANCE WITH THIS ORDER 21 22 IT IS FURTHER ORDERED that, for purposes of monitoring compliance with this 23 Order, the FTC is authorized to use all lawful means, including, but not limited to, posing as 24 consumers and suppliers to Defendants, their employees, or any other entity managed or 25 controlled in whole or in part by any Defendant, without the necessity of identification or prior 26 notice. 27 28 7 Case 2:12-cv-00536-GMN-VCF Document 293-1 1 IX. Filed 12/27/12 Page 8 of 10 NOTICE TO EMPLOYEES AND AGENTS 2 IT IS FURTHER ORDERED that within five business days following this Order, 3 Defendants shall provide a copy of this Order to each of their employees, directors, officers, 4 subsidiaries, affiliates, agents, and attorneys to the extent those persons’ activities relate to the 5 6 extension of credit to consumers or the collection of debts. Within ten business days following 7 this Order, Defendants shall provide the FTC with an affidavit identifying the names, titles, 8 addresses, and telephone numbers of the persons and entities that Defendants have served with 9 a copy of this Order in compliance with this provision. Defendants AMG Services, Inc., SFS, 10 Inc., Red Cedar Services, Inc., MNE Services, Inc. may, at their option, distribute a term sheet 11 in addition to this Order to their employees who are not managers, directors, officers, or 12 supervisors. 13 14 X. SERVICE OF THIS ORDER 15 IT IS FURTHER ORDERED that copies of this Order may be served by facsimile 16 transmission, personal or overnight delivery, or U.S. Express Mail, by agents and employees of 17 the FTC or any state or federal law enforcement agency or by private process server, on 18 19 20 21 22 Defendants or any other person or entity that may be subject to any provision of this Order. XI. ACKNOWLEDGMENT OF RECEIPT OF ORDER BY DEFENDANTS IT IS FURTHER ORDERED that Defendants, within five business days of receipt of this Order, shall submit to counsel for the FTC a truthful sworn statement acknowledging 23 receipt of this Order. 24 25 26 27 XII. RETENTION OF JURISDICTION IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes. 28 8 Case 2:12-cv-00536-GMN-VCF Document 293-1 Filed 12/27/12 Page 9 of 10 1 BIFURCATION OF PROCEEDINGS 2 WHEREAS the parties have agreed to a bifurcation of these proceedings into a liability 3 4 phase and if necessary, a relief phase; and 5 WHEREAS pursuant to Federal Rule of Civil Procedure 42(b), bifurcation serves the 6 interests of judicial economy, avoids costly and potentially unnecessary proceedings, and does 7 not prejudice any party, 8 IT IS FURTHER ORDERED that these proceedings shall be bifurcated as follows: 9 PHASE 1: LIABILITY 10 11 12 A. The Court shall first adjudicate the merits of the following FTC claims, including discovery, motion practice, and, if necessary, a hearing related thereto: 13 1. Defendants’ alleged violations of the FTC Act (15 U.S.C. § 45(a)); 14 2. Defendants’ alleged violations of TILA (15 U.S.C. §§1601-1666j) and 15 Regulation Z (12 C.F.R § 1026); 16 3. Defendants’ alleged violations of EFTA (15 U.S.C. § 1693) and 17 Regulation E (12 C.F.R. § 1005.10(e)(1)). 18 19 B. The Court shall also adjudicate through motion practice the legal question of 20 whether, and to what extent, the FTC has authority over Indian tribes whose 21 sovereignty is asserted in this case and/or AMG Services, Inc., MNE Services, 22 Inc., Red Cedar Services, Inc., and SFS, Inc. for alleged violations of the FTC 23 Act. 24 / / / 25 / / / 26 / / / 27 / / / 28 / / / 9 Case 2:12-cv-00536-GMN-VCF Document 293-1 1 Filed 12/27/12 Page 10 of 10 PHASE 2: COMMON ENTERPRISE CLAIM, INDIVIDUAL LIABILITY, AND 2 MONETARY RELIEF 3 A. Upon a finding by this Court of liability for any of the claims listed in paragraphs 4 A(1), A(2), or A(3), the parties shall adjudicate all remaining issues, claims, and 5 6 defenses, including discovery, motion practice, and a hearing related thereto, 7 including, but not limited to: 8 1. Whether Defendants constitute a common enterprise; 9 2. Whether any individual Defendant is personally liable for corporate 10 violations of the FTC Act; and 11 3. Relief sought by the FTC from Defendants and Relief Defendants. 12 B. If the Court determines that the FTC Act does not give the FTC authority over the 13 14 Indian tribes whose sovereignty is asserted in this case, but may give the FTC 15 authority over AMG Services, Inc., MNE Services, Inc., Red Cedar Services, Inc., 16 and SFS, Inc. for alleged violations of the FTC Act, the parties may resume fact 17 discovery related to the Defendants’ defense that the FTC does not have authority 18 to bring suit against Defendants for violations of the FTC Act. 19 This Order may be modified upon motion by any party for good cause shown. 20 21 If any dispute arises between the parties as to whether discovery requests, facts, or legal issues 22 pertain to Phase 1 or Phase 2 as described above, such dispute may be submitted to the Court for 23 resolution. 24 IT IS SO ORDERED: 25 26 ________________________________ United States District Judge 27 December 27, 2012 DATED: ________________________ 28 10