Federal Trade Commission v. Ivy Capital, Inc. et al, No. 2:2011cv00283 - Document 409 (D. Nev. 2013)

Court Description: FINAL JUDGMENT in favor of Federal Trade Commission against Benjamin E. Hoskins and Dream Financial, jointly and severally with all other defendants in this case that have already settled with the FTC, in the amount of $130,375,057.52 plus prej udgment interest in the amount of $3,589,426.92; against Oxford Financial, LLC in the amount of $1,529,292.25 plus prejudgment interest in the amount of $9,254.48; and against Leanne Hoskins in the amount of $1,128,795.78 plus pre judgment interest in the amount of $6,830.89; and against Mowab, Inc. in the amount of $203,118.40 plus prejudgment interest in the amount of $1,229.17. PERMANENT INJUNCTION. Signed by Judge James C. Mahan on 7/5/13. (Copies have been distributed pursuant to the NEF - MMM)
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Federal Trade Commission v. Ivy Capital, Inc. et al 1 UNITED STATES DISTRICT COURT DISTRICT OF NEVADA 2 3 Doc. 409 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 11 12 Case No. 2:11-cv-00283-JCMGWF FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AND MONETARY RELIEF Plaintiff, Federal Trade Commission (the “FTC” or the “commission”) filed a complaint 13 for permanent injunction and other equitable relief, including redress to consumers and 14 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. Defendant Benjamin E. Hoskins (“Mr. Hoskins”) subsequently filed a motion for 18 summary judgment concerning his individual liability in this action (doc. no. 312). Defendant 19 Leanne Hoskins (“Ms. Hoskins”) also filed a motion for summary judgment concerning her 20 liability has a relief defendant (doc. no. 320). The FTC filed a motion for summary judgment as 21 to all allegations concerning Mr. Hoskins and defendant Dream Financial, as well as all 22 allegations concerning relief defendants Leanne Hoskins (“Ms. Hoskins”), Oxford Financial, 23 LLC (“Oxford Financial”) and Mowab, Inc. (“Mowab”) (Doc. No. 323). 24 25 BACKGROUND 1. This is an action by the commission instituted under Sections 13(b) and 19 of the 1 Dockets.Justia.com Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 2 of 20 1 FTC Act, 15 U.S.C. §§ 53(b) and 57b, and the Telemarketing Act, 15 U.S.C. §§ 2 6101-6108. The commission has authority to seek the relief contained herein; 3 2. The commission’s complaint states a claim upon which relief may be granted under 4 Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the FTC’s trade regulation rule 5 entitled the Telemarketing Sales Rule (the “TSR”), 16 C.F.R. Part 310; 6 7 8 9 10 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 Dream Financial and Mr. Hoskins (collectively, the “defendants”) as 11 alleged in the commission’s complaint are in or affecting commerce, as “commerce” 12 is defined in Section 4 of the FTC Act, 15 U.S.C. § 44; 13 6. By virtue of the court’s decision regarding the FTC’s motion for summary judgment, 14 the defendants are liable for injunctive and equitable monetary relief for violations of 15 Section 5(a) of the FTC Act and the TSR. Furthermore, relief defendants Ms. 16 Hoskins, Oxford Financial and Mowab (the “relief defendants”) are liable for 17 equitable monetary relief with respect to ill-gotten gains from violations of Section 18 5(a) of the FTC Act and the TSR. 19 7. Entry of this order is in the public interest. 20 DEFINITIONS 21 For the purpose of this order, the following definitions shall apply: 22 1. “And” and “or” shall be understood to have both conjunctive and disjunctive 23 meanings. 24 25 2 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 3 of 20 1 2. “Asset” means any legal or equitable interest in, right to, or claim to, any real, 2 personal, or intellectual property including, but not limited to, chattel, goods, 3 instruments, equipment, fixtures, general intangibles, effects, leaseholds, contracts, 4 mail or other deliveries, shares or stock, securities, inventory, checks, notes, accounts, 5 credits, receivables (as those terms are defined in the Uniform Commercial Code), 6 cash, trusts, including but not limited to asset protection trusts, and reserve funds or 7 other accounts associated with any payments processed on behalf of any defendant or 8 relief defendant, including, but not limited to, such reserve funds held by a payment 9 processor, credit card processor, or bank. 10 3. “Assisting others” includes, but is not limited to, providing any of the following 11 goods or services to another entity: (1) performing customer service functions, 12 including, but not limited to, charging consumers for products or services, or 13 receiving or responding to consumer complaints; (2) drafting or providing, or 14 arranging for the drafting or provision of, any promotional material; (3) providing 15 names of, or assisting in the generation of, potential customers; or (4) performing 16 promotional or marketing services of any kind, or recruiting affiliates; or (5) 17 processing credit and debit card payments. 18 4. “Business coaching program” means any program, plan, product, or service, 19 including, but not limited to, those related to work-at-home opportunities, that is 20 represented, expressly or by implication, to train or teach a participant or purchaser 21 how to establish a business or earn money or other consideration through a business. 22 “Business coaching” shall not include providing services other than training or 23 teaching, including, but not limited to, website design and search engine optimization. 24 25 5. “Corporate defendant” means Dream Financial and its successors, assigns, affiliates, or subsidiaries. 3 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 4 of 20 1 6. “Defendants” mean the individual defendant and the corporate defendant, individually, collectively, or in any combination. 2 3 7. “Document” is synonymous in meaning and equal in scope to the usage of the term 4 in the Federal Rules of Civil Procedure 34(a), and includes writing, drawings, graphs, 5 charts, Internet sites, Web pages, Web sites, electronic correspondence, including e- 6 mail and instant messages, photographs, audio and video recordings, contracts, 7 accounting data, advertisements (including, but not limited to, advertisements placed 8 on the World Wide Web), FTP Logs, Server Access Logs, USENET Newsgroup 9 postings, World Wide Web pages, books, written or printed records, handwritten 10 notes, telephone logs, telephone scripts, receipt books, ledgers, personal and business 11 canceled checks and check registers, bank statements, appointment books, computer 12 records, and other data compilations from which information can be obtained and 13 translated, if necessary, through detection devices into reasonably usable form. A 14 draft or non-identical copy is a separate document within the meaning of the term. 15 8. “Individual defendant” means Benjamin E. Hoskins. 16 9. “Material” means likely to affect a person’s choice of, or conduct regarding, goods 17 or services. 18 10. “Non-disparagement agreement” means any contract or agreement that purports to 19 prohibit purchasers from providing information, making statements, or otherwise 20 communicating in any way about their experiences with any business coaching 21 program or related goods and services, including but not limited to providing 22 information to state, federal or non-governmental entities, filing complaints with any 23 consumer protection entity, and engaging in discussions with other consumers 24 through online forums or any other means. 25 4 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 5 of 20 1 11. “Person” means a natural person, organization, or other legal entity, including a 2 corporation, partnership, proprietorship, association, cooperative, government or 3 governmental subdivision or agency, or any other group or combination acting as an 4 entity. 5 12. The “commission” or the “FTC” means the Federal Trade Commission. 6 13. “Relief defendants” means Leanne Hoskins, Dream Financial and Mowab, together 7 8 9 with their successors, assigns, affiliates, or subsidiaries. 14. “Representatives” means defendants’ officers, agents, servants, employees, and attorneys, and any other person or entity in active concert or participation with 10 defendants who receives actual notice of this order by personal service or otherwise. 11 15. “Telemarketing” means any plan, program or campaign (whether or not covered by 12 the TSR, 16 C.F.R. Part 310) that is conducted to induce the purchase of goods or 13 services by means of the use of one or more telephones. 14 ORDER 15 I. BAN ON MARKETING OR SALE OF BUSINESS COACHING PROGRAMS 16 17 18 19 20 21 22 23 24 25 IT IS THEREFORE ORDERED that the defendants, whether acting directly or through any entity, corporation, subsidiary, division, director, manager, member, affiliate, independent contractor, accountant, financial advisor, or other device, are hereby permanently restrained and enjoined from: A. Advertising, marketing, promoting, offering for sale, or selling any business coaching program; and B. Assisting others engaged in advertising, marketing, promoting, offering for sale, or selling any business coaching program. 5 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 6 of 20 II. PROHIBITED MISREPRESENTATIONS AND OTHER CONDUCT PROHIBITIONS 1 2 3 IT IS FURTHER ORDERED that defendants and their representatives, whether acting 4 directly or through any entity, corporation, subsidiary, division, director, manager, member, 5 affiliate, independent contractor, accountant, financial advisor, or other device, are hereby 6 permanently restrained and enjoined from: 7 A. Making, or assisting others in making, directly or by implication, any false or misleading 8 statement or representation of material fact, including, but not limited to: any false or 9 misleading statement that defendants or any other individual or entity will provide a 10 11 12 13 14 15 16 17 refund to consumers who request one within a specified time period; B. Failing to disclose or to disclose adequately to consumers material aspects of any refund policy; and C. Requiring consumers to sign a non-disparagement agreement as a condition of receiving a refund. III. PROHIBITIONS AGAINST DECEPTIVE AND ABUSIVE TELEMARKETING PRACTICES IT IS FURTHER ORDERED that, in connection with telemarketing, defendants, and 18 their representatives, whether acting directly or through any entity, corporation, subsidiary, 19 division, director, manager, member, affiliate, independent contractor, accountant, financial 20 advisor, or other device, are hereby permanently restrained and enjoined from engaging in 21 or causing or assisting other persons to engage in, violations of any provision of the TSR, 22 including, but not limited to, the following: 23 24 A. Misrepresenting, directly or by implication, in the sale of goods or services, any material aspect of the performance, efficacy, nature or essential characteristics of their products 25 6 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 7 of 20 1 and services, in violation of Section 310.3(a)(2)(iii) of the TSR, 16 C.F.R. § 2 310.3(a)(2)(iii); 3 B. Failing to disclose or to disclose adequately, in a clear and conspicuous manner, all 4 material terms and conditions of any refund policy, in violation of Section 310.3(a)(1)(iii) 5 of the TSR, 16 C.F.R. § 310.3(a)(1)(iii), including that consumers must request a refund 6 within a specified time period after purchase; 7 C. Misrepresenting, directly or by implication, material aspects of the nature and terms of 8 any refund policy in violation of Section 310.3(a)(2)(iv) of the TSR, 16 C.F.R. § 9 310.3(a)(2)(iv), including that they will provide refunds to consumers who request one 10 11 within a specified time period; D. Initiating, or causing others to initiate, outbound telephone calls to telephone numbers on 12 the National Do Not Call Registry (the “DNC Registry”) in violation of Section 13 310.4(b)(1)(iii)(B) of the TSR, 16 C.F.R. § 310.4(b)(1)(iii)(B), unless 14 1. the seller has obtained the express agreement, in writing, of such person to 15 place calls to that person. Such written agreement shall clearly evidence such 16 person’s authorization that calls made by or on behalf of a specific party may 17 be placed to that person, and shall include the telephone number to which the 18 calls may be placed and the signature of that person; or 19 2. the seller has an established business relationship with such person and that 20 person has not previously stated that he or she does not wish to receive 21 outbound telemarketing calls made by or on behalf of the defendant or any 22 other individual or entity; and 23 E. Calling numbers on the DNC Registry without paying the annual fee necessary to access 24 the list of numbers on the DNC Registry in violation of Section 310.8 of the TSR, 16 25 C.F.R. § 310.8. 7 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 8 of 20 1 IV. EQUITABLE MONETARY RELIEF 2 IT IS FURTHER ORDERED that judgment is hereby entered in favor of the 3 commission and against Benjamin Hoskins and Dream Financial, jointly and severally with all 4 other defendants in this case that have already settled with the FTC, in the amount of one 5 hundred thirty million, three hundred seventy-five thousand, fifty-seven dollars and fifty-two 6 cents ($130,375,057.52), plus prejudgment interest in the amount of three million, five hundred 7 eighty-nine thousand, four hundred twenty-six dollars and ninety-two cents ($3,589,426.92), as 8 equitable monetary relief for consumer injury. 9 IT IS FURTHER ORDERED that judgment is hereby entered in favor of the 10 commission and against relief defendant Oxford Financial in the amount of one million, five 11 hundred twenty-nine thousand, two hundred ninety-two dollars and twenty-five cents 12 ($1,529,292.25), plus prejudgment interest in the amount of nine thousand, two hundred fifty- 13 four dollars and forty-eight cents ($9,254.48), as equitable monetary relief for ill-gotten gains. 14 IT IS FURTHER ORDERED that judgment is hereby entered in favor of the 15 commission and against relief defendant Leanne Hoskins in the amount of one million, one 16 hundred twenty-eight thousand, seven hundred ninety-five dollars and seventy-eight cents 17 ($1,128,795.78), plus prejudgment interest in the amount of six thousand, eight hundred thirty 18 dollars and eighty-nine cents ($6,830.89), as equitable monetary relief for ill-gotten gains. 19 IT IS FURTHER ORDERED that judgment is hereby entered in favor of the 20 commission and against the relief defendant Mowab in the amount of two hundred three 21 thousand, one hundred eighteen dollars and forty cents ($203,118.40), plus prejudgment interest 22 in the amount of one thousand, two hundred twenty-nine dollars and seventeen cents 23 ($1,229.17), as equitable monetary relief for ill-gotten gains. 24 25 8 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 9 of 20 V. PROHIBITION ON RELEASE OF CUSTOMER INFORMATION OR CUSTOMER LISTS 1 2 3 IT IS FURTHER ORDERED that the defendants and their representatives, whether 4 acting directly or through any corporation, partnership, subsidiary, division, agent, or other 5 device, are permanently restrained and enjoined from: 6 A. Disclosing, using, or benefitting from customer information, including the name, address, 7 telephone number, e-mail address, social security number, other identifying information, 8 or any data that enables access to a customer’s account (including a credit card, bank 9 account, or other financial account), of any person that the defendants obtained prior to 10 entry of this order in connection with the advertisement, marketing, promotion, offering 11 for sale, or sale of any business coaching programs; and 12 B. Failing to dispose of such customer information in all forms in their possession, custody, 13 or control within thirty (30) days after entry of this order. Disposal shall be by means 14 that protect against unauthorized access to the customer information, such as by burning, 15 pulverizing, or shredding any papers, and by erasing or destroying any electronic media, 16 to ensure that the customer information cannot practicably be read or reconstructed. 17 Provided, however, that customer information need not be disposed of if currently under the 18 control of the commission or the court-appointed receiver. Further, such information may be 19 disclosed, to the extent requested by a government agency or required by a law, regulation, or 20 court order. 21 22 23 VI. ASSET FREEZE IT IS FURTHER ORDERED that the freeze of the defendants’ assets set forth in the 24 preliminary injunction, entered by this court on March 25, 2011, shall remain in place until 25 further order of court and shall only be lifted as is necessary to effect the turnover of the 9 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 10 of 20 1 defendants’ assets in partial satisfaction of the equitable monetary relief provisions set forth in 2 section IV of this order. 3 4 VII. APPOINTMENT OF RECEIVER TO WIND DOWN CORPORATE DEFENDANT AND LIQUIDATE ASSETS 5 IT IS FURTHER ORDERED that Robb Evans & Associates, LLC, the receiver 6 appointed by prior orders of this court, is hereby appointed receiver for the corporate defendant 7 for the purpose of taking the necessary steps to wind down the business of the corporate 8 defendant, liquidate its assets, and pay any net proceeds to the FTC to satisfy the monetary 9 judgment in this order. In carrying out these duties, the receiver shall be the agent of this court, 10 11 12 13 shall be accountable directly to this court, and is authorized and directed to: A. Take any and all steps that the receiver concludes are appropriate to wind down the corporate defendant; B. Continue to exercise full control over the corporate defendant and continue to collect, 14 marshal, and take custody, control, and possession of all the funds, property, premises, 15 accounts, documents, mail, and other assets of, or in the possession or under the control 16 of the corporate defendant, wherever situated, the income and profits therefrom, and all 17 sums of money now or hereafter due or owing to the corporate defendant, with full power 18 to collect, receive, and take possession of all goods, chattels, rights, credits, monies, 19 effects, lands, leases, books and records, limited partnership records, work papers, and 20 records of accounts, including computer-maintained information, contracts, financial 21 records, monies on hand in banks and other financial institutions, and other papers and 22 documents of other individuals, partnerships, or corporations whose interests are now 23 held by or under the direction, possession, custody, or control of the corporate defendant 24 (“receivership estate”); 25 10 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 11 of 20 1 C. Continue to have full control over the management and personnel of the corporate 2 defendant, including the authority to remove, as the receiver deems necessary or 3 advisable, any director, officer, independent contractor, employee, or agent of this 4 defendant from control of, management of, or participation in, the affairs of this 5 defendant; 6 D. Take all steps necessary or advisable, including issuing subpoenas, to locate and liquidate 7 all other assets of the corporate defendant, cancel the corporate defendant’s contracts, 8 collect on amounts owed to the corporate defendant, and take such other steps as may be 9 necessary to wind-down, terminate, and dissolve the corporate defendant efficiently; 10 E. Take all steps necessary or advisable, including issuing subpoenas, to identify the name, 11 address, telephone number, date of purchase, program or product purchased, total amount 12 paid, amount of any full or partial refund or chargeback, and payment information for 13 consumers who were charged by the corporate defendant, and provide the FTC, upon 14 request, with any customer records or other business records of the corporate defendant; 15 F. Make payments and disbursements from the receivership estate that are necessary or 16 advisable for carrying out the directions of, or exercising the authority granted by, this 17 order. The receiver shall apply to the court for prior approval of any payment of any debt 18 or obligation incurred by the corporate defendant prior to the date of entry of the 19 temporary restraining order in this action, except payments that the receiver deems 20 necessary or advisable to secure and liquidate assets of the corporate defendant, such as 21 rental payments or payment of liens; 22 G. Continue to perform all acts necessary or advisable to complete an accounting of the 23 receivership assets, and prevent unauthorized transfer, withdrawal, or misapplication of 24 assets; 25 11 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 12 of 20 1 2 H. Continue to maintain accurate records of all receipts and expenditures that the firm makes as receiver; 3 I. Enter into contracts and purchase insurance as advisable or necessary; 4 J. Continue to defend, compromise, adjust, or otherwise dispose of any or all actions or 5 proceedings instituted in the past or in the future against the receiver in the firm’s role as 6 receiver, or against the corporate defendant, as the receiver deems necessary and 7 advisable to carry out the receiver’s mandate under this order; 8 K. Continue to institute, compromise, adjust, appear in, intervene in, or become party to 9 such actions or proceedings in state, federal, or foreign courts or arbitration proceedings 10 as the receiver deems necessary and advisable to carry out the receiver’s mandate under 11 this order; 12 L. Continue to maintain bank accounts created as designated depositories for funds of the 13 corporate defendant, and make all payments and disbursements from the receivership 14 estate from such an account; 15 M. Continue to perform all incidental acts that the receiver deems to be advisable or 16 necessary, which includes retaining, hiring, or dismissing any employees, independent 17 contractors, or agents; 18 19 20 N. Continue to cooperate with reasonable requests for information or assistance from any state or federal law enforcement agency; O. Dispose of, or arrange for the disposal of, the records of the corporate defendant no later 21 than six months after the court’s approval of the receiver’s final report as to the 22 receivership estate, except that: 23 1. to the extent that such records are reasonably available, the receiver shall arrange 24 for records sufficient to ascertain the funds that an individual consumer paid to 25 12 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 13 of 20 1 the corporate defendants and any refunds provided to individual consumers, to be 2 retained for a minimum of one year from the entry of this order, and 3 2. if state or local law regulating the corporate defendant’s business requires the 4 retention of particular records for a specified period, the receiver shall arrange for 5 such records to be disposed of after the specified period has expired. 6 P. To safeguard the privacy of consumers, records containing personal financial information 7 shall be shredded, incinerated, or otherwise disposed of in a secure manner. For records 8 that must be retained, the receiver may elect to retain records in their original form or to 9 retain photographic or electronic copies; 10 11 Q. Perform all acts necessary to protect, conserve, preserve, and prevent waste or dissipation of corporate defendant’s assets until their sale; 12 R. Sell the corporate defendant’s assets without further order of the court; 13 S. Enter into agreements in connection with the reasonable and necessary performance of 14 the receiver’s duty to sell the corporate defendant’s assets, including, but not limited to, 15 the retention of assistants, agents, or other professionals to assist in the sale of the these 16 assets; and 17 18 19 20 21 22 23 24 25 T. Distribute to the commission, without further order of the court, the funds received from the sale of the corporate defendant’s assets. VIII. COMPENSATION OF RECEIVER IT IS FURTHER ORDERED that the receiver and all personnel hired by the receiver, 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, in the possession or control of, or which may be received by, the defendants. The receiver shall apply to the court for approval of specific 13 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 14 of 20 1 amounts of compensation and expenses, and must not increase the hourly rates used as the bases 2 for such fee applications without prior approval of the court. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 IX. RECEIVER’S FINAL REPORT AND DISBURSEMENT IT IS FURTHER ORDERED that: A. The receiver shall, as directed in Section VII of this order, liquidate the assets of the corporate defendant as soon as practicable. No later than sixty (60) days from the date of the entry of this order, the receiver shall file and serve on the parties a report (the “final report”) to the court that details the steps taken to dissolve the receivership estate. The final report must include an accounting of the receivership estate’s finances and total assets and a description of what other actions, if any, must be taken to wind down the corporate defendant. B. The receiver shall mail copies of the final report to all known creditors of the corporate defendant with a notice stating that any objections to paying any assets of the corporate defendant to satisfy the receiver’s costs and expenses and the monetary judgment set forth in this order must be submitted to the court and served by mail upon the receiver and the parties within thirty (30) days of the mailing of the final report. C. No later than thirty (30) days after submission of the final report, the receiver shall file an application for payment of compensation and expenses associated with his performance of his duties as receiver. D. The court will review the final report and any objections to the report and, absent a valid objection, will issue an order directing that the receiver: 1. pay the reasonable costs and expenses of administering the receivership estate, including compensation of the receiver and the receiver’s personnel authorized by 25 14 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 15 of 20 1 Section VII of this order or other orders of this court and the actual out-of-pocket 2 costs incurred by the receiver in carrying out his duties; and 3 2. pay all remaining funds to the FTC or its designated agent to reduce the monetary judgment in Section IV. 4 5 E. If subsequent actions (such as the completion of tax returns or further actions to recover 6 funds for the receivership estate) are appropriate, the receiver shall file an additional 7 report or reports (the “supplemental reports”) describing the subsequent actions and a 8 subsequent application for the payment of fees and expenses related to the subsequent 9 acts. 10 F. With court approval, the receiver may hold back funds for a specified period as a reserve 11 to cover additional fees and costs related to actions to be addressed in a supplemental 12 report. If the receiver does not make a supplemental application for fees and expenses 13 within the specified period, or if funds remain in the reserve fund after the payment of 14 fees and expenses approved by the court in response to such a supplemental application, 15 all funds in the reserve funds shall be immediately paid to the FTC or its designated 16 agent. 17 X. ORDER ACKNOWLEDGMENTS 18 19 20 21 22 23 24 25 IT IS FURTHER ORDERED that defendants and relief defendants obtain acknowledgments of receipt of this order: A. Within seven (7) days of entry of this order, each defendant and relief defendant must submit to the commission an acknowledgment of receipt of this order sworn under penalty of perjury. B. For twenty (20) years after entry of this order, individual defendant for any business for which he, individually or collectively with any other defendant named in the complaint, 15 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 16 of 20 1 is the majority owner or directly or indirectly controls, and corporate defendant, must 2 deliver a copy of this order to: (1) all principals, officers, directors, and managers and (2) 3 any business entity resulting from any change in structure as set forth in Section XI, 4 below. Delivery must occur within seven (7) days of entry of this order for current 5 personnel. To all others, delivery must occur before they assume their responsibilities. 6 C. From each individual or entity to which a defendant delivered a copy of this order, that 7 defendant must obtain, within thirty (30) days, a signed and dated acknowledgement of 8 receipt of this order. 9 XI. COMPLIANCE REPORTING 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 IT IS FURTHER ORDERED that defendants make timely submissions to the commission: A. One (1) year after entry of this order, defendants must submit a compliance report, sworn under penalty of perjury. 1. Defendants must: (a) designate at least one telephone number and an email, physical, and postal address as points of contact, which representatives of the commission may use to communicate with defendants; (b) identify all of that defendant’s businesses by all of their names, telephone numbers, and physical, postal, email, and Internet addresses; (c) describe the activities of each business, including the products and services offered, the means of advertising, marketing, and sales, and the involvement of any other defendant (which Mr. Hoskins must describe if he knows or should know due to his own involvement); (d) describe in detail whether and how that defendant is in compliance with each section of this order; and (e) provide a copy of each 25 16 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 17 of 20 1 order acknowledgment obtained pursuant to this order, unless previously 2 submitted to the commission. 3 2. Additionally, individual defendant must: (a) identify all telephone numbers 4 and all email, Internet, physical, and postal addresses, including all residences; 5 (b) identify all titles and roles in all business activities, including any business 6 for which he performs services whether as an employee or otherwise and any 7 entity in which he has any ownership interest; and (c) describe in detail his 8 involvement in each such business, including title, role, responsibilities, 9 participation, authority, control, and any ownership. 10 B. For twenty (20) years following entry of this order, defendants must submit a 11 compliance notice, sworn under penalty of perjury, within fourteen (14) days of any 12 change in the following: 13 1. Defendants must report any change in: (a) any designated point of contact; or 14 (b) the structure of the corporate defendant or any entity that individual 15 defendant has any ownership interest in or directly or indirectly controls that 16 may affect compliance obligations arising under this order, including: 17 creation, merger, sale, or dissolution of the entity or any subsidiary, parent, or 18 affiliate that engages in any acts or practices subject to this order. 19 2. Additionally, individual defendant must report any change in: (a) name 20 (including aliases or fictitious names), e-mail, Internet address, and residence; 21 (b) title or role in any business activity, including any business for which he 22 performs services whether as an employee or otherwise and any entity in 23 which he has any ownership interest, including the name, physical address, 24 and Internet address, if any, of any such business or entity. 25 17 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 18 of 20 1 C. Each defendant must submit to the commission notice of the filing of any bankruptcy 2 petition, insolvency proceeding, or any similar proceeding by or against such 3 defendant within fourteen (14) days of its filing. 4 D. Any submission to the commission required by this order to be sworn under penalty 5 of perjury must be true and accurate and comply with 18 U.S.C. § 1746, such as by 6 concluding: “I declare under penalty of perjury under the laws of the United States of 7 America that the foregoing is true and correct. Executed on:_____” and supplying 8 the date, signatory’s full name, title (if applicable), and signature. 9 E. Unless otherwise directed by a commission representative in writing, all submissions 10 to the commission pursuant to this order must be e-mailed to DEbrief@ftc.gov or sent 11 by overnight courier (not the U.S. Postal Service) to: Associate Director for 12 Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 13 Pennsylvania Avenue NW, Washington, DC 20580. The subject line must begin: 14 FTC v. Benjamin E. Hoskins, Dream Financial, Leanne Hoskins, Oxford Financial, 15 LLC, and Mowab, Inc. (X110017). 16 XII. RECORDKEEPING 17 18 19 20 21 22 23 24 IT IS FURTHER ORDERED that defendants must create certain records for twenty (20) years after entry of the order, and retain each such record for five (5) years. Specifically, for any business in which either defendant, individually or collectively with any other defendant named in the complaint, is a majority owner or directly or indirectly controls, must maintain the following records: A. Accounting records showing the revenues from all goods or services sold, all costs incurred in generating those revenues, and the resulting net profit or loss; 25 18 Case 2:11-cv-00283-JCM-GWF Document 408 Filed 06/28/13 Page 19 of 20 1 B. Personnel records showing, for each person providing services, whether as an employee 2 or otherwise, that person’s: name, addresses, and telephone numbers; job title or position; 3 dates of service; and, if applicable, the reason for termination; 4 5 6 7 8 9 C. Customer files showing the names, addresses, telephone numbers, dollar amounts paid, and the quantity and description of goods or services purchased; D. Complaints and refund requests, whether received directly or indirectly, such as through a third party, and any response; E. All records necessary to demonstrate full compliance with each provision of this order, including all submissions to the commission; and 10 F. A copy of each advertisement or other marketing material. 11 XIII. COMPLIANCE MONITORING 12 13 14 15 16 17 18 19 20 21 22 23 24 IT IS FURTHER ORDERED that, for the purpose of monitoring defendants’ compliance with this order, including the financial representations upon which part of the judgment was suspended and any failure to transfer any assets as required by this order: A. Within fourteen (14) days of receipt of a written request from a representative of the commission, each defendant must: submit additional compliance reports or other requested information, which must be sworn under penalty of perjury; appear for depositions; and produce documents, for inspection and copying. The commission is also authorized to obtain discovery, without further leave of court, using any of the procedures prescribed by Federal Rules of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 45, and 69, provided that defendants, after attempting to resolve a dispute without court action and for good cause shown, may file a motion with this court seeking an order including one or more of the protections set forth in Rule 26(c). 25 19 1 B. For matters concerning this order, the commission is authorized to communicate directly 2 with each defendant. Defendants must permit representatives of the commission to 3 interview any employee or other person affiliated with any defendant who has agreed to 4 such an interview. The person interviewed may have counsel present. 5 C. The commission may use all other lawful means, including posing, through its 6 representatives, as consumers, suppliers, or other individuals or entities, to defendants or 7 any individual or entity affiliated with defendants, without the necessity of identification 8 or prior notice. Nothing in this order limits the commission’s lawful use of compulsory 9 process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1. 10 11 12 13 XIV. RETENTION OF JURISDICTION IT IS FURTHER ORDERED that this court retains jurisdiction of this matter for purposes of construction, modification, and enforcement of this order. 14 15 IT IS SO ORDERED: 16 17 18 19 ____________________________ The Honorable James C. Mahan UNITED STATES DISTRICT JUDGE July 5, 2013 DATED: _________________________ 20 21 22 23 24 25 20