The opinion of the court was delivered by: Hon. David O. Carter United States District Judge
Preliminary Injunction With Asset Freeze, Appointment of Permanent Receiver and Other Equitable Relief
On February 2, 2009, Plaintiff Federal Trade Commission filed a Complaint for a permanent injunction and other equitable relief in this matter pursuant to Section 13(b) the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b). Plaintiff concurrently applied ex parte for a Temporary Restraining Order ("TRO") pursuant to Rule 65 of the Federal Rules of Civil Procedure, and for an order to show cause why a preliminary injunction should not be granted pursuant to Rule 65 of the Federal Rules of Civil Procedure, and why a permanent receiver should not be appointed. On February 2, 2009, the Court issued a TRO with asset freeze against all Defendants, including an Order to Show Cause ("OSC") why a preliminary injunction should not issue and a permanent receiver should not be appointed over corporate Defendant National Foreclosure Relief, Inc. The Court initially scheduled a hearing on the OSC for February 12, 2009. The Court subsequently rescheduled the OSC hearing for March 9, 2009. The parties having stipulated to entry of a preliminary injunction, and for good cause shown, the Court hereby enters this Preliminary Injunction With Asset Freeze, Appointment of Permanent Receiver and Other Equitable Relief:
1. This Court has jurisdiction of the subject matter of this case. There is also good cause to believe it will have jurisdiction of all parties hereto, and that venue in this district is proper.
2. There is good cause to believe that Defendants National Foreclosure Relief, Inc., David Ealy, Chele Stone a/k/a Chele Medina, and Hugo Tapia ("Defendants") have engaged in and are likely to engage in acts that violate Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and that the Commission is likely to prevail on the merits of this action.
3. There is good cause to believe that immediate and irreparable harm will result from Defendants' ongoing violations of the FTC Act unless Defendants are restrained and enjoined by Order of this Court.
4. There is good cause to believe that immediate and irreparable damage to the Court's ability to grant effective final relief for consumers-including refunds, rescission and restitution, disgorgement or other equitable monetary relief-will occur from the sale, transfer, or other disposition or concealment by Defendants of assets or records unless Defendants are immediately restrained and enjoined by Order of this Court.
5. Good cause exists for the appointment of a Permanent Receiver over corporate Defendant National Foreclosure Relief, Inc.
6. Considering Plaintiff's likelihood of ultimate success and weighing the equities, a Preliminary Injunction ("Order") with an asset freeze, the appointment of a Permanent Receiver, and other equitable relief is in the public interest.
7. No security is required of any agency of the United States for issuance of a restraining order. Fed. R. Civ. P. 65(c).
For purposes of this Order, the following definitions shall apply:
1. "Plaintiff" means the Federal Trade Commission.
2. "Defendants" means National Foreclosure Relief, Inc., David Ealy, Chele Stone a/k/a Chele Medina, and Hugo Tapia , and each of them, by whatever names each might be known by, as well as their successors and assigns, whether acting directly or through any corporation, subsidiary, division, or other device, including, but not limited to, fictitious business names;
3. "NFR" refers to Defendant National Foreclosure Relief, Inc.
4. "Individual Defendants" refers to Defendants David Ealy, Chele Stone a/k/a Chele Medina, and Hugo Tapia.
5. "Receivership Defendants" refers to Defendant National Foreclosure Relief, Inc., as well as any successors, assigns, affiliates, and subsidiaries that conduct any business related to NFR's mortgage foreclosure rescue services and which the Permanent Receiver has reason to believe are owned or controlled in whole or in part by any of the Defendants.
6. "Mortgage foreclosure rescue service" means any service, product, or program wherein the offeror, expressly or by implication, claims that it can assist a homeowner in any manner to (A) stop, prevent, or postpone any home mortgage foreclosure sale, (B) obtain any forbearance from any beneficiary or mortgagee, (C) exercise any statutory right of reinstatement, (D) obtain any extension of the period within which the owner may reinstate his or her obligation, (E) obtain any waiver of an acceleration clause contained in any promissory note or contract secured by a deed of trust or mortgage on a residence in foreclosure or contained in that deed of trust or mortgage, (F) obtain a loan or advance of funds that is connected to the consumer's home ownership, (G) avoid or ameliorate the impairment of the owner's credit standing, credit rating or credit profile resulting from the recording of a notice of default or the conduct of a foreclosure sale, (H) save the owner's residence from foreclosure, or (I) assist the owner in obtaining from the beneficiary, mortgagee, trustee under a power of sale, or counsel for the beneficiary, mortgagee, or trustee, the remaining proceeds from the foreclosure sale of the owner's residence. The foregoing shall include any manner of claimed assistance, including, but not limited to, debt, budget, or financial counseling; receiving money for the purpose of distributing it to creditors; contacting creditors on behalf of the homeowner; arranging or attempting to arrange for an extension of the period within which the owner of property sold at foreclosure may cure his or her default; arranging or attempting to arrange for any delay or postponement of the time of a foreclosure sale; and giving advice of any kind with respect to filing for bankruptcy. Provided, however, that this definition shall not be construed to apply to mortgage lenders acting in the course of offering any service or product to any person whose home loan the lender currently owns or services.
7. "Assisting others" means knowingly providing any of the following goods or services to another person or entity:
a. performing customer service functions, including, but not limited to, receiving or responding to consumer complaints; or
b. formulating or providing, or arranging for the formulation or provision of, any telephone sales script or any other marketing material; or
c. providing names of, or assisting in the generation of, potential customers; or
d. performing marketing services of any kind.
8. "Material fact" means any fact that is likely to affect a person's choice of, or conduct regarding, goods or services.
9. "Assets" means any legal or equitable interest in, right to, or claim to, any real or personal property, including, without limitation, chattels, goods, instruments, equipment, fixtures, general intangibles, leaseholds, mail or other deliveries, inventory, checks, notes, accounts, credits, contracts, receivables, shares of stock, and all cash, wherever located.
10. The term "document" is equal in scope and synonymous in meaning to the usage of the term in Federal Rule of Civil Procedure 34(a), and includes writings, drawings, graphs, charts, photographs, audio and video recordings, computer records, and any other data compilations from which information can be obtained. A draft or non-identical copy is a separate document within the meaning of the term.
11. "Person" means a natural person, organization, or other legal entity, including a corporation, partnership, proprietorship, association, cooperative, or any other group or combination acting as an entity.
I. PROHIBITED REPRESENTATIONS
IT IS THEREFORE ORDERED that Defendants and their successors, assigns, officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with any of them who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering for sale or sale of any mortgage foreclosure rescue service, are hereby restrained and enjoined from falsely representing, or from assisting others who are falsely representing, expressly or by implication, any of the following:
A. that any Defendant or any other person will
1. stop, prevent, or postpone any home mortgage foreclosure sale;
2. save any consumer's residence from foreclosure;
3. prevent a notice of default from being filed with respect to any consumer's residence or home loan;
4. obtain or write a new home loan for any consumer;
5. obtain or arrange refinancing of a home loan for any consumer;
6. obtain or arrange a forbearance from any beneficiary, mortgagee, or other home-loan holder;
7. obtain or arrange a modification of any consumer's home loan;
8. obtain or arrange lower monthly mortgage payments for any consumer;
9. obtain or arrange affordable monthly mortgage payments for any consumer;
10. immediately or promptly contact any consumer's home-loan holder; or
11. give a full refund of any fees paid if the Defendant or any other person fails to stop, prevent, or postpone any foreclosure;
B. the terms that any beneficiary, mortgagee, or other home-loan holder will or is likely to offer or accept to cure any delinquency or default on, or to reinstate, any mortgage or other home loan, including but not limited to:
1. the amount of any good-faith, up-front, or lump sum payment that the consumer will be required to make; or
2. the amount of any monthly payment(s) that the consumer will be require to make;
C. the amount of time that it will take or is likely to take for any Defendant or other person to arrange or reach an agreement with any consumer's home-loan holder to prevent foreclosure or to cure any delinquency or default on, or to reinstate, any mortgage or other home loan;
D. the nature of the Defendant's or any other person's relationship with any lender or other home-loan holder;
E. the length of time that any Defendant or any other person has been in the mortgage foreclosure rescue business;
F. the cost of such service or of any aspect of such service;
G. that any Defendant or any other person is affiliated with, endorsed or approved by, or otherwise connected to any government agency, unit or department, including but not limited to the U.S. Department of Housing and Urban Development (H.U.D.);
H. the refund policy of any Defendant or any other person, including but not limited to the likelihood of a consumer obtaining a full or partial refund, or the circumstances in which a full or ...