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Federal Trade Commission v. Federal Loan Modification Law Center

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA


May 11, 2009

FEDERAL TRADE COMMISSION PLAINTIFF,
v.
FEDERAL LOAN MODIFICATION LAW CENTER, LLP; ANZ & ASSOCIATES, PLC; LEGALTURN INC., A.K.A. LEGAL TURN INC.; FEDERAL LOAN MODIFICATION, LLC; NABILE "BILL" ANZ; BOAZ MINITZER, AND JEFFREY BROUGHTON DEFENDANTS.

The opinion of the court was delivered by: Cormac J. Carney United States District Judge

[PROPOSED] MODIFIED PRELIMINARY INJUNCTION

This Modified Preliminary Injunction both modifies and supersedes the Preliminary Injunction issued by this Court on April 24, 2009.

I. FINDINGS OF FACT AND CONCLUSIONS OF LAW

Plaintiff Federal Trade Commission ("FTC") has filed a Complaint seeking a permanent injunction and other relief pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), and now seeks a preliminary injunction. This Court has considered the pleadings, exhibits, memoranda, and declarations, and now finds and concludes that:

A. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a) and 1245, and 15 U.S.C. §§ 45(a) and 53(b), and there is good cause to believe that it will have jurisdiction over all the parties hereto.

B. Venue in the Central District of California is proper under 15 U.S.C. § 53(b) and 28 U.S.C. § 1391(b) and (c).

C. There is good cause to believe that Defendants Federal Loan Modification Center, LLP, Anz & Associates, PLC, LegalTurn, Inc., a.k.a. Legal Turn Inc., Federal Loan Modification, LLC, Nabile "Bill" Anz, Boaz Minitzer and Jeffrey Broughton might be engaging in, and may continue to engage in, practices that violate Section 5 of the FTC Act, 15 U.S.C. § 15.

D. There is good cause to believe that immediate and irreparable damage to the Court's ability to grant effective final relief in the form of permanent injunction, rescission, restitution, and disgorgement might occur from the destruction, transfer, or concealment by Defendants of their business assets and documents or records unless Defendants are preliminarily restrained and enjoined by order of this Court.

E. A preliminary injunction freezing certain of the assets of the Corporate Defendants (as defined in this Preliminary Injunction) and granting other equitable relief is in the public interest.

II. DEFINITIONS

For the purposes of this Preliminary Injunction, the following definitions shall apply:

A. "Plaintiff" or "FTC" means the Federal Trade Commission.

B. "Defendants" means: (1) Federal Loan Modification Law Center, LLP; (2) Anz & Associates, PLC; (3) LegalTurn, Inc., a.k.a. Legal Turn, Inc.; (4) Federal Loan Modification, LLC; (5) Nabile "Bill" Anz; (6) Boaz Minitzer; and (7) Jeffrey Broughton.

C. "Corporate Defendants" means: (1) Federal Loan Modification Law Center, LLP; (2) Anz & Associates, PLC; (3) LegalTurn, Inc., a.k.a. Legal Turn, Inc.; and (4) Federal Loan Modification, LLC.

D. "Mortgage loan modification or foreclosure relief service" means any service, product, or program that is represented, expressly or by implication, to assist a homeowner in any manner to: (1) obtain or arrange a modification of any term of a home loan, deed of trust, or mortgage; (2) obtain or arrange a refinancing, recapitalization, or reinstatement of a home loan, deed of trust, or mortgage; (3) obtain or arrange a pre-foreclosure sale, short sale, or deed-in-lieu of foreclosure; (4) stop, prevent, or postpone any home mortgage or deed of trust foreclosure sale; (5) obtain any forbearance from any beneficiary or mortgagee; (6) obtain a loan or advance of funds that is connected to the consumer's home ownership; (7) avoid or ameliorate the impairment of the owner's credit standing, credit rating or credit profile; (8) examine, audit or evaluate any term of a home loan, deed of trust or mortgage; or (9) save the consumer's residence from foreclosure.

E. "Assisting others" means knowingly providing any of the following goods or services to another person or entity: (1) performing customer service functions, including, but not limited to, receiving or responding to consumer complaints; (2) formulating or providing, or arranging for the formulation or provision of, any telephone sales script or any other marketing material; (3) providing names of, or assisting in the generation of, potential customers; or (4) performing marketing services of any kind.

F. "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.

G. "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.

H. 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.

III. PRELIMINARY INJUNCTION

PENDING TRIAL, Defendants, and each of them, and their agents, servants, employees and attorneys and all those in active concert and preparation with any of them, ARE HEREBY RESTRAINED AND ENJOINED from:

A. Outside the ordinary course of business, transferring, selling, alienating, liquidating, encumbering, pledging, leasing, loaning, assigning, concealing, dissipating, converting, withdrawing, or otherwise disposing, of any assets of Corporate Defendants, wherever located, including assets held outside the United States, or incurring charges or cash advances on any credit or debit card issued in the name of the Corporate Defendants. The assets affected by this paragraph's hall include both existing assets and assets acquired after the effective date of this Preliminary Injunction wherever located. Provided that Defendants shall produce, within ten (10) business days of the close of any calendar month, an accounting of all transfers made in that month in the ordinary course of business, and upon request of the FTC, provide within a reasonable period of time, copies of documents showing such expenses (e.g., books and records of accounts, financial and accounting records, balance sheets, income statements and bank records (including monthly statements, cancelled checks, records of wire transfers and check registers)).

B. Representing, guaranteeing, or estimating, or from assisting others who are representing, guaranteeing, or estimating, the likelihood, expressly or by implication, that any of the Defendants or any other person will:

1. obtain a modification of any term of a consumer's home loan, deed of trust, or mortgage, including any recapitalization or reinstatement agreement;

2. obtain a pre-foreclosure sale, short sale, or deed-in-lieu of foreclosure;

3. stop, prevent, or postpone any home mortgage foreclosure sale;

4. save any consumer's residence from foreclosure;

5. obtain or arrange lower or affordable monthly mortgage payments for any consumer;

6. obtain or arrange lower interest rates on any home loan, deed of trust, or mortgage for any consumer; or

7. negotiate the terms that any beneficiary, mortgagor, 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, deed of trust, or other home loan.

C. Guaranteeing or estimating, or from assisting others who are guaranteeing or estimating, the terms that:

1. any beneficiary, mortgagor, or other home-loan holder will, or is likely to, order or accept or cure any delinquency or default on, or to reinstate, any mortgage, deed of trust, or other home loan; or

2. the amount of time it is likely to take for any of the Defendants or any other person to, obtain or arrange a modification of a consumer's home loan, deed of trust, or mortgage, including any recapitalization or reinstatement agreement, provided however that Federal Loan Modification Law Center LLP and its agents and representatives shall be allowed to provide substantiated estimates of the time it will take it to internally process client documentation and submit loan modification proposals to lenders and disclose that they are unable to provide estimates concerning any final determination by the lender.

D. Representing that any of the Defendants is affiliated with, endorsed or approved by, or otherwise connected to, the United States government, any governmental homeowner assistance plan, or any government agency, unit or department, including, but not limited to, the U.S. Department of Housing and Urban Development, the Federal Housing Administration, or the Department of the Treasury.

E. Marketing or advertising without disclaiming that any of the Defendants, or any person affiliated with Defendants, or Defendants' agents, are not affiliated with, endorsed or approved by, or otherwise connected to, the United States government, any governmental homeowner assistance plan, or any government agency, unit or department, including, but not limited to, the U.S. Department of Housing and Urban Development, the Federal Housing Administration, or the Department of the Treasury.

F. Destroying, erasing, mutilating, concealing, altering, transferring, or otherwise disposing of, in any manner, directly or indirectly, any documents or records that relate to the business practices, or business or personal finances, of any of the Defendants, or other entity directly or indirectly under the control of any of the Defendants.

G. Failing to create and maintain books, records, and accounts which, in reasonable detail, accurately, fairly, and completely reflect the incomes, assets, disbursements, transactions and use of monies by any of the Defendants or other entity directly or indirectly under the control of any of the Defendants.

H. Selling, renting, leasing, transferring, or otherwise disclosing the name, address, telephone number, credit card number, bank account number, e-mail address, or other identifying information of any person who paid money to any of the Defendants for a mortgage loan modification or foreclosure relief service or who were contacted or are on a list to be contacted by any of the Defendants; provided that any of the Defendants may disclose such identifying information to a law enforcement agency or as required by any law, regulation, or court order.

I. Requesting or receiving payment of any fee or consideration in advance of performing each and every loan modification or foreclosure relief service that any of the Defendants contracted to perform or represented would be performed for the party from whom payment is requested.

J. Refusing to refund any fees paid by a customer if a mortgage loan modification is not obtained or a foreclosure relief service is not performed.

IT IS FURTHER ORDERED that agents or representatives of the FTC may contact Federal Loan Modification Law Center LLP or its agents or representatives directly and anonymously for the purpose of monitoring compliance with this Order, provided that any recordings made by the FTC of such communications that occur in the course of such contacts are provided to counsel of record for Federal Loan Modification Law Center LLP within a reasonable period of time.

IT IS FURTHER ORDERED that defendants Federal Loan Modification LLC, LegalTurn, Inc., a.k.a. Legal Turn Inc., Boaz Minitzer and Jeffrey Broughton are hereby enjoined from withdrawing, transferring or otherwise accessing any monies, funds or assets in the accounts listed in Attachment "A," filed under seal by Federal Loan Modification Law Center.

IT IS FURTHER ORDERED that Bill Anz, on behalf of Federal Loan Modification Law Center LLP, shall have the power and right to transfer monies, funds and assets from the accounts listed in Attachment "A" to other accounts held in the name of Federal Loan Modification Law Center LLP for the sole purpose of protecting such assets in accordance with Paragraph III.A. of this Order.

No security is required of the FTC for issuance of this Preliminary Injunction. FED. R. CIV. P. 65(c).

IT IS SO ORDERED, this 11th day of May, 2009.

20090511

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