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Federal Trade Commission v. Data Medical Capital

July 13, 2009

FEDERAL TRADE COMMISSION, PLAINTIFF,
v.
DATA MEDICAL CAPITAL, INC., ET AL., DEFENDANTS



The opinion of the court was delivered by: Alicemarie H. Stotler United States District Judge

FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF PRELIMINARY INJUNCTION ISSUED JUNE 22, 2009

TABLE OF CONTENTS FINDINGS OF FACT.......................1

I. The Case and the Parties...............2

A. Background...................2

B. Contempt Defendants..............3

1. Defendant D'Antonio............3

2. Contempt Defendant RLG...........4

3. Contempt Defendant ALG...........5

4. Contempt Defendant Financial Group....6

II. Contempt Defendants' Business Practices.......7

A. Telemarketing.................7

B. Material Misrepresentations..........8

1. They Would Stop Foreclosures.......9

2. They Would Modify Consumers' Mortgages..9

3. Highly Qualified Attorneys Would Prevent Foreclosures and Would Negotiate Modified Mortgages................ 10

4. They Conducted "Forensic" Analyses of Consumers' Mortgages.......... 11

5. Contempt Defendants Provided Limited Disclaimers Only After Making Misrepresentations........... 12

CONCLUSIONS OF LAW..................... 13

I. The Court's Authority to Grant Preliminary Injunction and Other Relief................. 13

A. Jurisdiction................. 13

B. Legal Standard................ 13

II. The FTC is Likely to Succeed on the Merits..... 13

A. Legal Standard for Civil Contempt...... 13

B. The FTC is Likely to Prove by Clear and Convincing Evidence That the Permanent Injunction Applies to Contempt Defendants............. 14

1. Defendant D'Antonio........... 14

2. Contempt Defendant RLG......... 14

3. Contempt Defendant ALG......... 15

4. Contempt Defendant Financial Group... 16

C. The FTC is Likely to Prove by Clear and Convincing Evidence That Contempt Defendants Violated a Definite and Specific Court Order...... 16

1. The Permanent Injunction is a Definite and Specific Court Order.......... 16

2. The FTC is Likely to Prove by Clear and Convincing Evidence That Contempt Defendants Violated the Permanent Injunction.... 18

3. Contempt Defendants' Disclaimers Did Not Change the Net Impression of the Misrepresentations........... 20

4. The Equities Weigh in Favor of Granting Injunctive Relief............ 20

INTRODUCTION

The Court has considered the proposed Findings of Fact submitted by plaintiff FTC, lodged on June 29, 2009, and the objections thereto submitted by defendant Bryan D'Antonio on July 6, 2009, and by Rodis Law Group, Inc., on the same day, in connection with the June 22, 2009 Preliminary Injunction hearing. The evidence, briefs, and arguments before the Court include:

* Exhibits 1-15 to the FTC's Memorandum in Support of the FTC's Application for a Temporary Restraining Order and Preliminary Injunction (Docs. 95, 96, 97);*fn1

* Opposition of America's Law Group ("ALG") to plaintiff's application for preliminary injunction (Doc. 112);

* Opposition of Rodis Law Group ("RLG") to plaintiff's application for preliminary injunction (Doc. 120);

* The Report of Temporary Receiver's Activities for the Period of May 27, 2009 through June 12, 2009 filed with the Court on June 16, 2009 (Doc. 119);

* The declarations of Nicholas Chavarela, Nhahanh Nguyen, and Holly Johnson that were attached as Attachments A-C to the FTC's June 18, 2009 Reply to Rodis Law Group Inc.'s and America's Law Group's Opposition to Plaintiff's Application for a Preliminary Injunction (Doc. 122);

* The First Amended Objection of ALG to plaintiff's reply (Doc. 131);

* The deposition transcripts and exhibits attached thereto from the depositions of Bryan D'Antonio (Doc. 127), Ronald P. Rodis (Doc. 126), and Nicholas Chavarela (Doc. 128) that were lodged with the Court on June 19, 2009;

* All other materials filed or lodged in support or opposition in this matter; and

* The arguments made by the parties at the June 22, 2009 hearing.

Upon consideration of the foregoing, the Court makes the following findings of fact and conclusions of law in support of the preliminary injunction requested by Plaintiff Federal Trade Commission.

FINDINGS OF FACT

I. The Case and the Parties

A. Background

1. Plaintiff Federal Trade Commission ("FTC" or "Commission") is a federal law enforcement agency which enforces section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibiting unfair or deceptive acts or practices in or affecting commerce.

2. The FTC filed the complaint in this action on October 14, 1999, against Bryan D'Antonio ("D'Antonio") and entities he controlled (Doc. 1) and sought an ex parte TRO with an asset freeze that the Court granted on October 18, 1999 (Doc. 10).

3. D'Antonio agreed to the Stipulated Final Judgment and Order for Permanent Injunction ("2001 Permanent Injunction") that this Court entered on July 13, 2001. (Doc. 74.)

4. The 2001 Permanent Injunction, inter alia, permanently banned D'Antonio, and those acting in concert with him, from: (1) telemarketing or assisting others engaged in telemarketing; and (2) misrepresenting any material facts related to a consumer's decision to buy or accept a good or service. (Id.)

5. On May 27, 2009, the FTC filed an Ex Parte Application for a Temporary Restraining Order and a Preliminary Injunction, Pending Decision on Its Ex Parte Application for An Order to Show Cause Why Contempt Defendants Should Not Be Held in Contempt ("TRO Application"). (Doc. 83.)

6. On May 27, 2009, the Court issued a Temporary Restraining Order*fn2 with an asset freeze and appointment of a Temporary Receiver. (Doc. 85.)

7. On June 22, 2009, the Court conducted the Preliminary Injunction hearing and, upon finding good cause, issued the requested Preliminary Injunction, including a continued asset freeze and receivership, and set the Contempt Hearing for July 28, 2009. (Doc. 136). On June 24, 2009, the Court granted and denied in part D'Antonio's Ex-Parte Application for a release of funds and ordered a release of $100,000 to the law firm ...


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