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United States v. Global Mortgage Funding

July 17, 2009

UNITED STATES OF AMERICA, PLAINTIFF,
v.
GLOBAL MORTGAGE FUNDING, INC., A CALIFORNIA CORPORATION, ALSO F/D/B/A GLOBAL REALTY, INFORTE FINANCIAL, AND U.S. ESCROW; AND DAMIAN ROBERT KUTZNER, INDIVIDUALLY AND AS AN OFFICER OR DIRECTOR OF GLOBAL MORTGAGE FUNDING, INC., DEFENDANTS.



The opinion of the court was delivered by: David O. Carter United States District Judge

STIPULATED JUDGMENT AND ORDER FOR PERMANENT INJUNCTION

Plaintiff, the United States of America, acting upon notification and authorization to the Attorney General by the Federal Trade Commission ("FTC" or the "Commission"), commenced this action by filing the complaint herein, and Individual Defendant Damian Robert Kutzner and Corporate Defendant Global Mortgage Funding, Inc., each waived service of the summons and the complaint pursuant to Fed. R. Civ. P. 4(d). The parties are:

(1) the Plaintiff, represented by the attorneys whose names appear hereafter; (2) Individual Defendant Damian Robert Kutzner, represented by Michael L. Mallow, and by James J. Joseph in his capacity as Chapter 7 Bankruptcy Trustee for Damian Robert Kutzner (the "Trustee"); and (3) Corporate Defendant Global Mortgage Funding, Inc., by and through its President, Damian Robert Kutzner, its attorney, Michael L. Mallow, and James J. Joseph in his capacity as Chapter 7 Bankruptcy Trustee for Global Mortgage Funding, Inc. (the "Trustee"). The parties have agreed to settlement of this action without adjudication of any issue of fact or law (other than those decided by this Court's order granting the United States' motion to Strike Affirmative Defenses (R. 24; filed May 15, 2008)), and without Defendants' admitting liability for any of the violations alleged in the complaint.

THEREFORE, on the joint motion of Plaintiff, Individual Defendant Damian Robert Kutzner, and Corporate Defendant Global Mortgage Funding, Inc., it is hereby ORDERED, ADJUDGED AND DECREED as follows:

FINDINGS

1. This Court has jurisdiction over the subject matter and the parties pursuant to 28 U.S.C. §§ 1331, 1337(a), 1345 and 1355, and 15 U.S.C. §§ 45(m)(1)(A), 53(b), 56(a), and 57b.

2. Venue is proper as to all parties in this District.

3. The activities of Defendants are in or affecting commerce, as defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

4. The allegations of the complaint state a claim upon which relief may be granted against Defendants, under Sections 5(a), 5(m)(1)(A), 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a), 45(m)(1)(A), 53(b), and 57b.

5. The Commission previously sued present Defendants for alleged violations of the Federal Trade Commission Act, 15 U.S.C. § 53(b), and Sections 521(a) and 522(a) of the Gramm-Leach-Bliley Act ("GLB Act"), 15 U.S.C. §§ 6821(a) and 6822(a). FTC v. GM Funding, et al., No. 8:02-cv-01026-DOC (C.D. Cal. filed Nov. 6, 2002). The parties resolved that litigation with a consent decree signed and issued by this Court May 3, 2003.

6. On November 7, 2006, Corporate Defendant Global Mortgage Funding, Inc. filed a voluntary petition for relief under the liquidation provisions of Chapter 7 of the Bankruptcy Code, 11 U.S.C. § 101 et seq., in the United States Bankruptcy Court for this district, In re Global Mortgage, Inc., No. 8:06-12039-RK (Bankr. C.D. Cal. filed Nov. 7, 2006) (the "Global Mortgage Bankruptcy Case"). Subsequently, James J. Joseph was appointed Chapter 7 Trustee in the Global Mortgage Bankruptcy Case.

7. On May 15, 2008, Individual Defendant Damian Robert Kutzner filed a voluntary petition for relief under the liquidation provisions of Chapter 7 of the Bankruptcy Code, 11 U.S.C. § 101 et seq., in the United States Bankruptcy Court for this district, In re Damian Robert Kutzner, No. 8:08-bk-12656-ES (Bankr. C.D. Cal. filed May 15, 2008) (the "Kutzner Personal Bankruptcy Case") (together with the Global Mortgage Bankruptcy Case, "the Bankruptcy Cases"). Subsequently, James J. Joseph was appointed Chapter 7 Trustee for the Kutzner Personal Bankruptcy Case.

8. This action, including the enforcement of a judgment other than a money judgment, is not subject to the automatic bankruptcy stay provisions of 11 U.S.C. § 362(a)(1), (2), (3) or (6), because this action is brought by the United States pursuant to referral by the Commission to enforce the Commission's police or regulatory power as a governmental unit. Under 11 U.S.C. § 362(b)(4), it is thus exempt from the automatic stay. See FTC v. First Alliance Mortgage Co. (In re First Alliance Mortgage Co.), 264 B.R. 634, 645-51 (C.D. Cal. 2001) (Carter, J.).

9. The Trustee has filed motions in the Bankruptcy Cases and obtained the Bankruptcy Court's approval to enter into this Order and take any and all actions necessary and appropriate to implement and effectuate the terms and conditions of this Order.

10. Defendants have entered into this Stipulated Judgment and Order for Permanent Injunction ("Order") freely and without coercion. Defendants further acknowledge that they have read the provisions of this Order and are prepared to abide by them.

11. Plaintiff and Defendants hereby waive all rights to appeal or otherwise challenge or contest the validity of this Order.

12. Defendants agree that this Order does not entitle Defendants to seek or obtain attorneys' fees as a prevailing party under the Equal Access to Justice Act, 28 U.S.C. § 2412, and Defendants further waive any rights to attorneys' fees that may arise under said provision of law.

13. Entry of this Order is in the public interest.

DEFINITIONS

For the purpose of this Order, the following definitions shall apply:

1. "Asset" means any legal or equitable interest in, or right or claim to, any real and 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.

2. "Assisting others," in the context of assisting others who are engaging or participating in telemarketing, 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 customer complaints; (b) formulating or providing, or arranging for the formulation or provision of, any telephone sales script or any other marketing material; (c) providing names of, or assisting in the generation of, potential customers, or (d) performing marketing services of any kind.

3. "Commission" means Federal Trade Commission.

4. "Customer" means any person who is or may be required to pay for goods or services offered through telemarketing.

5. "Defendants" means the Individual Defendant and the Corporate Defendant, individually, collectively, or in any combination.

a. "Corporate Defendant" means Global Mortgage Funding, Inc., a California corporation, also f/d/b/a Global Realty, Inforte Financial, and U.S. Escrow;

b. "Individual Defendant" means Damian Robert Kutzner, individually and as an officer and director of Global Mortgage Funding, Inc.

6. "Donor" means any person solicited to make a charitable contribution.

7. "Engaging or participating in telemarketing" includes personally participating in telemarketing; managing others who participate in telemarketing; and owning or operating an enterprise conducting telemarketing.

8. "Established business relationship" means a relationship between a seller and a person based on:

(a) the person's purchase, rental, or lease of the seller's goods or services or a financial transaction between the person and seller, within the eighteen (18) months immediately preceding the date of the telemarketing call; or

(b) the person's inquiry or application regarding a product or service offered by the seller, within the three

(3) months immediately preceding the date of a telemarketing call.

9. "FTC" means Federal Trade Commission.

10. "National Do Not Call Registry" means the National Do Not Call Registry, which is the "do-not-call" registry maintained by the Commission pursuant to 16 C.F.R. § 310.4(b)(1)(iii)(B).

11. "Representatives" means Defendants' agents, servants, employees and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise.

12. "Seller" means any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to a customer in exchange for consideration, whether or not such person is under the jurisdiction of the Commission.

13. "Telemarketer" means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor.

14. "Telemarketing Sales Rule" or "Rule" means the FTC Rule entitled "Telemarketing Sales Rule," 16 C.F.R. Pt. 310 (2008), attached hereto as Appendix A and as may be hereafter amended.

15. "Telemarketing" means a plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones. The term includes a plan, program, or campaign where callers purport to take an informational survey, but also offer to sell goods or services.

(a) The term does not include the solicitation of sales through the mailing of a catalog that: Contains a written description or illustration of the goods or services offered for sale; includes the business address of the seller; includes multiple pages of written material or illustrations; and has been issued not less frequently than once a year, when the person making the solicitation does not solicit customers by telephone but only receives calls initiated by customers in response to the catalog and during those calls takes orders only without further solicitation. For purposes of the previous sentence, the term "further solicitation" does not include providing the customer with information about, or attempting to sell, any other item included in the same catalog which prompted the customer's call or in a substantially similar catalog.

16. "Outbound telephone call" means a telephone call initiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable contribution.

17. "Person" means any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity.

ORDER

I. PROHIBITION AGAINST TELEMARKETING BY INDIVIDUAL DEFENDANT

IT IS ORDERED that for five (5) years from entry of this Order, Individual Defendant Damian Robert Kutzner and his Representatives are hereby prohibited from engaging or participating in telemarketing, and from assisting others who are engaging or participating in telemarketing, provided that for purposes of this provision "telemarketing" does not include telephone calls conducted to induce the purchase or goods or services by a business, except calls to induce the retail sale of non-durable office or cleaning supplies.

II. PROHIBITION AGAINST VIOLATIONS OF THE TELEMARKETING SALES RULE BY INDIVIDUAL DEFENDANT

IT IS FURTHER ORDERED that, in connection with telemarketing, Individual Defendant Damian Robert Kutzner and his Representatives are hereby permanently restrained and enjoined from engaging in, causing other persons to engage in, or assisting other persons to engage in, ...


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