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Federal Trade Commission v. Loss Mitigation Services

August 19, 2009

FEDERAL TRADE COMMISSION, PLAINTIFF,
v.
LOSS MITIGATION SERVICES, INC. AND SYNERGY FINANCIAL MANAGEMENT CORPORATION, ALSO D/B/A DIRECT LENDER AND DIRECT LENDER.COM AND DEAN SHAFER BERNADETTE PERRY (A.K.A. BERNADETTE CARR AND BERNADETTE CARR-PERRY)AND MARION ANTHONY (A.K.A. "TONY") PERRY DEFENDANTS.



[PROPOSED] PRELIMINARY INJUNCTION ORDER WITH ASSET FREEZE AND OTHER EQUITABLE and RELIEF AS TO DEFENDANT DEAN SHAFER

Plaintiff Federal Trade Commission ("FTC") commenced this civil action on July 13, 2009, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), to obtain preliminary and permanent injunctive and other equitable relief for Defendants' violations of Section 5 of the FTC Act, 15 U.S.C. § 45, in connection with the marketing and sale of mortgage loan modification and foreclosure relief services. On July 20, 2009, the Court entered an Ex Parte Temporary Restraining Order With Asset Freeze and Other Equitable Relief and Order to Show Cause Why a Preliminary Injunction Should Not Issue [Docket Itm. # 14]. The Order set a hearing for August 3, 2009. On July 30, 2009, based on evidence and information received by the FTC after filing, the FTC filed an Ex Parte Application for Order to Show Cause Why Receiver Should not be Appointed and Other Injunctive Relief Be Entered [Docket Itm. # 17]. By Order on July 31, 2009, the Court continued the August 3, 2009 hearing to August 17, 2009 [Docket Itm. # 25]. On August 3, 2009, the FTC filed an Ex Parte Application and Ex Parte Application for Amended Temporary Restraining Order Appointing Temporary Receiver and Entering Additional Injunctive Relief and Order to Show Cause Why Permanent Receiver Should Not be Appointed and Other Injunctive Relief Be Entered [Docket Itm. #27]. On August 10, 2009, Defendant Dean Shafer filed a Response to Order to Show Cause Why a Preliminary Injunction Should Not Issue, on Behalf of Defendant Dean Shafer [Docket Itm. #32].

The FTC and Defendant Dean Shafer have stipulated and agreed to entry of this Preliminary Injunction Order with Asset Freeze and Other Equitable Relief as to Defendant Dean Shafer ("Shafer Order"). This Court, having considered the Complaint, exhibits, memoranda, declarations, and other submissions of the parties, and now being advised in the premises, hereby enters this Order:

FINDINGS OF FACT

1. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a) and 1345, 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.

2. 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).

3. There is good cause to believe that Defendants Loss Mitigation Services, Inc., Synergy Financial Management Corporation (also d/b/a Direct Lender and DirectLender.com), Dean Shafer, Bernadette Perry (a.k.a. Bernadette Carr and Bernadette Carr-Perry) and Marion Anthony (a.k.a. "Tony") Perry have engaged, and are likely to continue to engage, in acts or practices that violate Section 5 of the FTC Act, 15 U.S.C. § 45, and that the FTC therefore is likely to prevail on the merits in this action.

4. There is a reasonable likelihood that Defendants will violate Section 5 of the FTC Act, 15 U.S.C. § 45, in the future unless Defendants are restrained and enjoined by order of this Court.

5. 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 injunctive relief, rescission of contracts, restitution, disgorgement and other equitable remedies will occur from the destruction, transfer, dissipation or concealment by Defendants of their assets and business documents or records unless Defendants are immediately restrained and enjoined by order of this Court.

6. No security is required of any agency of the United States for issuance of a restraining order. Fed. R. Civ. P. 65(c).

7. Considering Plaintiff's likelihood of ultimate success on the merits and weighing the equities, a preliminary injunction order with asset freeze and other equitable relief is in the public interest.

ORDER DEFINITIONS

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

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

2. "Defendants" means, together and separately: (A) Loss Mitigation Services, Inc.; (B) Synergy Financial Management Corporation, also d/b/a Direct Lender and Direct Lender.com; (C) Dean Shafer; (D) Bernadette Perry (a.k.a. Bernadette Carr and Bernadette Carr-Perry) and (E) Marion Anthony (a.k.a. "Tony") Perry.

3. "Corporate Defendants" means: (A) Loss Mitigation Services, Inc. and (B) Synergy Financial Management Corporation, also d/b/a Direct Lender and Direct Lender.com.

4. "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 (A) obtain or arrange a modification of any term of a home loan, deed of trust, or mortgage; (B) obtain or arrange a refinancing, recapitalization, or reinstatement of a home loan, deed of trust, or mortgage; (C) obtain or arrange a pre-foreclosure sale, short sale, or deed-in-lieu of foreclosure; (D) stop, prevent, or postpone any home mortgage or deed of trust foreclosure sale; (E) obtain any forbearance from any beneficiary or mortgagee; (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 homeowner's credit standing, credit rating or credit profile; (H) examine, audit or evaluate any term of a home loan, deed of trust or mortgage; or (I) save the consumer's residence from foreclosure.

5. "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 inquiries or 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; (D) performing marketing services of any kind; or (E) providing mortgage loan modification or foreclosure relief services.

6. "Material fact" means any fact that is likely to affect a person's choice of, or conduct regarding, goods or services.

7. "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.

8. "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.

9. 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.

PROHIBITED REPRESENTATIONS

I. IT IS THEREFORE ORDERED that Defendant Dean Shafer and his successors, assigns, officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with him who receive actual notice of this Order by personal service, facsimile transmission, email, 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 loan modification or foreclosure relief service, are hereby preliminarily 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. obtain, arrange or negotiate a modification of any term of a consumer's home loan, deed of trust, or mortgage, including any recapitalization or reinstatement agreement;

2. obtain or arrange 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;

7. otherwise provide any mortgage loan modification or foreclosure relief service;

8. give a full or partial refund of any fees paid if the Defendant or any other person fails to provide a mortgage loan modification or foreclosure relief service;

B. the terms that any beneficiary, mortgagor, or other home-loan holder will or is likely to offer or accept, with respect to any item listed in subparagraphs I.A.1-8 above, or to cure any delinquency or default on, or to reinstate, any mortgage, deed of trust, or other home loan;

C. the amount of time it will take or is likely to take to obtain any item listed in subparagraphs I.A.1-8 above;

D. 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 partial refund will be granted to the consumer;

E. that any Defendant or any other person is the consumer's lender, or is affiliated with, working with, or authorized by, the consumer's lender, or

F. any other fact material to a consumer's decision whether to purchase mortgage loan modification or foreclosure relief services.

II. IT IS FURTHER ORDERED that Defendant Dean Shafer and his successors, assigns, officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with him who receive actual notice of this Order by personal service, facsimile transmission, email, or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering, or obtaining of any extension of credit, whether the credit is provided by a Defendant or by a third party, are hereby preliminarily enjoined from falsely representing, or from assisting others who are falsely representing, expressly or by ...


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