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Federal Trade Commission v. Forensic Case Management Services

January 4, 2013

FEDERAL TRADE COMMISSION, PLAINTIFF,
v.
FORENSIC CASE MANAGEMENT SERVICES, INC., ET AL., DEFENDANTS, AND KESTER-ARCHWOOD, LLC, ET AL., RELIEF DEFENDANTS.



The opinion of the court was delivered by: R. Gary Klausner United States District Judge

[Proposed] FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AND MONETARY RELIEF AS TO DEFENDANTS FORENSIC CASE MANAGEMENT SERVICES, INC., SPECIALIZED RECOVERY, INC., COMMERCIAL RECEIVABLES ACQUISITION, INC., DAVID M. HYNES II, LORENA QUIROZ-HYNES, JAMES S. HYNES, AND HEATHER TRUE

Plaintiff Federal Trade Commission ("FTC" or "Commission") commenced this civil action on September 12, 2011, pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and Section 814 of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692l, 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, and the FDCPA, 15 U.S.C. § 1692-1692p, in connection with the marketing and sale of debt collection services, and the collection of debts. The FTC's Complaint named three corporate defendants (Forensic Case Management Services, Inc.; Specialized Recovery, Inc.; and Commercial Receivables Acquisition, Inc.), and six individual defendants (David M. Hynes II; Lorena Quiroz-Hynes; James S. Hynes; Heather True; Frank E. Lindstrom, Jr.; and Kevin Medley). On September 13, 2011, the Court entered a temporary restraining order against Defendants. On September 27, 2011, the Court entered a preliminary injunction against Defendants.

On March 14, 2012, the Court entered a Final Judgment and Order for Permanent Injunction and Monetary Relief as to Defendant Frank Lindstrom, Jr. (DE132). On March 15, 2012, the Court entered a Final Judgment and Order for Permanent Injunction and Monetary Relief as to Defendant Kevin Medley (DE133). On June 12, 2012, the FTC amended its Complaint (DE 160: the "First Amended Complaint"), adding claims against relief defendants Vesper Collins, LLC, Innsbruck, LLC, Ramillies, LLC, and Kester-Archwood, LLC ("Relief Defendants"). On August 20, 2012, the Court entered a default against relief defendant Kester-Archwood, LLC (DE 184).

The FTC and Defendants Forensic Case Management Services, Inc., Specialized Recovery, Inc., Commercial Receivables Acquisition, Inc., David M. Hynes II, Lorena Quiroz-Hynes, James S. Hynes, and Heather True ("Settling Defendants") having agreed in the Stipulation for Final Judgment and Order for Permanent Injunction and Monetary Relief, hereby request that the Court enter this Final Judgment and Order for Permanent Injunction and Monetary Relief ("Order") to resolve all matters in dispute between the FTC and Settling Defendants in this action.

FINDINGS

By stipulation of the parties and being advised of the premises, the Court finds:

1. This is an action by the FTC instituted under Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, and Section 814 of the FDCPA, 15 U.S.C. § 1692l. The First Amended Complaint seeks both permanent injunctive relief and equitable monetary relief for Defendants' deceptive and abusive acts or practices as alleged therein.

2. The FTC has the authority under Sections 13(b) and 19 of the FTC Act, and Section 814 of the FDCPA, to seek the relief it has requested, and the Complaint states a claim upon which relief can be granted.

3. This Court has jurisdiction over the subject matter of this case and has jurisdiction over Settling Defendants. Venue in the Central District of California is proper.

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

5. Settling Defendants neither admit nor deny any of the allegations in the First Amended Complaint, except as specifically stated in this Order. Only for purposes of this action, Settling Defendants admit the facts necessary to establish jurisdiction.

6. Settling Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order. Settling Defendants forever waive, release, and discharge all claims, known or unknown, that they have in any capacity against the FTC or any of its agents for conduct undertaken through the date of entry of this Order. Settling Defendants also waive any claim that they may have held under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. Each settling party shall bear its own costs and attorneys' fees.

7. This action and the relief awarded herein are in addition to, and not in lieu of, other remedies that may be provided by law, including both civil and criminal remedies.

8. Entry of this Order is in the public interest. DEFINITIONS

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

1. "Asset" or "Assets" means any legal equitable interest in, right to, or claim to, any real or personal property, including, but not limited to: goods, instruments, equipment, fixtures, general intangibles, inventory, checks, or notes (as these terms are defined in the Uniform Commercial Code), lines of credit, chattels, leaseholds, contracts, mail or other deliveries, shares of stock, lists of consumer names, accounts, credits, premises, receivables, funds, and all cash, wherever located.

2. "Assisting others" includes, but is not limited to:

A. performing customer service functions, including, but not limited to, receiving or responding to consumer complaints;

B. performing debt collection or debt collection marketing services of any kind;

C. formulating or providing, or arranging for the formulation or provision of, any advertising or marketing material, including, but not limited to, any telephone sales script, direct mail solicitation, or the design, text, or use of images of any Internet website, email, or other electronic communication;

D. formulating or providing, or arranging for the formulation or provision of, any debt collection materials, including, but not limited to, any debt collection script, debt collection marketing material, debt collection training manual or other training materials, and debt collection compliance monitoring materials;

E. formulating or providing, or arranging for the formulation or provision of, any marketing support material or service, including but not limited to, web or Internet Protocol addresses or domain name registration for any Internet websites, affiliate marketing services, or media placement services;

F. providing names of, or assisting in the generation of, potential customers;

G. performing marketing, billing, or payment services of any kind; and

H. acting or serving as an owner, officer, director, manager, or principal of any entity.

3. "Consumer" means any natural person.

4. "Customer" means any person who has paid, or may be required to pay, for products, services, plans, or programs offered for sale or sold by any other person.

5. "Creditor" means any person or entity who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person or entity to the extent such person or entity receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt.

6. "Credit" means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.

7. "Credit repair services" means using any instrumentality of interstate commerce or the mails to sell, provide, or perform any service, in return for the payment of money or other valuable consideration, for the express or implied purpose of: (i) improving any consumer's credit record, credit history, or credit rating; or (ii) providing advice or assistance to any consumer with regard to any activity or service described in clause (i).

8. "Debt collection activities" means any activities of a debt collector to collect or attempt to collect, directly or indirectly, a debt owed or due, or asserted to be owed or due, another.

9. "Debt collector" means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by the last clause of the immediately-preceding sentence, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.

10. "Debt relief services" means any program or service represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt between a person and one or more unsecured creditors or debt collectors, including, but not limited to, a reduction in the balance, interest rate, or fees owed by a person to an unsecured creditor or debt collector.

11. "Extension of consumer credit" means credit offered or extended to a consumer primarily for personal, family, or household purposes.

12. "Financial-related product or service" means any product, service, plan, or program represented, expressly or by implication, to:

A. provide any consumer, arrange for any consumer to receive, or assist any consumer in receiving, an extension of consumer credit;

B. provide any consumer, arrange for any consumer to receive, or assist any consumer in receiving, credit repair services;

C. provide any consumer, arrange for any consumer to receive, or assist any consumer in receiving, mortgage assistance relief services;

D. provide any consumer, arrange for any consumer to receive, or assist any consumer in receiving, debt relief services; or

E. provide, or arrange for a customer to receive, assistance in the collection of any outstanding debt or financial obligation owed to that customer by a third party.

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


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