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Federal Trade Commission v. Alliance Document Preparation LLC

United States District Court, C.D. California

November 2, 2017

FEDERAL TRADE COMMISSION, Plaintiff,
v.
ALLIANCE DOCUMENT PREPARATION LLC, also dba EZ Doc Preps, Grads Aid, and First Document Aid, et al., Defendants, and DIRECT CONSULTING SERVICE LLC; and CAPITAL DOC PREP, INC., Relief Defendants.

          DAVID C. SHONKA Acting General Counsel CHARLES A. HARWOOD Regional Director ELEANOR DURHAM, MD Bar NADINE S. SAMTER, WA Bar #23881 Federal Trade Commission MARICELA SEGURA, CA Bar # 225999

          PRELIMINARY INJUNCTION AND OTHER EQUITABLE RELIEF

          HONORABLE S. JAMES OTERO UNITED STATES DISTRICT JUDGE

         Plaintiff, the Federal Trade Commission (“Commission” or “FTC”), has filed its Complaint for Permanent Injunction and Other Equitable Relief pursuant to Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), and the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108, and has moved, pursuant to Fed.R.Civ.P. 65(b), for a preliminary injunction, asset freeze, other equitable relief.

         FINDINGS OF FACT

         The Court, having considered the FTC's Complaint, ex parte application for temporary restraining order, declarations, exhibits, and the memorandum filed in support of the FTC's application, and the FTC's Motion for Preliminary Injunction, and the evidence presented, now finds that:

         1. This Court has jurisdiction over the subject matter of this case, and there is good cause to believe that it will have jurisdiction over all parties hereto and that venue in this district is proper.

         2. There is good cause to believe that Defendants have engaged in and are likely to engage in acts or practices that violate Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the FTC's Telemarketing Sales Rule (“TSR”), 16 C.F.R. Part 310, and that Plaintiff is therefore likely to prevail on the merits of this action.

         3. There is good cause to believe that immediate and continuing harm to consumers will result from Defendants' ongoing violations of the FTC Act and the TSR unless Defendants are restrained and enjoined by order of this Court.

         4. There is good cause to believe that Relief Defendants have received funds that can be traced directly to Defendants' unlawful acts or practices and that Relief Defendants have no legitimate claim to those funds.

         5. There is good cause to believe that irreparable damage to the Court's ability to grant effective final relief for consumers in the form of monetary restitution, rescission, disgorgement, or refunds will occur from the sale, transfer, destruction, or other disposition or concealment by Defendants or Relief Defendants of their assets or records, unless Defendants and Relief Defendants are preliminarily enjoined by order of this Court.

         6. Good cause exists for appointing a Receiver over the Receivership Defendants and maintaining a freeze of Defendants' and Relief Defendants' assets.

         7. Weighing the equities and considering FTC's likelihood of ultimate success on the merits, a preliminary injunction with an asset freeze, the appointment of a Receiver, and other equitable relief is in the public interest.

         8. No security is required of any agency of the United States for issuance of a preliminary injunction. Fed.R.Civ.P. 65(c).

         DEFINITIONS

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

         A. “Asset” 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 and by whomever held.

         B. “Debt Relief Service” 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.

         C. “Defendants” means Corporate Defendants and Individual Defendants, individually, collectively, or in any combination.

         D. “Corporate Defendants” means Alliance Document Preparation, LLC, also dba EZ Doc Preps. Grads Aid, and First Document Aid; SBS Capital Group, Inc., also dba Grads United Discharge; SBB Holdings, LLC, also dba Allied Doc Prep and Post Grad Services; First Student Aid, LLC; United Legal Center, LLC, also dba Alumni Aid Assistance, Post Grad Aid, and United Legal Discharge; Elite Consulting Service, LLC, fka First Grad Aid, LLC, also dba First Grad Aid; Grads Doc Prep, LLC; Elite Doc Prep, LLC, also dba Premier Student Aid.

         E. “Individual Defendants” means Benjamin Naderi, aka Benjamin Pournaderi and Benjamin Brooks; Shawn Gabbaie aka Shawn Goodman; Avinadav Rubeni aka Avid Rubeni; Michael Ratliff; Ramiar Reuveni aka Rami Reuveni; and Farzan Azinkhan and any other names by which they might be known.

         F. “Document” is synonymous in meaning and equal in scope to the usage of the terms “document” and “electronically stored information” in Fed.R.Civ.P. 34(a), and includes but is not limited to writings, drawings, graphs, charts, photographs, sound and video recordings, images, Internet sites, web pages, websites, electronic correspondence, including e-mail and instant messages, contracts, accounting data, advertisements, FTP Logs, Server Access Logs, books, written or printed records, handwritten notes, telephone logs, telephone scripts, receipt books, ledgers, personal and business canceled checks and check registers, bank statements, appointment books, computer records, customer or sales databases and any other electronically stored information, including Documents located on remote servers or cloud computing systems, and other data or data compilations from which information can be obtained directly or, if necessary, after translation into a reasonably usable form. A draft or non-identical copy is a separate document within the meaning of the term.

         G. “Electronic Data Host” means any person or entity in the business of storing, hosting, or otherwise maintaining electronically stored information. This includes, but is not limited to, any entity hosting a website or server, and any entity providing cloud-based electronic storage.

         H. “Person” means any individual, group, unincorporated association, limited or general partnership, corporation or other business entity.

         I. “Receivership Defendants” means all Corporate Defendants and Relief Defendants, individually, collectively, or in any combination.

         J. “Relief Defendants” means Direct Consulting Service, LLC, and Capital Doc Prep, Inc., and each of its subsidiaries, affiliates, successors, and assigns.

         K. “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.

         L. “Telemarketer” means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor. 16 C.F.R. § 310.2(ff).

         M. “Telemarketing” means a plan, program, or campaign (whether or not covered by the TSR, 16 C.F.R. Part 310) that is conducted to induce the purchase of goods or services or a charitable contribution by use of one or more telephones.

         N. “Receiver” means the Receiver appointed in Section XI of this Order. The term “Receiver” also includes any deputy receivers as may be named by the Receiver.

         ORDER

         I. REPRESENTATIONS PROHIBITED BY SECTION 5 OF THE FTC ACT

         IT IS FURTHER ORDERED that Defendants, their officers, agents, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, by personal service or otherwise, whether acting directly or indirectly, in connection with the advertising, marketing, promoting, or offering for sale, sale, or provision of any Debt Relief Service, are hereby preliminarily restrained and enjoined from:

         A. Misrepresenting or assisting others in misrepresenting, expressly or by implication, that:

1. Defendants are part of, affiliated with, or work directly with the government, government loan programs, the Department of Education (“ED”), or consumers' loan servicers;
2. Consumers who purchase Defendants' Debt Relief Services generally will have their monthly payments reduced or their loan balances forgiven in whole or in part;
3. Consumers are qualified for, or are approved to receive loan forgiveness or other programs that will permanently lower or eliminate their loan payments or balances; and
4. Any other fact material to consumers concerning any debt relief service, such as: the total costs; any material restrictions, limitations, or conditions; or any material aspect of its performance, efficacy, nature, or central characteristics; and

         B. Making or assisting others in making, any representation, expressly or by implication, about the benefits, performance, or efficacy of any Debt Relief Service, unless the representation is non-misleading and, at the time such representation is made, Defendants possess and rely upon competent and reliable evidence that is sufficient in quality and quantity based on standards generally accepted in the relevant fields, when considered in light of the entire body of relevant and reliable evidence, to substantiate that the representation is true.

         II. REPRESENTATIONS PROHIBITED BY THE TSR IT IS FURTHER ORDERED that the Defendants, their officers, agents, employees, and attorneys, and all other persons in active concert or participation with any of them who receive actual notice of this Order, whether acting directly or indirectly, in connection with providing, offering to provide, or arranging for others to provide any Debt Relief Service, are hereby preliminarily restrained and enjoined from:

         A. Providing, offering to provide, or arranging for others to provide any Debt Relief Service and requesting or receiving payment of any fees or consideration for any Debt Relief Service until and unless:

         1. The Seller or Telemarketer has renegotiated, settled, reduced, or otherwise altered the terms of at least one debt pursuant to a settlement agreement, debt management plan, or other such valid contractual agreement executed by the customer;

         2. The customer has made at least one payment pursuant to that settlement agreement, debt management plan, or other valid contractual agreement between the customer and the creditor or debt collector; and

         3. To the extent that debts enrolled in a service are renegotiated, settled, reduced, or otherwise altered individually, the fee or consideration either:

a. Bears the same proportional relationship to the total fee for renegotiating, settling, reducing, or altering the terms of the entire debt balance as the individual debt amount bears to the entire debt amount. The individual debt amount and the entire debt amount are those owed at the time the debt was enrolled in the service; or
b. Is a percentage of the amount saved as a result of the renegotiation, settlement, reduction, or alteration. The percentage charged cannot change from one individual debt to another. The amount saved is the difference between the amount owed at the time the debt was enrolled in the service and the amount actually paid to satisfy the debt requesting or receiving payment of any fees or consideration for any debt relief service;
B. Misrepresenting directly or indirectly, expressly or by implication, that Defendants are affiliated with, or endorsed or sponsored by, the government, government loan programs, the ED, or consumers' loan servicers; C. Misrepresenting, directly or indirectly, expressly or by implication, any material aspect of their Debt Relief Services, including, but not limited to, that:

         1. Consumers who purchase Defendants' Debt Relief Services generally will have their monthly payments reduced or their loan balances forgiven in whole or in part; and 2. Consumers are qualified for, or are approved to receive loan forgiveness or other ...


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