United States District Court, C.D. California
ORDER FOR PRELIMINARY INJUNCTION WITH ASSET FREEZE,
APPOINTMENT OF RECEIVER, AND OTHER EQUITABLE RELIEF
JAMES
V. SELNA, UNITED STATES DISTRICT JUDGE
WHEREAS
on November 4, 2019, Plaintiff Federal Trade Commission
(“FTC”) filed its Complaint for Permanent
Injunction and Other Equitable Relief (Dkt. 1) pursuant to
Sections 13(b) and 19 of the Federal Trade Commission Act
(“FTC Act”), 15 U.S.C. §§ 53(b), 57b,
and the Telemarketing and Consumer Fraud and Abuse Prevention
Act (“Telemarketing Act”), 15 U.S.C. §§
6101-6108; and
WHEREAS
at the same time, the FTC filed an application pursuant to
Fed.R.Civ.P. 65(b) for a temporary restraining order
(“TRO”), asset freeze, appointment of a receiver,
other equitable relief, and an order to show cause why a
preliminary injunction should not issue against Defendants;
and
WHEREAS
on November 4, 2019, the Court issued the requested TRO (Dkt.
41) and ordered the Defendants to show cause why a
preliminary injunction should not issue; and
WHEREAS
the Court has considered the Complaint, declarations,
exhibits, and memoranda submitted in support of the
Plaintiff's application for a TRO and request for a
preliminary injunction, any oppositions thereto, and the
entire record herein;
IT IS
THEREFORE ORDERED AS FOLLOWS:
FINDINGS
OF FACT
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.
2.
Venue lies properly in this Court.
3.
Plaintiff FTC is likely to succeed on the merits of its
claims that Defendants American Financial Support Services
Inc.; Arete Financial Group, also d/b/a Arete Financial
Freedom; Arete Financial Group LLC; CBC Conglomerate LLC,
also d/b/a 1file.org; Diamond Choice Inc., also d/b/a
Interest Rate Solutions; J&L Enterprise LLC, also d/ba
Premier Solutions Servicing; La Casa Bonita Investments,
Inc., f/k/a La Casa Bonita Investments LLC, also d/b/a
Education Loan Network, also d/b/a Edunet; U.S. Financial
Freedom Center, Inc.; Carey G. Howe; Anna C. Howe; Shunmin
“Mike” Hsu; Ruddy Palacios a/k/a Ruddy Barahona;
Oliver Pomazi; and Jay Singh 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. pt.
310, and Plaintiff is therefore likely to prevail on the
merits of this action.
4.
Plaintiff FTC is likely to succeed on the merits of its claim
that Relief Defendant MJ Wealth Solutions, LLC, has received
ill-gotten assets or otherwise benefitted from funds that are
the proceeds of Defendants' unlawful acts or practices,
and that MJ Wealth Solutions has no legitimate claim to the
ill-gotten assets in its possession.
5.
Immediate and irreparable harm will likely result from
Defendants' ongoing violations of the FTC Act and the TSR
unless Defendants are restrained and enjoined by order of
this Court.
6.
Immediate and irreparable damage to the Court's ability
to grant effective final relief for consumers-including
monetary restitution, rescission, disgorgement or
refunds-will likely occur from the sale, transfer,
destruction, or other disposition or concealment of their
assets by Defendants and Relief Defendant MJ Wealth
Solutions, and good cause therefore exists for freezing the
assets of all Defendants and Relief Defendant MJ Wealth and
issuing the ancillary equitable relief contained herein.
7. Good
cause exists for appointing a permanent receiver over the
Receivership Entities.
8.
Weighing the equities and considering Plaintiff's
likelihood of ultimate success on the merits, a preliminary
injunction with an asset freeze, appointment of a permanet
receiver, and other equitable relief is in the public
interest.
9. This
Court has authority to issue this Order pursuant to Sections
13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b),
57b; Federal Rule of Civil Procedure 65; and the All Writs
Act, 28 U.S.C. § 1651.
10. 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 property,
wherever located and by whomever held.
B.
“Corporate Defendants” means:
(1) American Financial Support Services Inc.;
(2) Arete Financial Group, also d/b/a Arete Financial
Freedom;
(3) Arete Financial Group LLC;
(4) CBC Conglomerate LLC, also d/b/a 1file.org;
(5) Diamond Choice Inc., also d/b/a Interest Rate Solutions;
(6) J&L Enterprise LLC, also d/ba Premier Solutions
Servicing;
(7) La Casa Bonita Investments, Inc., f/k/a La Casa Bonita
Investments LLC, also d/b/a Education Loan Network, also
d/b/a Edunet;
(8) U.S. Financial Freedom Center, Inc.;
and each of their subsidiaries, affiliates, successors, and
assigns.
C.
“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, payments, or fees owed by a person to an unsecured
creditor or debt collector.
D.
“Defendant(s)” means Corporate
Defendants, Individual Defendants, and Relief Defendant,
individually, collectively, or in any combination.
E.
“Document” is synonymous in
meaning and equal in scope to the usage of
“document” and “electronically stored
information” in Federal Rule of Civil Procedure 34(a),
and includes 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.
F.
“ED” means the United States
Department of Education.
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.
“Financial Institution” means
any bank, savings and loan institution, credit union, or any
financial depository of any kind, including, but not limited
to, any brokerage house, trustee, broker-dealer, escrow
agent, title company, commodity trading company, or precious
metal dealer.
I.
“Individual Defendant(s)” means
Carey G. Howe, Anna C. Howe, Shunmin “Mike” Hsu,
Ruddy Palacios a/k/a Ruddy Barahona, Oliver Pomazi, and Jay
Singh, individually, collectively, or in any combination.
J.
“Receiver” means the permanent
receiver appointed in Section XI of this Order and any deputy
receivers that shall be named by the permanent receiver.
K.
“Receivership Entities” means
(1) the Corporate Defendants and (2) any other entity that
has conducted any business related to Defendants'
marketing and sale of Debt Relief Services, including receipt
of Assets derived from any activity that is the subject of
the Complaint in this matter, and that the Receiver
determines is controlled or owned by any Defendant.
L.
“Relief Defendant” means MJ
Wealth Solutions, LLC.
ORDER
I.
PROHIBITED BUSINESS ACTIVITIES
IT
IS THEREFORE ORDERED that Defendants,
Defendants' officers, agents, employees, and attorneys,
and all other persons in active concert or participation with
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 of any goods or services, are temporarily
restrained and enjoined from:
A. misrepresenting or assisting others in misrepresenting,
expressly or by implication, any material fact, including,
but not limited to:
1. consumers who purchase Defendants' Debt Relief
Services will have their monthly payments reduced to a lower,
specific amount or have their loan balances forgiven in whole
or in part;
2. most or all of consumers' monthly payments to
Defendants will be applied toward consumers' debts;
3. Defendants will assume responsibility for servicing
consumers' loans;
4. Defendants are affiliated or work directly with ED or one
of ED's authorized loan servicers;
5. any other fact material to consumers concerning any good
or 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. requesting or receiving payment of a fee or consideration
for Debt Relief Services before (a) Defendants have
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; and (b) 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.
II.
PROHIBITION ON RELEASE OF ...