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Federal Trade Commission v. Money Now Funding, LLC

United States District Court, Ninth Circuit

August 19, 2013

Federal Trade Commission, Plaintiff,
v.
Money Now Funding, LLC, an Arizona limited liability company, a/k/a Money Now Funded, a/k/a Cash4Businesses, a/k/a CashFourBusinesses; Rose Marketing, LLC, an Arizona limited liability company; DePaola Marketing, LLC, an Arizona limited liability company; Affiliate Marketing Group, LLC, an Arizona limited liability company; Legal Doxs, LLC, an Arizona limited liability company, a/k/a First Business, LLC; U.S. Doc Assist, LLC, an Arizona limited liability company, a/k/a First Business, LLC; Affinity Technologies, LLC, an Arizona limited liability company; Marketing Expert Solutions, LLC, an Arizona limited liability company; Lukeroy K. Rose, a/k/a Luke Rose, individually, as manager/member of Defendants Affinity Technologies, LLC and Rose Marketing, LLC, and as the de facto principal of Defendants Money Now Funding, LLC, DePaola Marketing, LLC, and Affiliate Marketing Group, LLC; Cordell Bess, a/k/a Blaine Thompson, also d/b/a JJB Marketing, individually and as de facto officer of Defendants Money Now Funding, LLC and Rose Marketing, LLC; Solana DePaola, individually and as de facto officer of Defendant Money Now Funding, LLC and as manager/member of Defendant DePaola Marketing, LLC; Jennifer Beckman, individually and as manager/member of Defendant Marketing Expert Solutions, LLC; William D. Claspell, a/k/a Bill Claspell, an individual; Richard Frost, a/k/a Richard Strickland, an individual; Dino Mitchell, a/k/a Dino Jones, an individual; Clinton Rackley, a/k/a Clinton Fosse, an individual; Lance Himes, a/k/a Lance R. Himes, a/k/a Raymond L. Himes, a/k/a Lance Haist, individually and as de facto principal of Defendants Legal Doxs, LLC and U.S. Doc Assist, LLC; Leary Darling, individually, as a member and de facto officer of Defendant U.S. Doc Assist, LLC, and as a de facto officer of Defendant Legal Doxs, LLC; Donna F. Duckett, an individual, also d/b/a D&D Marketing Solutions; Della Frost, an individual, also d/b/a ZoomDocs, also d/b/a Zoom Docs LLC; Christopher Grimes, an individual, also d/b/a Elite Marketing Strategies; Alannah M. Harre, an individual, also d/b/a National Marketing Group; Ronald W. Hobbs, a/k/a Ron Hobbs, an individual, also d/b/a Ron Hobbs & Associates, also d/b/a Sales Academy USA, LLC; Janine Lilly, an individual, also d/b/a Doc Assistant; Michael McIntyre, an individual, also d/b/a McIntyre Marketing; Benny Montgomery, an individual, also d/b/a Montgomery Marketing; Virginia Rios, an individual, also d/b/a V&R Marketing Solutions; and Kendrick Thomas, an individual, also d/b/a KT Advertising, Defendants.

PRELIMINARY INJUNCTION ORDER WITH ASSET FREEZE, APPOINTMENT OF A PERMANENT RECEIVER, AND OTHER EQUITABLE RELIEF

ROSLYN O. SILVER, Chief District Judge.

This Court held a hearing on August 14, 2013 regarding the Federal Trade Commission's ("FTC") request for a preliminary injunction. Attorney Melvin McDonald appeared on behalf of the Himes Defendants. The Court asked Mr. McDonald whether he had any objection to entry of a Preliminary Injunction in this case. Mr. McDonald stated that he did not.

Mr. McDonald has now filed an objection to the FTC's proposed preliminary injunction order (Doc. 49) that focuses solely on a demand for attorneys' fees. As was discussed at the hearing, this is a collateral matter.

The FTC has filed its Complaint for Permanent Injunction and Other Equitable Relief pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and has applied for a temporary restraining order ("TRO"), asset freeze, other equitable relief, and an order to show cause why a preliminary injunction should not issue pursuant to Rule 65 of the Federal Rules of Civil Procedure. The Court held a show cause hearing on August 14, 2013 at which the Corporate Defendants and the following individual Defendants had the opportunity to present evidence and arguments: Lukeroy K. Rose, Solana DePaola, Jennifer Beckman, William D. Claspell, Richard Frost, Dino Mitchell, Lance Himes, Leary Darling, Donna F. Duckett, Della Frost, Alannah M. Harre, Janine Lilly, Michael McIntyre, Benny Montgomery, and Kendrick Thomas.[1] Attorneys representing Defendants Lukeroy K. Rose and Solana DePaola and attorneys representing Defendants Lance Himes, Leary Darling, and their corporate entities appeared; no other defendants appeared or were represented. Defense counsel, on behalf of their clients, did not oppose entry of a Preliminary Injunction Order. Accordingly, having considered all the arguments, evidence, and pleadings filed in this matter, the Court now finds as follows.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. This Court has jurisdiction over the subject matter of this case, jurisdiction over all parties, and venue in this district is proper.

2. There is good cause to believe that Defendants Money Now Funding, LLC, Rose Marketing, LLC, DePaola Marketing, LLC, Affiliate Marketing Group, LLC, Legal Doxs, LLC, U.S. Doc Assist, LLC, Affinity Technologies, LLC, Marketing Expert Solutions, LLC, Lukeroy K. Rose, Cordell Bess, Solana DePaola, Jennifer Beckman, William D. Claspell, Richard Frost, Dino Mitchell, Clinton Rackley, Lance Himes, Leary Darling, Donna F. Duckett, Della Frost, Christopher Grimes, Alannah M. Harre, Ronald W. Hobbs, Janine Lilly, Michael McIntyre, Benny Montgomery, Virginia Rios, and Kendrick Thomas have engaged in and are likely to engage in acts and practices that violate Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), the FTC's Trade Regulation Rule entitled "Disclosure Requirements and Prohibitions Concerning Business Opportunities" ("Business Opportunity Rule" or "Rule"), 16 C.F.R. Part 437, as amended, and the FTC's Trade Regulation Rule entitled "Telemarketing Sales Rule" ("TSR" or "Rule"), 16 C.F.R. Part 310, and that the Commission is likely to prevail on the merits of this action.

3. There is good cause to believe that immediate and irreparable harm will result from Defendants' ongoing violations of the FTC Act, the Business Opportunity Rule, and the TSR unless Defendants are restrained and enjoined by Order of this Court.

4. There is good cause to believe that immediate and irreparable damage to the Court's ability to grant effective final relief for consumers - including the refund of monies paid, restitution, or rescission or reformation of contract - will occur from the sale, transfer, or other disposition or concealment by Defendants of assets or records, and that therefore in accordance with Fed.R.Civ.P. 65(b), the interests of justice require that this Order be granted.

5. Good cause exists for (a) the appointment of a Permanent Receiver over Corporate Defendants Money Now Funding, LLC; Rose Marketing, LLC; DePaola Marketing, LLC; Affiliate Marketing Group, LLC; Legal Doxs, LLC; U.S. Doc Assist, LLC; Affinity Technologies, LLC; and Marketing Expert Solutions, LLC; (b) freezing of Defendants' assets; and (c) the ancillary relief ordered below.

6. Considering Plaintiff's likelihood of ultimate success and weighing the equities, a Preliminary Injunction with asset freeze, the appointment of a Permanent Receiver, and other equitable relief is in the public interest.

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

To the extent any of Findings of Fact are more properly characterized as Conclusions of Law, they should be so considered; to the extent any Conclusions of Law are more properly characterized as Findings of Fact, they should be so considered.

DEFINITIONS

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

1. "Asset" means any legal or equitable interest in, right to, or claim to, any real, personal, or intellectual property of any Corporate Defendant or Individual Defendant, or held for the benefit of any Corporate Defendant or Individual Defendant, wherever located, including, but not limited to, chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, contracts, mail or other deliveries, shares of stock, securities, inventory, checks, notes, accounts, credits, receivables (as those terms are defined in the Uniform Commercial Code), cash, trusts, including, but not limited to, any trust held for the benefit of any of the Defendants, and reserve funds or any other accounts associated with payments processed by, or on behalf of, any of the Defendants, including, but not limited to, reserve funds held by payment processors or financial institutions.

2. "Business Opportunity Rule" means the FTC Rule entitled "Disclosure Requirements and Prohibitions Concerning Business Opportunities" 16 C.F.R. Part 437, as amended.

3. "Corporate Defendants" means Money Now Funding, LLC, Rose Marketing, LLC, DePaola Marketing, LLC, Affiliate Marketing Group, LLC, Legal Doxs, LLC, U.S. Doc Assist, LLC, Affinity Technologies, LLC, Marketing Expert Solutions, LLC and their successors and assigns.

4. "Defendants" means all of the Individual Defendants and the Corporate Defendants, individually, collectively, or in any combination.

5. 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 and translated, if necessary, through detection devices into reasonably usable form. A draft or non-identical copy is a separate document within the meaning of the term.

6. "Individual Defendants" Lukeroy K. Rose, Solana DePaola, Jennifer Beckman, William D. Claspell, Richard Frost, Dino Mitchell, Lance Himes, Leary Darling, Donna F. Duckett, Della Frost, Alannah M. Harre, Janine Lilly, Michael McIntyre, Benny Montgomery, and Kendrick Thomas individually, collectively, or in any combination.

7. "Material" means likely to affect a person's choice of, or conduct regarding, opportunities, products or services.

8. "National Do Not Call Registry" means the registry of telephone numbers maintained by the FTC, pursuant to the Telemarketing Sales Rule, 16 C.F.R. section 310.4(b)(1)(iii)(B), of Persons who do not wish to receive Outbound Telephone Calls to induce the purchase of goods or services.

9. "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.

10. "Person" means a natural person, organization, or other legal entity, including a corporation, partnership, proprietorship, association, cooperative, government or governmental subdivision or agency, or any other group or combination acting as an entity.

11. "Plaintiff' means the Federal Trade Commission.

12. "Receiver" means the permanent receiver appointed in Section XIII of this Order and any deputy receivers that shall be named by the permanent receiver.

13. "Receivership Defendants" means the Corporate Defendants.

14. "Representatives" means Defendants' officers, agents, servants, employees, or attorneys, and any other person in active concert or participation with them who receives actual notice of this Order by personal service or otherwise.

15. "Telemarketing" means any plan, program, or campaign which is conducted to induce the purchase of goods or services by use of one or more telephones, and which involves a telephone call, whether or not covered by the TSR.

16. "Work-at-home Opportunity" means any good, service, plan, or program that is represented, expressly or by implication, to assist an individual in any manner to earn money while working from home or from locations other than the business premises of the Defendants.

ORDER

I.

PROHIBITED BUSINESS ACTIVITIES

IT IS THEREFORE ORDERED that Defendants and their Representatives, whether acting directly or indirectly, in connection with the advertising, marketing, promotion, offering for sale, or sale of any products or services, are hereby preliminarily restrained and enjoined from making, in any manner, expressly or by implication, any false or unsubstantiated representations of any material fact including, but not limited to:

A. That any Defendant or other person offers, sells, or provides loans or cash advances;

B. The amount of income, earnings, or profits that a person may or is likely to earn, or that other persons have earned;

C. That any Defendants or other person will provide, locate, or obtain leads containing the names or contact information of persons potentially interested in Defendants products or services;

D. That any Defendant or other person will contact, sell, or provide services to businesses consumers refer;

E. The total cost to purchase, receive, or use any products or services; or

F. Any material aspect of the performance, efficacy, nature, or central characteristics any product or service.

II.

PROHIBITIONS RELATED TO THE SALE AND MARKETING OF BUSINESS OR WORK AT HOME OPPORTUNITIES

IT IS ORDERED that Defendants and their Representatives, whether acting directly or indirectly, in connection with the advertising, marketing, promotion, offering for sale, or sale of any business opportunity or Work-at-home opportunity, are hereby preliminarily restrained and enjoined from:

A. Failing to disclose, or disclose adequately, in writing material information pertaining to the any opportunity at least seven (7) days before the consumer signs a contract or makes a payment in connection with that opportunity including:

1. Basic identifying information of the seller of the opportunity, including the seller's name, business address, and telephone number;
2. Any civil or criminal actions against the seller or affiliates of the seller for misrepresentation, fraud, or unfair or deceptive practices within the 10 years preceding the date that the opportunity is offered;
3. Material terms and conditions of any cancellation or refund policy; Or
4. Any claim of actual or potential earnings that purchasers of the opportunity may experience.

B. Making any earnings claims unless there is (1) a reasonable basis for the claim at the time the claim is made; and (2) written substantiation for the earnings claim in the possession of Defendants' at the time the claim is made;

C. Violating the Business Opportunity Rule, 16 C.F.R. Part 437, as amended, a copy of which is attached.

III.

PROHIBITIONS AGAINST VIOLATING THE TELEMARKETING SALES RULE

IT IS ORDERED that Defendants and their Representatives, whether acting directly or indirectly, in connection with Telemarketing of any product or service, are hereby preliminarily restrained and enjoined from engaging in violations of the Telemarketing Sales Rule, 16 C.F.R. Part 310, including, but not limited to:

A. Initiating, or causing others to initiate, an outbound telephone call (1) to a person's telephone number on the National Do Not Call Registry or (2) to a person who previously has stated that he or she does not wish to receive an outbound telephone call made by or on behalf of the seller whose goods or services are being offered;

B. Causing the telephone to ring or engaging persons in telephone conversation repeatedly or continuously, with intent to annoy, abuse, or harass the person at the called number;

C. Threating, intimidating, or the using of profane or obscene language; or

D. Initiating outbound telephone calls to a telephone number within a given area code on behalf of a seller who has not, either directly or through another person, paid the required annual fee for access to the telephone numbers within that ...


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