STEPHEN V. WILSON, District Judge.
Plaintiff the Federal Trade Commission ("FTC" or "Commission"), filed its Complaint for permanent injunction and other equitable relief in this matter pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b) against AlliedWallet, Inc., Allied Wallet, Ltd., GTBill, LLC, and GTBill Ltd., Ahmad Khawaja (also known as Andy Khawaja), Mohammad Diab (also known as Moe Diab), and Amy Rountree (collectively, "Defendants"). Defendant Amy Rountree ("Defendant Rountree") has waived service of the summons and the Complaint. The FTC and Defendant Rountree stipulate to the entry of this Stipulated Final Order for Permanent Injunction and Monetary Judgment ("Order") to resolve all matters in dispute in this action between them.
THEREFORE, IT IS ORDERED as follows:
1. This Court has jurisdiction over this matter.
2. The Complaint charges that Defendant Rountree participated in unfair acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a), by processing or arranging for processing of charges to consumers' credit and debit cards on behalf of Defendants' Clients, which had obtained the payments through fraud or were otherwise violating the law.
3. Defendant Rountree neither admits nor denies any of the allegations in the Complaint, except as specifically stated in this Order. Only for purposes of this action, Defendant Rountree admits the facts necessary to establish jurisdiction.
4. Defendant Rountree waives any claim that she may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and agrees to bear her own costs and attorney fees.
5. Defendant Rountree and the Commission waive all rights to appeal or otherwise challenge or contest the validity of this Order.
For the purpose of this Order, the following definitions apply:
A.
B.
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D.
E.
F.
G.
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I.
J.
K.
L.
M.
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O.
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V.
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AA.
BB.
IT IS ORDERED that Defendant Rountree, whether acting directly or through an intermediary, is permanently restrained and enjoined from Payment Processing, and from assisting others engaged in Payment Processing, whether directly or through an intermediary, for any Person:
A. Offering to sell, selling, promoting or marketing the following goods or services:
B. Engaged in Outbound Telemarketing;
C. Listed on the Mastercard Member Alert to Control High-Risk Merchants (MATCH) list for any of the following reasons: excessive Chargebacks or fraud, fraud conviction, laundering, identification as a Questionable Merchant per the Mastercard Questionable Merchant Audit Program, merchant collusion, illegal transactions, or identity theft;
D. Registered as, or qualifies for registration as, a high risk-merchant type according to Mastercard or Visa's rules and regulations; or
E. That is a Covered Client subject to an Order from any lawsuit brought by the Commission or any other state or federal law enforcement agency relating to consumer protection or telemarketing laws or regulations.
IT IS FURTHER ORDERED that Defendant Rountree, whether acting directly or through an intermediary, is permanently restrained and enjoined from Credit Card Laundering, and from assisting others engaged in Credit Card Laundering, whether directly or through an intermediary.
IT IS FURTHER ORDERED that Defendant Rountree, Defendant Rountree's 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, are each permanently restrained and enjoined from:
A. Making, or assisting others in making, directly or by implication, any false or misleading statement in order to obtain Payment Processing services, including but not limited to false or misleading statements about the geographic location, name, identity, or corporate form of the Merchant;
B. Failing to disclose to an Acquirer or other Financial Institution, service provider, Payment Processor, ISO, or other entity that enables a Person to accept payments of any kind any material information related to a Merchant Account including, but not limited to, (a) the identity of any owner, manager, director, or officer of the applicant for or holder of a Merchant Account, and (b) any connection between an owner, manager, director, or officer of the applicant for or holder of a Merchant Account and any Person who, for a reason related to excessive Chargebacks or fraud, identification as a Questionable Merchant per the Mastercard Questionable Merchant Audit Program, merchant collusion, illegal transaction, or identity theft, had a Merchant Account terminated by a Payment Processor or a Financial Institution, or has been fined or otherwise disciplined in connection with a Merchant Account by a Payment Processor or a Financial Institution; and
C. Engaging in any tactics to avoid fraud and risk monitoring programs established by any Financial Institution, Acquirer, or the operators of any payment system, including, but not limited to, balancing or distributing sales transaction volume or sales transaction activity among multiple Merchant Accounts or merchant billing descriptors; splitting a single sales transaction into multiple smaller transactions; or using a shell company to apply for a Merchant Account.
IT IS FURTHER ORDERED that Defendant Rountree, Defendant Rountree's 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, are permanently restrained and enjoined from providing substantial assistance or support to any Person that they know, or should know, is engaged in:
A. Misrepresenting, directly or by implication, any material aspect of the performance, efficacy, nature, or central characteristics of any goods or services;
B. Misrepresenting, directly or by implication, any material aspect of the nature or terms of any refund, cancellation, exchange, or repurchase policies;
C. The unauthorized debiting or charging of consumer bank or credit card accounts; or
D. Any deceptive, unfair, or abusive act or practice prohibited by Section 5 of the FTC Act or by the TSR.
IT IS FURTHER ORDERED that Defendant Rountree, Defendant Rountree's 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, are permanently restrained and enjoined from Payment Processing or acting as an ISO or Sales Agent for any prospective High Risk Client without first engaging in a reasonable screening of the prospective High Risk Client to determine whether the prospective High Risk Client's business practices are, or are likely to be, deceptive or unfair within the meaning of Section 5 of the FTC Act, or violation of the Telemarketing Sales Rule. Such reasonable screening shall include, but not be limited to:
A. Obtaining from each prospective High Risk Client, including the principal(s) and controlling Person(s) of the entity, any Person(s) with a majority ownership interest in the entity, and any corporate name, trade name, fictitious name or aliases under which such Person(s) conduct or have conducted business:
1. A description of the nature of the prospective High Risk Client's business, including describing the nature of the goods and services sold and methods of sale, for which the prospective High Risk Client seeks Payment Processing services;
2. The name of the principal(s) and controlling Person(s) of the entity, and Person(s) with a majority ownership interest in the entity;
3. A list of all business and trade names, fictitious names, DBAs, and Internet websites under or through which the prospective High Risk Client has marketed or intends to market the goods and services for which the prospective High Risk Client seeks Payment Processing services;
4. Each physical address at which the prospective High Risk Client has conducted business or will conduct the business(es) identified pursuant to subsection (1) of this Section V.A;
5. The name and address of every Acquirer, originating depository Financial Institution (if Defendant proposes to provide Payment Processing services for ACH Debit or RCPO transactions to such prospective High Risk Client), and Payment Processor used by the prospective High Risk Client during the preceding two years, and all merchant identification numbers used by any such banks or Payment Processors in connection with the prospective High Risk Client;
6. The prospective High Risk Client's past Chargeback Rate and Total Return Rate (if Defendant proposes to provide Payment Processing services for ACH Debit or RCPO transactions) for the preceding three (3) months, or for the preceding six months if the prospective High Risk Client is a Covered Client, and estimates of future Chargeback Rates and Total Return Rates (if Defendant proposes to provide Payment Processing services for ACH Debit or RCPO transactions);
7. The names of trade and bank references; and
8. Whether the prospective High Risk Client, including the principal(s) and controlling Person(s) of the entity, any Person(s) with a majority ownership interest in the entity, and any corporate name, trade name, fictitious name or aliases under which such Person(s) conduct or have conducted business, has ever been:
B. Taking reasonable steps to assess the accuracy of the information provided pursuant to Sections V.A of this Order, including but not limited to: reviewing the Internet websites used by the prospective High Risk Client to market its goods or services; obtaining and reviewing copies of monthly Payment Processing statements issued by any bank, ISO, Sales Agent, Acquirer, or Payment Processor used by the High Risk Client during the preceding six (6) months; obtaining and reviewing all current marketing materials for each good or service related to the offer for which Defendant Rountree would provide the prospective High Risk Client with Payment Processing, ISO, or Sales Agent services. The purpose of such steps is to determine whether the prospective High Risk Client is engaged in any of the following acts or practices, in which case Defendant Rountree shall not provide Payment Processing or act as an ISO or Sales Agent for the prospective High Risk Client:
1. Failing to clearly and conspicuously disclose all products and services that are sold in conjunction with the offered product or service, and the total cost to purchase, receive, or use, any products or services that are the subject of the sales offer;
2. Misrepresenting any material aspect of the performance, efficacy, nature, or central characteristics of goods or services that are the subject of the sales offer;
3. Failing to clearly and conspicuously disclose all material terms and conditions of an offer;
4. Misrepresenting, expressly or by implication, any material aspect of the prospective High Risk Client's refund, cancellation, exchange, or repurchase policies; and
5. Causing billing information to be submitted for payment without the customer's express authorization.
IT IS FURTHER ORDERED that Defendant Rountree, Defendant Rountree's 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 Payment Processing or acting as an ISO or Sales Agent, are permanently restrained and enjoined from:
A. Failing to monitor the sales activity of all current Clients to identify Clients that should be designated as High Risk Clients requiring additional screening pursuant to Section V of this Order, and for newly-designated High Risk Clients, failing to complete the reasonable screening process described in Section V of the Order within a one month period;
B. Failing to monitor each High Risk Client's transactions to determine whether the High Risk Client is engaged in practices that are deceptive or unfair in violation of Section 5 of the FTC Act. Such monitoring shall include, but not be limited to, regularly reviewing High Risk Clients' Internet websites from an IP address that is not associated with Defendant Rountree, regularly reviewing each High Risk Client's Chargeback Rates, Total Return Rates (if Defendant proposes to provide Payment Processing services for ACH Debit or RCPO transactions), and reasons provided for these rates, as well as examining any unusual or suspect transaction patterns, values, and volume;
C. Failing to calculate and update at least on a monthly basis for each High Risk Client the Chargeback Rate and Total Return Rate (if Defendant proposes to provide Payment Processing services for ACH Debit or RCPO transactions). For any Client with multiple processing accounts, the calculation of the Chargeback Rate and Total Return Rate shall be made for each of the High Risk Client's individual processing accounts, and in the aggregate for each High Risk Client;
D. Failing to immediately stop processing sales transactions and, as soon as practical but in no more than 5 days, close all processing accounts for:
1. Any Covered Client whose Total Return Rate exceeds two and one-half percent (2.5%) and whose total number of ACH Debit or RCPO returned transactions in any month exceeds forty (40) transactions;
2. Any Covered Client whose monthly Chargeback Rate exceeds one percent (1%) and whose total number of Chargebacks exceeds forty (40) in two of the past six months; and
3. Any Covered Client that Defendant Rountree knows or should know is engaged in tactics to avoid fraud and risk monitoring programs established by any Financial Institution, Acquirer, or the operators of any payment system, including, but not limited to, balancing or distributing sales transaction volume or sales transaction activity among multiple Merchant Accounts or merchant billing descriptors; splitting a single sales transaction into multiple smaller transactions, or using shell companies to apply for additional Merchant Accounts.
E. Failing to immediately conduct a reasonable investigation of the cause of Total Return Rate (if Defendant Rountree proposes to provide Payment Processing services for ACH Debit or RCPO transactions) or Chargeback Rates (a reasonable investigation includes, but is not limited to: verifying and updating the truth and accuracy of information gathered in compliance with Section V of this Order and any other advertising of the High Risk Client; confirming that the High Risk Client has obtained required consumer authorizations for the transactions; contacting Financial Institutions and Better Business Bureaus to gather detailed information, including complaints and other relevant information, regarding the High Risk Client; reviewing from an IP address that is not associated with Defendant Rountree the Internet websites used by the High Risk Client to market its goods and services; searching publicly available sources for legal actions taken by the Commission or other state or federal law enforcement agencies against the High Risk Client; and conducting "test" shopping to determine the High Risk Client's sales practices, where possible) for:
1. Any High Risk Client, excluding Covered Clients, whose Total Return Rate exceeds two and one-half percent (2.5%) and whose total number of ACH Debit or RCPO returned transactions in any month exceeds forty (40); and
2. Any High Risk Client, excluding Covered Clients, whose monthly Chargeback Rate exceeds one percent (1%) and whose total number of Chargebacks exceeds forty (40) in two of the past six months.
F. Failing to stop processing sales transactions and close all processing accounts for any High Risk Client investigated pursuant to Subsection E, above, within 60 days of commencing the investigation, unless Defendant Rountree drafts a written report establishing facts that demonstrate, by clear and convincing evidence, that the High Risk Client's business practices related to the offer(s) for which Defendant Rountree provides Payment Processing are not deceptive or unfair in violation of Section 5 of the FTC Act and are not in violation of the Telemarketing Sales Rule.
G. Failing to immediately stop processing sales transactions and close all processing accounts for any High Risk Client that Defendant Rountree knows or should know is engaged in tactics to avoid fraud and risk monitoring programs established by any Financial Institution, Acquirer, or the operators of any payment system, including, but not limited to, balancing or distributing sales transaction volume or sales transaction activity among multiple Merchant Accounts or merchant billing descriptors; splitting a single sales transaction into multiple smaller transactions, or using shell companies to apply for additional Merchant Accounts.
IT IS FURTHER ORDERED that:
A. Judgment in the amount of Three Hundred and Twenty Thousand, Four Hundred and Nine Dollars and Eighty-Two Cents ($320,429.82) is entered in favor of the Commission against Defendant Rountree as equitable monetary relief.
B. The judgment is suspended, subject to the Subsections below.
C. The Commission's agreement to the suspension of the judgment is expressly premised upon the truthfulness, accuracy, and completeness of Defendant Rountree's sworn financial statements and related documents (collectively, "financial representations") submitted to the Commission, namely:
1. the Financial Statement of Amy Rountree digitally signed by Defendant Rountree on January 2, 2019, including the attachments, submitted by email by Defendant Rountree's counsel's assistant, Taly Goody, to Commission counsel Andrew Hudson on January 4, 2019; and
2. information submitted via email from Defendant Rountree's counsel David Steiner to Commission counsel Andrew Hudson on February 15, 2019, regarding personal property.
D. The suspension of the judgment will be lifted as to Defendant Rountree if, upon motion by the Commission, the Court finds that Defendant Rountree failed to disclose any material asset, materially misstated the value of any asset, or made any other material misstatement or omission in the financial representations identified above.
E. If the suspension of the judgment is lifted, the judgment becomes immediately due as to Defendant Rountree in the amount specified in Subsection A above (which the parties stipulate only for purposes of this Section represents the amount by which Defendant Rountree was unjustly enriched by the conduct alleged in the Complaint), plus interest computed from the date of entry of this Order.
IT IS FURTHER ORDERED that:
A. Defendant Rountree relinquishes dominion and all legal and equitable right, title, and interest in all assets transferred pursuant to this Order and may not seek the return of any assets.
B. The facts alleged in the Complaint will be taken as true, without further proof, in any subsequent civil litigation by or on behalf of the Commission, including in a proceeding to enforce its rights to any payment or monetary judgment pursuant to this Order, such as a nondischargeability complaint in any bankruptcy case.
C. The facts alleged in the Complaint establish all elements necessary to sustain an action by the Commission pursuant to Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and this Order will have collateral estoppel effect for such purposes.
D. Defendant Rountree acknowledges that her Taxpayer Identification Number (Social Security Number), which Defendant Rountree has submitted to the Commission, may be used for collecting and reporting on any delinquent amount arising out of this Order, in accordance with 31 U.S.C. § 7701.
E. All money paid to the Commission pursuant to this Order may be deposited into a fund administered by the Commission or its designee to be used for equitable relief, including consumer redress and any attendant expenses for the administration of any redress fund. If a representative of the Commission decides that direct redress to consumers is wholly or partially impracticable or money remains after redress is completed, the Commission may apply any remaining money for such other equitable relief (including consumer information remedies) as it determines to be reasonably related to Defendant Rountree's practices alleged in the Complaint. Any money not used for such equitable relief is to be deposited to the U.S. Treasury as disgorgement. Defendant Rountree has no right to challenge any actions the Commission or its representatives may take pursuant to this Subsection.
IT IS FURTHER ORDERED that Defendant Rountree must fully cooperate with representatives of the Commission in this case and in any investigation related to or associated with the transactions or the occurrences that are the subject of the Complaint. Defendant Rountree must provide truthful and complete information, evidence, and testimony. Defendant Rountree must appear for interviews, discovery, hearings, trials, and any other proceedings that a Commission representative may reasonably request upon 5 days written notice, or other reasonable notice, at such places and times as a Commission representative may designate, without the service of a subpoena. Nothing in this Section IX precludes Defendant Rountree from invoking her constitutional Fifth Amendment privilege against self-incrimination.
IT IS FURTHER ORDERED that Defendant Rountree obtain acknowledgments of receipt of this Order:
A. Defendant Rountree, within 7 days of entry of this Order, must submit to the Commission an acknowledgment of receipt of this Order sworn under penalty of perjury.
B. For 10 years after entry of this Order, Defendant Rountree for any business that she, individually or collectively with any other Defendants, is the majority owner or controls directly or indirectly, must deliver a copy of this Order to: (1) all principals, officers, directors, and LLC managers and members; (2) all employees having managerial responsibilities for Payment Processing services and all agents and representatives who participate in providing Payment Processing services; (3) any business entity resulting from any change in structure as set forth in the Section titled Compliance Reporting; and (4) any Acquirer, Payment Processor, Payment Facilitator, or ISO that provides Defendant Rountree with a Merchant Account now or in the future.
C. Delivery of this Order must occur within 7 days of entry of this Order for current personnel. For all other personnel, delivery must occur before they assume their responsibilities.
D. From each individual or entity to which Defendant Rountree delivered or delivers a copy of this Order, that Defendant Rountree must obtain, within 30 days, a signed and dated acknowledgment of receipt of this Order.
IT IS FURTHER ORDERED that Defendant Rountree make timely submissions to the Commission:
A. One year after entry of this Order, Defendant Rountree must submit a compliance report, sworn under penalty of perjury:
1. Defendant Rountree must: (a) identify the primary physical, postal, and email address and telephone number, as designated points of contact, which representatives of the Commission may use to communicate with Defendant Rountree; (b) identify all of Defendant Rountree's businesses by all of their names, telephone numbers, and physical, postal, email, and Internet addresses; (c) describe the activities of each business, including the goods and services offered, the means of advertising, marketing, and sales, and the involvement of any other Defendant (which Defendant Rountree must describe if she knows or should know due to her own involvement); (d) describe in detail whether and how Defendant Rountree is in compliance with each Section of this Order; and (e) provide a copy of each Order Acknowledgment obtained pursuant to this Order, unless previously submitted to the Commission.
2. Additionally, Defendant Rountree must: (a) identify all telephone numbers and all physical, postal, email and Internet addresses, including all residences; (b) identify all business activities, including any business for which she performs services whether as an employee or otherwise and any entity in which she has any ownership interest; and (c) describe in detail her involvement in each such business, including title, role, responsibilities, participation, authority, control, and any ownership.
B. For 10 years after entry of this Order, Defendant Rountree must submit a compliance notice, sworn under penalty of perjury, within 14 days of any change in the following:
1. Defendant Rountree must report any change in: (a) any designated point of contact; or (b) the structure of any entity that Defendant Rountree has any ownership interest in or controls directly or indirectly that may affect compliance obligations arising under this Order, including: creation, merger, sale, or dissolution of the entity or any subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order.
2. Additionally, Defendant Rountree must report any change in: (a) name, including aliases or fictitious name, or residence address; or (b) title or role in any business activity, including any business for which she performs services whether as an employee or otherwise and any entity in which she has any ownership interest, and identify the name, physical address, and any Internet address of the business or entity.
C. Defendant Rountree must submit to the Commission notice of the filing of any bankruptcy petition, insolvency proceeding, or similar proceeding by or against Defendant Rountree within 14 days of its filing.
D. Any submission to the Commission required by this Order to be sworn under penalty of perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by concluding: "I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on: _____" and supplying the date, signatory's full name, title (if applicable), and signature.
E. Unless otherwise directed by a Commission representative in writing, all submissions to the Commission pursuant to this Order must be emailed to DEbrief@ftc.gov or sent by overnight courier (not the U.S. Postal Service) to: Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. The subject line must begin: FTC v. Amy Rountree, Matter No. 1723155.
IT IS FURTHER ORDERED that Defendant Rountree must create certain records for 10 years after entry of the Order, and retain each such record for 5 years. Specifically, Defendant Rountree for any business that she, individually or collectively with any other Defendants, is a majority owner or controls directly or indirectly, must create and retain the following records:
A. accounting records showing the revenues from all goods or services sold;
B. personnel records showing, for each person providing services, whether as an employee or otherwise, that person's: name; addresses; telephone numbers; job title or position; dates of service; and (if applicable) the reason for termination;
C. records of all consumer complaints and refund requests pertaining to Payment Processing Services, whether received directly or indirectly, such as through a third party, and any response;
D. records necessary to demonstrate that Defendant Rountree has requested, received, and reviewed the scripts, advertising and marketing materials of any Person for whom she provides any services;
E. all records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Commission;
F. documents sufficient to show monthly and yearly Chargeback and refund amounts both by dollar amounts and number of transactions; and
G. all communications and contracts with credit card companies, banks, Financial Institutions and Payment Processors.
IT IS FURTHER ORDERED that, for the purpose of monitoring Defendant Rountree's compliance with this Order and any failure to transfer any assets as required by this Order:
A. Within 14 days of receipt of a written request from a representative of the Commission, Defendant Rountree must: submit additional compliance reports or other requested information, which must be sworn under penalty of perjury; appear for depositions; and produce documents for inspection and copying. The Commission is also authorized to obtain discovery, without further leave of court, using any of the procedures prescribed by Federal Rules of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 45, and 69.
B. For matters concerning this Order, the Commission is authorized to communicate directly with each Defendant Rountree. Defendant Rountree must permit representatives of the Commission to interview any employee or other Person affiliated with any Defendant Rountree who has agreed to such an interview. The Person interviewed may have counsel present.
C. The Commission may use all other lawful means, including posing, through its representatives as consumers, suppliers, or other individuals or entities, to Defendant Rountree or any individual or entity affiliated with Defendant Rountree, without the necessity of identification or prior notice. Nothing in this Order limits the Commission's lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1.
D. Upon written request from a representative of the Commission, any consumer reporting agency must furnish consumer reports concerning Defendant Rountree pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C. § 1681b(a)(1).
IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order.
