JAMES D. WHITTEMORE, District Judge.
Plaintiff, the Federal Trade Commission ("Commission" or "FTC") filed its Complaint for Permanent Injunction and Other Equitable Relief ("Complaint") in this matter pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b), and 57b, and the FTC's Trade Regulation Rule entitled "Disclosure Requirements and Prohibition Concerning Business Opportunities" ("Business Opportunity Rule" or "Rule"), 16 C.F.R. Part 437, as amended. The Commission and Defendants The Online Entrepreneur, Inc., Ben and Dave's Consulting Associates, Inc., and David Clabeaux (collectively "Settling Defendants") stipulate to the entry of this Order for Permanent Injunction and Monetary Judgment ("Final Order") to resolve all matters in dispute in this action between them.
1. This Court has jurisdiction over this matter.
2. The Complaint charges that Settling Defendants violated of Section 5 of the FTC Act, 15 U.S.C. § 45 and 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, in connection with the advertising, marketing and sale of a business opportunity.
3. Settling Defendants neither admit nor deny any of the allegations in the Complaint, except as specifically stated in this Final Order. Only for purposes of this action, Settling Defendants admit the facts necessary to establish jurisdiction.
4. Settling Defendants waive any claim that they 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 Final Order, and agree to bear their own costs and attorney fees.
5. The Settling Defendants waive all rights to appeal or otherwise challenge or contest the validity of this Final Order.
For the purpose of this order, the following definitions shall apply:
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
A. Advertising, marketing, promoting, offering for sale, or assisting others in the advertising, marketing, promoting, or offering for sale of any (1) Business Opportunity, (2) Work-at-Home Opportunity, or (3) service to assist in the creation, advertising, marketing, promotion, or operation of a Business Opportunity or Work-at-Home Opportunity, including, but not limited to website development, advertising, marketing, lead generation, social media promotion, search engine optimization, training, and business establishment services; and
B. Holding any ownership interest, share, or stock in any business, other than a publicly traded company, that engages in or assists in advertising, marketing, promoting, offering for sale of any (1) Business Opportunity, (2) Work-at-Home Opportunity, or (3) service to assist in the creation, advertising, marketing, promotion, or operation of a Business Opportunity or Work-at-Home Opportunity, including, but not limited to website development, advertising, marketing, lead generation, social media promotion, search engine optimization, training, and business establishment services.
A. Misrepresenting, or assisting others in misrepresenting, expressly or by implication:
B. Failing to disclose truthfully in a Clear and Conspicuous manner, before consumers provide any billing information or incur a charge, the material terms and conditions of the offer, including but not limited to:
C. Making expressly or by implication, a representation enumerated in Section II.A., unless the representation is true, and at the time it is made, Settling Defendants possess and rely upon competent and reliable evidence that, when evaluated in an objective manner, substantiates the claim;
D. Assisting others in failing to disclose information set forth in Section H.B.
A. Judgment in the amount of $2,923,318.00 (two million nine hundred and twenty-three thousand three hundred and eighteen dollars) is entered in favor of the Commission against the Settling Defendants, jointly and severally, as equitable monetary relief.
B. In partial satisfaction of the judgment against Settling Defendants, within ten (10) days of the date of entry of this Final Order:
C. Upon such payment and all other asset transfers set forth in Section III, the remainder of the judgment as to Settling Defendants is suspended, subject to the Subsections below.
D. The Commission's agreement to the suspension of part of the judgment is expressly premised upon the truthfulness, accuracy, and completeness of the Settling Defendants' sworn financial statements and related documents (collectively, "Financial Statements") submitted to the Commission, namely:
E. In the event that it is necessary to execute additional documents to transfer or liquidate assets of any Settling Defendant under this Final Order, or to dissolve and wind down the Receivership Defendants, Settling Defendants shall execute such documents within three (3) days of a written request from the Receiver or the Commission.
F. The suspension of the judgment will be lifted as to any Settling Defendant if, upon motion by the Commission, the Court finds that Settling Defendant 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.
G. If the suspension of the judgment is lifted, the judgment becomes immediately due as to that Settling Defendant in the amount specified in Subsection III. A, above which the parties stipulate only for purposes of this Section represents the consumer injury alleged in the Complaint, less any payment previously made pursuant to this Section, plus interest computed from the date of entry of this Final Order.
H. Settling Defendants relinquish dominion and all legal and equitable right, title, and interest in all assets transferred pursuant to this Final Order and may not seek the return of any assets.
I. 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 Final Order, such as a nondischargeability complaint in any bankruptcy case.
J. 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 Final Order will have collateral estoppel effect for such purposes.
K. Settling Defendants acknowledge that their Taxpayer Identification Numbers (Social Security Numbers or Employer Identification Numbers), which Settling Defendants previously submitted to the Commission, may be used for collecting and reporting on any delinquent amount arising out of this Final Order, in accordance with 31 U.S.C. § 7701.
L. All money paid to the Commission pursuant to this Final 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 Settling Defendants' practices alleged in the Complaint. Any money not used for such equitable relief is to be deposited to the U.S. Treasury as disgorgement. Settling Defendants have no right to challenge any actions the Commission or its representatives may take pursuant to this Subsection.
A. Except as modified by this Section of the Final Order, the receivership imposed by this court shall continue in the manner set forth in the Preliminary Injunction Order entered in this matter on November 6, 2012 (Dkt. 22).
B. The Receiver shall take all necessary steps to wind down the affairs of the Receivership Defendants.
C. The Receiver shall forthwith take all steps necessary to liquidate the receivership assets and those assets that are surrendered pursuant to Section III of this Final Order and, after such liquidation, shall promptly remit the net proceeds to the Plaintiff as payment toward the monetary judgment entered against Settling Defendants. The Receiver is authorized to withhold a reasonable sum, not to exceed ten (10) percent of the net proceeds of the sale of any non-liquid assets surrendered pursuant to Section III as costs, fees, and expenses.
D. The Receiver shall continue to be entitled to compensation for the performance of his duties pursuant to this Final Order from the assets of the Receivership Defendants, at the billing rate previously agreed to by the Receiver. Within sixty (60) days after entry of this Final Order, and every sixty (60) days thereafter, the Receiver shall file with the court a report detailing the action he has taken to wind down the affairs, marshal, and liquidate receivership assets and those assets that are surrendered pursuant to Section III of this Final Order, shall account for all assets marshaled, and shall submit any request for payment of reasonable compensation.
E. The Receiver shall file his Final Report within one hundred and eighty ( 180) days after entry of this Final Order, unless this time is extended by the court for good cause. Upon approval of the Receiver's final report and request for payment, the receivership shall be terminated and all funds remaining after payment of the Receiver's final approved payment shall be remitted immediately to the FTC or its designated representative in partial satisfaction of the judgment pursuant to Section Ill of this Final Order.
F. Any and all uncollected judgments obtained for the benefit of the Receivership Defendants shall be assigned to the Commission for further collection efforts.
A. Failing to provide sufficient customer information to enable the Commission to efficiently administer consumer redress. If a representative of the Commission requests in writing any information related to redress, Settling Defendants must provide it, in the form prescribed by the Commission, within fourteen (14) days.
B. Disclosing, using, or benefitting from customer information, including the name, address, telephone number, email address, social security number, other identifying information, or any data that enables access to a customer's account (including a credit card, bank account, or other financial account), that any Settling Defendant obtained prior to entry of this Final Order in connection with the advertising, marketing, promotion, offering for sale, or sale of business opportunities or work-at-home opportunities; and
C. Failing to destroy such customer information in all forms in their possession, custody, or control within thirty (30) days after receipt of written direction to do so from a representative of the Commission.
Provided, however, that customer information need not be disposed of, and may be disclosed, to the extent requested by a government agency or required by law, regulation, or court order.
A. Each Settling Defendant, within seven (7) days of entry of this Final Order, must submit to the Commission an acknowledgment of receipt of this Final Order sworn under penalty of perjury.
B. For fifteen (15) years after entry of this Final Order, the Settling Individual Defendant for any business that he, individually or collectively with any other Defendant, is the majority owner or controls directly or indirectly, and each Settling Corporate Defendant, must deliver a copy of this Final Order to: (I) all principals, officers, directors, and LLC managers and members; (2) all employees, agents, and representatives who participate in the advertising, marketing, promoting, offering for sale or sale of any business opportunity or work-at-home opportunity; and (3) any business entity resulting from any change in structure as set forth in the Section titled Compliance Reporting. Delivery must occur within seven (7) days of entry of this Final Order for current personnel. For all others, delivery must occur before they assume their responsibilities.
C. From each individual or entity to which a Settling Defendant delivered a copy of this Final Order, that Settling Defendant must obtain, within thirty (30) days, a signed and dated acknowledgment of receipt of this Final Order.
A. One (1) year after entry of this Final Order, each Settling Defendant must submit a compliance report, sworn under penalty of perjury:
B. For fifteen (15) years following entry of this Final Order, each Settling Defendant must submit a compliance notice, sworn under penalty of perjury, within fourteen (14) days of any change in the following:
C. Each Settling Defendant must submit to the Commission notice of the filing of any bankruptcy petition, insolvency proceeding, or any similar proceeding by or against such Settling Defendant within fourteen (I 4) days of its filing.
D. Any submission to the Commission required by this Final Order to be sworn under penalty of perjury must be true and accurate and comply with 28 U.S.C. § I 746, such as by concluding: "l 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 Final Order must be emailed to
The subject line must begin: FTC v. The Online Entrepreneur, Inc., et al., X130013.
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, whether receive directly or indirectly, such as through a third party, and any response;
D. All records necessary to demonstrate full compliance with each provision of this Final Order, including all submissions to the Commission; and
E. A copy of each advertisement or other marketing material.
A. Within fourteen (14) days of receipt of a written request from a representative of the Commission, each Settling Defendant 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. Upon written request from a representative of the Commission, any credit reporting agency must furnish consumer reports concerning the Settling Defendants pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C. § 1681b(a)(1).
C. For matters concerning this Final Order, the Commission is authorized to communicate directly with each Settling Defendant. Settling Defendant must permit representatives of the Commission to interview any employee or other person affiliated with any Settling Defendant who has agreed to such an interview. The person interviewed may have counsel present.
D. The Commission may use all other lawful means, including posing, through its representatives as consumers, suppliers, or other individuals or entities, to Settling Defendants or any individual or entity affiliated with Settling Defendants, without the necessity of identification or prior notice. Nothing in this Final 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.
