ORDER FOR PRELIMINARY INJUNCTION
MICHAEL W. FITZGERALD, District Judge.
Plaintiff, the Federal Trade Commission ("FTC"), commenced this civil action on July 14, 2014, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. §§ 53(b), 57(b) and 12 U.S.C. § 5538, to obtain preliminary and permanent injunctive and other equitable relief for Defendants' violations of Section 5 of the FTC Act, 15 U.S.C. § 45, the Mortgage Assistance Relief Services Rule ("MARS Rule"), 16 C.F.R. Part 322, re-codified as Mortgage Assistance Relief Services ("Regulation O"), 12 C.F.R. Part 1015, in connection with the marketing and sale of mortgage assistance relief services. The Court enters this preliminary injunction order ("Order").
THEREFORE, IT IS ORDERED as follows:
FINDINGS
1. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), and 1345; 15 U.S.C. §§ 45(a), 53(b), and 57b, and Section 626 of the Omnibus Act, as clarified by Section 511 of the Credit Card Act, and amended by Section 1097 of the Dodd-Frank Act, 12 U.S.C. § 5538.
2. Venue is proper in this District under 28 U.S.C. § 1391(b)(1), (b)(2), (b)(3), (c)(1), (c)(2), and (d), and 15 U.S.C. § 53(b).
3. There is good cause to believe that Defendants have engaged, and are likely to continue to engage, in acts or practices that violate Section 5 of the FTC Act, 15 U.S.C. § 45 and Regulation O, and that the FTC is, therefore, likely to prevail on the merits of this action.
4. Balancing the equities and considering the FTC's likelihood of success on the merits, the entry of this Order is in the public interest.
5. As an agency of the United States, the FTC need not post a security for the issuance of a preliminary injunction. Fed. R. Civ. P. 65(c).
DEFINITIONS
1. "Corporate Defendants" means Mortgage Relief Advocates, LLC, a California Limited Liability Company, also d/b/a The MRA Group, and National Forensic Loan Audit Servicers, LLC, a California Limited Liability Company, Evertree, LLC, a California Limited Liability Company, and Key Stone Real Estate, LLC, a California Limited Liability Company.
2. "Defendants" means all of the Individual Defendants and the Corporate Defendants, individually, collectively, or in any combination.
3. "Individual Defendants" means Pablo Rodriguez and Michael Rodriguez.
4. "Document" and "Electronically Stored Information" are synonymous in meaning and equal in scope to the usage of the terms in Rule 34(a) of the Federal Rules of Civil Procedure and include, but are not limited to:
a. The original or a true copy of any written, typed, printed, electronically stored, transcribed, taped, recorded, filmed, punched, or graphic matter or other data compilations of any kind, including, but not limited to, letters, email or other correspondence, messages, memoranda, interoffice communications, notes, reports, summaries, manuals, magnetic tapes or discs, tabulations, books, records, checks, invoices, work papers, journals, ledgers, statements, returns, reports, schedules, or files; and
b. Any electronically stored information stored on any server, Blackberrys or any type of mobile device, flash drives, personal digital assistants ("PDAs"), desktop personal computer and workstations, laptops, notebooks, and other portable computers, or other electronic storage media, whether assigned to individuals or in pools of computers available for shared use, or personally owned but used for work-related purposes; backup disks and tapes, archive disks and tapes, and other forms of offline storage, whether stored onsite with the computer used to generate them, stored offsite in another company facility, or stored, hosted, or otherwise maintained offsite by a third-party; and computers and related offline storage used by Defendants, or Defendants' participating associates, which may include persons who are not employees of the company or who do not work on company premises.
5. "Electronic Data Host" means any person or entity in the business of storing, hosting, or otherwise maintaining electronically stored information.
6. "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.
7. "Mortgage assistance relief product or service" means any product, service, plan, or program, offered or provided to the consumer in exchange for consideration, that is represented, expressly or by implication, to assist or attempt to assist the consumer with any of the following:
a. stopping, preventing, or postponing any mortgage or deed of trust foreclosure sale for the consumer's dwelling, any repossession of the consumer's dwelling, or otherwise saving the consumer's dwelling from foreclosure or repossession;
b. negotiating, obtaining, or arranging a modification of any term of a dwelling loan, including a reduction in the amount of interest, principal balance, monthly payments, or fees;
c. obtaining any forbearance or modification in the timing of payments from any dwelling loan holder or servicer on any dwelling loan;
d. negotiating, obtaining, or arranging any extension of the period of time within which the consumer may (i) cure his or her default on a dwelling loan, (ii) reinstate his or her dwelling loan, (iii) redeem a dwelling, or (iv) exercise any right to reinstate a dwelling loan or redeem a dwelling;
e. obtaining any waiver of an acceleration clause or balloon payment contained in any promissory note or contract secured by any dwelling; or
f. negotiating, obtaining, or arranging (i) a short sale of a dwelling, (ii) a deed-in-lieu of foreclosure, (iii) or any other disposition of a dwelling other than a sale to a third party that is not the dwelling loan holder. The foregoing shall include any manner of claimed assistance, including, but not limited to, auditing or examining a consumer's mortgage or home loan application and offering to provide or providing legal services, or offering to sell a consumer a plan or subscription to a service that provides such assistance.
8. "Person" means any individual, group, unincorporated association, limited or general partnership, corporation or other business entity.
ORDER
I
PROHIBITED MISREPRESENTATIONS
IT IS THEREFORE ORDERED that Defendants, Defendants' officers, agents, servants, 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 the advertising, marketing, promotion, offering for sale, sale, or provision of any mortgage assistance relief service, are preliminarily restrained and enjoined from misrepresenting or assisting others in misrepresenting, expressly or by implication:
A. that any Defendant or any other person:
1. will obtain for consumers mortgage loan modifications that will make consumers' payments substantially more affordable, or will help consumers avoid foreclosure;
2. typically will deliver the promised result from the mortgage assistance relief service within four to six months; and
3. as a result of various loan audits, research, and reviews, including a forensic loan audit, generally will obtain for consumers mortgage loan modifications that will make consumers' payments substantially more affordable, or will help consumers avoid foreclosure;
B. the amount of time it will take the mortgage assistance relief service provider to accomplish any represented service or result;
C. the degree of success that any Defendant or any other person has had in performing any mortgage assistance relief service, including through the provision of legal services; and
D. the frequency that audits and reviews of consumers' mortgage loans and transactions conducted by Defendants or any other person reveal fraud, errors, or predatory acts.
II.
DISCLOSURES REQUIRED BY AND REPRESENTATIONS PROHIBITED BY THE MARS RULE
IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, servants, 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 the advertising, marketing, promotion, offering for sale, sale, or provision of any mortgage assistance relief service, are hereby preliminarily restrained and enjoined from engaging in, or assisting others in engaging in, the following conduct:
A. Representing, expressly or by implication, in connection with the advertising, marketing, promotion, offering for sale, sale or performance of any mortgage assistance relief service, that a consumer cannot or should not contact or communicate with his lender or servicer, in violation of 12 C.F.R. § 1015.3(a) (Dec. 30, 2011);
B. Failing to make the following disclosure in all general and consumer-specific commercial communications: "[Name of Company]" is not associated with the government, and our service is not approved by the government or your lender," in violation of 12 C.F.R. § 1015.4(a)(1) & 1015.4(b)(2) (Dec. 30, 2011);
C. Failing to make the following disclosure in all general and consumer-specific commercial communications: "Even if you accept this offer and use our service, your lender may not agree to change your loan," in violation of 12 C.F.R. § 1015.4(a)(2) and 1015.4(b)(3) (Dec. 30, 2011);
D. Failing to make the following disclosure in all consumer-specific commercial communications: "You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us [insert amount or method for calculating the amount] for our services." For the purposes of this subsection, the amount "you will have to pay" shall consist of the total amount the consumer must pay to purchase, receive, and use all of the mortgage assistance relief services that are the subject of the sales offer, including but not limited to, all fees and charges, in violation of 12 C.F.R. § 1015.4(b)(1) (Dec. 30, 2011); and
E. Failing to make the following disclosure, in all general commercial communications, consumer-specific commercial communications, and other communications in cases where any Defendant or person has represented, expressly or by implication, in connection with the advertising, marketing, promotion, offering for sale, or performance of any mortgage assistance relief service, that the consumer should temporarily or permanently discontinue payments, in whole or in part, on a dwelling loan, and to place clearly and prominently, and in close proximity to any such representation the following disclosure: "If you stop paying your mortgage, you could lose your home and damage your credit rating," in violation of 12 C.F.R. § 1015.4(c) (Dec. 30, 2011).
III.
PROHIBITION AGAINST COLLECTION OF ADVANCE FEES
IT IS THEREFORE ORDERED that Defendants, Defendants' officers, agents, servants, 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 the advertising, marketing, promotion, offering for sale, sale, or provision of any mortgage assistance relief service, are hereby preliminarily restrained and enjoined from engaging in, or assisting others in asking for or receiving payment before a consumer has executed a written agreement between the consumer and the consumer's loan holder or servicer.
IV.
PRESERVATION OF RECORDS AND TANGIBLE THINGS
IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, servants, 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 the advertising, marketing, promotion, offering for sale, sale, or provision of any mortgage assistance relief service, are hereby preliminarily restrained and enjoined from destroying, erasing, mutilating, concealing, altering, transferring, or otherwise disposing of, in any manner, directly or indirectly, any documents or records that relate to the business practices, or business and personal finances, of Defendants, or an entity directly or indirectly under the control of Defendants.
V.
DISABLEMENT OF WEBSITES AND PRESERVATION OF ELECTRONICALLY STORED INFORMATION
IT IS FURTHER ORDERED that, to the extent not already done pursuant to the TRO issued in this case, (1) any person hosting any Internet website or server for, or on behalf of, any Defendant, and (2) Defendants and Defendants' officers, agents, servants, 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, shall:
A. Immediately take any necessary steps to ensure that any Internet website used by Defendants for the advertising, marketing, promotion, offering for sale, sale, or provision of any mortgage assistance relief service, and containing statements or representations prohibited by Sections I or II of this Order cannot be accessed by the public; and
B. Prevent the alteration, destruction or erasure of any (1) Internet website used by Defendants for the advertising, marketing, promotion, offering for sale, sale, or provision of any mortgage assistance relief service, by preserving such websites in the format in which they are maintained currently and (2) any electronically stored information stored on behalf of Defendants or entities in active concert or participation with any of them.
C. Immediately notify in writing counsel for the FTC of any other Internet website operated or controlled by any Defendant for the advertising, marketing, promotion, offering for sale, sale, or provision of any mortgage assistance relief service and not listed on Attachment A hereto.
VI.
SUSPENSION OF INTERNET DOMAIN NAME REGISTRATIONS
IT IS FURTHER ORDERED that, to the extent not already done pursuant to the TRO in this case, any domain name registrar shall suspend the registration of any Internet website used by Defendants for the advertising, marketing, promotion, offering for sale, sale, or provision of any mortgage assistance relief service, and containing statements or representations prohibited by Sections I or II of this Order and provide immediate notice to counsel for the FTC of any other Internet domain names registered by Defendants or their officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with any of them who receive actual notice of this Order by personal service or otherwise.
VII.
FINANCIAL STATEMENTS AND ACCOUNTING
IT IS FURTHER ORDERED that, to the extent it has not already been done pursuant to the TRO issued in this case, each Defendant, within three (3) business days of service of this Order, shall prepare and deliver to counsel for the FTC:
A. For Individual Defendants, a completed financial statement accurate as of the date of service of this Order upon such Defendant in the form of Attachment B to this Order captioned "Financial Statement of Individual Defendant."
B. For Corporate Defendants, a completed financial statement accurate as of the date of service of this Order upon such Defendant (unless otherwise agreed upon with FTC counsel) in the form of Attachment C to this Order captioned "Financial Statement of Corporate Defendant."
C. For each Defendant, a completed statement, verified under oath, of all payments, transfers or assignments of funds, assets, or property worth more than $2,500 in funds or other assets during the previous three years by loan, gift, sale or other transfer. For each person to whom a transfer has been made, state the total amount transferred during that period. Such statement shall include: (a) the transferee's name, address and relationship; (b) the property transferred; (c) the aggregate value; (d) the transfer date; and (e) the type of transfer.
D. Defendants shall notify the FTC at least one business day before transferring or withdrawing funds exceeding $5,000 from any account. Such notification shall include the amount of the transfer or withdrawal, the account and bank from which the funds are to be transferred or withdrawn, the date of the proposed transfer or withdrawal, the recipient of the proposed transfer or withdrawal, and the account and bank to which the funds will be transferred or deposited.
E. Corporate Defendants shall state their: (1) total gross sales revenues for 2012, 2013, and 2014 to date; (2) their total gross expenses for 2012, 2013, and 2014 to date; (3) their gross operating expenditures on a monthly basis per category for 2012, 2013, and 2014 to date, including but not limited to payroll, advertising, marketing, utilities, and property leases; and (4) their gross capital expenditures for 2012, 2013, and 2014 to date.
F. Corporate Defendants shall provide a list of all of their officers, directors, and trustees, and all other individuals or entities with authority to direct the operations of any Corporate Defendant or withdraw money from the account of any Corporate Defendant.
VIII.
CONSUMER CREDIT REPORTS
IT IS FURTHER ORDERED that pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C. § 1681b(1), any consumer reporting agency may furnish to the FTC a consumer report concerning any Defendant.
IX.
PROHIBITION ON RELEASE OF CONSUMER INFORMATION
IT IS FURTHER ORDERED that, except as required by a law enforcement agency, law, regulation or court order, Defendants, Defendants' officers, agents, servants, 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 preliminarily restrained and enjoined from disclosing, using, or benefitting from consumer information, including the name, address, telephone number, email address, social security number, other identifying information, or any data that enables access to a consumer's account (including a credit card, bank account, or other financial account), of any person which any Defendant obtained prior to entry of this Order in connection with any mortgage assistance relief service.
X.
MONITORING
IT IS FURTHER ORDERED that agents or representatives of the FTC may contact Corporate Defendants directly or anonymously for the purpose of monitoring compliance with this Order, and may record or preserve any communications that occur in the course of such contacts.
XI.
DEFENDANTS' DUTY TO DISTRIBUTE ORDER
IT IS FURTHER ORDERED that Defendants shall immediately provide a copy of this Order to each affiliate, subsidiary, division, sales entity, successor, assign, officer, director, employee, independent contractor, client company, electronic data host, agent, attorney, spouse, and representative of Defendants and shall, within three (3) calendar days from the date of entry of this Order, provide counsel for the FTC with a sworn statement that: (a) confirms that Defendants have provided copies of the Order as required by this Section and (b) lists the names and addresses of each entity or person to whom Defendants provided a copy of the Order. Furthermore, Defendants shall not take any action that would encourage officers, agents, directors, employees, salespersons, independent contractors, attorneys, subsidiaries, affiliates, successors, assigns, or other persons or entities in active concert or participation with Defendants to disregard this Order or believe that they are not bound by its provisions.
XII.
EXPIRATION OF ORDER
IT IS FURTHER ORDERED that this Order shall expire upon entry of a final judgment in this case.
XIII.
CORRESPONDENCE WITH PLAINTIFF
IT IS FURTHER ORDERED that, for the purposes of this Order, because mail addressed to the FTC is subject to delay due to heightened security screening, all correspondence and service of pleadings on Plaintiff shall be sent either via email, facsimile, or courier such as Federal Express to:
Yaa Apori, Esq.
Federal Trade Commission
600 Pennsylvania Ave., NW
Mail Stop CC-10232
Washington, DC 20580
yapori@ftc.gov
(202) 326-3796
(202) 326-3768 (facsimile)
XIV.
SERVICE OF THIS ORDER
IT IS FURTHER ORDERED that copies of this Order may be served by facsimile, email, personal or overnight delivery, or U.S. Mail, by agents and employees of the FTC or any state or federal law enforcement agency or by private process server, upon any financial institution or other entity or person that may have possession, custody, or control of any documents or assets of any Defendant, or that may otherwise be subject to any provision of this Order. Service upon any branch or office of any financial institution shall effect service upon the entire financial institution.
XV.
RETENTION OF JURISDICTION
IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes of construction, modification, and enforcement of this Order.
IT IS SO ORDERED.
ATTACHMENT A
ATTACHMENT B
ATTACHMENT C
