DEAN D. PREGERSON, District Judge.
The Commission filed its Complaint for Permanent Injunction and Other Equitable Relief on March 16, 2015 (DE 1). The Complaint and Summons have been served on Defendant Leyes (DE 31). The Court, having considered the Complaint, the Commission's application for a temporary restraining order, and the memorandum and exhibits filed in support thereof, issued a Temporary Restraining Order against all Defendants, including Defendant Leyes (DE 7). The Commission and Defendant Leyes, acting by and through their respective counsel, have now consented to entry of this Order, to remain in effect until the final resolution of this matter, with the following findings of facts and Order provisions:
1. This Court has jurisdiction over the subject matter of this case and over Defendant Leyes.
2. Venue lies properly in this district.
3. There is a substantial likelihood that the Commission will ultimately succeed in establishing that Defendants 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 Section 404 of Credit Repair Organizations Act, 15 U.S.C. § 1679b, and that the Commission is therefore likely to prevail on the merits of this action.
4. Good cause exists to restrain and enjoin Defendant Leyes from engaging in the conduct alleged in the Complaint.
5. Good cause also exists to continue the freeze over Defendant Leyes' Assets and other ancillary relief.
6. This Order is in the public interest.
7. The Commission is an independent agency of the United States of America and no security is required of any agency of the United States for issuance of a preliminary injunction, see Fed. R. Civ. P. 65(c).
For the purpose of this Order, the following definitions shall apply:
1.
2.
3.
4.
5.
6.
7.
8.
A. That any Defendant or any other Person is affiliated with, licensed or sponsored by, or otherwise connected to any person or government entity;
B. That any Defendant or any other Person can lawfully remove negative information, including accurate and non-obsolete information, from a consumer's credit reports;
C. That any Defendant or any other Person can increase a consumer's credit score, or otherwise substantially improve a consumer's credit score; and
D. 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.
Provided, however, that Defendant Leyes may disclose such identifying information to a law enforcement agency or as required by any law, regulation, or court order.
A. Transferring, liquidating, converting, encumbering, pledging, loaning, selling, concealing, dissipating, disbursing, assigning, relinquishing, spending, withdrawing, granting a lien or security interest or other interest in, or otherwise disposing any funds, real or personal property, accounts, contracts, shares of stock, lists of consumer names, or other Assets, or any interest therein, wherever located, including outside the United States, that are:
B. Opening or causing to be opened any safe deposit boxes, commercial mail boxes, or storage facilities titled in the name of any Defendant, either individually or jointly, or subject to access by any Defendant, except as necessary to comply with written requests from the Receiver acting pursuant to its authority under this Order;
C. Obtaining a personal or secured loan encumbering the Assets of any Defendant, or subject to access by any Defendant;
D. Incurring liens or other encumbrances on real property, personal property, or other Assets in the name, individually or jointly, of any Defendant or of any corporation, partnership, or other entity directly or indirectly owned, managed, or controlled by any Defendant; or
E. Incurring charges or cash advances on any credit or bank card issued in the name, individually or jointly, of the Corporate Defendant or any corporation, partnership, or other entity directly or indirectly owned, managed, or controlled by any Defendant or of which any Defendant is an officer, director, member, or manager. This includes any corporate bankcard or corporate credit card account for which any Defendant is, or was on the date that the Complaint was filed, an authorized signor.
F. Cashing any checks or depositing any money orders or cash received from consumers, clients, or customers of any Defendant.
Provided that the Assets affected by this Section shall include: (1) all Assets of Defendants as of March 16, 2015, the date of filing the Complaint in this matter; or (2) Assets obtained by Defendants after March 16, 2015 if those Assets are derived from any activity that is the subject of the Complaint in this matter or that is prohibited by this Order.
A. Hold and retain within its control and prohibit the withdrawal, removal, assignment, transfer, pledge, encumbrance, disbursement, dissipation, relinquishment, conversion, sale, or other disposal of any such Assets, as well as all Documents or other property related to such Assets, except by further order of this Court;
B. Deny any Person, except the Receiver, access to any safe deposit box, commercial mail box, or storage facility that is titled in the name of Defendant Leyes, either individually or jointly, or otherwise subject to access by Defendant Leyes;
C. Provide Commission counsel and the Receiver, within five (5) days of receiving a copy of this Order, a sworn statement setting forth:
D. Upon the request of Commission counsel or the Receiver, promptly provide Commission counsel or the Receiver with copies of all records or other Documents pertaining to such account or Asset, including originals or copies of account applications, account statements, signature cards, checks, drafts, deposit tickets, transfers to and from the accounts, including wire transfers and wire transfer instructions, all other debit and credit instruments or slips, currency transaction reports, 1099 forms, and all logs and records pertaining to safe deposit boxes, commercial mail boxes, and storage facilities.
A. Completed financial statements on the forms attached to this Order as
B. A completed IRS Form 4506, appended to this Order as
A. Provide Commission counsel with a full accounting, verified under oath and accurate as of the date of this Order, of all funds, Documents, and Assets outside of the United States which are: (1) titled in the name, individually or jointly, of Defendant Leyes; or (2) held by any person or entity for the benefit of Defendant Leyes; or (3) under the direct or indirect control, whether jointly or singly, of Defendant Leyes;
B. Provide Commission counsel and the Receiver access to all records of accounts or Assets of Defendant Leyes held by financial institutions located outside the territorial United States.
C. Transfer to the territory of the United States and deliver to the Receiver all funds, Documents, and Assets located in foreign countries which are: (1) titled in the name individually or jointly of Defendant Leyes; or (2) held by any Person or entity, for the benefit of Defendant Leyes; or (3) under the direct or indirect control of Defendant Leyes, whether jointly or singly; and
D. The same business day as any repatriation, (1) notify Commission counsel of the name and location of the financial institution or other entity that is the recipient of such funds, Documents, or Assets; and (2) serve this Order on any such financial institution or other entity.
A. Sending any statement, letter, fax, email or wire transmission, or telephoning or engaging in any other act, directly or indirectly, that results in a determination by a foreign trustee or other entity that a "duress" event has occurred under the terms of a foreign trust agreement until such time that Defendant Leyes' Assets have been fully repatriated pursuant to this Order; or
B. Notifying any trustee, protector or other agent of any foreign trust or other related entities of either the existence of this Order, or of the fact that repatriation is required pursuant to a court order, until such time that Defendant Leyes' Assets have been fully repatriated pursuant to this Order.
A. Promptly furnish consumer reports as requested concerning Defendant Leyes to Commission counsel, pursuant to Section 604(a)(1) of the Fair Credit Reporting Act, 15 U.S.C. § 1681b(a)(1); and
B. Promptly furnish any Documents related to any dispute of the accuracy of information contained in a credit report initiated by Defendant Leyes, including, but not limited to, correspondence and other Documents submitted by Defendant Leyes to the consumer reporting agency and any response from the consumer reporting agency to Defendant Leyes.
A. Destroying, erasing, falsifying, writing over, mutilating, concealing, altering, transferring, or otherwise disposing of, in any manner, directly or indirectly, Documents that relate to: (1) the business, business practices, Assets, or business or personal finances of any Defendant; (2) the business practices or finances of entities directly or indirectly under the control of any Defendant; or (3) the business practices or finances of entities directly or indirectly under common control with any other Defendant, including any and all marketing materials, Internet pages, consumer complaints, call detail records, telephone logs, telephone scripts, contracts, correspondence, email, corporate books and records, accounting data, financial statements, receipt books, ledgers, personal and business canceled checks and check registers, bank statements, calendars, appointment books, and tax returns;
B. Failing to create and maintain Documents that, in reasonable detail, accurately, fairly, and completely reflect Defendants' incomes, disbursements, transactions, and use of Defendants' Assets.
A. Assume full control of the Corporate Defendant by removing, as the Receiver deems necessary or advisable, any director, officer, independent contractor, employee, or agent of the Corporate Defendant, including any Defendant, from control of, management of, or participation in, the affairs of the Corporate Defendant;
B. Take exclusive custody, control, and possession of all Assets and Documents of, or in the possession, custody, or under the control of, the Corporate Defendant, wherever situated. The Receiver shall have full power to divert mail and to sue for, collect, receive, take in possession, hold, and manage all Assets and Documents of the Corporate Defendant and other Persons or entities whose interests are now under the direction, possession, custody, or control of, the Corporate Defendant. The Receiver shall assume control over the Corporate Defendant's income and profits and all sums of money now or hereafter due or owing to the Corporate Defendant. Provided, however, that the Receiver shall not attempt to collect any amount from a consumer if the Receiver believes the consumer was a victim of the deceptive acts or practices or other violations of law alleged in the Complaint in this matter, without prior Court approval;
C. Take all steps necessary to secure and take exclusive custody of each location from which the Corporate Defendant operate its businesses. Such steps may include, but are not limited to, any of the following, as the Receiver deems necessary or advisable: (1) serving this Order; (2) completing a written inventory of all the Corporate Defendant's Assets; (3) obtaining pertinent information from all employees and other agents of the Corporate Defendant, including the name, home address, social security number, job description, company history, passwords or access codes, method of compensation, and all accrued and unpaid commissions and compensation of each such employee or agent; (4) photographing and videotaping any or all portions of the location; (5) securing the location by changing the locks and disconnecting any internet access or other means of access to the computers, internet or records maintained at that location; and (6) requiring any Persons present on the premises at the time this Order is served to leave the premises, to provide the Receiver with proof of identification, or to demonstrate to the satisfaction of the Receiver that such Persons are not removing from the premises Documents or Assets of the Corporate Defendant;
D. Law enforcement personnel, including police, sheriffs, or U.S. postal inspectors, may assist the Receiver in implementing these provisions in order to keep the peace and maintain security. If requested by the Receiver, the United States Marshal will provide appropriate and necessary assistance to the Receiver to implement this Order and is authorized to use any necessary and reasonable force to do so;
E. Conserve, hold, and manage all Assets of the Corporate Defendant, and perform all acts necessary or advisable to preserve the value of those Assets in order to prevent any irreparable loss, damage, or injury to consumers or creditors of the Corporate Defendant, including determining the available Assets and preventing the unauthorized transfer, withdrawal, or misapplication of Assets;
F. Enter into and cancel contracts, and purchase insurance as advisable or necessary;
G. Prevent the inequitable distribution of Assets and determine, adjust, and protect the interests of consumers and creditors who have transacted business with the Corporate Defendant;
H. Manage and administer the business of the Corporate Defendant until further order of this Court by performing all incidental acts that the Receiver deems to be advisable or necessary, which includes retaining, hiring, or dismissing any employees, independent contractors, or agents;
I. Suspend business operations of the Corporate Defendant if, in the judgment of the Receiver, such operations cannot be continued legally or profitably;
J. Prevent the destruction or erasure of any web page or website registered to and operated, in whole or in part, by the Corporate Defendant;
K. Take all steps necessary to ensure that any of the Corporate Defendant's web pages or websites relating to Credit Repair Services, including, but not limited to,
L. Choose, engage, and employ attorneys, accountants, appraisers, and other independent contractors and technical specialists, as the Receiver deems advisable or necessary in the performance of duties and responsibilities under the authority granted by this Order;
M. Make payments and disbursements from the receivership estate that are necessary or advisable for carrying out the directions of, or exercising the authority granted by, this Order. The Receiver shall apply to the Court for prior approval of any payment of any debt or obligation incurred by the Corporate Defendant prior to the date of entry of this Order, except payments that the Receiver deems necessary or advisable to secure Assets of the Corporate Defendant, such as rental payments;
N. Institute, compromise, adjust, appear in, intervene in, or become party to such actions or proceedings in state, federal or foreign courts or arbitration proceedings as the Receiver deems necessary and advisable to preserve or recover the Assets of the Corporate Defendant, or that the Receiver deems necessary and advisable to carry out the Receiver's mandate under this Order, including actions challenging fraudulent or voidable transfers;
O. Defend, compromise, adjust, or otherwise dispose of any or all actions or proceedings instituted in the past or in the future against the Receiver in his role as Receiver, or against the Corporate Defendant, as the Receiver deems necessary and advisable to preserve the Assets of the Corporate Defendant, or as the Receiver deems necessary and advisable to carry out the Receiver's mandate under this Order;
P. Issue subpoenas to obtain Documents and records pertaining to the receivership, and conduct discovery in this action on behalf of the receivership estate;
Q. Open one or more bank accounts as designated depositories for funds of the Corporate Defendant. The Receiver shall deposit all funds of the Corporate Defendant in such a designated account and shall make all payments and disbursements from the receivership estate from such an account. The Receiver shall serve copies of monthly account statements on all parties;
R. Maintain accurate records of all receipts and expenditures incurred as Receiver;
S. Cooperate with reasonable requests for information or assistance from any state or federal law enforcement agency; and
T. File timely reports with the Court at reasonable intervals, or as otherwise directed by the Court.
A. All Assets of the Corporate Defendant;
B. All Documents of the Corporate Defendant, including books and records of accounts, all financial and accounting records, balance sheets, income statements, bank records (including monthly statements, canceled checks, records of wire transfers, and check registers), client lists, title Documents and other papers;
C. All computers, electronic devices, machines, and data in whatever form used to conduct the business of the Corporate Defendant;
D. All Assets and Documents belonging to other Persons or entities whose interests are under the direction, possession, custody, or control of the Corporate Defendant; and
E. All keys, codes, user names and passwords necessary to gain or to secure access to any Assets or Documents of the Corporate Defendant, including access to their business premises, means of communication, accounts, computer systems, or other property.
In the event that any Person or entity fails to deliver or transfer any Asset or Document, or otherwise fails to comply with any provision of this Section, the Receiver may file ex parte an Affidavit of Non-Compliance regarding the failure. Upon filing of the affidavit, the Court may authorize, without additional process or demand, Writs of Possession or Sequestration or other equitable writs requested by the Receiver. The writs shall authorize and direct the United States Marshal or any sheriff or deputy sheriff of any county, or any other federal or state law enforcement officer, to seize the Asset, Document, or other item covered by this Section and to deliver it to the Receiver.
A. A list of all Assets and property, including accounts, of the Corporate Defendant that are held in any name other than the name of the Corporate Defendant, or by any Person or entity other than the Corporate Defendant; and
B. A list of all agents, employees, officers, or those Persons in active concert and participation with Defendants, who have been associated with or done business with the Corporate Defendant.
A. Interfering with the Receiver's efforts to manage, or take custody, control, or possession of, the Assets or Documents subject to the receivership;
B. Transacting any of the business of the Corporate Defendant;
C. Transferring, receiving, altering, selling, encumbering, pledging, assigning, liquidating, or otherwise disposing of any Assets owned, controlled, or in the possession or custody of, or in which an interest is held or claimed by, the Corporate Defendant or the Receiver; and
D. Refusing to cooperate with the Receiver or the Receiver's duly authorized agents in the exercise of their duties or authority under any order of this Court.
A. Filing or assisting in the filing of a petition for relief under the Bankruptcy Code, 11 U.S.C. § 101 et seq., or of any similar insolvency proceeding on behalf of the Corporate Defendant;
B. Commencing, prosecuting, or continuing a judicial, administrative, or other action or proceeding against the Corporate Defendant, including the issuance or employment of process against the Corporate Defendant, except that such actions may be commenced if necessary to toll any applicable statute of limitations;
C. Filing or enforcing any lien on any asset of the Corporate Defendant, taking or attempting to take possession, custody, or control of any Asset of the Corporate Defendant; or attempting to foreclose, forfeit, alter, or terminate any interest in any Asset of the Corporate Defendant, whether such acts are part of a judicial proceeding, are acts of self-help, or otherwise; or
D. Initiating any other process or proceeding that would interfere with the Receiver managing or taking custody, control, or possession of, the Assets or Documents subject to the receivership.
Provided that, this Order does not stay: (1) the commencement or continuation of a criminal action or proceeding; (2) the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power; or (3) the enforcement of a judgment, other than a money judgment, obtained in an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power.
A. In order to allow the Commission and the Receiver to preserve Assets and evidence relevant to this action and to expedite discovery, the Commission and the Receiver, and their representatives, agents, contractors, and assistants, shall have immediate access to the business premises and storage facilities, owned, controlled, or used by the Corporate Defendant. Such locations include, but are not limited to, 4255 E. Florence Avenue, Bell, California 90201, and any offsite location or commercial mailbox used by the Corporate Defendant;
B. The Commission and the Receiver, and their representatives, agents, contractors, and assistants, are authorized to remove Documents from the Corporate Defendant's premises in order that they may be inspected, inventoried, and copied for the purpose of preserving discoverable material in connection with this action. The Commission shall return any removed materials to the Receiver within five (5) business days of completing inventorying and copying, or such time as is agreed upon by the Commission and the Receiver;
C. The Commission and the Receiver, and their representatives, agents, contractors, and assistants, are authorized to obtain the assistance of the U.S. Marshal's office, U.S. Postal Inspection Service, and other federal, state and local law enforcement officers as they deem necessary to effect service and to implement peacefully the provisions of this Order;
D. The Receiver shall allow the Commission and Defendant Leyes reasonable access to the premises and business records of the Corporate Defendant within his possession for the purpose of inspecting and copying materials relevant to this action. The Receiver shall have the discretion to determine the time, manner, and reasonable conditions of such access; and
E. If any Documents, computers, or electronic storage devices containing information related to the business practices or finances of the Corporate Defendant are at a location other than those listed herein, including personal residence(s) of Defendant Leyes, then, immediately upon receiving notice of this order, Defendant Leyes shall produce to the Receiver all such Documents, computers, and electronic storage devices, along with any codes or passwords needed for access. In order to prevent the destruction of computer data, upon service of this Order upon Defendant Leyes, any such computers or electronic storage devices shall be powered down in the normal course of the operating system used on such devices and shall not be powered up or used until produced for copying and inspection.
