MATTHEW F. KENNELLY, District Judge.
Plaintiff Federal Trade Commission ("FTC" or "Commission") respectfully requests that the Court enter the attached proposed Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief against Defendant Avrom Boris Lasarow ("Order"). The proposed Order, similar to those the Court entered against defendants Kristi Kimball and her company New Consumer Solutions LLC (Dkt. 27) and L Health Ltd. (Dkt. 34), would remedy the challenged practices by defendant Lasarow and prevent their future recurrence. In addition, the Order would resolve this litigation. The Commission therefore respectfully requests that the Court grant its motion and enter the proposed Order against defendant Lasarow.
The Commission filed its Complaint for Permanent Injunction and Other Equitable Relief on February 23, 2015 against defendant Lasarow and his company L Health Ltd. (the "Lasarow Defendants"), and Kristi Kimball and her company, New Consumer Solutions LLC (the "NCS Defendants"). (Dkt. 1.) The Complaint alleges violations of Sections 5(a) and 12 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a), 52. The Commission thereafter submitted a proposed Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief against the NCS Defendants, which the Court entered on April 30, 2015. (Dkt. 27.) The Commission also submitted motions to enter a default and a default judgment against defendant L Health Ltd., which the Court entered, respectively, on April 21 and May 29, 2015. (Dkt. 18, 34.)
The proposed Order closely resembles those the Court entered against the other defendants, and contains permanent injunctive relief, equitable monetary relief, and monitoring provisions to ensure compliance. The Order would prohibit defendant Lasarow from: representing without substantiation that any device detects or diagnoses melanoma or risk factors of melanoma, or increases users' chances of detecting melanoma in early stages (Section I); making other unsubstantiated health-related claims (Section II); misusing customer information (Section VI); or failing to preserve records relating to claim substantiation (Section VII). The above provisions are tailored to prevent defendant Lasarow from engaging in the challenged, and reasonably related, misconduct.
As with the order against defendant L Health Ltd. (Dkt. 34), Section III of the proposed Order is an equitable monetary judgment for $58,623.42, a reasonable approximation of the Lasarow Defendants' sales. (Dkt. 30.) The proposed Order suspends the judgment based on defendant Lasarow's demonstrated inability to pay, but provides the sum will become immediately due and payable if he materially misrepresented his assets. Section IV contains other provisions related to the monetary judgment.
The proposed Order also contains standard monitoring, recordkeeping, and reporting provisions designed to facilitate defendant Lasarow's compliance and, if necessary, enforcement by the Commission. Such provisions include required order distribution to key personnel and acknowledgment of receipt (Section VIII); reporting requirements (Section IX); compliance recordkeeping (Section X); and compliance monitoring (Section XI). The Court would retain jurisdiction for enforcement purposes, such as contempt (Section XII).
For the forgoing reasons, the Commission respectfully requests that the Court enter the attached proposed Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief against Defendant Avrom Boris Lasarow.
Plaintiff, the Federal Trade Commission ("Commission" or "FTC"), filed its Complaint for Permanent Injunction and Other Equitable Relief against defendants Avrom Boris Lasarow, L Health Ltd., formerly known as Lasarow Healthcare Technologies Ltd., Kristi Zuhlke Kimball, and New Consumer Solutions LLC (together, "Defendants"), pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), alleging unfair or deceptive acts or practices and false advertisements in violation of Sections 5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a) and 52.
The Commission and defendant Avrom Boris Lasarow stipulate to the entry of this Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief ("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 Defendants participated in deceptive acts or practices in violation of Sections 5 and 12 of the FTC Act, 15 U.S.C. §§ 45 and 52, in the advertising and sale of Mole Detective, Mole Detective 2, Mole Detect, and Mole Detect Pro.
3. Defendant Lasarow neither admits nor denies any of the allegations in the Complaint, except as specifically stated in this Order. Only for purposes of this action, he admits the facts necessary to establish jurisdiction.
4. Defendant Lasarow waives any claim that he 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 his own costs and attorney fees.
5. Defendant Lasarow waives all rights to appeal or otherwise challenge or contest the validity of this Order.
For the purpose of this Order, the following definitions apply:
1. "Defendant" means Defendant Avrom Boris Lasarow.
2. "Defendants" means all of the Defendants named in the full caption of this matter, individually, collectively, or in any combination.
3. "Advertising" and "promotion" means any written or verbal statement, illustration, or depiction designed to effect a sale or create interest in the purchasing of products or services, regardless of the medium.
4. "Device" means, as defined in Section 15 of the FTC Act, 15 U.S.C. § 55, an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is—
A. Recognized in the official National Formulary, or the United States Pharmacopeia, or any supplement to them,
B. Intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or
C. Intended to affect the structure or any function of the body of man or other animals, and
which does not achieve any of its principal intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its principal intended purposes.
5. "Person" means a natural person, an organization, or another legal entity, including a corporation, partnership, sole proprietorship, limited liability company, association, cooperative, or any other group or combination acting as an entity.
6. "Melanoma App" means a computer software application to aid consumers in detecting melanoma or risk of melanoma, including, but not limited to, Mole Detective, Mole Detective 2, Mole Detect, and Mole Detect Pro.
7. "Reliably Reported," for a human clinical test or study ("test"), means a report of the test has been published in a peer-reviewed journal, and such published report provides sufficient information about the test for experts in the relevant field to assess the reliability of the results.
8. The term "including" in this Order means "including without limitation."
9. The terms "and" and "or" in this Order shall be construed conjunctively or disjunctively as necessary, to make the applicable phrase or sentence inclusive rather than exclusive.
A. Detects or diagnoses melanoma or risk factors of melanoma, or
B. Increases users' chances of detecting melanoma in early stages, unless the representation is non-misleading and, at the time of making such representation, they possess and rely upon competent and reliable scientific evidence to substantiate that the representation is true. For purposes of this Section, competent and reliable scientific evidence shall consist of human clinical testing of the Device that is sufficient in quality and quantity, based on standards generally accepted by experts in the relevant field, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that the representation is true. Such testing shall be blinded, conform to actual use conditions, include a representative range of skin lesions, and be conducted by researchers qualified by training and experience to conduct such testing. In addition, all underlying or supporting data and documents generally accepted by experts in the relevant field as relevant to an assessment of such testing as set forth in the Section entitled Preservation of Records Relating to Competent and Reliable Human Clinical Tests or Studies must be available for inspection and production to the Commission.
A. Judgment in the amount of Fifty-Eight Thousand, Six Hundred Twenty-Three Dollars and Forty-Two Cents ($58,623.42) is entered in favor of the Commission against Defendant 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's sworn Financial Statement dated December 23, 2014, Declaration dated July 16, 2015, and related documents (collectively, "financial representations") submitted to the Commission.
D. The suspension of the judgment will be lifted as to Defendant if, upon motion by the Commission, the Court finds that he 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 in the amount specified in Subsection A above (which the parties stipulate only for purposes of this Section represents the consumer injury alleged in the Complaint), plus interest computed from the date of entry of this Order.
A. Defendant 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 acknowledges that his Taxpayer Identification Number (Social Security Number or Employer Identification Number), which Defendant must submit 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 funds 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, with the Court's prior approval, 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's practices alleged in the Complaint, or deposit funds to the U.S. Treasury as disgorgement. Defendant has no right to challenge any actions the Commission or its representatives may take pursuant to this Subsection.
A. Making any representation for any drug that is permitted in labeling for such drug under any tentative or final standard promulgated by the Food and Drug Administration, or under any new drug application approved by the Food and Drug Administration; and
B. Making any representation for any product that is specifically permitted in labeling for such product by regulations promulgated by the Food and Drug Administration pursuant to the Nutrition Labeling and Education Act of 1990.
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, Defendant must provide it, in the form prescribed by the Commission, within 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 Defendant obtained prior to entry of this Order in connection with the advertising or sale of any Melanoma App; and
C. Failing to destroy such customer information in all forms in his possession, custody, or control within 30 days after entry of this Order.
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. All protocols and protocol amendments, reports, articles, write-ups, or other accounts of the results of the test, and drafts of such documents reviewed by the test sponsor or any other person not employed by the research entity;
B. All documents referring or relating to recruitment; randomization; instructions, including oral instructions, to participants; and participant compliance;
C. Documents sufficient to identify all test participants, including any participants who did not complete the test, and all communications with any participants relating to the test; all raw data collected from participants enrolled in the test, including any participants who did not complete the test; source documents for such data; any data dictionaries; and any case report forms;
D. All documents referring or relating to any statistical analysis of any test data, including, but not limited to, any pretest analysis, intent-to-treat analysis, or between-group analysis performed on any test data; and
E. All documents referring or relating to the sponsorship of the test, including all contracts and communications between any sponsor and the test's researchers.
Provided, however, the preceding preservation requirement shall not apply to a Reliably Reported test, unless the test was conducted, controlled, or sponsored, in whole or in part (1) by any Defendant, or by any person or entity affiliated with or acting on behalf of any Defendant, including officers, agents, representatives, and employees, or by any other person or entity in active concert or participation with any Defendant ("Defendant's affiliates"), or (2) by the supplier or manufacturer of the product at issue, or (3) by a supplier to any Defendant, to Defendant's affiliates, or to the product's manufacturer of any ingredient or component contained in such product.
For any test conducted, controlled, or sponsored, in whole or in part, by Defendant or any business that he, individually or collectively with any other Defendants, is a majority owner or controls directly or indirectly, Defendant must establish and maintain reasonable procedures to protect the confidentiality, security, and integrity of any personal information collected from or about participants. These procedures shall be documented in writing and shall contain administrative, technical, and physical safeguards appropriate to their size and complexity, the nature and scope of their activities, and the sensitivity of the personal information collected from or about the participants.
A. Defendant, 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 5 years after entry of this Order, Defendant, for any business that engages in conduct related to the subject matter of this Order that he, individually or collectively with any other Defendants, is a 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, agents, and representatives who participate in conduct related to the subject matter of the Order; and (3) any business entity resulting from any change in structure as set forth in the Section titled Compliance Reporting. Delivery must occur within 7 days of entry of this Order for current personnel. For all others, delivery must occur before they assume their responsibilities.
C. From each individual or entity to which Defendant delivered a copy of this Order, he must obtain, within 30 days, a signed and dated acknowledgment of receipt of this Order.
A. Sixty days after entry of this Order, Defendant must submit a compliance report, sworn under penalty of perjury:
1. Defendant 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 him; (b) identify all of his businesses by all of their names, telephone numbers, and physical, postal, email, and Internet addresses; (c) describe the activities of each business, including the products and services offered, the means of advertising, marketing, and sales, and the involvement of any other Defendants (which Defendant must describe if he knows or should know due to his own involvement); (d) describe in detail whether and how Defendant 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 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 he performs services whether as an employee or otherwise and any entity in which he has any ownership interest; and (c) describe in detail his involvement in each such business, including title, role, responsibilities, participation, authority, control, and any ownership.
B. For 10 years following entry of this Order, Defendant must submit a compliance notice, sworn under penalty of perjury, within 14 days of any change in the following:
1. Defendant must report any change in: (a) any designated point of contact; or (b) the structure of any entity that Defendant has any ownership interest in or controls directly or indirectly that may affect compliance obligations arising under this Order, including: the 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 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 he performs services, whether as an employee or otherwise, and any entity in which he has any ownership interest, and identify the name, physical address, and Internet address of the business or entity.
C. Defendant must submit to the Commission notice of the filing of any bankruptcy petition, insolvency proceeding, or any similar proceeding by or against him within fourteen 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, D.C. 20580. The subject line must begin: FTC v. Avrom Boris Lasarow, et al.
A. Accounting records showing the revenues from all products 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 complaints and refund requests, whether received 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 Order, including all submissions to the Commission; and
E. A copy of each unique advertisement or other marketing material.
A. Within 14 days of receipt of a written request from a representative of the Commission, 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 also is 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 Defendant. Defendant must permit representatives of the Commission to interview any employee or other person affiliated with him 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 or any individual or entity affiliated with him, 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.
