ORDER

GLORIA M. NAVARRO, Chief District Judge.

Pending before the Court is a Motion for Preliminary Injunction (ECF No. 780) filed by The Federal Trade Commission (the "FTC"). Defendants Park 269, LLC and Kim C. Tucker (the "Relief Defendants") and Defendants AMG Capital Management, LLC ("AMG"); Level 5 Motorsports, LLC; LeadFlash Consulting LLC; Black Creek Capital Corporation; Broadmoor Capital Partners; Scott A. Tucker; Nereyda M. Tucker, as Executor of the Estate of Blaine A. Tucker (the "Tucker Defendants") (collectively "Defendants") filed their respective Responses in Opposition (ECF Nos. 796 and 797) on May 26, 2015, one day after the deadline to Respond to the FTC's motion.1 The FTC subsequently filed a timely Joint Reply (ECF No. 803) to both Responses.2

I. BACKGROUND

This action was brought by the FTC, asserting that the "high-fee, short-term payday loans" offered by Defendants AMG, SFS, Inc., Red Cedar Services, Inc., and former Defendant MNE Services, Inc. ("Lending Defendants")3 violated section 5 of the Federal Trade Commission Act of 1914, 15 § U.S.C. 45(a)(1), the Truth in Lending Act of 1968, 15 U.S.C. § 1601(a), and Regulation Z, 12 C.F.R. § 1026(a). (Am. Compl. 15:1-20:6, ECF No. 386).

On December 27, 2012, the Court signed an Order entering the parties' joint stipulation for preliminary injunction and bifurcation. (ECF No. 296). The Bifurcation Order divided the litigation into two phases: a liability phase and a relief phase. (Id. 9:1-10:23). During Phase I of the proceedings, the Court would adjudicate the merits of the FTC's claims for violations of the FTC Act, TILA, and EFTA. (Id. 9:1-24). During Phase II of the proceedings, the Court would adjudicate the remaining issues, including the individual liability of the various Defendants. (Id. 10:119). On May 28, 2014, this Court entered an Order (ECF No. 584) adopting a Report and Recommendation entered by Judge Ferenbach and granting summary judgment in favor of the FTC on two of its four causes of action. Accordingly, the litigation is now in Phase II of the proceedings.

In the instant Motion, the FTC seeks a preliminary injunction against the Tucker Defendants and the Relief Defendants in the form of an asset freeze and accounting "[i]n light of mounting evidence that Defendants have been engaged in a continuous improper dissipation of and concealment of assets." (Mot. for Prelim. Inj. 1:2-4, ECF No. 780). For the reasons set forth below, the Court grants the Motion for Preliminary Injunction.

II. LEGAL STANDARD

Under Section 13(b) of the Federal Trade Commission Act ("FTC Act"), the Court may grant the FTC a preliminary injunction "[u]pon a proper showing that, weighing the equities and considering the Commission's likelihood of ultimate success, such action would be in the public interest." 15 U.S.C. § 53(b). Section 13(b) of the FTC Act, therefore, "places a lighter burden on the Commission than that imposed on private litigants by the traditional equity standard." F.T.C. v. Warner Commc'n, Inc., 742 F.2d 1156, 1159 (9th Cir. 1984). Under this more lenient standard, the FTC need not show irreparable harm; instead, it must only demonstrate (1) that it is likely to succeed on the merits and (2) that the equities weigh in favor of an injunction. Id. at 1160; see also F.T.C. v. World Wide Factors, 882 F.2d 344, 346 (9th Cir. 1989).

A court's authority to grant injunctive relief under Section 13(b) includes "all the inherent equitable powers . . . for the proper and complete exercise" of the court's equity jurisdiction. F.T.C. v. H.N. Singer, Inc., 668 F.2d 1107, 1112 (9th Cir. 1982) (citations omitted). One such power is the authority to freeze a defendant's assets. Id. at 1113; F.T.C. v. Evans Prods. Co., 775 F.2d 1084, 1088-89 (9th Cir. 1985). As the Ninth Circuit emphasized in H.N. Singer, an order freezing assets is a form of "ancillary relief" rather than a primary remedy. See 668 F.2d at 1112-13. "Courts have inherent equitable powers to grant ancillary relief, other than a preliminary injunction restraining future violations of the law, when there is no likelihood of recurrence." Evans Prods., 775 F.2d at 1088. "A party seeking an asset freeze must show a likelihood of dissipation of the claimed assets, or other inability to recover monetary damages, if relief is not granted." Johnson v. Couturier, 572 F.3d 1067, 1085 (9th Cir. 2009).

III. DISCUSSION

A. Likelihood of Success on the Merits

"[T]he burdens at the preliminary injunction stage track the burdens at trial." Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 429 (2006). Thus, the burden is on the FTC to demonstrate that it is likely to prevail on its claims that: (1) Scott Tucker and Blaine Tucker are individually liable; (2) a common enterprise existed among the lenders and their entities; and (3) the Relief Defendants are liable. "Because irreparable injury must be presumed in a statutory enforcement action, the district court need only . . . find some chance of probable success on the merits." World Wide Factors, 882 F.2d at 347 (internal quotation marks omitted).

The Court finds that the FTC has satisfied its burden of demonstrating probable success on the merits of its claims, and considers each claim in turn.

1. Scott Tucker and Blaine Tucker are Personally Liable for Violations of the FTC Act

Personal liability for violations of the FTC Act fall into two categories: liability for injunctive relief and liability for monetary relief. Individuals are liable for injunctive relief if they directly participate in the deceptive acts or have the authority to control them. F.T.C. v. Publ'g Clearing House, Inc., 104 F.3d 1168, 1170 (9th Cir. 1997); F.T.C. v. Stefanchik, 559 F.3d 924, 931 (9th Cir. 2009). To subject an individual to monetary liability, the FTC must show that the individual had knowledge of the misrepresentations, was recklessly indifferent to the truth or falsity of the misrepresentation, or was aware of a high probability of fraud and intentionally avoided the truth. Publ'g Clearing House, 104 F.3d at 1171; Stefanchik, 559 F.3d at 931. "[T]he extent of an individual's involvement in a fraudulent scheme alone is sufficient to establish the requisite knowledge for personal restitutionary liability." F.T.C. v. Affordable Media, 179 F.3d 1228, 1235 (9th Cir. 1999).

The evidence produced by the FTC demonstrates that Scott Tucker and Blaine Tucker acted with reckless indifference to the truth or falsity or an awareness of a high probability of fraud and an intentional avoidance of the truth. Specifically, Scott Tucker, as AMG's president, directed all lending and collection activities, approved lending policies, drafted and reviewed loan disclosures and website content, and interacted and entered into agreements with third party servicers. (See e.g., Grote Dep. 165:21-166:8, ECF No. 781-28). For his part as AMG's vice-president, Blaine Tucker edited and approved loan disclosures, reviewed content appearing on the Lending Defendants' websites, and had the authority to modify and approve consumer call scripts and other lending policies implemented by the loan companies. (See e.g., AMG Resp. to Interrog. No. 9, ECF No. 781-29). Further, both Scott Tucker and Blaine Tucker received periodic reports tracking consumer complaints and were aware that AMG's customers often did not understand the Lending Defendants' process of renewals and paydowns. (See, e.g., Ex. 30 to Singhvi Decl., ECF No. 781-36). This evidence is sufficient to support a preliminary conclusion that Scott Tucker and Blaine Tucker were recklessly indifferent to or intentionally avoided the possibility of their representations being false or fraudulent.

2. Lenders Engaged in a Common Enterprise

"[E]ntities constitute a common enterprise when they exhibit either vertical or horizontal commonality—qualities that may be demonstrated by a showing of strongly interdependent economic interests or the pooling of assets and revenues." F.T.C. v. Network Servs. Depot, Inc., 617 F.3d 1127, 1142-43 (9th Cir. 2010). In deciding whether a common enterprise exists, courts may consider such factors as whether the companies were under common ownership and control; whether they pooled resources and staff; whether they shared phone numbers, employees, and email systems; and whether they jointly participated in a "common venture" in which they benefited from a shared business scheme or referred customers to one another. Id. at 1243.

In support of its claim that the Tucker Defendants engaged in a common enterprise, the FTC points out that "[t]he Tucker Corporate Defendants, wholly owned and controlled by Scott Tucker and Blaine Tucker, shared office space with each other and shared employees with AMG."4 (Mot. for Prelim. Inj. 24:13-14; see also Ex. 57 to Singhvi Decl., ECF No. 57; Cert. of Int. Parties, ECF No. 58; Tucker Defs.' Am. Ans. ¶¶ 10-12, 15, ECF No. 397). Further, the FTC also demonstrates that the Tucker Corporate Defendants and the Lending Defendants commingled corporate funds through "thousands of exorbitant and seemingly random payments made by the [Lending Defendants] to the Tucker Corporate Defendants." (Mot. for Prelim. Inj. 24:13-14; see also Ex. 5 to Singhvi Decl. at 5-7, 22-25, 45, 53, 57, 67-70, ECF No. 781-11).

While the Tucker Defendants acknowledge that "[t]he bulk of the Motion [for Preliminary Injunction] is devoted to trying to establish that Scott and Blaine Tucker were members of the alleged common enterprise," they neither discuss nor refute the FTC's evidence that the lenders engaged in a common enterprise. (Tucker Defs.' Resp. 21:10-11, ECF No. 797). Accordingly, based on FTC's evidence indicating that a common enterprise existed, and the Tucker Defendants' tacit agreement to this claim by failing to refute it, the Court finds that the FTC is likely to succeed in proving that the Tucker Defendants engaged in a common enterprise.

3. The Relief Defendants are Liable

District courts are given broad authority under the FTC Act to fashion equitable remedies to the extent necessary to ensure effective relief. Network Servs. Depot, 617 F.3d at 1141-42. "The broad equitable powers of the federal courts can be employed to recover ill gotten gains for the benefit of the victims of wrongdoing, whether held by the original wrongdoer or by one who has received the proceeds after the wrong." S.E.C. v. Colello, 139 F.3d 674, 676 (9th Cir. 1998). "The creditor plaintiff must show that the [relief] defendant has received ill gotten funds and that he does not have a legitimate claim to those funds." Id. at 677. Upon such a showing, the remedy is an equitable monetary judgment in the amount of the funds that the relief defendant received. See id.; see also S.E.C. v. Banner Fund Int'l, 211 F.3d 602, 617 (D.C. Cir. 2000) ("[D]isgorgement is an equitable obligation to return a sum equal to the amount wrongfully obtained, rather than a requirement to replevy a specific asset.").

The Relief Defendants received funds derived from the fraudulent activities of the other defendants. Kim Tucker received at least $19 million in non-salary payments, usually orchestrated by Scott Tucker, originating from a Lending Defendant or a member of the common enterprise. (See, e.g., Ex. 109 to Singhvi Decl., ECF No. 781-115). Park 269, wholly owned by Kim Tucker and nominal owner of an $8 million mansion in Aspen, Colorado, also received payments arranged by Scott Tucker for the property's purchase, mortgage, property taxes, furnishing, maintenance, and housekeeping. (See, e.g., Ex. 118 to Singhvi Decl., ECF No. 781-124). Based on this evidence of commingling of funds, and considering that the Court has preliminarily found Scott Tucker to be personally liable for violations of the FTC Act, the Court finds that the FTC has demonstrated a likelihood of success that it will recover from the Relief Defendants.

B. Balancing of the Public and Private Interests

In balancing the equities, public equities receive far greater weight than private equities. Affordable Media, 179 F.3d at 1236. Public equities include economic benefits and competitive advantages for consumers, and effective relief for the FTC. See Warner Commc'n, 742 F.2d at 1165. "[W]hen a district court balances the hardships of the public interest against a private interest, the public interest should receive greater weight." World Wide Factors, 882 F.2d at 347. If the FTC demonstrates a likelihood of success on the merits, "a countershowing of private equities alone does not justify denial of a preliminary injunction." Warner Commc'n, 742 F.2d at 1165.

The Court finds that the public equities are substantial and outweigh the private equities in this case. As discussed below, the FTC has established that its ability to provide restitution to consumers will be severely impaired by the denial of an injunction. While the Tucker Defendants insist that living expenses and attorneys' fees must be excluded from the asset freeze, the Court has discretion to impose limited allowances for normal living expenses and attorneys' fees. See, e.g., F.T.C. v. Ideal Fin. Sols., Inc., No. 2:13-CV-00143-JAD-GW, 2014 WL 4541191, at *2 (D. Nev. Sept. 9, 2014) ("The Ninth Circuit recognizes district courts' discretion in civil cases to `forbid or limit payment of attorney fees out of frozen assets.'") (quoting Commodity Futures Trading Com'n v. Noble Metals Int'l, Inc., 67 F.3d 766, 775 (9th Cir. 1995)). Therefore, the balance of equities favors the FTC.

C. Asset Freeze

Congress has given district courts equitable authority to order the freezing of assets under § 13(b) of the FTCA. H.N. Singer, 668 F.2d at 1113. An asset freeze is proper to ensure that adequate funds will be available to compensate defrauded consumers. Id. "A party seeking an asset freeze must show a likelihood of dissipation of the claimed assets, or other inability to recover monetary damages, if relief is not granted." Johnson, 572 F.3d at 1085. The Court must also consider whether the freezing of assets "under certain circumstances . . . might thwart the goal of compensating investors if the freeze were to cause such disruption of defendants' business affairs that they would be financially destroyed." Id. (quoting S.E.C. v. Manor Nursing Ctrs., Inc., 458 F.2d 1082, 1106 (2d Cir. 1972)).

The FTC has presented sufficient evidence to justify an asset freeze. Not only has it shown that the Tucker Defendants are likely to conceal and dissipate assets, but it has also shown that a monetary award against the Tucker Defendants exceeds their ability to pay. Regarding dissipation and concealment of assets, the evidence demonstrates that the Tucker Defendants dissipated funds by writing thousands of checks to their wholly owned companies and using corporate assets for personal expenditures, including jet travel, luxury automobiles, a vacation home, and personal credit card expenses. (Ex. 66 to Singhvi Decl., ECF No. 781-72; Ex. 38 to Singhvi Decl., ECF No. 781-44). Further, between March 2013 and late 2014, the Tucker Defendants' total assets shuffled through numerous financial institutions and ultimately decreased by $90 million. (See, e.g., Budich Decl. ¶ 8, ECF No. 782; Ex. 45 to Singhvi Decl., ECF No. 781-51).

Next, regarding the Tucker Defendants' abilities to pay a monetary reward, the FTC estimates that it may recover the following amounts: $340 million to $1.3 billion against the Tucker Defendants based on consumer restitution; $400 million against the Tucker Defendants if the Court awards disgorgement; and $27 million against the Relief Defendants based on the value of unearned payments made to them.5 (Mot. for Prelim. Inj. 27:23-27). Because the total assets currently held by the Tucker Defendants and the Relief Defendants do not exceed $125 million, it is likely that the Court's judgment would greatly exceed Defendants' abilities to pay. (See Budich Decl. ¶ 8). Finally, an asset freeze would not disrupt Defendants' businesses as they have ceased operations. See H.N. Singer, 668 F.2d at 1113 (finding that "there is no danger that the freeze will disrupt the defendants' business affairs [because] . . . [t]hey are out of business").

While the Tucker Defendants do not dispute any of these facts, they nevertheless maintain that "[t]he FTC has failed to demonstrate the likelihood of dissipation or concealment of assets." (Tucker Defs.' Resp. 21:8). Principally, the Tucker Defendants argue that the FTC's evidence of dissipation is "`substantially outdated' and `stale.'" (Id. 21:14) (quoting F.T.C. v. Merch. Servs. Direct, LLC, No. 13-CV-0279-TOR, 2013 WL 4094394, at *3 (E.D. Wash. Aug. 13, 2013)).6 In addition, the Tucker Defendants suggest that no dissipation occurred with regard to "[t]he $90 million difference in assets from March to the latter part of 2014 [because those funds reflect] tax payments made by or on behalf of the Tucker Defendants." (Tucker Defs.' Resp. 23:1-3).

However, each of the Tucker Defendants' arguments are misplaced. Indeed, evidence of past dissipation is relevant to and probative of the likelihood of future dissipation. See, e.g., Affordable Media, 179 F.3d at 1236-37 (noting defendants' history of concealing and dissipating assets supported likelihood of dissipation finding). In addition, the Tucker Defendants cite no case law to support the proposition that funds obtained from deceived consumers to reduce their own income tax liability mitigates against a finding of dissipation. C.f. F.T.C. v. Crittendon, 823 F.Supp. 699, 704 (C.D. Cal. 1993) aff'd 19 F.3d 26 (9th Cir. 1994) (funds derived from deception are held in constructive trust for deceived consumers, and are not to be used to pay defendant's taxes). Moreover, as the FTC points out, "if the Tucker Defendants' paid $100 million in income taxes, where are the earnings upon which those taxes were assessed?" (Mot. for Prelim. Inj. 24:8-9). Given that the Tucker Defendants appear to have had just $212.6 million in assets by the end of March 2013, FTC's question renders Defendants' explanations doubtful. (See Budich Decl. ¶ 7).

Accordingly, the Tucker Defendants' conduct establishes a likelihood that in the absence of an asset freeze and accounting, asset dissipation and concealment will continue.7 See, e.g., Johnson, 572 F.3d at 1085 (defendant's past of diverting more than $35 million in company assets to his personal bank account created a likelihood of asset dissipation). The Court therefore finds that it is necessary to freeze their assets and orders an accounting "to preserve the possibility of effective relief." Reebok Int'l, Ltd. v. Marnatech Enters., Inc., 970 F.2d 552, 560 (9th Cir. 1992).

Based the forgoing, the Court shall issue a preliminary injunction consistent with the definitions set forth below.

IV. DEFINITIONS

1. "Asset" means any legal or equitable interest in, right to, or claim to, any real, personal, or intellectual property including, but not limited to, chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, contracts, mail or other deliveries, shares of stock, securities, inventory, checks, notes, accounts, credits, receivables (as those terms are defined in the Uniform Commercial Code), cash, trusts, including but not limited to asset protection trusts, and reserve funds or other accounts associated with any payments processed on behalf of any Defendant, including, but not limited to, such reserve funds held by a payment processor, credit card processor, or bank.

2. "Defendants" means (a) each Tucker Defendant and (b) each Relief Defendant. Furthermore, any person insofar as he or she is acting in the capacity of an officer, agent, servant, employee, or attorney of any Tucker Defendant or any Relief Defendant, and any person or entity in active concert or participation with any of the foregoing who receives actual notice of this Order by personal service or otherwise, is bound to comply with this Order, see Fed.R.Civ.P. 65(d), whether these persons or entities are acting directly or through a trust, corporation, subsidiary, division, or other device.

3. "Document" is synonymous in meaning and equal in scope to the usage of the term in the Federal Rules of Civil Procedure 34(a), and includes writing, drawings, graphs, charts, Internet sites, Web pages, Web sites, electronic correspondence, including email and instant messages, photographs, audio and video recordings, contracts, accounting data, advertisements (including, but not limited to, advertisements placed on the World Wide Web), FTP Logs, Server Access Logs, USENET Newsgroup postings, World Wide Web pages, books, written or printed records, handwritten notes, telephone logs, telephone scripts, receipt books, ledgers, personal and business canceled checks and check registers, bank statements, appointment books, computer records, and other data compilations from which information can be obtained and translated, if necessary, through detection devices into reasonably usable form. A draft or non-identical copy is a separate document within the meaning of the term.

4. "Person" means a natural person, organization, or other legal entity, including a corporation, partnership, proprietorship, association, cooperative, government or governmental subdivision or agency, or any other group or combination acting as an entity.

5. "Plaintiff" or "Commission" or "FTC" means the Federal Trade Commission.

6. "Relief Defendants" means Kim Tucker, Park 269, LLC, and their successors, assigns, affiliates, or subsidiaries.

7. "Representatives" means Defendants' officers, agents, servants, employees, and attorneys, and any other person or entity in active concert or participation with them who receives actual notice of this Order by personal service or otherwise.

8. "Tucker Defendants" means Scott A. Tucker, AMG Capital Management, LLC, Level 5 Motorsports, LLC, Black Creek Capital Corporation, LeadFlash Consulting LLC, Broadmoor Capital Partners, LLC, and Nereyda M. Tucker, as Executor of the Estate of Blaine A. Tucker, and their successors, entities, assigns, affiliates, or subsidiaries.

V. CONCLUSION

IT IS HEREBY ORDERED that the Tucker Defendants' Motion for Extension of Time (ECF No. 786) and the Relief Defendants' Motion for Extension of Time (ECF No. 792) are DENIED as moot.

IT IS FURTHER ORDERED that the Tucker Defendants' Motion to Reconsider (ECF No. 808) is DENIED.

IT IS FURTHER ORDERED that the FTC's Motion to Unseal (ECF No. 810) is GRANTED in part and DENIED in part. The Clerk is ordered to UNSEAL the following documents: Declaration of Natalie C. Dempsey (ECF No. 803-8); OneClickCash Traning Manual (ECF No. 803-9); and UCL Team Meeting Minutes (ECF No. 803-10). Blaine Tucker's Living Trust (ECF No. 803-7) will remain filed under SEAL.

IT IS FURTHER ORDERED that the FTC's Motion for Preliminary Injunction (ECF No. 780) is GRANTED pursuant to the following terms:

I.

ASSET FREEZE

IT IS HEREBY ORDERED that Defendants and their Representatives, whether acting directly or through any entity, corporation, subsidiary, division, director, manager, member, affiliate, independent contractor, accountant, financial advisor, or other device, are hereby preliminarily restrained and enjoined from:

A. Transferring, liquidating, converting, encumbering, pledging, loaning, selling, concealing, dissipating, disbursing, assigning, relinquishing, spending, withdrawing, granting a lien or security interest in, or otherwise disposing of any funds, real or personal property, accounts, contracts, shares of stock, lists of consumer names, or other assets, wherever located, including outside the United States, that are:

B. Opening or causing to be opened, unless accompanied by counsel for the Commission, any safe deposit boxes titled in the name of any Defendant, either individually or jointly, or subject to access by any Defendant;

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, singly 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 any Defendant, or any corporation, partnership, or other entity irectly or indirectly owned, managed, or controlled by any Defendant or of which any Defendant is an officer, director, member, or manager. This includes, but is not limited to, any corporate bank or credit card account for which any Defendant is an authorized signer.

IT IS FURTHER ORDERED that the assets affected by this Section shall include assets (a) existing as of the date this Order was entered, or (b) acquired by any Defendant following entry of this Order, if such assets are derived from the conduct alleged in the Commission's Complaint.

IT IS FURTHER ORDERED that Defendant Scott A. Tucker and Relief Defendant Kim Tucker may retain access to $75,000 (collectively) for attorneys' fees and living expenses for two months following the date of this Order and that Defendant Nereyda M. Tucker may retain $25,000 for attorneys' fees and living expenses for two months following the date of this Order. After the end of this two-month period, the FTC, Scott A. Tucker, Kim Tucker, and Nereyda M. Tucker shall confer regarding future allowances for attorneys' fees and living expenses.

II.

DUTIES OF ASSET HOLDERS

IT IS FURTHER ORDERED that any financial or brokerage institution, credit card processing company, payment processor, merchant bank, acquiring bank, business entity, or person who receives actual notice of this Order (by personal service or otherwise) that (a) holds, controls, or maintains custody of any account or asset of any Defendant, (b) holds, controls, or maintains custody of any asset associated with credit or debit card charges made on behalf of any Defendant, including but not limited to, reserve funds held by payment processors, or (c) has held, controlled, or maintained custody of any such account or asset at any time since the date of entry of this Order shall:

A. Hold and retain within its control and prohibit the withdrawal, removal, assignment, transfer, pledge, encumbrance, disbursement, dissipation, relinquishing, conversion, sale, or other disposal of any such asset except by further order of this Court;

B. Deny any person access to any safe deposit box that is:

C. Provide the FTC's counsel, within three (3) business days of receiving a copy of this Order, a sworn statement setting forth:

D. Upon the request of the FTC, promptly provide the FTC with copies of all records or other documentation pertaining to such account or asset, including, but not limited to, 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 safe deposit box logs.

III.

FINANCIAL STATEMENTS

IT IS FURTHER ORDERED that each Defendant, within five (5) days of service of this Order upon them, shall prepare and deliver to counsel for the Commission completed financial statements on the forms attached to this Order as Attachment A (Financial Statement of Individual Defendant) for themselves individually, and Attachment B (Financial Statement of Corporate Defendant) for each business entity under which they conduct business or of which they are an officer, and for each trust for which any Defendant is a trustee. The financial statements shall be accurate as of the date of entry of this Order. Each Defendant shall include in the financial statements a full accounting of all funds and assets, whether located inside or outside of the United States, that are: (a) titled in the name of such Defendant, jointly, severally, or individually; (b) held by any person or entity for the benefit of such Defendant; or (c) under the direct or indirect control of such Defendant.

IV.

REPATRIATION OF ASSETS AND DOCUMENTS

IT IS FURTHER ORDERED that within three (3) days following the service of this Order, each Defendant shall:

A. Provide the Commission with a full accounting of all funds, documents, and assets outside of the United States which are: (1) titled in the name, individually or jointly, of any Defendant; or (2) held by any person or entity for the benefit of any Defendant; or (3) under the direct or indirect control, whether jointly or singly, of any Defendant; and

B. Transfer to the territory of the United States all funds, documents, and assets located in foreign countries which are: (1) titled in the name individually or jointly of any Defendant; or (2) held by any person or entity, for the benefit of any Defendant; or (3) under the direct or indirect control of any Defendant, whether jointly or singly.

V.

NONINTERFERENCE WITH REPATRIATION

IT IS FURTHER ORDERED that Defendants and their Representatives, whether acting directly or through any entity, corporation, subsidiary, division, director, manager, member, affiliate, independent contractor, accountant, financial advisor, or other device, are hereby restrained and enjoined from taking any action, directly or indirectly, which may result in the encumbrance or dissipation of foreign assets, or in the hindrance of the repatriation required by Section IV of this Order, including, but not limited to:

A. Sending any statement, letter, fax, e-mail 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 all assets have been fully repatriated pursuant to Section IV of 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 all assets have been fully repatriated pursuant to Section IV of this Order.

VI.

ACKNOWLEDGEMENT AND DISTRIBUTION OF ORDER BY DEFENDANTS

IT IS FURTHER ORDERED that Defendants obtain acknowledgments of receipt of this Order:

A. Each Defendant, within three (3) days of entry of this Order, must submit to the Commission an acknowledgment of receipt of this Order sworn under penalty of perjury.

B. Defendants shall immediately provide a copy of this Order to each officer, director, employee, agent, attorney, or other representative of any Defendant, who has the ability to dispose of or manage the Assets of any Defendant. Defendants shall, within ten (10) days from the date of entry of this Order, provide the FTC with a sworn statement that Defendants have complied with this provision of the Order, which statement shall include the names and addresses of each such person or entity who received a copy of this Order. Furthermore, Defendants shall not take any action that would encourage those who receive this Order to disregard it or believe that they are not bound by its provisions.

VII.

SERVICE ON FINANCIAL INSTITUTIONS,

ENTITIES, OR PERSONS

IT IS FURTHER ORDERED that copies of this Order may be served by any means, including facsimile transmission, e-mail, and overnight delivery service, 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.

VIII.

GENERAL SERVICE OF ORDER

IT IS FURTHER ORDERED that pursuant to Rule 4(c)(2), Fed. R. Civ. P., this Order and the initial papers filed in this matter may be served on Defendants, upon the business premises of Defendants, and 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 be subject to any provision of this Order, by employees of the FTC, by employees of any other law enforcement agency, by any agent of Plaintiff, or by any agent of any process service retained by Plaintiff.

IX.

CORRESPONDENCE

IT IS FURTHER ORDERED that, for the purpose of this Order, all correspondence and service of pleadings on Plaintiff shall be addressed to:

X.

RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes.

Attachment A

FINANCIAL STATEMENT OF INDIVIDUAL DEFENDANT

Definitions and Instructions:

Penalty for False Information:

Federal law provides that any person may be imprisoned for not more than five years, fined, or both, if such person:

(1) "in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or devise a material fact; makes any materially false, fictitious or fraudulent statement or representation; or makes or uses any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry" (18 U.S.C. § 1001);

(2) "in any . . . statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true" (18 U.S.C. § 1621); or

(3) "in any (. . . statement under penalty of perjury as permitted under section 1746 of title 28, United States Code) in any proceeding before or ancillary to any court or grand jury of the United States knowingly makes any false material declaration or makes or uses any other information . . . knowing the same to contain any false material declaration" (18 U.S.C. § 1623).

For a felony conviction under the provisions cited above, federal law provides that the fine may be not more than the greater of (i) $250,000 for an individual or $500,000 for a corporation, or (ii) if the felony results in pecuniary gain to any person or pecuniary loss to any person other than the defendant, the greater of twice the gross gain or twice the gross loss. 18 U.S.C. § 3571.

Attachment B

FINANCIAL STATEMENT OF CORPORATE DEFENDANT

Instructions:

1. Complete all items. Enter "None" or "N/A" ("Not Applicable") where appropriate. If you cannot fully answer a question, explain why.

2. The font size within each field will adjust automatically as you type to accommodate longer responses.

3. In completing this financial statement, "the corporation" refers not only to this corporation but also to each of its predecessors that are not named defendants in this action.

4. When an Item asks for information about assets or liabilities "held by the corporation," include ALL such assets and liabilities, located within the United States or elsewhere, held by the corporation or held by others for the benefit of the corporation.

5. Attach continuation pages as needed. On the financial statement, state next to the Item number that the Item is being continued. On the continuation page(s), identify the Item number being continued.

6. Type or print legibly.

7. An officer of the corporation must sign and date the completed financial statement on the last page and initial each page in the space provided in the lower right corner.

Penalty for False Information:

Federal law provides that any person may be imprisoned for not more than five years, fined, or both, if such person:

For a felony conviction under the provisions cited above, federal law provides that the fine may be not more than the greater of (i) $250,000 for an individual or $500,000 for a corporation, or (ii) if the felony results in pecuniary gain to any person or pecuniary loss to any person other than the defendant, the greater of twice the gross gain or twice the gross loss. 18 U.S.C. § 3571.

BACKGROUND INFORMATION

Item 1. General Information

Item 2. Legal Information

Item 3. Registered Agent

Item 4. Principal Stockholders

List all persons and entities that own at least 5% of the corporation's stock.

Item 5. Board Members

List all members of the corporation's Board of Directors.

Item 6. Officers

List all of the corporation's officers, including de facto officers (individuals with significant management responsibility whose titles do not reflect the nature of their positions).

Item 7. Businesses Related to the Corporation

List all corporations, partnerships, and other business entities in which this corporation has an ownership interest.

Item 8. Businesses Related to Individuals

List all corporations, partnerships, and other business entities in which the corporation's principal stockholders, board members, or officers (i.e., the individuals listed in Items 4-6 above) have an ownership interest.

Item 9. Related Individuals

List all related individuals with whom the corporation has had any business transactions during the three previous fiscal years and current fiscal year-to-date. A "related individual" is a spouse, sibling, parent, or child of the principal stockholders, board members, and officers (i.e., the individuals listed in Items 4-6 above).

Item 10. Outside Accountants

List all outside accountants retained by the corporation during the last three years.

Item 11. Corporation's Recordkeeping

List all individuals within the corporation with responsibility for keeping the corporation's financial books and records for the last three years.

Item 12. Attorneys

List all attorneys retained by the corporation during the last three years.

Item 13. Pending Lawsuits Filed by the Corporation

List all pending lawsuits that have been filed by the corporation in court or before an administrative agency. (List lawsuits that resulted in final judgments or settlements in favor of the corporation in Item 25).

Item 14. Current Lawsuits Filed Against the Corporation

List all pending lawsuits that have been filed against the corporation in court or before an administrative agency. (List lawsuits that resulted in final judgments, settlements, or orders in Items 26-27).

Item 15. Bankruptcy Information

List all state insolvency and federal bankruptcy proceedings involving the corporation.

Item 16. Safe Deposit Boxes

List all safe deposit boxes, located within the United States or elsewhere, held by the corporation, or held by others for the benefit of the corporation. On a separate page, describe the contents of each box.

FINANCIAL INFORMATION

REMINDER: When an Item asks for information about assets or liabilities "held by the corporation," include ALL such assets and liabilities, located within the United States or elsewhere, held by the corporation or held by others for the benefit of the corporation.

Item 17. Tax Returns

List all federal and state corporate tax returns filed for the last three complete fiscal years. Attach copies of all returns.

Item 18. Financial Statements

List all financial statements that were prepared for the corporation's last three complete fiscal years and for the current fiscal year-to-date. Attach copies of all statements, providing audited statements if available.

Item 19. Financial Summary

For each of the last three complete fiscal years and for the current fiscal year-to-date for which the corporation has not provided a profit and loss statement in accordance with Item 18 above, provide the following summary financial information.

Item 20. Cash, Bank, and Money Market Accounts

List cash and all bank and money market accounts, including but not limited to, checking accounts, savings accounts, and certificates of deposit, held by the corporation. The term "cash" includes currency and uncashed checks.

Item 21. Government Obligations and Publicly Traded Securities

List all U.S. Government obligations, including but not limited to, savings bonds, treasury bills, or treasury notes, held by the corporation. Also list all publicly traded securities, including but not limited to, stocks, stock options, registered and bearer bonds, state and municipal bonds, and mutual funds, held by the corporation.

Item 22. Real Estate

List all real estate, including leaseholds in excess of five years, held by the corporation.

Item 23. Other Assets

List all other property, by category, with an estimated value of $2,500 or more, held by the corporation, including but not limited to, inventory, machinery, equipment, furniture, vehicles, customer lists, computer software, patents, and other intellectual property.

Item 24. Trusts and Escrows

List all persons and other entities holding funds or other assets that are in escrow or in trust for the corporation.

Item 25. Monetary Judgments and Settlements Owed To the Corporation

List all monetary judgments and settlements, recorded and unrecorded, owed to the corporation.

Item 26. Monetary Judgments and Settlements Owed By the Corporation

List all monetary judgments and settlements, recorded and unrecorded, owed by the corporation.

Item 27. Government Orders and Settlements

List all existing orders and settlements between the corporation and any federal or state government entities.

Item 28. Credit Cards

List all of the corporation's credit cards and store charge accounts and the individuals authorized to use them.

Item 29. Compensation of Employees

List all compensation and other benefits received from the corporation by the five most highly compensated employees, independent contractors, and consultants (other than those individuals listed in Items 5 and 6 above), for the two previous fiscal years and current fiscal year-to-date. "Compensation" includes, but is not limited to, salaries, commissions, consulting fees, bonuses, dividends, distributions, royalties, pensions, and profit sharing plans. "Other benefits" include, but are not limited to, loans, loan payments, rent, car payments, and insurance premiums, whether paid directly to the individuals, or paid to others on their behalf.

Item 30. Compensation of Board Members and Officers

List all compensation and other benefits received from the corporation by each person listed in Items 5 and 6, for the current fiscal year-to-date and the two previous fiscal years. "Compensation" includes, but is not limited to, salaries, commissions, consulting fees, dividends, distributions, royalties, pensions, and profit sharing plans. "Other benefits" include, but are not limited to, loans, loan payments, rent, car payments, and insurance premiums, whether paid directly to the individuals, or paid to others on their behalf.

Item 31. Transfers of Assets Including Cash and Property

List all transfers of assets over $2,500 made by the corporation, other than in the ordinary course of business, during the previous three years, by loan, gift, sale, or other transfer.

Item 32. Documents Attached to the Financial Statement

List all documents that are being submitted with the financial statement.

I am submitting this financial statement with the understanding that it may affect action by the Federal Trade Commission or a federal court. I have used my best efforts to obtain the information requested in this statement. The responses I have provided to the items above are true and contain all the requested facts and information of which I have notice or knowledge. I have provided all requested documents in my custody, possession, or control. I know of the penalties for false statements under 18 U.S.C. § 1001, 18 U.S.C. § 1621, and 18 U.S.C. § 1623 (five years imprisonment and/or fines). I certify under penalty of perjury under the laws of the United States that the foregoing is true and correct.