ATTORNEYS FOR PLAINTIFF
UNITED STATES DISTRICT COURT
TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE WHY PRELIMINARY INJUNCTION SHOULD NOT ISSUE
Plaintiff, the Federal Trade Commission ("Commission"), having filed a Complaint for a permanent injunction and other relief, including restitution to consumers, pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and having moved for an ex parte temporary restraining order and for an order to show cause why a preliminary injunction should not be granted pursuant to Rule 65(b) of the Federal Rules of Civil Procedure, and the Court having considered the pleadings, declarations, exhibits, and memorandum filed in support thereof, it is the finding of this Court that:
1. This Court has jurisdiction of the subject matter of this case and there is good cause to believe it will have jurisdiction over all parties hereto.
2. There is good cause to believe the Commission will ultimately succeed in establishing that defendants have engaged in and are likely to engage in acts and practices that violate Sections 310.3(a), (b) and (c) of the Telemarketing Sales Rule, 16 C.F.R. § 310.3(a), (b) and (c).
3. There is good cause to believe that immediate and irreparable damage will be done to the public and to this Court's ability to grant full and effective relief among the parties hereto absent entry of this Order on an ex parte basis.
4. Weighing the equities and considering the Commission's likelihood of ultimate success, a Temporary Restraining Order is in the public interest.
CEASE AND DESIST
IT IS THEREFORE ORDERED that defendants Woofter Investment Corporation ("Woofter"), which does business as A.T.M.S., and Patsy M. Barbour a.k.a. Patsy Barbour-Woofter are hereby temporarily restrained and enjoined from:
A. Promoting, offering for sale, selling, reselling, or purchasing on behalf of others, directly or indirectly, tickets, chances or interests in any foreign or U.S. lottery.
B. Providing customer service, registration of tickets, chances or interests in any foreign or U.S. lottery, or any other service to any telemarketer or seller of tickets, chances or interests in any foreign or U.S. lottery.
C. Providing credit card processing for any telemarketer or seller in a manner that violates the Telemarketing Sales Rule, 16 C.F.R. 310.3(c).
IT IS FURTHER ORDERED that, except as stipulated by the parties, or as directed by further order of the Court, defendants are hereby temporarily restrained and enjoined from, directly or through any other person or entity:
A. Transferring, converting, encumbering, selling, concealing, dissipating, disbursing, assigning, spending, withdrawing, or otherwise disposing of any funds, real or personal property, accounts, contracts, membership or mailing lists, shares of stock or other assets, or any interest therein, wherever located, that are: (a) owned or controlled by defendants, in whole or in part; or (b) in the actual or constructive possession of defendants; or (c) owned, controlled by, or in the actual constructive possession of any corporation, partnership, or other entity directly or indirectly owned, managed, or controlled by, or under common control with, defendants, including, but not limited to, any assets held by or for defendants at any bank or savings and loan institution, or with any broker-dealer, escrow agent, title company, commodity trading company, precious metal dealer, or other financial institution or depository of any kind;
B. Opening or causing to be opened any safe deposit boxes titled in the name of any of these defendants, or subject to access by defendants; and
C. Incurring charges on any credit card issued in the name, singly or jointly, of defendants.
The assets affected by this section shall include both existing assets and assets acquired after issuance of this Order, and defendants shall hold and account for these assets and all payments received by them, including but not limited to borrowed funds or property and gifts.
MAINTENANCE OF RECORDS
IT IS FURTHER ORDERED that defendants are hereby temporarily restrained and enjoined from:
A. Failing to create and maintain books, records, and accounts which, in reasonable detail, accurately, fairly, and completely reflect the incomes, disbursements, transactions, and use of monies by defendants.
B. Destroying, erasing, mutilating, concealing, altering, transferring or otherwise disposing of, in any manner, directly or indirectly, any contracts, client lists, membership or mailing lists, accounting data, correspondence, advertisements, computer tapes, disks, or other computerized records, books, written or printed records, handwritten notes, telephone logs, telephone scripts, "verification" tapes or other audio or video tape recordings, receipt books, invoices, postal receipts, ledgers, personal and business canceled checks and check registers, bank statements, appointment books, copies of federal, state or local business or personal income or property tax returns, and other documents or records of any kind that relate to the business practices or business or personal finances of defendants.
DUTIES OF ASSET HOLDERS
IT IS FURTHER ORDERED that, except as stipulated by the parties or as directed by further order of the Court, any financial or brokerage institution, business entity, or person that holds, controls, or maintains custody of any account or asset, including any membership or mailing lists, real or personal of property defendants, or has held, controlled, or maintained custody of any account or asset of defendants at any time since December 31, 1995, shall
A. Prohibit all persons and entities except, with respect to Woofter's assets, the receiver appointed by this Order and his designated representatives or agents, from withdrawing, removing, assigning, transferring, pledging, encumbering, disbursing, dissipating, converting, selling, or otherwise disposing of any of these assets.
B. Deny all persons and entities, except, with respect to Woofter's assets, the receiver appointed by this Order and his designated representatives and agents, access to any safe deposit box that is titled in the name of either defendant, either individually or jointly, or otherwise subject to access by either defendant.
C. Provide counsel for plaintiff and, with respect to Woofter's assets, the receiver, within five (5) business days of receiving a copy of this Order, a certified statement setting forth:
D. Upon request and within five (5) business days, provide to counsel for plaintiff and, with respect to Woofter's assets, to the receiver, copies of all records or other documentation pertaining to the accounts or assets described in Paragraph C above, 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, all other debit and credit instruments or slips, currency transaction reports, 1099 forms, and safe deposit box logs.
E. With respect to Woofter's assets, cooperate with all reasonable requests of the receiver relating to implementation of this Order, including transferring funds at the receiver's direction and producing records related to defendants' accounts.
SERVICE OF TRO
IT IS FURTHER ORDERED that copies of this Order may be served by first class mail, overnight delivery, facsimile, or personally, by employees or agents of the FTC or the receiver, upon any bank, savings and loan institution, credit union, financial institution, brokerage house, escrow agent, money market or mutual fund, title company, commodity trading company, common carrier, storage company, trustee, commercial mail receiving agency, mail holding or forwarding company, or any other person, partnership, corporation, or legal entity that may be in possession of any records, assets, property, or property right of defendants, and any other person, partnership, corporation, or legal entity that may be subject to any provision of this Order.
DEFENDANTS' FINANCIAL STATEMENTS
IT IS FURTHER ORDERED that defendants shall, within four business days from service of this Order, prepare and deliver to the counsel for the Commission and, with respect to Woofter's assets, the receiver, completed financial statements on the forms attached to this Order. The completed financial statements shall be accurate as of the date of service of this Order upon the defendants. Defendants shall attach to these completed financial statements copies of all state and federal income and property tax returns for each individual and entity since January 1, 1995 and copies of all policies of insurance in effect since January 1, 1996 with attachments and schedules thereto, insuring against loss of, or damage to, real or personal property owned or held by or for defendants.
ACCESS TO PREMISES
IT IS FURTHER ORDERED that defendants shall allow plaintiff and the receiver, and their representatives, agents, and assistants, immediate access to Woofter's business premises and any other locations where Woofter's property or business records are located. The locations of defendant Woofter's business premises specifically include, but are not limited to, the Woofter offices and facilities at 1500 Tropicana in Las Vegas, NV. The purpose of plaintiff's access shall be to inspect and inventory all defendants' property, assets, and documents and to inspect and copy any documents relevant to this action. For purposes of this provision, the term "document" shall include all those items described in Paragraph III.B above. The Commission shall have the right to remove documents from defendants' premises in order that they may be inspected, inventoried, and copied. The documents so removed shall be returned to Woofter's premises, or any other location directed by the receiver, within seven business days unless the receiver agrees to a longer period. The FTC may also have immediate access to documents for purposes of inspection, inventorying, and copying, in the event they have been removed from defendants' premises by, and are in the possession of, another law enforcement agency of investigative agency.
APPOINTMENT OF RECEIVER AND RECEIVER DUTIES
IT IS FURTHER ORDERED that Mahan & Ellis Chartered, is appointed as a temporary receiver with the full power of an equity receiver for Woofter and its subsidiaries and affiliates, and of all funds, properties, premises and other assets directly or indirectly owned, wherever situated, beneficially or otherwise, by this defendant with directions and authority to accomplish the following:
A. Take custody, control, and possession of all funds, property, premises, mail, and other assets of, or in the possession or control of Woofter, including the contents of any safe deposit box, wherever situated, with full power to divert, return to sender, hold without opening, open, or copy any mail, and to sue for, collect, receive and take in possession all goods, chattels, rights, credits, monies, effects, lands, leases, books, work papers, and records of accounts, including electronic files on any media, and other papers and documents of defendant Woofter.
B. Conserve, hold, and manage all such assets, pending stipulation of the parties or further order of this Court; to obtain an accounting thereof; and to report to this Court and the Commission any violations of this Order or of Sections 310.3(a), (b) and (c) of the Telemarketing Sales Rule, 16 C.F.R. § 310.3(a), (b) and (c), that the receiver may become aware of by any defendant, their respective officers, directors, agents, servants, employees, attorneys, salespersons, successors, assigns, subsidiaries, affiliates, corporations, and other persons or entities under their control and all persons in active concert or participation with them.
C. Hold, preserve, and administer the business of Woofter until further order of this Court, with full authority to perform all acts necessary or incidental thereto, including terminating employees, and independent contractors.
D. Cease all operation or maintenance of the promotion, offering for sale, sale, resale, or purchase on behalf of others, of tickets, chances or interests in any foreign or U.S. lottery, and provision of services, for any telemarketer or seller of tickets, chances or interests in any foreign or U.S. lottery.
E. Cease all credit card laundering activity, as "credit card laundering" is defined in Section 310.3(c) of the Telemarketing Sales Rule, 16 C.F.R. 310.3(c).
F. Continue and conduct any lawful business of Woofter not incident to telemarketing or selling of tickets, chances or interests in any foreign or U.S. lottery, in such manner, to such extent, and for such duration as the receiver may in good faith deem to be necessary or appropriate to profitably and lawfully operate that business, if at all; provided that the continuation and conduct of the business shall be conditioned upon Woofter first demonstrating to the satisfaction of the Court, at the show cause hearing scheduled in Section XX below, that the business can be lawfully operated at a profit using the funds and other assets of the receivership estate. Woofter shall immediately, and thereafter from time to time upon request of the receiver, advise the receiver concerning each location at which Woofter conducts business and all matters relevant to the continuation and conduct of that business.
G. Employ any managers, agents, employees, servants, accountants, and technical specialists as may in the receiver's judgment be advisable or necessary in the management, conduct, control, or custody of the affairs of Woofter and the assets thereof, and otherwise generally to assist in the receivership.
H. Make any payments and disbursements that may be necessary and advisable for the preservation of the properties of Woofter and as may be necessary and advisable in discharging the receivership duties.
I. Give information, in a form to be provided or approved by counsel for the plaintiff, regarding the status of Woofter and this action to current, former, or prospective customers of Woofter that the receiver in its judgment deems advisable or necessary and practicable, including but not limited to notice through answering machines and faxes.
J. Receive and collect any and all sums of money due or owing Woofter in any manner whatsoever, whether the same are now due or shall hereafter become due and payable, except to the extent that debts are owed by members of the public who purchased tickets, chances or interests in any foreign or U.S. lottery, and to do such things and enter into such agreements in connection with the administration, care, preservation, and maintenance of the properties of Woofter as the receiver may deem advisable.
K. Institute, prosecute, and defend, compromise, adjust, intervene in, or become party to any actions or proceedings in state, federal, or foreign courts as may in the receiver's opinion be necessary or proper for the protection, maintenance, and preservation of the assets of Woofter or the carrying out of the terms of this Order, and likewise to defend, compromise, or adjust or otherwise dispose of any or all actions or proceedings instituted against the receiver or against Woofter and also to appear in and conduct the defense of any suit or adjust or compromise any actions or proceedings now pending in any court by or against Woofter where the prosecution, defense, or other disposition of those actions or proceedings will, in the judgment of the receiver, be advisable or proper for the protection of the properties of Woofter.
L. Make periodic reports, observations, and recommendations to this Court, and seek guidance and instructions from this Court, if the receiver deems it necessary, upon one day's written or oral notice to all parties who have filed an appearance in this proceeding.
M. The receiver and its accountants, attorneys, agents, and consultants shall be compensated from the assets of the receivership estate for their normal hourly charges and for all expenses incurred by them in fulfilling the terms of this Order. This compensation for the receiver's personnel shall be at the rate of $180 per hour for the principals, $120 per hour for the receiver's associate, and the customary hourly rates for other agents and consultants of the receiver. The receiver shall also be compensated for photocopying, long distance, postage, travel, and other expenses at actual cost. The receiver may pay itself and its accountants, attorneys, agents, and consultants on a regular basis as and when billed from assets of the receivership estate, provided that the receiver shall provide a monthly accounting to the Court, that the Court shall retain the right to accept or deny any particular charges, and that the receiver shall apply to the Court for approval of these charges at regular intervals of three months.
TURN OVER TO RECEIVER
IT IS FURTHER ORDERED that, immediately upon service of this Order upon them, defendants, and any other person or entity served with a copy of this Order, shall immediately deliver over to the receiver:
A. Possession and custody of all funds, assets, property owned beneficially or otherwise, and all other assets, wherever situated, of Woofter.
B. Possession and custody of all 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, membership and mailing lists, title documents, and other papers of Woofter.
C. Possession and custody of all funds and other assets belonging to members of the public now held by Woofter.
D. All passwords or codes required to access any hardware, software, or electronic files on any media.
E. All keys, passwords, identification numbers, entry codes, and combinations to locks required to open or gain access to any of Woofter's property or effects, Woofter's computer files (including all backup tapes), and all monies in any bank deposited by or to the credit of Woofter, wherever situated.
F. Information identifying the accounts, employees, properties, or other assets or obligations of Woofter.
G. A statement providing the total number of individuals and entities, and the name, address, phone number, and account records of each of them, who is a customer or client of Woofter, whether directly or through any other entity, and the total dollar amount of money received from each customer or client and paid out to each customer or client.
NON-INTERFERENCE WITH RECEIVER
IT IS FURTHER ORDERED that the defendants shall refrain from interfering with the receiver taking custody, control, or possession and from interfering in any manner, directly or indirectly, with the custody, possession, and control of the receiver; shall fully cooperate with and assist the receiver appointed in this action; and shall take no action, directly or indirectly, to hinder or obstruct the receiver in the conduct of its duties or to interfere in any manner, directly or indirectly, with the custody, possession, management, or control by the receiver.
THIRD PARTY COOPERATION WITH RECEIVER
IT IS FURTHER ORDERED that any bank, savings and loan institution, credit union, financial institution, brokerage house, money market or mutual fund, common carrier, storage company, escrow agent, title company, commodity trading company, trustee, Internet service provider, or any other person, partnership, corporation, or other legal entity that is served with a copy of this Order, shall cooperate with all reasonable requests of the receiver relating to implementation of this Order, including transferring funds and the contents of safe deposit boxes at the receiver's discretion and producing for the receiver records related to defendants' accounts.
IT IS FURTHER ORDERED that the receiver shall file with the Clerk of this Court within five (5) days of entry of this Order, a bond in the sum of $10,000 with sureties to be approved by the Court, conditioned that the receiver will well and truly perform the duties of the office and duly account for all monies and properties which may come into its hands and abide by and perform all things which he shall be directed to do.
STAY OF OTHER ACTIONS
IT IS FURTHER ORDERED that except by leave of this Court, defendants and all customers, principals, investors, creditors, stockholders, lessors, and other persons seeking to establish or enforce any claim, right or interest against or on behalf of defendants, or its subsidiaries or affiliates, and all others acting for or on behalf of those persons, including attorneys, trustees, agents, sheriffs, constables, marshals, and other officers, and their deputies and their respective attorneys, agents, servants, and employees, be and are hereby stayed from:
A. Commencing, prosecuting, continuing, or enforcing any suit or proceeding against Woofter, or its subsidiaries or affiliates, or the receiver, except that any action may be filed to toll any applicable statutes of limitations.
B. Commencing, prosecuting, continuing, or enforcing any suit or proceeding in the name of the defendants or their subsidiaries or affiliates.
C. Accelerating the due date of any obligation or claimed obligation, enforcing any lien upon, or taking or attempting to take possession or retaining possession of, property of defendant Woofter, or its subsidiaries or affiliates, or any property claimed by Woofter, or attempting to foreclose, forfeit, alter, or terminate any interests of Woofter in any property, whether these acts are part of a judicial proceeding or otherwise.
D. Using self-help or executing or issuing, or causing the execution or issuance, of any court attachment, subpoena, replevin, execution, or other process for the purpose of impounding or taking possession of or interfering with or creating or enforcing a lien upon any property, wheresoever located, owned or in the possession of the Woofter, or its subsidiaries or affiliates, or the receiver appointed pursuant to this Order or any agents appointed by the receiver.
E. Doing any act or thing whatsoever to interfere with the receiver taking control, possession, or management of the property subject to this receivership, or to in any way interfere with the receiver, or to harass or interfere in any manner with the duties of the receiver; or to interfere in any manner with the exclusive jurisdiction of this Court over the property and assets of defendant Woofter or its subsidiaries or affiliates.
Provided, however, that nothing in this section shall prohibit any federal, state, or local law enforcement or regulatory authority from commencing or prosecuting an action against any defendant.
IT IS FURTHER ORDERED that Plaintiff is granted leave to initiate discovery pursuant to FRCP 30(a), to take the deposition of any person, in any judicial district, at any time after the date of this Order, upon three (3) days notice; pursuant to FRCP 33, defendants' responses to any interrogatories served by the plaintiff shall be within ten (10) days after service of the interrogatories; pursuant to FRCP 34, defendants' response to any request by plaintiff for production of documents shall be within five (5) days after service of the request; pursuant to FRCP 36 defendants' responses to any request for admissions served by plaintiff shall be within five (5) days after service of the requests.
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 a consumer report concerning any defendant to plaintiff or the receiver.
NOTICE TO RELATED PERSONS AND ENTITIES
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, agent, attorney, and representative, and shall, within ten days from the date of entry of this Order, provide plaintiff 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 the Order.
FILING OF PLEADINGS
IT IS FURTHER ORDERED that defendants shall file their opposition, including any declarations, exhibits, memoranda, or other evidence on which defendants intend to rely, not less than three (3) business days before the hearing on the order to show cause why a preliminary injunction should not issue. Defendants shall serve copies of all these materials on plaintiff by delivery or facsimile to designated counsel for the Federal Trade Commission, at 915 Second Avenue, Suite 2896, Seattle, Washington 98174, prior to 4:00 p.m. on the day that it is filed.
WITNESSES AT HEARINGS
IT IS FURTHER ORDERED that, if any party to this action intends to present the testimony of any witness at the hearing on a preliminary injunction in this matter, that party shall, at least three (3) business days prior to the scheduled date and time of hearing, file with this Court and serve on counsel for the other party, a statement of the name, address, and telephone number of that witness, and either a summary of the witness' expected testimony, or the witness' declaration or affidavit revealing the substance of the witness' expected testimony; and that, after the service of the statement, the served party thereafter shall have two business days from the time of service of the witness information to provide information to the Court and to the serving party for any witness whose testimony the served party intends to present.
IT IS FURTHER ORDERED that the Temporary Restraining Order granted herein expires ten (10) days after entry unless, within that time, the Order for good cause shown is extended for an additional period not to exceed ten(10) days, or unless it is extended with the consent of the parties.
IT IS FURTHER ORDERED that each of the defendants shall appear before this Court on the _____ day of _______________, 1997, at __________ o'clock ___.m., to show cause, if any there be, why this Court should not continue the appointment of the receiver and enter a preliminary injunction, pending final ruling on the Complaint against these defendants, enjoining them from further violations of Sections 310.3(a), (b) and (c)of the Telemarketing Sales Rule, 16 C.F.R. §§ 310.3(a), (b) and (c), continuing the relief provided herein and the freeze of their assets, and imposing whatever additional relief may be appropriate.
RETENTION OF JURISDICTION
IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes.
SO ORDERED, this _____ day of April, 1997, at _______.