Court Finds Canadian Defendants Violated Asset Freeze, Orders Defendant Jailed

A U.S. district court judge has held two Canadian corporations and their principal in contempt of court, and ordered that the individual be jailed for violating a court-ordered asset freeze. The parties held in contempt are defendants in an FTC lawsuit filed in July 2004, in federal district court in Chicago. In entering its contempt order, the court found that the defendants had violated a court-imposed asset freeze when they transferred five real estate properties in Welland, Ontario, Canada, to another corporation, which then listed them for sale. The court fined the defendants $5,000 per day and ordered that the individual defendant, Terrence Croteau, be arrested and confined in a federal prison until the defendants comply with the court’s order.

The FTC’s complaint charges defendants 4049705 Canada Inc., d/b/a Pinacle; 3782484 Canada Inc., d/b/a M.D.S.C. Publishing; and Croteau with billing consumers in the United States for business directory listings that they had not ordered and did not want. The defendants used an in-house collections department to harass consumers with dunning notices and threats to sue them and damage their credit ratings if they did not pay for the unordered listings. The district court entered a temporary restraining order with an asset freeze against the defendants on July 27, 2004, and a preliminary injunction on September 9, 2004. In October 2004, the U. S. Department of Justice filed criminal charges against Croteau as part of Operation Roaming Charge, a cross-border law enforcement crackdown on telemarketing fraud.

In the FTC’s case, the court found that the defendants had violated the court-imposed asset freeze by transferring five real estate properties that they owned or controlled in Canada to a corporation named 1609685 Ontario Limited. The properties are located in Welland, Ontario, Canada at the following addresses: 30 Jackson Court West, 185 Denistoun Street Unit 54, 185 Denistoun Street Unit 107, 91-93 East Main Street, and 78 Jackson Court West. The court found that after the transfer to 1609685 Ontario Limited, the properties were then listed for sale.

The court held the defendants in contempt for violating the asset freeze and ordered: 1) the defendants to take all steps necessary to prevent any further sale of the real estate that is subject to the court’s asset freeze; 2) the defendants immediately to deposit the proceeds from the sale of any of the properties into the Court’s Registry; 3) the defendants to be fined $5,000 per day for each day they remain in contempt; and 4) the arrest and jailing of Terrence Croteau until he complies with the court order.

Copies of the contempt citation and other legal documents related to this case are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.