UNITED STATES DISTRICT COURT
Plaintiff, the Federal Trade Commission ("Commission"), having filed a complaint for a permanent injunction and other relief, including restitution to consumers, pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and Section 6 (b) of the Telemarketing and Consumer Fraud and Abuse Prevention Act (Telemarketing Act), 15 U.S.C. § 6105(b), and having moved for an ex parte temporary restraining order, asset freeze, and 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:
For purposes of this Order the following definitions shall apply:
I. PROHIBITED PRACTICES
IT IS THEREFORE ORDERED that, in connection with the offering of any loan or other extension of credit, defendant is hereby temporarily restrained and enjoined from:
A. Falsely representing, directly or by implication, that:
B. Falsely representing, directly or by implication, or failing to disclose any fact material to a consumers decision to pay a fee for any loan or other extension of credit;
C. Violating any provision of the Telemarketing Sales Rule, 16 C.F.R. Part 310, including but not limited to:
D. Failing to comply fully with Section 701(d) of the Equal Credit Opportunity Act, 15 U.S.C. § 1691(d), and Section 202.9 of Federal Reserve Board Regulation B, 12 C.F.R. § 202.9.
II. ASSET FREEZE
IT IS FURTHER ORDERED that, except as stipulated by the parties, or as directed by further order of this Court, defendant is hereby temporarily restrained and enjoined, directly or through any other person or entity, from:
A. Transferring, converting, encumbering, selling, concealing, dissipating, disbursing, assigning, spending, withdrawing, or otherwise disposing of any funds, real or personal property, accounts, contracts, donor or mailing (including E-mail) lists, shares of stock or other assets, or any interest therein, wherever located, including funds in any trust account, that are (a) owned or controlled by defendant in whole or in part; or (b) in the actual or constructive possession of defendant, or (c) owned, controlled by, or in the actual or constructive possession of any corporation, partnership, or other entity directly or indirectly owned, managed, or controlled by, or under common control with defendant, including, but not limited to, any assets held by or for defendant at any bank, or 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, precious metal dealer, or other financial institution or depository of any kind, specifically including assets in the name of any d.b.a., including Pinnacle Financial Services and/or Inner Circle;
B. Opening or causing to be opened any safe deposit box titled in the name of defendant or subject to access by defendant;
C. Incurring charges on any credit card issued in the name, singly or jointly, of defendant.
The assets affected by this Section II shall include both existing assets and assets acquired after issuance of this Order, and defendant shall hold and account for these assets and all payments received by him, including, but not limited to, borrowed funds or property and gifts.
III. MAINTENANCE OF RECORDS
IT IS FURTHER ORDERED that defendant is 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 defendant;
B. Destroying, erasing, mutilating, concealing, altering, transferring or otherwise disposing of, in any manner, directly or indirectly, any contracts, donor or mailing (including E- mail) 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 or 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 defendant.
IV. DUTIES OF ASSET HOLDERS
IT IS FURTHER ORDERED that, except as stipulated by the parties or as directed by further order of this Court, any financial or brokerage institution, business entity, or person that (a) holds, controls, or maintains custody of any account or asset of defendant, including, but not limited to, any mailing (including E-mail) lists, real property, personal property, or any account or asset that defendant may control by virtue of being a signatory on said account or asset, or (b) has, since January 1, 1996, held, controlled, or maintained custody of any such account or asset shall:
A. Prohibit all persons and entities 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 access to any safe deposit box that is titled in the name, individually or jointly, of defendant or otherwise subject to access by defendant; and
C. Provide to plaintiff, within five business days of receiving a copy of this Order, a certified statement setting forth:
D. Upon request and within five business days, provide to counsel for plaintiff copies of all records or other documentation pertaining to the account or asset 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.
V. SERVICE OF TEMPORARY RESTRAINING ORDER
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 Commission 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, media broker, newspaper or other advertiser in any medium, or any other person, partnership, corporation, or other legal entity that may be in possession of any records, assets, property, or property right of defendant and any other person, partnership, corporation, or legal entity that may be subject to any provision of this Order.
VI. DEFENDANTS FINANCIAL STATEMENT
IT IS FURTHER ORDERED that defendant shall, within four business days from service of this Order, prepare and deliver to the counsel for the Commission a completed financial statement on the form attached to this Order. The completed financial statement shall be accurate as of the date of service of this Order upon defendant. Defendant shall attach to this completed financial statement copies of all his federal and state and local business or personal income and property tax returns since January 1, 1996, 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 defendant.
VII. CONSUMER CREDIT REPORT
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 defendant to plaintiff.
VIII. CREATION OF OTHER BUSINESSES
IT IS FURTHER ORDERED that defendant is hereby temporarily restrained and enjoined from creating, operating or controlling any business entity, whether newly-formed or previously inactive, including any partnership, limited partnership, joint venture, sole proprietorship, or corporation, without first providing counsel for the Commission with a written statement disclosing: (1) the name of the business entity; (2) the address and telephone number of the business entity; (3) the names of the business entity's officers, directors, principals, managers and employees; and (4) a detailed description of the business entity's intended activities.
IX. NOTICE TO RELATED PERSONS AND ENTITIES
IT IS FURTHER ORDERED that defendant 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 defendant has complied with this provision of the Order, which statement shall include the name and address of each such person or entity who or which received a copy of the Order.
X. FILING OF OPPOSITION
IT IS FURTHER ORDERED that defendant shall file his opposition to the Order to Show Cause, including any declarations, exhibits, memoranda, or other evidence on which defendant intends to rely, not less than three business days before the hearing on the order to show cause why a preliminary injunction should not issue. Defendant shall serve copies of all such materials on plaintiff by delivery or facsimile to designated counsel for the Commission, at the Federal Trade Commission, 915 Second Avenue, Suite 2896, Seattle, Washington 98174, prior to 4:30 p.m., Pacific Time, of the day that it is filed.
XI. EXPEDITED DISCOVERY
IT IS FURTHER ORDERED that, for the purpose of locating assets owned or controlled, directly or indirectly, in whole or in part, by defendant, plaintiff is granted leave to initiate discovery on nonparties at any time after the date of entry of this Order and prior to the proposed discovery plan required by Fed. R. Civ. P. 26(f) including, pursuant to Fed. R. Civ. P. 30(a), taking the deposition of any nonparty, in any judicial district, upon three days notice, and, pursuant to Fed. R. Civ. P. 45, requesting production of documents from any nonparty, within five days after service of the request.
IT IS FURTHER ORDERED that the Temporary Restraining Order granted herein expires ten days after entry unless, within such time, the Order for good cause shown is extended for an additional period not to exceed ten days, or unless it is extended by consent of the parties.
XIII. SHOW CAUSE HEARING
IT IS FURTHER ORDERED that the defendant shall appear before this Court on the _____ day of _______________, 1998, at __________ o'clock ___.m., to show cause, if any there be, why this Court should not enter a preliminary injunction, pending final ruling on the Complaint against said defendant, enjoining him from further violations of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and Sections 310.3 and 310.4 of the Telemarketing Sales Rule, 16 C.F.R. §§ 310.3 and 310.4, and continuing the relief provided herein and the freeze of his assets, and imposing such additional relief as may be appropriate.
XIV. WITNESSES AT HEARING
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 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 such witness' expected testimony; and that, after the service of such statement, the served party thereafter shall have 48 hours 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.
XV. RETENTION OF JURISDICTION
IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes.
DATED this _____ day of __________________, 199 .
U.S. District Court Judge
Mary T. Benfield