IN THE UNITED STATES DISTRICT COURT
FEDERAL TRADE COMMISSION, Plaintiff,
THINK ACHIEVEMENT CORPORATION, et al., Defendants.
CIVIL NO. 2:98-CV-12-JM
On January 15, 1998, plaintiff Federal Trade Commission ("Commission") filed a complaint for injunction and other equitable relief, including restitution and disgorgement, pursuant to Sections 5(a) and 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a) and 53(b). The Commission simultaneously moved for a temporary restraining order with an asset freeze, the appointment of a receiver, and other preliminary relief. On January 15, 1998, the Court granted the Commission's motion and ordered defendants Think Achievement Corporation, National Answering Service, Inc., New Age Advertising Corp., H.D. Davidson Advertising Corp., Patricia Harris, Harry Brankle, Sena Rager, Tillwanner Jackson, Ferron Harris, Jill Robinson (collectively, the "Enjoined Defendants"), and Steven Stucker to show cause why a preliminary injunction should not be entered against them. On February ___, 1998, the Court entered a stipulated preliminary injunction as to defendant Steven Stucker.
On February 4, 1998, the Commission filed a motion for leave to amend its complaint to add as additional defendants The Answering Service, Inc., The Rosewood Group, Career Advancement Corp., Information Delivery Systems, Inc., William Tankersley, and David Barnack ("Additional Defendants"). Simultaneously with its motion to amend, the Commission filed a motion for temporary restraining order against the Additional Defendants.
All Enjoined Defendants have been served with the summons, complaint, temporary restraining order, and related papers. No Enjoined Defendant has filed any papers in opposition to the entry of a preliminary injunction.
The Court has considered the Commission's motion, and the brief and exhibits filed in support thereof, and makes the following findings pursuant to Fed.R.Civ.P. 65(b).
1. The Court has jurisdiction over the subject matter of this case and there is good cause to believe it will have jurisdiction over all parties hereto.
2. The Enjoined Defendants place advertisements in various newspapers that announce that jobs are available with the United States Postal Service (the "Postal Service"). When consumers call in response to these advertisements, the Enjoined Defendants and their telemarketers solicit consumers to purchase a package of "registration" materials for approximately $47.
3. The Commission has shown a likelihood of proving that the Enjoined Defendants falsely represent that:
(a) their employment program is affiliated with or endorsed by the Postal Service;
(b) permanent positions with the Postal Service are available in the geographic areas where they place their advertisements, and that the Postal Service is offering examinations for those positions;
(c) consumers who purchase and review their materials are likely to receive scores of 95 or higher on the Postal Service entrance examination;
(d) consumers who purchase and review their materials are likely to receive permanent positions with the Postal Service within a short period of time; and
(e) they pay full refunds to all consumers who request them.
4. There is good cause to believe the Commission will ultimately succeed in establishing that the Enjoined Defendants have engaged in, and are likely to engage in, deceptive acts and practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
5. The potential injury to the Commission and to the public it represents outweighs any hardship to the Enjoined Defendants from the entry of this Order, and the entry of this Order is in the public interest.
6. The Court finds that a receiver for the corporate defendants is necessary to preserve their assets and documents. Since there appears to be no legal and profitable manner to continue the business, the Court finds that the receivership estate should be liquidated as soon as possible.
7. As an agency of the United States, the Commission need not post a security for the issuance of a preliminary injunction. Fed.R.Civ.P. 65(c).
8. This order is binding upon the Enjoined Defendants, and their officers, agents, servants, employees, attorneys, and upon those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise. Fed.R.Civ.P. 65(d).
I. PROHIBITED BUSINESS ACTIVITIES
IT IS THEREFORE ORDERED that the Enjoined Defendants are hereby preliminarily restrained and enjoined, from falsely representing, expressly or by implication:
A. that any employment program is affiliated with or endorsed by the Postal Service;
B. that permanent positions with the Postal Service are available in particular geographic areas, and that the Postal Service is offering examinations for such positions;
C. that consumers who purchase and review printed materials are likely to receive high scores on Postal Service exams;
D. that consumers who purchase and review printed materials are likely to receive permanent positions with the Postal Service within a short period of time;
E. that full refunds are paid to all consumers who request them; and
F. any other material fact regarding any employment program, or employment with Postal Service.
II. DOCUMENT PRESERVATION
IT IS FURTHER ORDERED that the Enjoined Defendants, and any other person or entity served with a copy of this Order, are hereby preliminarily restrained and enjoined from:
A. destroying, concealing, altering, transferring or otherwise disposing of any documents or records, stored on any medium, that relate in any way to the business practices or business or personal finances of any defendant or any entity directly or indirectly under any defendant's control; and
B. failing to keep books, records, and accounts which, in reasonable detail, accurately reflect the incomes, disbursements, transactions and use of monies by any defendant or other entity directly or indirectly under any defendant's control.
III. ASSET FREEZE
IT IS FURTHER ORDERED that the Enjoined Defendants are hereby preliminarily restrained and enjoined from:
A. selling, transferring, encumbering, loaning, concealing, dissipating, converting, withdrawing, or making any other disposition of any funds, credit instruments, real or personal property, or other assets or any interest therein, whenever acquired and wherever located, including any assets outside the territorial United States, which are: (1) owned, possessed or controlled by any Enjoined Defendant; (2) held for the benefit of any Enjoined Defendant; or (3) owned, possessed or controlled by any person or entity directly or indirectly under any Enjoined Defendant's control; and
B. opening or causing to be opened any safe deposit boxes titled in the name of an Enjoined Defendant, or subject to access by an Enjoined Defendant.
Provided, however, that the Enjoined Defendants may file a motion with Court for the release of funds for reasonable and necessary expenses. No such funds shall be spent without prior approval from the Court.
Provided, further, that the Enjoined Defendants may retain and spend income from employment performed after January 16, 1998.
IV. RETENTION OF ASSETS AND DOCUMENTS BY THIRD PARTIES
IT IS FURTHER ORDERED that any bank or financial institution, brokerage house, escrow agent, money market or mutual fund, commodity trading company, title company, common carrier, storage company, trustee, mail receiving agent, or any person or other entity served with a copy of this Order by any means (including, but not limited to, facsimile transmission, overnight delivery or hand delivery) shall, until further order by this Court:
A. hold and retain within such entity's or person's control, and prohibit the withdrawal, assignment, transfer, encumbrance, disbursement, sale, or other disposal of any assets or documents held by such entity or person on behalf of, for the benefit of, or subject to access or use by any Enjoined Defendant;
B. deny access to any safe deposit boxes held by such entity or person on behalf of, for the benefit of, or subject to access or use by any Enjoined Defendant; and
C. provide to the Commission, within four business days after service of this order, a statement setting forth:
1. an identification of each account or asset titled in the name, individually or jointly, or held on behalf of, or for the benefit of, any Enjoined Defendant;
2. the balance of each such account, or a description of the nature and value of such asset;
3. an identification of any safe deposit box that is either titled in the name of, individually or jointly, or is otherwise subject to access or control by, any Enjoined Defendant; and
4. if an account, safe deposit box, or other asset has been closed or removed, the date closed or removed and the balance on said date.
Provided, that a financial institution does not have to provide the information required in this Subparagraph if (1) the financial institution has complied with the similar provision set forth in the Temporary Restraining Order entered by the Court on January 15, 1998, and extended by the Court on January 23, 1998; and (2) the information provided has not changed.
The accounts subject to this section include existing assets and assets deposited after the effective date of this Order. All correspondence to the Commission shall be addressed to:
V. CONTINUATION OF RECEIVERSHIP
IT IS FURTHER ORDERED that J. Brian Hittinger shall continue to serve as receiver for defendants National Answering Service, Inc., Think Achievement Corporation, New Age Advertising Corp., and H.D. Davidson Advertising Corp. (collectively, the "Receivership Defendants"). The receiver shall wind up the business affairs of the Receivership Defendants and liquidate all assets. The receiver may take any necessary measures to preserve the assets of the receivership estate, including the sale of property and the termination of contracts, including leases of business premises. On or before March 10, 1998, and at 60 day intervals thereafter, the receiver shall file a periodic report as provided by Local Rule 66.1(c). The receiver shall have the powers and rights set forth in Appendix A to this Order.
IT IS SO ORDERED, this day of February, 1998.
JAMES T. MOODY
APPENDIX A: TERMS OF RECEIVERSHIP
I. POWERS OF RECEIVER
The receiver is empowered to:
A. take possession of all records, documents, property and other assets of the Receivership Defendants, wherever situated;
B. hold and manage all such assets in order to reduce the risk of loss, damage or injury;
C. continue the business of the Receivership Defendants in such manner and for such duration as the receiver may in good faith deem to be appropriate, if at all;
D. hire agents to serve the receiver and Receivership Defendants, and to terminate such agents;
E. make such payments and disbursements as may be necessary for the preservation of the estate;
F. receive and collect sums of money due or owing the Receivership Defendants;
G. obtain, by presentation of this Order, information within the custody or control of any person or entity sufficient to identify accounts, properties, assets or employees of the Receivership Defendants;
H. utilize the services of any local, state, or federal law enforcement agency as permitted by law;
I. remove the individual defendants, and any other shareholder, director, officer or other person from the control, or the employment, of the Receivership Defendants;
J. attend any deposition noticed by any party to this action and ask questions of any witness pertinent to the receivership estate; and
K. institute, prosecute and defend, compromise, adjust, intervene in or become party to such actions or proceedings in state or federal court as may in the receiver's opinion be necessary or proper for the collection, marshaling, protection, maintenance, and preservation of the assets of the Receivership Defendants, and the recovery of assets conveyed by the Receivership Defendants, 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 the Receivership Defendants, and also to appear in and conduct the defense of any suit or to adjust or compromise any actions or proceedings now pending in any court by or against the Receivership Defendants where such prosecution, defense or other disposition of such actions or proceedings will in the judgment of the receiver be advisable or proper for the protection of the properties of the Receivership Defendants.
II. DELIVERY OF RECEIVERSHIP PROPERTY
The Enjoined Defendants, and any other person or entity served with a copy of this Order, shall deliver to the receiver upon request:
A. possession and custody of all funds, assets, records, documents and other property, wherever situated, of the Receivership Defendants; and
B. all keys, combinations and passwords required to open or gain access to any of the receivership property.
III. COOPERATION WITH THE RECEIVER
The Enjoined Defendants and any other person or entity with notice of this Order shall not interfere in any way with the functions of the receiver and shall assist the receiver in accomplishing the purposes of the receivership including the gathering and preserving of documents and assets. The Enjoined Defendants, acting personally or through others, shall not excuse debts to the receivership defendants, take, use or divert the Receivership Defendants' assets, or otherwise impair or dispose of the assets of the Receivership Defendants.
IV. STAY OF ACTIONS
During the pendency of the receivership ordered herein, except for actions by law enforcement agencies and actions necessary to toll any applicable statutes of limitations, the Enjoined Defendants and all other entities or persons seeking to establish or enforce any claim, right or interest against or on behalf of the Receivership Defendants, or its subsidiaries or affiliates are stayed from:
A. commencing, prosecuting, continuing or enforcing any suit or proceeding against the Receivership Defendants, or its subsidiaries or affiliates;
B. commencing, prosecuting, continuing or enforcing any suit or proceeding in the name of the Receivership Defendants or its 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 the Receivership Defendants, or its subsidiaries or affiliates, or any property claimed by any of them, or attempting to foreclose, forfeit, alter, or terminate any of their interests in any property, whether or not such acts are part of a judicial proceeding; and
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 Receivership Defendants or the receiver appointed pursuant to this Order.
Pursuant to Northern District of Indiana Local Rule 66.1, the receiver and his agents may be compensated for reasonable and necessary fees and expenses from the assets of the receivership estate, upon application to the Court and after notice to plaintiff and defendants.