BLAINE T. WELSH
Assistant United States Attorney
701 E. Bridger Ave., Ste. 800
Las Vegas, NV 89101
(702) 388-6336

Attorneys for Plaintiff

UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA

FEDERAL TRADE COMMISSION, Plaintiff,

v.

AFFORDABLE MEDIA, LLC; FINANCIAL GROWTH CONSULTANTS, LLC; STERLING MULTI-MEDIA CO.; VENTURE CAPITALIZATION CO.; ERIC STEVEN STEIN; INA LIBERTY BELL; RUTH STEIN, also known as RUTH GARCIA; DENYSE LINDAALYCE ANDERSON; MICHAEL K. ANDERSON; GEORGE JOHN McWILLIAMS; and EDWARD JAMES HALLY, Defendants.

CV-S-

[Plaintiff’s Proposed]
TEMPORARY RESTRAINING ORDER

Plaintiff Federal Trade Commission ("FTC" or "Commission") having moved for a temporary restraining order with asset freeze, expedited asset discovery, immediate access to defendants' premises, and an order to show cause why a preliminary injunction should not issue; the Court having considered plaintiff's motion, the memorandum of points and authorities, exhibits, and documents filed in support thereof; and now being advised in the premises, finds that:

1. This Court has jurisdiction over the subject matter of this case, and there is good cause to believe that the Court will have jurisdiction over all of the parties;
2. There is good cause to believe that Affordable Media, LLC; Financial Growth Consultants, LLC; Sterling Multi-Media Co.; Venture Capitalization Co.; Eric Steven Stein; Ina Liberty Bell; Ruth Stein; Denyse Lindaalyce Anderson; Michael K. Anderson; George John McWilliams; and Edward James Hally (collectively, "defendants"), have engaged and are likely to continue to engage in acts or practices that violate Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and Section 310.3(a)(2)(vi) of the Commission’s Telemarketing Sales Rule, 16 C.F.R. Part 310;
3. The Commission is likely to prevail on the merits of its complaint;
4. There is good cause to believe that immediate and irreparable damage to the Court's ability to grant effective final relief for consumers in the form of monetary redress will occur from the sale, transfer, assignment, or other disposition or concealment by defendants of their assets or business records unless defendants are immediately restrained and enjoined by order of this Court, and that in accordance with Fed. R. Civ. P. 65(b), the interest of justice therefore requires that the Commission's motion be heard ex parte without prior notice to defendants;
5. Weighing the equities and considering the Commission's likelihood of ultimate success, a temporary restraining order with asset freeze and an order permitting expedited asset discovery and immediate access to defendants' premises, is in the public interest; and
6. No security is required of any agency of the United States for issuance of a restraining order. Fed. R. Civ. P. 65(c).

PROHIBITED BUSINESS PRACTICES

I. THEREFORE, IT IS HEREBY ORDERED that defendants, and their agents, employees, officers, servants and attorneys, and those persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise, are hereby restrained and enjoined from making or assisting others in making, directly or by implication, any false or misleading oral or written statement or representation in connection with marketing investments involving television commercials that promote various products, including but not limited to:

A. Misrepresenting, directly or by implication, the returns that prospective investors are likely to receive;

 

B. Misrepresenting, directly or by implication, the returns that previous investors have received;

 

C. Misrepresenting, directly or by implication, that investors are likely to receive the return of their principal;

 

D. Misrepresenting, directly or by implication, the time frame in which investors are likely to receive a return on their investments, as well as the return of their principal; and

 

E. Misrepresenting, directly or by implication, the profitability, risk, or any other material fact relating to such investments.

RECORD KEEPING PROVISIONS

II. IT IS FURTHER ORDERED that defendants, and their officers, agents, servants, employees, and attorneys, and all other persons or entities directly or indirectly under their control or under common control with them, and all other persons or other entities in active concert or participation with them, are hereby restrained and enjoined from:

A. Destroying, erasing, mutilating, concealing, altering, transferring, or otherwise disposing of, in any manner, any: books; records; "verification" or other audio or video tape recordings; computer tapes, discs or other computerized records; accounting data; personal and business checks (fronts and backs); correspondence; forms; advertisements; brochures; manuals; banking records; customer lists; customer files; invoices; telephone records; ledgers; payroll records; scripts; postal receipts; appointment books; state or federal income tax returns; or other documents of any kind in their possession, custody, or control; and

 

B. Failing to make and keep books, records, bank statements, documents indicating title to real or personal property, and any other data which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of defendants.

ASSET FREEZE

III. IT IS FURTHER ORDERED that defendants, and their officers, agents, servants, employees, and attorneys, and all other persons or entities directly or indirectly under their control or under common control with them, and all other persons or other entities in active concert or participation with them, are hereby restrained and enjoined, until further order of this Court, from:

A. Transferring, encumbering, selling, concealing, pledging, hypothecating, assigning, spending, withdrawing, disbursing, conveying, gifting, dissipating, or otherwise disposing of any funds, property, coins, lists of consumer names, shares of stock, or other assets, wherever located, that are (1) owned or controlled by any defendant, in whole or in part; (2) in the actual or constructive possession of any defendant; (3) held by an agent of any defendant as a retainer for the agent's provision of services to any defendant; or (4) owned, controlled by, or in the actual or constructive possession of, or otherwise held for the benefit of, any corporation, partnership, or other entity directly or indirectly owned, managed, or controlled by any defendant;

 

B. Opening or causing to be opened any safe deposit boxes titled in the name of any defendant, or subject to access by any defendant; and

 

C. Incurring charges or cash advances on any credit or debit card issued in the name, singly or jointly, of any defendant, or any corporation, partnership, or other entity directly or indirectly owned, managed, or controlled by any defendant.

 

D. The assets affected by Paragraph III shall include both existing assets and assets acquired after the effective date of this Order, including, without limitation, those acquired by loan or gift, and assets in the form of retainers paid to defendants' agents as compensation for the provision of services to defendants. Any individual defendant, or any third party holding assets for the benefit of any individual defendant, shall hold all assets, including without limitation, payments, loans and gifts, received after service of this Order, and must deposit payments received into a domestic account at a financial institution in Nevada that is titled in the individual defendant's name and is designated by prior written notice to counsel for the Commission. Each individual defendant shall maintain only one designated domestic account. Each business entity owned, managed or controlled by any individual defendant shall maintain only one such designated domestic account, unless the Commission stipulates otherwise in writing, and it shall be separate from the individual defendant's personal designated domestic account.

 

E. Defendants Eric Steven Stein, Ruth Stein, Ina Liberty Bell, Denyse Lindaalyce Anderson, Michael K. Anderson, George John McWilliams, and Edward James Hally may file a motion with the Court for the release of funds from their individual personal assets for the payment of reasonable and necessary living expenses, and attorneys’ fees. Provided, however, that no funds shall be released to any individual defendant until that defendant has complied fully with the reporting requirements set forth in Paragraph IV below.

FINANCIAL REPORTS

IV. IT IS FURTHER ORDERED that each defendant shall, within two business days after service of this Order, prepare and deliver to counsel for the Commission:

A. A complete and accurate financial statement. The individual defendants shall include all financial information as requested in Department of Treasury - Internal Revenue Service Collection Information Statement for Individuals (Form 433-A). All other defendants shall include all financial information as requested in the Collection Information Statement for Businesses (Form 433-B); and

 

B. A complete statement, verified under oath, of all payments, transfers, or assignment of funds, assets, or property worth $2,000 or more since January 1, 1997. Such schedule shall include (1) the amount transferred or assigned; (2) the name of each transferee or assignee; (3) the date of the assignment or transfer; and (4) the type and amount of consideration paid the defendant.

 

Each statement shall specify the name and address of each financial institution and brokerage firm at which the defendant has accounts or safe deposit boxes, along with the account and box numbers. Said schedules shall include assets held in foreign as well as domestic accounts.

 

C. In addition, each defendant shall, within two business days after service of this order, prepare and deliver to counsel for the Commission statements setting forth the following: (1) the identity (including name, address, telephone number, amount(s) invested, and date(s) of investment) of each consumer who has purchased investments involving television commercials from that defendant since January 1, 1997; (2) the amount of money returned by the defendants to each consumer identified pursuant to clause (1) above; (3) the commission received by that defendant for each investment identified in clause (1); and (4) the amount of revenues that defendant, or any other defendant, has received from the sale of products advertised on television.

RETENTION OF ASSETS AND DOCUMENTS BY THIRD PARTIES

V. IT IS FURTHER ORDERED, pending determination of the Commission's request for a preliminary injunction, that any financial or brokerage institution, escrow agent, title company, commodity trading company, business entity, or person that holds, controls or maintains accounts or assets of any defendant, or has held, controlled or maintained any account or asset of any defendant at any time since January 1, 1997, upon service with a copy of this Order, shall:

A. Hold and retain within its control and prohibit the withdrawal, removal, assignment, transfer, pledge, hypothecation, encumbrance, disbursement, dissipation, conversion, sale, gift, or other disposal of any of the assets, funds, or other property held by or on behalf of any defendant in any account maintained in the name of or for the benefit of any defendant, in whole or in part, except as directed in writing by the Commission or by further order of the Court;

B. Deny access to any safe deposit boxes that are either:

1. titled in the name, individually or jointly, of any defendant, or

 

2. otherwise subject to access by any defendant;

C. Provide counsel for the Commission, within five business days of service of this Order, a statement setting forth:

1. the identification of each account or asset titled in the name, individually or jointly, of any defendant, or held on behalf of, or for the benefit of, any defendant;

 

2. the balance of each such account, or a description and appraisal of the value of such asset, as of the close of business on the day on which this Order is served;

 

3. the identification of any safe deposit box that is either titled in the name, individually or jointly, of any defendant, or is otherwise subject to access by any defendant; and

 

4. if an account, safe deposit box, or other asset has been closed or removed, the date closed or removed, the balance on such date, and the manner in which such account or asset was closed or removed; and

D. The Commission is granted leave, pursuant to Fed. R. Civ. P. 45, to subpoena documents immediately from any such financial institution, account custodian, or other aforementioned entity concerning the nature, location, status, and extent of defendants' assets, and compliance with this Order.

For the purposes of this Paragraph, the Commission may properly serve this Order on any financial or brokerage institution, business entity, or person that holds, controls, or maintains custody of any account or asset of any defendant, or has held, controlled or maintained custody of any account or asset of any defendant at any time since January 1, 1997, by facsimile transmission, hand, or overnight carrier. The assets and funds affected by this Paragraph shall include both existing assets and assets acquired after the effective date of this Order.

REPATRIATION

VI. IT IS FURTHER ORDERED that, within five (5) business days following the service of this Order, defendants shall:

A. Provide the plaintiff with a full accounting of all funds, documents and assets outside of the territory of the United States which are held either: (1) by them; (2) for their benefit; or (3) under their direct or indirect control, jointly or singly;

 

B. transfer to the territory of the United States all funds, documents and assets in foreign countries held either: (1) by them; (2) for their benefit; or (3) under their direct or indirect control, jointly or singly;

 

C. hold and retain all repatriated funds, documents and assets and prevent any transfer, disposition, or dissipation whatsoever of any such assets or funds, except as required by Paragraph III of this Order; and

 

D. provide plaintiff access to defendants' records and documents held by financial institutions outside the territorial United States, by signing the Consent to Release of Financial Records attached to this Order.

EXPEDITED DISCOVERY

VII. IT IS FURTHER ORDERED that the Commission is granted leave to conduct certain expedited discovery, and that, commencing with the time and date of this Order, in lieu of the time periods, notice provisions, and other requirements of Rules 26, 30, 34, and 45 of the Federal Rules of Civil Procedure, and the Local Rules, expedited discovery shall proceed as follows, both as to parties and as to non-parties:

A. Pursuant to Fed. R. Civ. P. 30, the Commission may, upon two days notice, take depositions upon oral examination concerning the nature, location, status, and extent of defendants' assets and business records, and compliance with this Order. Such depositions may be taken Monday through Saturday. Deposition transcripts that have not been signed by the witness may be used for purposes of the hearing on the order to show cause why a preliminary injunction should not issue.

 

Provided, notwithstanding Fed. R. Civ. P. 30(a)(2), that this Subparagraph shall not preclude any future depositions by plaintiff.

 

B. Pursuant to Fed. R. Civ. P. 34(b), the defendants shall produce all documents requested by the Commission within two days of receipt of such request.

RIGHT OF ACCESS

VIII.IT IS FURTHER ORDERED that defendants, and each of them, and any other person served with a copy of this Order, shall permit the Commission's employees, agents, and assistants immediate access to defendants' business premises, including but not limited to the offices located at: 4634 Maryland Parkway, Suites 101 and 109, Las Vegas, Nevada; 1565 Hotel Circle South, Suite 300, San Diego, California; and 44 Union Boulevard, Suite 110, Lakewood, Colorado. This right of access shall extend to any and all business premises and storage facilities owned, controlled or used by any of the defendants (even if other business entities also share such premises or facilities), shall continue from day to day, and shall include access to the entire premises for the purpose of inspecting, indexing, and copying:

A. Documents evidencing, referring, or relating to the advertising, marketing, or offering of investments involving television commercials that promote various products;

 

B. Documents evidencing, referring, or relating to defendants' financial status, including but not limited to, the nature or location of any bank account, safe deposit box, or other asset of any defendant;

 

C. Documents evidencing, referring, or relating to defendants' production and placement of television commercials, and the sales of products by means of such commercials;

 

D. Documents evidencing, referring, or relating to any correspondence, transaction, or other communication by or between any consumer or prospective consumer and any defendant or any defendant's representatives, employees, agents, officers, servants, or assistants; and

 

E. Documents evidencing or referring to any correspondence, action, or other communication by or between any law enforcement agency, consumer group, or Better Business Bureau and any defendant or any defendant's representatives, employees, agents, officers, servants, or assistants.

The defendants shall provide Commission employees, agents, and assistants with any necessary means of access to these documents, including without limitation keys and combinations to locks, computer access codes, and storage access information. The defendants, their agents, employees, salespersons, accountants and attorneys are hereby enjoined and restrained from interfering in any way with the Commission's right of access described herein. The Commission’s representatives may remove original documents from defendants’ business premises for the purpose of making photocopies, provided that the originals are returned to defendants within a reasonable period of time.

NOTICE TO EMPLOYEES

IX. IT IS FURTHER ORDERED that defendants shall immediately provide a copy of this Order to each of their corporations, subsidiaries, affiliates, directors, officers, employees, agents, and independent contractors. Within twenty-one calendar days following service of this Order by the Commission, defendants shall serve on the Commission an affidavit identifying the names, titles, addresses, and telephone numbers of the persons and entities defendants have served with a copy of this Order in compliance with this provision.

CREDIT REPORTS

X. IT IS FURTHER ORDERED that plaintiff Commission may obtain credit reports concerning defendants pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C. § 1681b(1), and that upon written request, any credit reporting agency from which such reports are requested shall provide them to plaintiff Commission.

ORDER TO SHOW CAUSE

XI. IT IS FURTHER ORDERED that the defendants shall appear on the _______ day of _______________, 1998, at __________ ____.m. at the United States Courthouse, Courtroom _____, Las Vegas, Nevada, to show cause, if any there be, why this Court should not enter a preliminary injunction, pending final ruling on the complaint, against said defendants enjoining them from further violations of the Federal Trade Commission Act and of the Telemarketing Sales Rule, continuing the freeze of their assets, and imposing such additional relief as may be appropriate.

XII. IT IS FURTHER ORDERED that defendants shall file answering affidavits, pleadings, and legal memoranda with the Court and serve the same on counsel for the Commission not less than four business days prior to the hearing ordered in Paragraph XI, above. Defendants shall serve copies of all such materials on the Commission by hand, by facsimile transmission, or by overnight delivery service to the address listed in Paragraph XIII. Provided that if the defendants choose to serve the Commission via overnight delivery, the documents shall be delivered so that they shall be received by the Commission on or before the date listed above in this Paragraph. Plaintiff Commission may file responsive or supplemental pleadings, materials, affidavits, or memoranda with the Court no later than two business days before the hearing ordered in Paragraph XI, above. The Commission shall serve copies of all such materials on counsel for each defendant by hand, by facsimile transmission, or by overnight delivery service. Provided further that if the Commission chooses to serve any defendant via overnight delivery, the documents shall be delivered so that they shall be received by that defendant on or before the date listed above in this Paragraph.

CORRESPONDENCE WITH PLAINTIFF

XIII.For the purposes of this Order, all correspondence and pleadings to the Commission shall be addressed to:

Gregg Shapiro
Federal Trade Commission
Sixth St. & Pennsylvania Ave., N.W.
Room H-200
Washington, D.C. 20580
(202) 326-3549 (voice)
(202) 326-3392 (facsimile)

SERVICE OF THIS ORDER

XIV. IT IS FURTHER ORDERED, pursuant to Federal Rule of Civil Procedure 4(c)(2), that copies of this Order and the initial pleadings and papers filed in this matter, including the complaint and summonses, may be served by employees of the Commission, by employees of any state or other federal law enforcement agency, including but not limited to the United States Marshal's Service, and by agents of any process servers retained by the Commission, upon any office of the defendants, any individual defendant, any financial or brokerage institution, or any person or entity that may be in possession of any assets, property, or property rights of defendants.

RETENTION OF JURISDICTION

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

IT IS SO ORDERED.

________________________________
United States District Judge

Issued at _________, __.m.

Dated: ______________, 1998

Consent to Release of Financial Records

I, _________________________, of the State of _________________ in the United States of America, do hereby direct any bank or trust company at which I have a bank account of any kind or at which a corporation or other entity has a bank account of any kind upon which I am authorized to draw, and its officers, employees and agents, to disclose all information and deliver copies of all documents of every nature in your possession or control which relate to the said bank accounts to any attorney of the Federal Trade Commission, and to give evidence relevant thereto, in the matter of the Federal Trade Commission v. Affordable Media, LLC, et al., now pending in the United States District Court for the District of Nevada, and this shall be irrevocable authority for so doing. This direction is intended to apply to the laws of countries other than the United States which restrict or prohibit the disclosure of bank information without the consent of the holder of the account, and shall be construed as consent with respect thereto, and the same shall apply to any of the bank accounts for which I may be a relevant principal.

Dated: ____________________________, 1998

Signature: _________________________________

Printed full name: _________________________________