# Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2235 Filed 05/24/22 Page 1 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Aftc%3A76896befeb5ca982 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2235 Filed 05/24/22 Page 1 of 78 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN FEDERAL TRADE COMMISSION, Case No. 2:22-cv-11120 Plaintiff, Hon. Bernard A. Friedman v. FINANCIAL EDUCATION SERVICES, INC., et al., Defendants. TEMPORARY RESTRAINING ORDER Plaintiff, the Federal Trade Commission (“FTC”), has filed its Complaint for Permanent Injunction, Monetary Relief, and Other Relief pursuant to Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, Section 410(b) of the Credit Repair Organizations Act (“CROA”), 15 U.S.C. § 1679h(b), and Section 6(b) of the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6105(b), and has moved, pursuant to Fed. R. Civ. P. 65(b), for a temporary restraining order, asset freeze, appointment of receiver, and other equitable relief. FINDINGS OF FACT The Court, having considered the Complaint, the ex parte Motion for a Temporary Restraining Order, declarations, exhibits, and the memorandum of Page 1 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2236 Filed 05/24/22 Page 2 of 78 points and authorities filed in support thereof, and being otherwise advised, finds that: A. This Court has jurisdiction over the subject matter of this case, and there is good cause to believe that it will have jurisdiction over all parties hereto and that venue in this district is proper. B. There is good cause to believe that: 1. in numerous instances, in connection with the marketing, telemarketing, and sale of credit repair services, Defendants have falsely represented that they can significantly improve consumers’ credit scores by, among other things, removing permanently negative information from consumers’ credit reports or profiles or adding positive payment history to consumers’ credit reports or profiles; 2. in numerous, in connection with the marketing, telemarketing, and sale of credit repair services, Defendants have taken advanced fees for their credit repair services; 3. in numerous instances, in connection with the marketing, telemarketing, and sale of credit repair services, Defendants have not made required disclosures regarding those services; and 4. Defendants operated and promoted a marketing scheme in which they appear to have: Page 2 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2237 Filed 05/24/22 Page 3 of 78 a. operating an illegal pyramid scheme; b. in numerous instances, falsely representing that consumers who become agents (“FES Agents”) to recruit new FES Agents will earn substantial income; and c. providing the means and instrumentalities for the commission of deceptive acts and practices by furnishing consumers with promotional materials to be used in marketing credit repair services and recruiting new FES Agents. C. There is good cause to believe that Defendants have engaged in and are likely to engage in acts or practices that violate Section 5 of the FTC Act, 15 U.S.C. § 45, multiple provisions of CROA, 15 U.S.C. §§ 1679-1679l, and multiple provisions of the FTC’s Telemarketing Sales Rule (“TSR”), 16 C.F.R. Part 310, and that the FTC is therefore likely to prevail on the merits of this action. As demonstrated by consumer declarations, consumer complaints, and the additional documentation filed by the FTC, the FTC has established a likelihood of success in showing that Defendants have made false, misleading, and deceptive representations regarding their credit repair services, taken illegal advance fees for those services, failed to make required disclosures regarding those services, operated an illegal pyramid scheme, made false, misleading, and deceptive representations regarding their investment opportunity, and provided Page 3 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2238 Filed 05/24/22 Page 4 of 78 consumers with the means and instrumentalities to commit deceptive acts and practices. D. There is good cause to believe that Defendants have taken in gross revenues of approximately $467 million as a result of their unlawful practices. E. There is good cause to believe that immediate and irreparable harm will result from Defendants’ ongoing violations of the FTC Act, CROA, and the TSR unless Defendants are restrained and enjoined by order of this Court. F. There is good cause to believe that immediate and irreparable damage to the Court’s ability to grant effective final relief for consumers—including rescission or reformation of contracts and the refund of money or return of property—will occur from the sale, transfer, destruction or other disposition or concealment by Defendants of their assets or 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 interests of justice require that this Order be granted without prior notice to Defendants. Thus, there is good cause for relieving the FTC of the duty to provide Defendants with prior notice of its Motion for a Temporary Restraining Order. G. Good cause exists for appointing a temporary receiver over the Receivership Entities, freezing Defendants’ assets, permitting the FTC and the Receiver Page 4 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2239 Filed 05/24/22 Page 5 of 78 immediate access to the Defendants’ business premises, and permitting the FTC and the Receiver to take expedited discovery. H. Weighing the equities and considering the FTC’s likelihood of ultimate success on the merits, a temporary restraining order with an asset freeze, immediate access to business premises, expedited discovery, and other equitable relief is in the public interest. I. This Court has authority to issue this Order pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b); Federal Rule of Civil Procedure 65; and the All Writs Act, 28 U.S.C. § 1651. J. No security is required of any agency of the United States for issuance of a temporary restraining order. Fed. R. Civ. P. 65(c). DEFINITIONS For the purpose of this Order, the following definitions shall apply: A. “Asset” means any legal or equitable interest in, right to, or claim to, any property, wherever located and by whomever held. B. “Consumer” means any Person. C. “Corporate Defendants” means Financial Education Services, Inc., United Wealth Services, Inc., VR-Tech, LLC, VR-Tech Mgt, LLC, CM Rent Inc., and Youth Financial Literacy Foundation. and each of their subsidiaries, affiliates, successors, and assigns. Page 5 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2240 Filed 05/24/22 Page 6 of 78 D. “Credit Repair Service” means any service, in return for payment of money or other valuable consideration, for the express or implied purpose of: (1) improving any consumer’s credit report, credit record, credit history, credit profile, credit score, or credit rating; or (2) providing advice or assistance to any consumer with regard to any activity or service the purpose of which is to improve a consumer’s credit report, credit record, credit history, credit profile, credit score, or credit rating. E. “Defendants” means Corporate Defendants and Individual Defendants, individually, collectively, or in any combination. F. “Document” is synonymous in meaning and equal in scope to the usage of “document” and “electronically stored information” in Federal Rule of Civil Procedure 34(a), Fed. R. Civ. P. 34(a), and includes writings, drawings, graphs, charts, photographs, sound and video recordings, images, Internet sites, web pages, websites, electronic correspondence, including e-mail and instant messages, contracts, accounting data, advertisements, FTP Logs, Server Access Logs, books, written or printed records, handwritten notes, telephone logs, telephone scripts, receipt books, ledgers, personal and business canceled checks and check registers, bank statements, appointment books, computer records, customer or sales databases and any other electronically stored information, including Documents located on remote servers or cloud computing systems, Page 6 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2241 Filed 05/24/22 Page 7 of 78 and other data or data compilations from which information can be obtained directly or, if necessary, after translation into a reasonably usable form. A draft or non-identical copy is a separate document within the meaning of the term. G. “Electronic Data Host” means any person or entity in the business of storing, hosting, or otherwise maintaining electronically stored information. This includes, but is not limited to, any entity hosting a website or server, and any entity providing “cloud based” electronic storage. H. “Individual Defendants” means Parimal Naik, Michael Toloff, Christopher Toloff, and Gerald Thompson, individually, collectively, or in any combination. I. “Marketing Program” includes, but is not limited to, any multi-level, affiliate, or network marketing program, business opportunity, pyramid marketing scheme, Ponzi scheme, or chain marketing scheme. J. “Person” means a natural person, an organization or other legal entity, including a corporation, partnership, sole proprietorship, limited liability company, association, cooperative, or any other group or combination acting as an entity. K. “Public Health and Safety Event” means (1) any public health or safety emergency announced or declared by any federal, state, or local governmental authority or (2) the existence of any order, regulation, or action by any federal, state, or local government authority relating to public health or safety governing Page 7 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2242 Filed 05/24/22 Page 8 of 78 or otherwise restricting public or commercial activity, such as a quarantine or stay-at-home order. L. “Receiver” means the temporary receiver appointed in Section XII of this Order and any deputy receivers that shall be named by the temporary receiver. M. “Receivership Entities” means Corporate Defendants as well as any other entity that has conducted any business related to Defendants’ credit repair services or investment opportunity, including receipt of Assets derived from any activity that is the subject of the Complaint in this matter, and that the Receiver determines is controlled or owned by any Defendant. ORDER PROHIBITED CREDIT REPAIR ACTIVITIES I. IT IS THEREFORE ORDERED that, until further order of this Court, Defendants, Defendants’ officers, agents, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or indirectly, in connection with the advertising, marketing, promoting, offering for sale, providing, or performing of any Credit Repair Service, are temporarily restrained and enjoined from: A. Misrepresenting or assisting others in misrepresenting, directly or indirectly, expressly or by implication: Page 8 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2243 Filed 05/24/22 Page 9 of 78 1. That any Person can remove negative information or hard inquiries from any other Person’s credit report, credit record, credit history, credit profile; 2. That any Person will report any other Person’s rent payment history or other positive payment history to any consumer reporting agency or any other Person; 3. That any Person can substantially improve any other Person’s credit score or credit rating; 4. That any Person is or was a victim of identity theft; 5. That any Person is an additional authorized user on any other Person’s credit card or line of credit account; 6. That any credit building product will substantially improve any Person’s credit score or credit rating; or 7. Any other fact material to consumers concerning any Credit Repair Service, such as the total costs; any material restrictions, limitations, or conditions; or any material aspect of its performance, efficacy, nature, or central characteristics; B. Filing, causing to be filed, or encouraging any Person to file, with any other Person an identity theft report; Page 9 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2244 Filed 05/24/22 Page 10 of 78 C. Charging or receiving money or other valuable consideration for the performance of any Credit Repair Service before such service is fully performed; D. Failing to provide any Person with a written statement of “Consumer Credit File Rights Under State and Federal Law,” in the form and manner required by Section 405(a) of CROA, 15 U.S.C. § 1679c(a); E. Failing to provide any Person with a written and dated contract which meets the requirements of Section 406(b) of CROA, 15 U.S.C. § 1679d(b); F. Failing to include in contracts for any Credit Repair Service the following required terms and conditions: (1) the terms and conditions of payment, including the total amount of all payments to be made by the consumer; (2) a full and detailed description of the services to be performed for the consumer, including all guarantees of performance and an estimate of the date by which the performance of the services (to be performed by Defendants or any other Person) will be complete or the length of the period necessary to perform such services, (3) the name and principal business address of Defendants or any other Person providing such services, and (4) the specific conspicuous statement in bold face type, in immediate proximity to the space reserved for the consumer’s signature on the contract, which reads as follows: “You may cancel this contract without penalty or Page 10 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2245 Filed 05/24/22 Page 11 of 78 obligation at any time before midnight of the 3rd business day after the date on which you signed the contract. See the attached notice of cancellation form for an explanation of this right.” G. Failing to provide any Person with a separate form with the heading “Notice of Cancellation,” in the form and manner required by Section 407(b) of CROA, 15 U.S.C. § 1679e(b); and H. Failing to provide any Person with a copy of a completed contract and all disclosures required under CROA and a copy of any other document such Person is required to sign. PROHIBITED MARKETING PROGRAM ACTIVITIES II. IT IS FURTHER ORDERED that, until further order of this Court, Defendants, Defendants’ officers, agents, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or indirectly, in connection with the advertising, marketing, promoting, or offering for sale of any Marketing Program, are temporarily restrained and enjoined from: A. Engaging in, participating in, assisting others, or providing others with the means and instrumentalities to engage or participate in, any Marketing Program that: Page 11 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2246 Filed 05/24/22 Page 12 of 78 1. Pays compensation for recruiting new members; 2. Encourages, incentivizes, or requires members to purchase goods or services to obtain or maintain eligibility for bonuses, rewards, or commissions; 3. Induces others to encourage or incentivize members to purchase goods or services to obtain or maintain eligibility for bonuses, rewards, or commissions; 4. Pays any compensation related to the purchase or sale of goods or services unless such compensation is for sales to or purchases by persons who are not members of the Marketing Program and who are not being recruited to become members of the Marketing Program; 5. Fails to monitor and take all reasonable steps necessary to ensure than any compensation paid is for sales to or purchases by persons who are not members of the Marketing Program and who are not being recruited to become members of the Marketing Program; 6. Constitutes a pyramid scheme or chain marketing scheme; B. Misrepresenting or assisting others in misrepresenting, directly or indirectly, expressly or by implication: 1. that consumers who participate in any Marketing Program will receive or are likely to receive substantial income; or Page 12 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2247 Filed 05/24/22 Page 13 of 78 2. Any other fact material to consumers concerning any Marketing Program, such as the total costs; any material restrictions, limitations, or conditions; or any material aspect of its performance, efficacy, nature, or central characteristics. PROHIBITION ON RELEASE OF CUSTOMER INFORMATION III. IT IS FURTHER ORDERED that, until further order of this Court, Defendants, Defendants’ officers, agents, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, are hereby temporarily restrained and enjoined from: A. Selling, renting, leasing, transferring, or otherwise disclosing, the name, address, birth date, telephone number, email address, credit card number, bank account number, Social Security number, or other financial or identifying information of any person that any Defendant obtained in connection with any activity that pertains to the subject matter of this Order; and B. Benefitting from or using the name, address, birth date, telephone number, email address, credit card number, bank account number, Social Security number, or other financial or identifying information of any person that any Page 13 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2248 Filed 05/24/22 Page 14 of 78 Defendant obtained in connection with any activity that pertains to the subject matter of this Order. C. Provided, however, that Defendants may disclose such identifying information to a law enforcement agency, to their attorneys as required for their defense, as required by any law, regulation, or court order, or in any filings, pleadings or discovery in this action in the manner required by the Federal Rules of Civil Procedure and by any protective order in the case. ASSET FREEZE IV. IT IS FURTHER ORDERED that, until further order of this Court, Defendants and their officers, agents, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, are hereby temporarily restrained and enjoined from: A. Transferring, liquidating, converting, encumbering, pledging, loaning, selling, concealing, dissipating, disbursing, assigning, relinquishing, spending, withdrawing, granting a lien or security interest or other interest in, or otherwise disposing of any Assets that are: 1. owned or controlled, directly or indirectly, by any Defendant; 2. held, in part or in whole, for the benefit of any Defendant; 3. in the actual or constructive possession of any Defendant; or Page 14 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2249 Filed 05/24/22 Page 15 of 78 4. owned or controlled by, in the actual or constructive possession of, or otherwise held for the benefit of, any corporation, partnership, asset protection trust, or other entity that is directly or indirectly owned, managed or controlled by any Defendant. B. Opening or causing to be opened any safe deposit boxes, commercial mail boxes, or storage facilities titled in the name of any Defendant or subject to access by any Defendant; C. Incurring charges or cash advances on any credit, debit, or ATM card issued in the name, individually or jointly, of any Corporate Defendant or any corporation, partnership, or other entity directly or indirectly owned, managed, or controlled by any Defendant or of which any Defendant is an officer, director, member, or manager. This includes any corporate bankcard or corporate credit card account for which any Defendant is, or was on the date that this Order was signed, an authorized signor; or D. Cashing any checks or depositing any money orders or cash received from consumers, clients, or customers of any Defendant. E. The Assets affected by this Section shall include: (1) all Assets of Defendants as of the time this Order is entered; and (2) Assets obtained by Defendants after this Order is entered if those Assets are derived from any activity that is the subject of the Complaint in this matter or that is Page 15 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2250 Filed 05/24/22 Page 16 of 78 prohibited by this Order. This Section does not prohibit any repatriation of foreign Assets specifically required by this order. DUTIES OF ASSET HOLDERS AND OTHER THIRD PARTIES V. IT IS FURTHER ORDERED that, until further order of this Court, any financial or brokerage institution, Electronic Data Host, credit card processor, payment processor, merchant bank, acquiring bank, independent sales organization, third party processor, payment gateway, insurance company, business entity, or person who receives actual notice of this Order (by service or otherwise) that: (a) has held, controlled, or maintained custody, through an account or otherwise, of any Document on behalf of any Defendant or any Asset that has been owned or controlled, directly or indirectly, by any Defendant; held, in part or in whole, for the benefit of any Defendant; in the actual or constructive possession of any Defendant; or owned or controlled by, in the actual or constructive possession of, or otherwise held for the benefit of, any corporation, partnership, asset protection trust, or other entity that is directly or indirectly owned, managed or controlled by any Defendant; (b) has held, controlled, or maintained custody, through an account or otherwise, of any Document or Asset associated with credits, debits, or charges made on behalf of any Defendant, including reserve funds held by payment processors, credit card processors, merchant banks, acquiring banks, independent sales organizations, Page 16 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2251 Filed 05/24/22 Page 17 of 78 third party processors, payment gateways, insurance companies, or other entities; or (c) has extended credit to any Defendant, including through a credit card account, shall: A. Hold, preserve, and retain within its control and prohibit the withdrawal, removal, alteration, assignment, transfer, pledge, encumbrance, disbursement, dissipation, relinquishment, conversion, sale, or other disposal of any such Document or Asset, as well as all Documents or other property related to such Assets, except by further order of this Court or as directed in writing by the Receiver regarding Assets or Documents owned by, held in the name of, for the benefit of, or otherwise controlled by any Receivership Entity; provided, however, that this provision does not prohibit an Individual Defendant from incurring charges on a personal credit card established prior to entry of this Order, up to the pre-existing credit limit; B. Deny any person except the Receiver access to any safe deposit box, commercial mail box, or storage facility that is titled in the name of any Defendant, either individually or jointly, or otherwise subject to access by any Defendant; C. Provide FTC counsel and the Receiver, within three (3) days of receiving a copy of this Order, a sworn statement setting forth, for each Asset or account covered by this Section: Page 17 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2252 Filed 05/24/22 Page 18 of 78 1. The identification number of each such account or Asset; 2. The balance of each such account, or a description of the nature and value of each such Asset as of the close of business on the day on which this Order is served, and, if the account or other Asset has been closed or removed, the date closed or removed, the total funds removed in order to close the account, and the name of the person or entity to whom such account or other Asset was remitted; and 3. The identification of any safe deposit box, commercial mail box, or storage facility that is either titled in the name, individually or jointly, of any Defendant, or is otherwise subject to access by any Defendant; and D. Upon the request of the Receiver, promptly provide him with copies of all records or other Documents pertaining to any account covered by this Section or Asset, including originals or copies of account applications, account statements, signature cards, checks, drafts, deposit tickets, transfers to and from the accounts, including wire transfers and wire transfer instructions, all other debit and credit instruments or slips, currency transaction reports, 1099 forms, and all logs and records pertaining to safe deposit boxes, commercial mail boxes, and storage facilities. E. Provided, however, that this Section does not prohibit any repatriation of foreign Assets specifically required by this order. Page 18 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2253 Filed 05/24/22 Page 19 of 78 FINANCIAL DISCLOSURES AND ACCOUNTING VI. IT IS FURTHER ORDERED that each Defendant, within five (5) days of service of this Order upon them, shall prepare and deliver to FTC counsel and the Receiver: A. Completed financial statements on the forms attached to this Order as Attachment A (Financial Statement of Individual Defendant) for Individual Defendant, and Attachment B (Financial Statement of Corporate Defendant) for Corporate Defendant; B. Completed Attachment C (IRS Form 4506, Request for Copy of a Tax Return) for each Defendant; and FOREIGN ASSET REPATRIATION VII. IT IS FURTHER ORDERED that within five (5) days following the service of this Order, each Defendant shall: A. Provide the Receiver with a full accounting, verified under oath and accurate as of the date of this Order, of all Assets, Documents, and accounts outside of the United States which are: (1) titled in the name, individually or jointly, of any Defendant; (2) held by any person or entity for the benefit of any Defendant or for the benefit of, any corporation, partnership, asset protection trust, or other entity that is directly or indirectly owned, managed or Page 19 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2254 Filed 05/24/22 Page 20 of 78 controlled by any Defendant; or (3) under the direct or indirect control, whether jointly or singly, of any Defendant; B. Take all steps necessary to provide FTC counsel access to all Documents and records that may be held by third parties located outside of the territorial United States of America, including signing the Consent to Release of Financial Records appended to this Order as Attachment D. C. Transfer to the territory of the United States and all Documents and Assets located in foreign countries which are: (1) titled in the name, individually or jointly, of any Defendant; (2) held by any person or entity for the benefit of any Defendant or for the benefit of, any corporation, partnership, asset protection trust, or other entity that is directly or indirectly owned, managed or controlled by any Defendant; or (3) under the direct or indirect control, whether jointly or singly, of any Defendant; and D. The same business day as any repatriation, (1) notify FTC counsel of the name and location of the financial institution or other entity that is the recipient of such Documents or Assets; and (2) serve this Order on any such financial institution or other entity. NON-INTERFERENCE WITH REPATRIATION VIII. IT IS FURTHER ORDERED that, until further order of this Court, Defendants, Defendants’ officers, agents, employees, and attorneys, and all Page 20 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2255 Filed 05/24/22 Page 21 of 78 other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, are hereby temporarily restrained and enjoined from taking any action, directly or indirectly, which may result in the encumbrance or dissipation of foreign Assets, or in the hindrance of the repatriation required by this Order, including, but not limited to: A. Sending any communication or engaging in any other act, directly or indirectly, that results in a determination by a foreign trustee or other entity that a “duress” event has occurred under the terms of a foreign trust agreement until such time that all Defendants’ Assets have been fully repatriated pursuant to this Order; or B. Notifying any trustee, protector or other agent of any foreign trust or other related entities of either the existence of this Order, or of the fact that repatriation is required pursuant to a court order, until such time that all Defendants’ Assets have been fully repatriated pursuant to this Order. CONSUMER CREDIT REPORTS IX. IT IS FURTHER ORDERED that the FTC may obtain credit reports concerning any Defendants pursuant to Section 604(a)(1) of the Fair Credit Reporting Act, 15 U.S.C. 1681b(a)(1), and that, upon written request, any credit Page 21 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2256 Filed 05/24/22 Page 22 of 78 reporting agency from which such reports are requested shall provide them to the FTC. PRESERVATION OF RECORDS X. IT IS FURTHER ORDERED that, until further order of this Court, Defendants, Defendants’ officers, agents, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, are hereby temporarily restrained and enjoined from: A. Destroying, erasing, falsifying, writing over, mutilating, concealing, altering, transferring, or otherwise disposing of, in any manner, directly or indirectly, Documents that relate to: (1) the business, business practices, Assets, or business or personal finances of any Defendant; (2) the business practices or finances of entities directly or indirectly under the control of any Defendant; or (3) the business practices or finances of entities directly or indirectly under common control with any other Defendant; and B. Failing to create and maintain Documents that, in reasonable detail, accurately, fairly, and completely reflect Defendants’ incomes, disbursements, transactions, and use of Defendants’ Assets. Page 22 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2257 Filed 05/24/22 Page 23 of 78 REPORT OF NEW BUSINESS ACTIVITY XI. IT IS FURTHER ORDERED that, until further order of this Court, Defendants, Defendants’ officers, agents, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, are hereby temporarily restrained and enjoined from creating, operating, or exercising any control over any business entity, whether newly formed or previously inactive, including any partnership, limited partnership, joint venture, sole proprietorship, or corporation, without first providing FTC counsel 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. APPOINTMENT OF TEMPORARY RECEIVER XII. IT IS FURTHER ORDERED that Patrick A. Miles, Jr. is appointed as temporary receiver of the Receivership Entities with full powers of an equity receiver. The Receiver shall be solely the agent of this Court in acting as Receiver under this Order. Page 23 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2258 Filed 05/24/22 Page 24 of 78 DUTIES AND AUTHORITIES OF RECEIVER XIII. IT IS FURTHER ORDERED that the Receiver is directed and authorized to accomplish the following: A. Assume full control of Receivership Entities by removing, as the Receiver deems necessary or advisable, any director, officer, independent contractor, employee, attorney, or agent of any Receivership Entity from control of, management of, or participation in, the affairs of the Receivership Entity; B. Take exclusive custody, control, and possession of all Assets and Documents of, or in the possession, custody, or under the control of, any Receivership Entity, wherever situated; C. Take exclusive custody, control, and possession of all Documents or Assets associated with credits, debits, or charges made on behalf of any Receivership Entity, wherever situated, including reserve funds held by payment processors, credit card processors, merchant banks, acquiring banks, independent sales organizations, third party processors, payment gateways, insurance companies, or other entities; D. Conserve, hold, manage, and prevent the loss of all Assets of the Receivership Entities, and perform all acts necessary or advisable to preserve the value of those Assets. The Receiver shall assume control over the income and profits therefrom and all sums of money now or hereafter Page 24 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2259 Filed 05/24/22 Page 25 of 78 due or owing to the Receivership Entities. The Receiver shall have full power to sue for, collect, and receive, all Assets of the Receivership Entities and of other persons or entities whose interests are now under the direction, possession, custody, or control of, the Receivership Entities. Provided, however, that the Receiver shall not attempt to collect any amount from a consumer if the Receiver believes the consumer’s debt to the Receivership Entities has resulted from the deceptive acts or practices or other violations of law alleged in the Complaint in this matter, without prior Court approval; E. Obtain, conserve, hold, manage, and prevent the loss of all Documents of the Receivership Entities, and perform all acts necessary or advisable to preserve such Documents. The Receiver shall: divert mail; preserve all Documents of the Receivership Entities that are accessible via electronic means (such as online access to financial accounts and access to electronic documents held onsite or by Electronic Data Hosts, by changing usernames, passwords or other log-in credentials; take possession of all electronic Documents of the Receivership Entities stored onsite or remotely; take whatever steps necessary to preserve all such Documents; and obtain the assistance of the FTC’s Digital Forensic Unit, or retain an expert, for the purpose of obtaining electronic documents stored onsite or remotely. Page 25 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2260 Filed 05/24/22 Page 26 of 78 F. Choose, engage, and employ attorneys, accountants, appraisers, and other independent contractors and technical specialists, as the Receiver deems advisable or necessary in the performance of duties and responsibilities under the authority granted by this Order; G. Make payments and disbursements from the receivership estate that are necessary or advisable for carrying out the directions of, or exercising the authority granted by, this Order, and to incur, or authorize the making of, such agreements as may be necessary and advisable in discharging his or her duties as Receiver. The Receiver shall apply to the Court for prior approval of any payment of any debt or obligation incurred by the Receivership Entities prior to the date of entry of this Order, except payments that the Receiver deems necessary or advisable to secure Assets of the Receivership Entities, such as rental payments; H. Take all steps necessary to secure and take exclusive custody of each location from which the Receivership Entities operate their businesses. Such steps may include, but are not limited to, any of the following, as the Receiver deems necessary or advisable: (1) securing the location by changing the locks and alarm codes and disconnecting any internet access or other means of access to the computers, servers, internal networks, or other records maintained at that location; and (2) requiring any persons present at Page 26 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2261 Filed 05/24/22 Page 27 of 78 the location to leave the premises, to provide the Receiver with proof of identification, and/or to demonstrate to the satisfaction of the Receiver that such persons are not removing from the premises Documents or Assets of the Receivership Entities. Law enforcement personnel, including, but not limited to, police or sheriffs, may assist the Receiver in implementing these provisions in order to keep the peace and maintain security. If requested by the Receiver, the United States Marshal will provide appropriate and necessary assistance to the Receiver to implement this Order and is authorized to use any necessary and reasonable force to do so; I. Take all steps necessary to prevent the modification, destruction, or erasure of any web page or website registered to and operated, in whole or in part, by any Defendants, and to provide access to all such web page or websites to the FTC’s representatives, agents, and assistants, as well as Defendants and their representatives; J. Enter into and cancel contracts and purchase insurance as advisable or necessary; K. Prevent the inequitable distribution of Assets and determine, adjust, and protect the interests of consumers who have transacted business with the Receivership Entities; Page 27 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2262 Filed 05/24/22 Page 28 of 78 L. Make an accounting, as soon as practicable, of the Assets and financial condition of the receivership and file the accounting with the Court and deliver copies thereof to all parties; M. Institute, compromise, adjust, appear in, intervene in, defend, dispose of, or otherwise become party to any legal action in state, federal or foreign courts or arbitration proceedings as the Receiver deems necessary and advisable to preserve or recover the Assets of the Receivership Entities, or to carry out the Receiver’s mandate under this Order, including but not limited to, actions challenging fraudulent or voidable transfers; N. Issue subpoenas to obtain Documents and records pertaining to the Receivership, and conduct discovery in this action on behalf of the receivership estate, in addition to obtaining other discovery as set forth in this Order; O. Open one or more bank accounts at designated depositories for funds of the Receivership Entities. The Receiver shall deposit all funds of the Receivership Entities in such designated accounts and shall make all payments and disbursements from the receivership estate from such accounts. The Receiver shall serve copies of monthly account statements on all parties; Page 28 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2263 Filed 05/24/22 Page 29 of 78 P. Maintain accurate records of all receipts and expenditures incurred as Receiver; Q. Allow the FTC’s representatives, agents, and assistants, as well as Defendants’ representatives and Defendants themselves, reasonable access to the premises of the Receivership Entities, or any other premises where the Receivership Entities conduct business. The purpose of this access shall be to inspect and copy any and all books, records, Documents, accounts, and other property owned by, or in the possession of, the Receivership Entities or their agents. The Receiver shall have the discretion to determine the time, manner, and reasonable conditions of such access; R. Allow the FTC’s representatives, agents, and assistants, as well as Defendants and their representatives reasonable access to all Documents in the possession, custody, or control of the Receivership Entities; S. Cooperate with reasonable requests for information or assistance from any state or federal civil or criminal law enforcement agency; T. Suspend business operations of the Receivership Entities if in the judgment of the Receiver such operations cannot be continued legally and profitably; U. If the Receiver identifies a nonparty entity as a Receivership Entity, promptly notify the entity as well as the parties, and inform the entity that it can challenge the Receiver’s determination by filing a motion with the Page 29 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2264 Filed 05/24/22 Page 30 of 78 Court. Provided, however, that the Receiver may delay providing such notice until the Receiver has established control of the nonparty entity and its assets and records, if the Receiver determines that notice to the entity or the parties before the Receiver establishes control over the entity may result in the destruction of records, dissipation of assets, or any other obstruction of the Receiver’s control of the entity; and V. If in the Receiver’s judgment the business operations cannot be continued legally and profitably, take all steps necessary to ensure that any of the Receivership Entities’ web pages or websites relating to the activities alleged in the Complaint cannot be accessed by the public, or are modified for consumer education and/or informational purposes, and take all steps necessary to ensure that any telephone numbers associated with the Receivership Entities cannot be accessed by the public, or are answered solely to provide consumer education or information regarding the status of operations. W.Provided, however, that the Receiver may delay undertaking any of the duties set forth in this Section XV to the extent that the Receiver determines that a Public Health or Safety Event prevents the Receiver from undertaking such duties safely; and provided, further, that any such delay shall not be deemed a failure of the Receiver to exercise his or her obligations. Page 30 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2265 Filed 05/24/22 Page 31 of 78 TRANSFER OF RECEIVERSHIP PROPERTY TO RECEIVER XIV. IT IS FURTHER ORDERED that Defendants and any other person, with possession, custody or control of property of, or records relating to, the Receivership Entities shall, upon notice of this Order by personal service or otherwise, fully cooperate with and assist the Receiver in taking and maintaining possession, custody, or control of the Assets and Documents of the Receivership Entities and immediately transfer or deliver to the Receiver possession, custody, and control of, the following: A. All Assets held by or for the benefit of the Receivership Entities; B. All Documents or Assets associated with credits, debits, or charges made on behalf of any Receivership Entity, wherever situated, including reserve funds held by payment processors, credit card processors, merchant banks, acquiring banks, independent sales organizations, third party processors, payment gateways, insurance companies, or other entities; C. All Documents of or pertaining to the Receivership Entities; D. All computers, electronic devices, mobile devices and machines used to conduct the business of the Receivership Entities; E. All Assets and Documents belonging to other persons or entities whose interests are under the direction, possession, custody, or control of the Receivership Entities; and Page 31 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2266 Filed 05/24/22 Page 32 of 78 F. All keys, codes, user names and passwords necessary to gain or to secure access to any Assets or Documents of or pertaining to the Receivership Entities, including access to their business premises, means of communication, accounts, computer systems (onsite and remote), Electronic Data Hosts, or other property. G. In the event that any person or entity fails to deliver or transfer any Asset or Document, or otherwise fails to comply with any provision of this Section, the Receiver may file an Affidavit of Non-Compliance regarding the failure and a motion seeking compliance or a contempt citation. PROVISION OF INFORMATION TO RECEIVER XV. IT IS FURTHER ORDERED that Defendants shall immediately provide to the Receiver: A. A list of all Assets and accounts of the Receivership Entities that are held in any name other than the name of a Receivership Entity, or by any person or entity other than a Receivership Entity; B. A list of all agents, employees, officers, attorneys, servants and those persons in active concert and participation with the Receivership Entities, or who have been associated or done business with the Receivership Entities; and Page 32 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2267 Filed 05/24/22 Page 33 of 78 C. A description of any documents covered by attorney-client privilege or attorney work product, including files where such documents are likely to be located, authors or recipients of such documents, and search terms likely to identify such electronic documents. COOPERATION WITH THE RECEIVER XVI. IT IS FURTHER ORDERED that Defendants; Receivership Entities; Defendants’ or Receivership Entities’ officers, agents, employees, and attorneys, all other persons in active concert or participation with any of them, and any other person with possession, custody, or control of property of or records relating to the Receivership entities who receive actual notice of this Order shall fully cooperate with and assist the Receiver. This cooperation and assistance shall include, but is not limited to, providing information to the Receiver that the Receiver deems necessary to exercise the authority and discharge the responsibilities of the Receiver under this Order; providing any keys, codes, user names and passwords required to access any computers, electronic devices, mobile devices, and machines (onsite or remotely) and any cloud account (including specific method to access account) or electronic file in any medium; advising all persons who owe money to any Receivership Entity that all debts should be paid directly to the Receiver; and transferring funds at Page 33 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2268 Filed 05/24/22 Page 34 of 78 the Receiver’s direction and producing records related to the Assets and sales of the Receivership Entities. NON-INTERFERENCE WITH THE RECEIVER XVII. IT IS FURTHER ORDERED that, until further order of this Court, Defendants; Receivership Entities; Defendants’ or Receivership Entities’ officers, agents, employees, attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, and any other person served with a copy of this Order, are hereby restrained and enjoined from directly or indirectly: A. Interfering with the Receiver’s efforts to manage, or take custody, control, or possession of, the Assets or Documents subject to the receivership; B. Transacting any of the business of the Receivership Entities; C. Transferring, receiving, altering, selling, encumbering, pledging, assigning, liquidating, or otherwise disposing of any Assets owned, controlled, or in the possession or custody of, or in which an interest is held or claimed by, the Receivership Entities; or D. Refusing to cooperate with the Receiver or the Receiver’s duly authorized agents in the exercise of their duties or authority under any order of this Court. Page 34 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2269 Filed 05/24/22 Page 35 of 78 STAY OF ACTIONS XVIII. IT IS FURTHER ORDERED that: A. Except by leave of this Court, during the pendency of the receivership ordered herein, Defendants, Defendants’ officers, agents, employees, attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, and their corporations, subsidiaries, divisions, or affiliates, and all investors, creditors, stockholders, lessors, customers and other persons seeking to establish or enforce any claim, right, or interest against or on behalf of Defendants, and all others acting for or on behalf of such persons, are hereby enjoined from taking action that would interfere with the exclusive jurisdiction of this Court over the Assets or Documents of the Receivership Entities, including, but not limited to: 1. Filing or assisting in the filing of a petition for relief under the Bankruptcy Code, 11 U.S.C. § 101 et seq., or of any similar insolvency proceeding on behalf of the Receivership Entities; 2. Commencing, prosecuting, or continuing a judicial, administrative, or other action or proceeding against the Receivership Entities, including the issuance or employment of process against the Receivership Page 35 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2270 Filed 05/24/22 Page 36 of 78 Entities, except that such actions may be commenced if necessary to toll any applicable statute of limitations; or 3. Filing or enforcing any lien on any asset of the Receivership Entities, taking or attempting to take possession, custody, or control of any Asset of the Receivership Entities; or attempting to foreclose, forfeit, alter, or terminate any interest in any Asset of the Receivership Entities, whether such acts are part of a judicial proceeding, are acts of self-help, or otherwise; or B. The Receiver and his agents acting within the scope of such agency (“Retained Personnel”) are entitled to rely on all outstanding rules of law and orders of this Court and shall not be liable to anyone for their own good faith compliance with any order, rule, law, judgment, or decree. In no event shall the Receiver or any Retained Personnel be liable to anyone for their acts or omissions or their good faith compliance with their duties and responsibilities, except as a result of a finding by this Court that they acted or failed to act as a result of malfeasance, bad faith, gross negligence or in reckless disregard of their duties. Any party, person, or entity (except the FTC) seeking recovery from the Receiver or any Retained Personnel for conduct in the course of the administration of the estate must first obtain leave from this Court. This Court shall retain Page 36 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2271 Filed 05/24/22 Page 37 of 78 jurisdiction over any action filed against the Receiver or any Retained Personnel based upon acts or omissions committed in their representative capacities. C. Provided, however, that this Order does not stay: (1) the commencement or continuation of a criminal action or proceeding; (2) the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit’s police or regulatory power; or (3) the enforcement of a judgment, other than a money judgment, obtained in an action or proceeding by a governmental unit to enforce such governmental unit’s police or regulatory power. COMPENSATION OF RECEIVER XIX. IT IS FURTHER ORDERED that the Receiver and all personnel hired by the Receiver as herein authorized, including counsel to the Receiver and accountants, are entitled to reasonable compensation for the performance of duties pursuant to this Order and for the cost of actual out-of-pocket expenses incurred by them, from the Assets now held by, in the possession or control of, or which may be received by, the Receivership Entities. The Receiver shall file with the Court and serve on the parties periodic requests for the payment of such reasonable compensation, with the first such request filed no more than sixty (60) days after the date of entry of this Order. The Receiver shall not Page 37 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2272 Filed 05/24/22 Page 38 of 78 increase the hourly rates used as the bases for such fee applications without prior approval of the Court. RECEIVER’S BOND XX. IT IS FURTHER ORDERED that the Receiver shall file with the Clerk of this Court 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 abide by and perform all acts the Court directs. 28 U.S.C. § 754. RECEIVER’S REPORTS XXI. IT IS FURTHER ORDERED that the Receiver shall report to this Court on or before any date set for a hearing on whether a Preliminary Injunction should issue, regarding (1) the steps taken by the Receiver to implement the terms of this Order; (2) the value of all liquidated and unliquidated assets of the Receivership Entities; (3) the sum of all liabilities of the Receivership Entities; (4) the steps the Receiver intends to take in the future to (a) prevent any diminution in the value of assets of the Receivership Entities, (b) pursue receivership assets from third parties, and (c) adjust the liabilities of the Receivership Entities, if appropriate; (5) whether the business of the Receivership Entities can be operated lawfully and profitably; and (6) any other matters that the Receiver believes should be brought to the Court’s attention. Provided, however, that if any of the required information would hinder the Page 38 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2273 Filed 05/24/22 Page 39 of 78 Receiver’s ability to pursue receivership assets, the portions of the Receiver’s report containing such information may be filed under seal and not served on the parties. IMMEDIATE ACCESS TO BUSINESS PREMISES AND RECORDS XXII. IT IS FURTHER ORDERED that: A. In order to allow the FTC and the Receiver to preserve Assets and evidence relevant to this action and to expedite discovery and unless the FTC or Receiver determines that a Public Health or Safety Event makes it unsafe for the FTC or the Receiver to do so, the FTC and the Receiver, and their representatives, agents, contractors, and assistants, shall have immediate access to the business premises and storage facilities, owned, controlled, or used by the Receivership Entities. Such locations include, but are not limited to, 37735 Enterprise Court, Farmington Hills, Michigan, and any offsite location or commercial mailbox used by the Receivership Entities. The Receiver may exclude Defendants, Receivership Entities, and their employees from the business premises during the immediate access. B. In the event of a Public Health or Safety Event, the Receiver may, if the Receiver determines it safe to do so, enter any of Defendants’ business premises after business hours. Any landlord, management office, security office, or any other Person that controls access to any such business Page 39 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2274 Filed 05/24/22 Page 40 of 78 premises shall, immediately upon receiving notice of this order, cooperate with the Receiver and take whatever steps necessary to allow the Receiver access to such business premises after business hours; and such Persons are prohibited from notifying Defendants of the existence of this Order or the Receiver’s entry into the business premises until the Receiver has notified such Persons in writing that the Receiver has secured such business premises. C. The FTC and the Receiver, and their representatives, agents, contractors, and assistants, are authorized to remove Documents from the Receivership Entities’ premises in order that they may be inspected, inventoried, and copied. The FTC shall return any removed materials to the Receiver within five (5) business days of completing inventorying and copying, or such time as is agreed upon by the FTC and the Receiver; D. The FTC’s access to the Receivership Entities’ documents pursuant to this Section shall not provide grounds for any Defendant to object to any subsequent request for documents served by the FTC. E. The FTC and the Receiver, and their representatives, agents, contractors, and assistants, are authorized to obtain the assistance of federal, state and local law enforcement officers as they deem necessary to effect service and to implement peacefully the provisions of this Order; Page 40 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2275 Filed 05/24/22 Page 41 of 78 F. If any Documents, computers, or electronic storage devices containing information related to the business practices or finances of the Receivership Entities are at a location other than those listed herein, including personal residence(s) of any Defendant, then, immediately upon receiving notice of this order, Defendants and Receivership Entities shall produce to the Receiver all such Documents, computers, and electronic storage devices, along with any codes or passwords needed for access. In order to prevent the destruction of computer data, upon service of this Order, any such computers or electronic storage devices shall be powered down in the normal course of the operating system used on such devices and shall not be powered up or used until produced for copying and inspection. Defendants are precluded from introducing in any proceeding in this case any Document not so produced. G. If any communications or records of any Receivership Entity are stored with an Electronic Data Host, such Entity shall, immediately upon receiving notice of this order, provide the Receiver with the username, passwords, and any other login credential needed to access the communications and records, and shall not attempt to access, or cause a third-party to attempt to access, the communications or records. Page 41 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2276 Filed 05/24/22 Page 42 of 78 DISTRIBUTION OF ORDER BY DEFENDANTS XXIII. IT IS FURTHER ORDERED that Defendants shall immediately provide a copy of this Order to each affiliate, telemarketer, marketer, sales entity, successor, assign, member, officer, director, employee, agent, independent contractor, client, attorney, spouse, subsidiary, division, and representative of any Defendant, and shall, within ten (10) days from the date of entry of this Order, and provide FTC counsel and the Receiver with a sworn statement that this provision of the Order has been satisfied, which statement shall include the names, physical addresses, phone number, and email addresses of each such person or entity who received a copy of the Order. Furthermore, Defendants shall not take any action that would encourage officers, agents, members, directors, employees, salespersons, independent contractors, attorneys, subsidiaries, affiliates, successors, assigns or other persons or entities in active concert or participation with them to disregard this Order or believe that they are not bound by its provisions. EXPEDITED DISCOVERY XXIV. IT IS FURTHER ORDERED that, notwithstanding the provisions of the Fed. R. Civ. P. 26(d) and (f) and 30(a)(2)(A)(iii), and pursuant to Fed. R. Civ. P. 30(a), 34, and 45, the FTC and the Receiver are granted leave, at any time after service of this Order, to conduct limited expedited discovery for the purpose of Page 42 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2277 Filed 05/24/22 Page 43 of 78 discovering: (1) the nature, location, status, and extent of Defendants’ Assets; (2) the nature, location, and extent of Defendants’ business transactions and operations; (3) Documents reflecting Defendants’ business transactions and operations; or (4) compliance with this Order. SERVICE OF THIS ORDER XXV. IT IS FURTHER ORDERED that copies of this Order as well as the Motion for Temporary Restraining Order and all other pleadings, Documents, and exhibits filed contemporaneously with that Motion (other than the complaint and summons), may be served by any means, including facsimile transmission, electronic mail or other electronic messaging, personal or overnight delivery, U.S. Mail or FedEx, by agents and employees of the FTC, by any law enforcement agency, or by private process server, upon any Defendant or any person (including any financial institution) that may have possession, custody or control of any Asset or Document of any Defendant, or that may be subject to any provision of this Order pursuant to Rule 65(d)(2) of the Federal Rules of Civil Procedure. For purposes of this Section, service upon any branch, subsidiary, affiliate or office of any entity shall effect service upon the entire entity. Page 43 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2278 Filed 05/24/22 Page 44 of 78 CORRESPONDENCE AND SERVICE ON THE FTC XXVI. IT IS FURTHER ORDERED that, for the purpose of this Order, all correspondence and service of pleadings on the FTC shall be addressed to: Gregory A. Ashe, K. Michelle Grajales, and Julia E. Heald, Federal Trade Commission, 600 Pennsylvania Avenue NW, Room CC-10232, Washington, D.C. 20580, email: gashe@ftc.gov, mgrajales@ftc.gov, and jheald@ftc.gov. PRELIMINARY INJUNCTION HEARING XXVII. IT IS FURTHER ORDERED that: A. The Motion for Temporary Restraining Order is also deemed to be a motion for a preliminary injunction order, and that the FTC is not required to file or serve a separate motion for a preliminary injunction in order to see the entry of a preliminary injunction under Federal Rule of Civil Procedure 65. B. The Court will consider all materials filed by the FTC in connection with the Motion for Temporary Restraining Order to have been filed in connection with the FTC’s motion for a preliminary injunction hearing. The FTC shall be permitted, but is not required, to file a supplemental brief and supporting exhibits in advance of any preliminary injunction hearing. C. Defendants wishing to be heard on this matter may appear in this Court, on the FTC’s motion for preliminary injunction, before the Honorable Judge Bernard A. Friedman, at 2:00 p.m. on Monday, June 6, 2022 in Page 44 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2279 Filed 05/24/22 Page 45 of 78 Courtroom 110 of the United States District Court, Eastern District of Michigan, 231 W Lafayette Blvd, Detroit, Michigan 48226, to show cause, if there be any, why this Court should not enter a preliminary injunction and order preliminary relief against them, pursuant to Rule 65 of the Federal Rules of Civil Procedure, extending the temporary relief granted in this Order pending a final adjudication on the merits. D. This Order shall expire at 11:59 P.M. fourteen days following the entry of this order, unless otherwise ordered by this Court. RETENTION OF JURISDICTION XXVIII. IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes. IT SO ORDERED, Dated: May 24, 2022 Detroit, Michigan s/Bernard A. Friedman Bernard A. Friedman Senior United States District Judge Page 45 of 45 Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2280 Filed 05/24/22 Page 46 of 78 ATTACHMENT A Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2281 Filed 05/24/22 Page 47 of 78COMMISSION FEDERAL TRADE FINANCIAL STATEMENT OF INDIVIDUAL DEFENDANT Definitions and Instructions: 1. Complete all items. Enter “None” or “N/A” (“Not Applicable”) in the first field only of any item that does not apply to you. If you cannot fully answer a question, explain why. 2. “Dependents” include your spouse, live-in companion, dependent children, or any other person, whom you or your spouse (or your children’s other parent) claimed or could have claimed as a dependent for tax purposes at any time during the past five years. 3. “Assets” and “Liabilities” include ALL assets and liabilities, located within the United States or any foreign country or territory, whether held individually or jointly and whether held by you, your spouse, or your dependents, or held by others for the benefit of you, your spouse, or your dependents. 4. Attach continuation pages as needed. On the financial statement, state next to the Item number that the Item is being continued. On the continuation page(s), identify the Item number(s) being continued. 5. Type or print legibly. 6. Initial each page in the space provided in the lower right corner. 7. Sign and date the completed financial statement on the last page. Penalty for False Information: Federal law provides that any person may be imprisoned for not more than five years, fined, or both, if such person: (1) “in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or devise a material fact; makes any materially false, fictitious or fraudulent statement or representation; or makes or uses any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry” (18 U.S.C. § 1001); (2) “in any . . . statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true” (18 U.S.C. § 1621); or (3) “in any ( . . . statement under penalty of perjury as permitted under section 1746 of title 28, United States Code) in any proceeding before or ancillary to any court or grand jury of the United States knowingly makes any false material declaration or makes or uses any other information . . . knowing the same to contain any false material declaration” (18 U.S.C. § 1623). For a felony conviction under the provisions cited above, federal law provides that the fine may be not more than the greater of (i) $250,000 for an individual or $500,000 for a corporation, or (ii) if the felony results in pecuniary gain to any person or pecuniary loss to any person other than the defendant, the greater of twice the gross gain or twice the gross loss. 18 U.S.C. § 3571. Federal Trade Commission Financial Statement of Individual Defendant Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2282 Filed 05/24/22 Page 48 of 78 BACKGROUND INFORMATION Item 1. Information About You Full Name Social Security No. Current Address of Primary Residence Driver’s License No. State Issued Date of Birth: / / (mm/dd/yyyy) Place of Birth Phone Numbers Home: ( ) Fax: ( ) Rent Own From (Date): E-Mail Address / / (mm/dd/yyyy) Internet Home Page Previous Addresses for past five years (if required, use additional pages at end of form) Address From: / / (mm/dd/yyyy) Rent Address From: From: Rent / / (mm/dd/yyyy) Own / Rent Address Until: / Until: / / Until: / / Own / / Own Identify any other name(s) and/or social security number(s) you have used, and the time period(s) during which they were used: Item 2. Information About Your Spouse or Live-In Companion Spouse/Companion's Name Social Security No. Address (if different from yours) Phone Number ( Date of Birth / / (mm/dd/yyyy) Place of Birth ) Rent / / (mm/dd/yyyy) Identify any other name(s) and/or social security number(s) you have used, and the time period(s) during which they were used: Employer’s Name and Address Own From (Date): Job Title Years in Present Job Annual Gross Salary/Wages $ Item 3. Information About Your Previous Spouse Name and Address Social Security No. Date of Birth / / (mm/dd/yyyy) Item 4. Contact Information (name and address of closest living relative other than your spouse) Name and Address Phone Number ( ) Initials: 1 of 10 Federal Trade Commission Financial Statement of Individual Defendant Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2283 Filed 05/24/22 Page 49 of 78 Item 5. Information About Dependents (whether or not they reside with you) Name and Address Social Security No. Date of Birth / / (mm/dd/yyyy) Relationship Name and Address Social Security No. Date of Birth / / (mm/dd/yyyy) Relationship Name and Address Date of Birth / / (mm/dd/yyyy) Social Security No. Relationship Name and Address Date of Birth / / (mm/dd/yyyy) Social Security No. Relationship Item 6. Employment Information/Employment Income Provide the following information for this year-to-date and for each of the previous five full years, for each business entity of which you were a director, officer, member, partner, employee (including self-employment), agent, owner, shareholder, contractor, participant or consultant at any time during that period. “Income” includes, but is not limited to, any salary, commissions, distributions, draws, consulting fees, loans, loan payments, dividends, royalties, and benefits for which you did not pay (e.g., health insurance premiums, automobile lease or loan payments) received by you or anyone else on your behalf. Company Name and Address Ownership Interest? Yes Dates Employed Positions Held $ $ To (Month/Year) / $ / / $ / / $ $ Income Received: Y-T-D & 5 Prior Yrs. Year Income 20 $ $ From (Month/Year) / To (Month/Year) / From (Month/Year) / To (Month/Year) / $ / / $ / / $ No Company Name and Address Yes 20 From (Month/Year) / Dates Employed Positions Held Ownership Interest? Income To (Month/Year) / Company Name and Address Yes Year From (Month/Year) / No Positions Held Ownership Interest? Income Received: Y-T-D & 5 Prior Yrs. Dates Employed $ Income Received: Y-T-D & 5 Prior Yrs. Year Income 20 $ $ From (Month/Year) / To (Month/Year) / From (Month/Year) / To (Month/Year) / $ / / $ / / $ No $ Initials: 2 of 10 Federal Trade Commission Financial Statement of Individual Defendant Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2284 Filed 05/24/22 Page 50 of 78 Item 7. Pending Lawsuits Filed By or Against You or Your Spouse List all pending lawsuits that have been filed by or against you or your spouse in any court or before an administrative agency in the United States or in any foreign country or territory. Note: At Item 12, list lawsuits that resulted in final judgments or settlements in your favor. At Item 21, list lawsuits that resulted in final judgments or settlements against you. Nature of Status or Caption of Proceeding Court or Agency and Location Case No. Relief Requested Proceeding Disposition Item 8. Safe Deposit Boxes List all safe deposit boxes, located within the United States or in any foreign country or territory, whether held individually or jointly and whether held by you, your spouse, or any of your dependents, or held by others for the benefit of you, your spouse, or any of your dependents. Name of Owner(s) Name & Address of Depository Institution Box No. Contents Initials: 3 of 10 Federal Trade Commission Financial Statement of Individual Defendant Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2285 Filed 05/24/22 Page 51 of 78 FINANCIAL INFORMATION REMINDER: When an item asks for information regarding your “assets” and “liabilities” include ALL assets and liabilities, located within the United States or in any foreign country or territory, or institution, whether held individually or jointly, and whether held by you, your spouse, or any of your dependents, or held by others for the benefit of you, your spouse, or any of your dependents. In addition, provide all documents requested in Item 24 with your completed Financial Statement. ASSETS Item 9. Cash, Bank, and Money Market Accounts List cash on hand (as opposed to cash in bank accounts or other financial accounts) and all bank accounts, money market accounts, or other financial accounts, including but not limited to checking accounts, savings accounts, and certificates of deposit. The term “cash on hand” includes but is not limited to cash in the form of currency, uncashed checks, and money orders. a. Amount of Cash on Hand $ b. Name on Account Form of Cash on Hand Name & Address of Financial Institution Account No. Current Balance $ $ $ $ $ Item 10. Publicly Traded Securities List all publicly traded securities, including but not limited to, stocks, stock options, corporate bonds, mutual funds, U.S. government securities (including but not limited to treasury bills and treasury notes), and state and municipal bonds. Also list any U.S. savings bonds. Owner of Security Issuer Broker House, Address Broker Account No. Current Fair Market Value $ Owner of Security Issuer Broker House, Address Broker Account No. Current Fair Market Value $ Owner of Security Issuer Broker House, Address Broker Account No. Current Fair Market Value $ Type of Security No. of Units Owned Loan(s) Against Security $ Type of Security No. of Units Owned Loan(s) Against Security $ Type of Security No. of Units Owned Loan(s) Against Security $ Initials: 4 of 10 Federal Trade Commission Financial Statement of Individual Defendant Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2286 Filed 05/24/22 Page 52 of 78 Item 11. Non-Public Business and Financial Interests List all non-public business and financial interests, including but not limited to any interest in a non-public corporation, subchapter-S corporation, limited liability corporation (“LLC”), general or limited partnership, joint venture, sole proprietorship, international business corporation or personal investment corporation, and oil or mineral lease. Entity’s Name & Address Type of Business or Financial Interest (e.g., LLC, partnership) Owner (e.g., self, spouse) Ownership % If Officer, Director, Member or Partner, Exact Title Item 12. Amounts Owed to You, Your Spouse, or Your Dependents Debtor’s Name & Address Date Obligation Incurred (Month/Year) / Current Amount Owed $ Original Amount Owed $ Payment Schedule $ Debtor’s Telephone Debtor’s Relationship to You Debtor’s Name & Address Date Obligation Incurred (Month/Year) / Current Amount Owed $ Debtor’s Telephone Nature of Obligation (if the result of a final court judgment or settlement, provide court name and docket number) Original Amount Owed $ Nature of Obligation (if the result of a final court judgment or settlement, provide court name and docket number) Payment Schedule $ Debtor’s Relationship to You Item 13. Life Insurance Policies List all life insurance policies (including endowment policies) with any cash surrender value. Insurance Company’s Name, Address, & Telephone No. Beneficiary Insurance Company’s Name, Address, & Telephone No. Policy No. Insured Loans Against Policy $ Beneficiary Policy No. Insured Loans Against Policy $ Face Value $ Surrender Value $ Face Value $ Surrender Value $ Item 14. Deferred Income Arrangements List all deferred income arrangements, including but not limited to, deferred annuities, pensions plans, profit-sharing plans, 401(k) plans, IRAs, Keoghs, other retirement accounts, and college savings plans (e.g., 529 Plans). Trustee or Administrator’s Name, Address & Telephone No. Name on Account Date Established / / (mm/dd/yyyy) Trustee or Administrator’s Name, Address & Telephone No. Account No. Type of Plan Surrender Value before Taxes and Penalties $ Account No. Type of Plan Surrender Value before Taxes and Penalties $ Name on Account Date Established / / Initials: 5 of 10 Federal Trade Commission Financial Statement of Individual Defendant Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2287 Filed 05/24/22 Page 53 of 78 Item 15. Pending Insurance Payments or Inheritances List any pending insurance payments or inheritances owed to you. Type Amount Expected Date Expected (mm/dd/yyyy) $ / / $ / / $ / / Item 16. Vehicles List all cars, trucks, motorcycles, boats, airplanes, and other vehicles. Vehicle Type Make Registration State & No. Purchase Price $ Account/Loan No. Model Address of Vehicle’s Location Lender’s Name and Address Registered Owner’s Name Vehicle Type Year Make Registration State & No. Purchase Price $ Account/Loan No. Model Address of Vehicle’s Location Lender’s Name and Address Registered Owner’s Name Vehicle Type Year Registered Owner’s Name Make Registration State & No. Purchase Price $ Account/Loan No. Model Address of Vehicle’s Location Lender’s Name and Address Registered Owner’s Name Vehicle Type Year Year Make Registration State & No. Purchase Price $ Account/Loan No. Model Address of Vehicle’s Location Lender’s Name and Address Original Loan Amount $ Current Value $ Current Balance $ Monthly Payment $ Original Loan Amount $ Current Value $ Current Balance $ Monthly Payment $ Original Loan Amount $ Current Value $ Current Balance $ Monthly Payment $ Original Loan Amount $ Current Value $ Current Balance $ Monthly Payment $ Item 17. Other Personal Property List all other personal property not listed in Items 9-16 by category, whether held for personal use, investment or any other reason, including but not limited to coins, stamps, artwork, gemstones, jewelry, bullion, other collectibles, copyrights, patents, and other intellectual property. Property Category (e.g., artwork, jewelry) Name of Owner Property Location Acquisition Cost Current Value $ $ $ $ $ $ Initials: 6 of 10 Federal Trade Commission Financial Statement of Individual Defendant Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2288 Filed 05/24/22 Page 54 of 78 Item 18. Real Property List all real property interests (including any land contract) Property’s Location Type of Property Acquisition Date (mm/dd/yyyy) / / Lender’s Name and Address Purchase Price $ Name(s) on Title or Contract and Ownership Percentages Current Value $ Loan or Account No. Other Mortgage Loan(s) (describe) Property’s Location Purchase Price $ Current Balance On First Mortgage or Contract $ Monthly Payment $ Rental Unit Monthly Payment $ Monthly Rent Received Current Balance $ $ Name(s) on Title or Contract and Ownership Percentages Type of Property Acquisition Date (mm/dd/yyyy) / / Lender’s Name and Address Basis of Valuation Current Value $ Loan or Account No. Other Mortgage Loan(s) (describe) Basis of Valuation Current Balance On First Mortgage or Contract $ Monthly Payment $ Rental Unit Monthly Payment $ Current Balance $ Monthly Rent Received $ LIABILITIES Item 19. Credit Cards List each credit card account held by you, your spouse, or your dependents, and any other credit cards that you, your spouse, or your dependents use, whether issued by a United States or foreign financial institution. Name of Credit Card (e.g., Visa, MasterCard, Department Store) Account No. Name(s) on Account Current Balance $ $ $ $ $ Item 20. Taxes Payable List all taxes, such as income taxes or real estate taxes, owed by you, your spouse, or your dependents. Type of Tax Amount Owed Year Incurred $ $ $ Initials: 7 of 10 Federal Trade Commission Financial Statement of Individual Defendant Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2289 Filed 05/24/22 Page 55 of 78 Item 21. Other Amounts Owed by You, Your Spouse, or Your Dependents List all other amounts, not listed elsewhere in this financial statement, owed by you, your spouse, or your dependents. Lender/Creditor’s Name, Address, and Telephone No. Nature of Debt (if the result of a court judgment or settlement, provide court name and docket number) Lender/Creditor’s Relationship to You Date Liability Was Incurred Original Amount Owed Current Amount Owed Payment Schedule / / $ $ (mm/dd/yyyy) Lender/Creditor’s Name, Address, and Telephone No. Nature of Debt (if the result of a court judgment or settlement, provide court name and docket number) Lender/Creditor’s Relationship to You Date Liability Was Incurred / / (mm/dd/yyyy) Original Amount Owed $ Current Amount Owed $ Payment Schedule OTHER FINANCIAL INFORMATION Item 22. Trusts and Escrows List all funds and other assets that are being held in trust or escrow by any person or entity for you, your spouse, or your dependents. Include any legal retainers being held on your behalf by legal counsel. Also list all funds or other assets that are being held in trust or escrow by you, your spouse, or your dependents, for any person or entity. Trustee or Escrow Agent’s Name & Address Date Established (mm/dd/yyyy) / / Grantor Beneficiaries Present Market Value of Assets* $ / / $ / / $ *If the market value of any asset is unknown, describe the asset and state its cost, if you know it. Item 23. Transfers of Assets List each person or entity to whom you have transferred, in the aggregate, more than $5,000 in funds or other assets during the previous five years by loan, gift, sale, or other transfer (exclude ordinary and necessary living and business expenses paid to unrelated third parties). For each such person or entity, state the total amount transferred during that period. Transferee’s Name, Address, & Relationship Property Transferred Aggregate Value* Transfer Date (mm/dd/yyyy) $ / / $ / / $ / / Type of Transfer (e.g., Loan, Gift) *If the market value of any asset is unknown, describe the asset and state its cost, if you know it. Initials: 8 of 10 Federal Trade Commission Financial Statement of Individual Defendant Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2290 Filed 05/24/22 Page 56 of 78 Item 24. Document Requests Provide copies of the following documents with your completed Financial Statement. Federal tax returns filed during the last three years by or on behalf of you, your spouse, or your dependents. All applications for bank loans or other extensions of credit (other than credit cards) that you, your spouse, or your dependents have submitted within the last two years, including by obtaining copies from lenders if necessary. Item 9 For each bank account listed in Item 9, all account statements for the past 3 years. Item 11 For each business entity listed in Item 11, provide (including by causing to be generated from accounting records) the most recent balance sheet, tax return, annual income statement, the most recent year-to-date income statement, and all general ledger files from account records. Item 17 All appraisals that have been prepared for any property listed in Item 17, including appraisals done for insurance purposes. You may exclude any category of property where the total appraised value of all property in that category is less than $2,000. Item 18 All appraisals that have been prepared for real property listed in Item 18. Item 21 Documentation for all debts listed in Item 21. Item 22 All executed documents for any trust or escrow listed in Item 22. Also provide any appraisals, including insurance appraisals that have been done for any assets held by any such trust or in any such escrow. SUMMARY FINANCIAL SCHEDULES Item 25. Combined Balance Sheet for You, Your Spouse, and Your Dependents Assets Liabilities Cash on Hand (Item 9) Funds Held in Financial Institutions (Item 9) U.S. Government Securities (Item 10) Publicly Traded Securities (Item 10) Non-Public Business and Financial Interests (Item 11) Amounts Owed to You (Item 12) Life Insurance Policies (Item 13) Deferred Income Arrangements (Item 14) Vehicles (Item 16) Other Personal Property (Item 17) Real Property (Item 18) Other Assets (Itemize) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Total Assets Loans Against Publicly Traded Securities (Item 10) Vehicles - Liens (Item 16) Real Property – Encumbrances (Item 18) Credit Cards (Item 19) Taxes Payable (Item 20) Amounts Owed by You (Item 21) Other Liabilities (Itemize) Total Liabilities $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Item 26. Combined Current Monthly Income and Expenses for You, Your Spouse, and Your Dependents Provide the current monthly income and expenses for you, your spouse, and your dependents. Do not include credit card payments separately; rather, include credit card expenditures in the appropriate categories. Income (State source of each item) Salary - After Taxes Source: Fees, Commissions, and Royalties Source: Interest Source: Dividends and Capital Gains Source: Gross Rental Income Source: Profits from Sole Proprietorships Source: Distributions from Partnerships, S-Corporations, and LLCs Source: $ $ $ $ $ $ Expenses Mortgage or Rental Payments for Residence(s) Property Taxes for Residence(s) Rental Property Expenses, Including Mortgage Payments, Taxes, and Insurance Car or Other Vehicle Lease or Loan Payments Food Expenses Clothing Expenses $ $ $ $ $ $ Utilities $ $ Initials: 9 of 10 Federal Trade Commission Financial Statement of Individual Defendant Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2291 Filed 05/24/22 Page 57 of 78 Item 26. Combined Current Monthly Income and Expenses for You, Your Spouse, and Your Dependents (cont.) Distributions from Trusts and Estates Source: Distributions from Deferred Income Arrangements Source: Social Security Payments Alimony/Child Support Received Gambling Income $ $ $ $ $ Medical Expenses, Including Insurance Other Insurance Premiums Other Transportation Expenses $ $ $ $ $ $ $ $ $ $ $ Other Expenses (Itemize) Other Income (Itemize) Total Income $ Total Expenses $ ATTACHMENTS Item 27. Documents Attached to this Financial Statement List all documents that are being submitted with this financial statement. For any Item 24 documents that are not attached, explain why. Item No. Document Relates To Description of Document I am submitting this financial statement with the understanding that it may affect action by the Federal Trade Commission or a federal court. I have used my best efforts to obtain the information requested in this statement. The responses I have provided to the items above are true and contain all the requested facts and information of which I have notice or knowledge. I have provided all requested documents in my custody, possession, or control. I know of the penalties for false statements under 18 U.S.C. § 1001, 18 U.S.C. § 1621, and 18 U.S.C. § 1623 (five years imprisonment and/or fines). I certify under penalty of perjury under the laws of the United States that the foregoing is true and correct. Executed on: _______________ (Date) ___________________________________ Signature 10 of 10 Federal Trade Commission Financial Statement of Individual Defendant Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2292 Filed 05/24/22 Page 58 of 78 ATTACHMENT B Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2293 Filed 05/24/22 Page 59 of 78 FEDERAL TRADE COMMISSION FINANCIAL STATEMENT OF CORPORATE DEFENDANT Instructions: 1. Complete all items. Enter “None” or "N/A" (“Not Applicable”) where appropriate. If you cannot fully answer a question, explain why. 2. The font size within each field will adjust automatically as you type to accommodate longer responses. 3. In completing this financial statement, “the corporation” refers not only to this corporation but also to each of its predecessors that are not named defendants in this action. 4. When an Item asks for information about assets or liabilities “held by the corporation,” include ALL such assets and liabilities, located within the United States or elsewhere, held by the corporation or held by others for the benefit of the corporation. 5. Attach continuation pages as needed. On the financial statement, state next to the Item number that the Item is being continued. On the continuation page(s), identify the Item number being continued. 6. Type or print legibly. 7. An officer of the corporation must sign and date the completed financial statement on the last page and initial each page in the space provided in the lower right corner. Penalty for False Information: Federal law provides that any person may be imprisoned for not more than five years, fined, or both, if such person: (1) “in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry” (18 U.S.C. § 1001); (2) “in any . . . statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true” (18 U.S.C. § 1621); or (3) “in any (. . . statement under penalty of perjury as permitted under section 1746 of title 28, United States Code) in any proceeding before or ancillary to any court or grand jury of the United States knowingly makes any false material declaration or makes or uses any other information . . . knowing the same to contain any false material declaration.” (18 U.S.C. § 1623) For a felony conviction under the provisions cited above, federal law provides that the fine may be not more than the greater of (i) $250,000 for an individual or $500,000 for a corporation, or (ii) if the felony results in pecuniary gain to any person or pecuniary loss to any person other than the defendant, the greater of twice the gross gain or twice the gross loss. 18 U.S.C. § 3571. Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2294 Filed 05/24/22 Page 60 of 78 BACKGROUND INFORMATION Item 1. General Information Corporation’s Full Name ___________________________________________________________________________ Primary Business Address ______________________________________________________ From (Date) _________ Telephone No. _____________________________ Fax No. _____________________________ E-Mail Address________________________ Internet Home Page________________________ All other current addresses & previous addresses for past five years, including post office boxes and mail drops: Address____________________________________________________________ From/Until____________________ Address____________________________________________________________ From/Until____________________ Address____________________________________________________________ From/Until____________________ All predecessor companies for past five years: Name & Address _________________________________________________________ From/Until ______________ Name & Address _________________________________________________________ From/Until ______________ Name & Address _________________________________________________________ From/Until ______________ Item 2. Legal Information Federal Taxpayer ID No. _________________________ State & Date of Incorporation _________________________ State Tax ID No. ____________________ State ________________ Profit or Not For Profit _____________________ Corporation’s Present Status: Active ________________ Inactive _______________ Dissolved __________________ If Dissolved: Date dissolved _________________________ By Whom ______________________________________ Reasons _________________________________________________________________________________________ Fiscal Year-End (Mo./Day) ________________ Corporation’s Business Activities _____________________________ Item 3. Registered Agent Name of Registered Agent __________________________________________________________________________ Address __________________________________________________________ Telephone No. __________________ Page 2 Initials __________ Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2295 Filed 05/24/22 Page 61 of 78 Item 4. Principal Stockholders List all persons and entities that own at least 5% of the corporation’s stock. Name & Address % Owned _________________________________________________________________________________ ______________ _________________________________________________________________________________ ______________ _________________________________________________________________________________ ______________ _________________________________________________________________________________ ______________ Item 5. Board Members List all members of the corporation’s Board of Directors. Name & Address % Owned Term (From/Until) ____________________________________________________________________ __________ _________________ ____________________________________________________________________ __________ _________________ ____________________________________________________________________ __________ _________________ ____________________________________________________________________ __________ _________________ ____________________________________________________________________ __________ _________________ Item 6. Officers List all of the corporation’s officers, including de facto officers (individuals with significant management responsibility whose titles do not reflect the nature of their positions). Name & Address % Owned _______________________________________________________________________________ ________________ _______________________________________________________________________________ ________________ _______________________________________________________________________________ ________________ _______________________________________________________________________________ ________________ _______________________________________________________________________________ ________________ Page 3 Initials __________ Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2296 Filed 05/24/22 Page 62 of 78 Item 7. Businesses Related to the Corporation List all corporations, partnerships, and other business entities in which this corporation has an ownership interest. Name & Address Business Activities % Owned ___________________________________________________________________ ___________________ _________ ___________________________________________________________________ ___________________ _________ ___________________________________________________________________ ___________________ _________ State which of these businesses, if any, has ever transacted business with the corporation _______________________ ________________________________________________________________________________________________ Item 8. Businesses Related to Individuals List all corporations, partnerships, and other business entities in which the corporation’s principal stockholders, board members, or officers (i.e., the individuals listed in Items 4 - 6 above) have an ownership interest. Individual’s Name Business Name & Address Business Activities % Owned __________________ __________________________________________________ __________________ ________ __________________ __________________________________________________ __________________ ________ __________________ __________________________________________________ __________________ ________ State which of these businesses, if any, have ever transacted business with the corporation _______________________ ________________________________________________________________________________________________ Item 9. Related Individuals List all related individuals with whom the corporation has had any business transactions during the three previous fiscal years and current fiscal year-to-date. A “related individual” is a spouse, sibling, parent, or child of the principal stockholders, board members, and officers (i.e., the individuals listed in Items 4 - 6 above). Name and Address Relationship Business Activities _________________________________________________________ _________________ ______________________ _________________________________________________________ _________________ ______________________ _________________________________________________________ _________________ ______________________ Page 4 Initials __________ Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2297 Filed 05/24/22 Page 63 of 78 Item 10. Outside Accountants List all outside accountants retained by the corporation during the last three years. Name Firm Name Address CPA/PA? ____________________ ______________________ ________________________________________ ____________ ____________________ ______________________ ________________________________________ ____________ ____________________ ______________________ ________________________________________ ____________ ____________________ ______________________ ________________________________________ ____________ ____________________ ______________________ ________________________________________ ____________ Item 11. Corporation’s Recordkeeping List all individuals within the corporation with responsibility for keeping the corporation’s financial books and records for the last three years. Name, Address, & Telephone Number Position(s) Held ____________________________________________________________________________ ___________________ ____________________________________________________________________________ ___________________ ____________________________________________________________________________ ___________________ ____________________________________________________________________________ ___________________ Item 12. Attorneys List all attorneys retained by the corporation during the last three years. Name Firm Name Address ____________________ ___________________________ ________________________________________________ ____________________ ___________________________ ________________________________________________ ____________________ ___________________________ ________________________________________________ ____________________ ___________________________ ________________________________________________ ____________________ ___________________________ ________________________________________________ Page 5 Initials __________ Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2298 Filed 05/24/22 Page 64 of 78 Item 13. Pending Lawsuits Filed by the Corporation List all pending lawsuits that have been filed by the corporation in court or before an administrative agency. (List lawsuits that resulted in final judgments or settlements in favor of the corporation in Item 25). Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address___________________________________________________________________________ Docket No._________________ Relief Requested____________________ Nature of Lawsuit____________________ ____________________________________ Status______________________________________________________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address___________________________________________________________________________ Docket No._________________ Relief Requested____________________ Nature of Lawsuit____________________ ____________________________________ Status______________________________________________________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address___________________________________________________________________________ Docket No._________________ Relief Requested____________________ Nature of Lawsuit____________________ ____________________________________ Status______________________________________________________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address___________________________________________________________________________ Docket No._________________ Relief Requested____________________ Nature of Lawsuit____________________ ____________________________________ Status______________________________________________________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address___________________________________________________________________________ Docket No._________________ Relief Requested____________________ Nature of Lawsuit____________________ ____________________________________ Status______________________________________________________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address___________________________________________________________________________ Docket No._________________ Relief Requested____________________ Nature of Lawsuit____________________ ____________________________________ Status______________________________________________________ Page 6 Initials __________ Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2299 Filed 05/24/22 Page 65 of 78 Item 14. Current Lawsuits Filed Against the Corporation List all pending lawsuits that have been filed against the corporation in court or before an administrative agency. (List lawsuits that resulted in final judgments, settlements, or orders in Items 26 - 27). Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address___________________________________________________________________________ Docket No._________________ Relief Requested____________________ Nature of Lawsuit____________________ ____________________________________ Status______________________________________________________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address___________________________________________________________________________ Docket No._________________ Relief Requested____________________ Nature of Lawsuit____________________ ____________________________________ Status______________________________________________________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address___________________________________________________________________________ Docket No._________________ Relief Requested____________________ Nature of Lawsuit____________________ ____________________________________ Status______________________________________________________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address___________________________________________________________________________ Docket No._________________ Relief Requested____________________ Nature of Lawsuit____________________ ____________________________________ Status______________________________________________________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address___________________________________________________________________________ Docket No._________________ Relief Requested____________________ Nature of Lawsuit____________________ ____________________________________ Status______________________________________________________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address___________________________________________________________________________ Docket No._________________ Relief Requested____________________ Nature of Lawsuit____________________ ____________________________________ Status______________________________________________________ Page 7 Initials __________ Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2300 Filed 05/24/22 Page 66 of 78 Item 15. Bankruptcy Information List all state insolvency and federal bankruptcy proceedings involving the corporation. Commencement Date _________________ Termination Date _________________ Docket No. __________________ If State Court: Court & County _______________________ If Federal Court: District __________________________ Disposition ______________________________________________________________________________________ Item 16. Safe Deposit Boxes List all safe deposit boxes, located within the United States or elsewhere, held by the corporation, or held by others for the benefit of the corporation. On a separate page, describe the contents of each box. Owner’s Name Name & Address of Depository Institution Box No. __________________ ___________________________________________________________________ __________ __________________ ___________________________________________________________________ __________ __________________ ___________________________________________________________________ __________ __________________ ___________________________________________________________________ __________ __________________ ___________________________________________________________________ __________ FINANCIAL INFORMATION REMINDER: When an Item asks for information about assets or liabilities “held by the corporation,” include ALL such assets and liabilities, located within the United States or elsewhere, held by the corporation or held by others for the benefit of the corporation. Item 17. Tax Returns List all federal and state corporate tax returns filed for the last three complete fiscal years. Attach copies of all returns. Federal/ State/Both Tax Year Tax Due Federal Tax Paid Federal Tax Due State Tax Paid State Preparer’s Name ___________ __________ $_________ $_________ $__________ $__________ ______________________________ ___________ __________ $_________ $_________ $__________ $__________ ______________________________ ___________ __________ $_________ $_________ $__________ $__________ ______________________________ Page 8 Initials __________ Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2301 Filed 05/24/22 Page 67 of 78 Item 18. Financial Statements List all financial statements that were prepared for the corporation’s last three complete fiscal years and for the current fiscal year-to-date. Attach copies of all statements, providing audited statements if available. Year Balance Sheet Profit & Loss Statement Cash Flow Statement Changes in Owner’s Equity Audited? _________ _____________ ______________________ __________________ _______________________ ________ _________ _____________ ______________________ __________________ _______________________ ________ _________ _____________ ______________________ __________________ _______________________ ________ _________ _____________ ______________________ __________________ _______________________ ________ Item 19. Financial Summary For each of the last three complete fiscal years and for the current fiscal year-to-date for which the corporation has not provided a profit and loss statement in accordance with Item 18 above, provide the following summary financial information. Current Year-to-Date 1 Year Ago 2 Years Ago 3 Years Ago Gross Revenue $_________________ $_______________ $_______________ $_______________ Expenses $_________________ $_______________ $_______________ $_______________ Net Profit After Taxes $_________________ $_______________ $_______________ $_______________ Payables $_________________ Receivables $_________________ Item 20. Cash, Bank, and Money Market Accounts List cash and all bank and money market accounts, including but not limited to, checking accounts, savings accounts, and certificates of deposit, held by the corporation. The term “cash” includes currency and uncashed checks. Cash on Hand $_________________________ Cash Held for the Corporation’s Benefit $_______________________ Name & Address of Financial Institution Signator(s) on Account Account No. Current Balance _____________________________________ _______________________________ ______________ $___________ _____________________________________ _______________________________ ______________ $___________ _____________________________________ _______________________________ ______________ $___________ _____________________________________ _______________________________ ______________ $___________ Page 9 Initials __________ Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2302 Filed 05/24/22 Page 68 of 78 Item 21. Government Obligations and Publicly Traded Securities List all U.S. Government obligations, including but not limited to, savings bonds, treasury bills, or treasury notes, held by the corporation. Also list all publicly traded securities, including but not limited to, stocks, stock options, registered and bearer bonds, state and municipal bonds, and mutual funds, held by the corporation. Issuer _________________________________ Type of Security/Obligation __________________________________ No. of Units Owned __________ Current Fair Market Value $__________________ Maturity Date _______________ Issuer _________________________________ Type of Security/Obligation __________________________________ No. of Units Owned __________ Current Fair Market Value $__________________ Maturity Date _______________ Item 22. Real Estate List all real estate, including leaseholds in excess of five years, held by the corporation. Type of Property________________________________ Property’s Location__________________________________ Name(s) on Title and Ownership Percentages___________________________________________________________ Current Value $____________________ Loan or Account No. __________________________ Lender’s Name and Address_________________________________________________________________________ Current Balance On First Mortgage $_______________ Monthly Payment $______________ Other Loan(s) (describe)____________________________________________ Current Balance $_________________ Monthly Payment $__________________ Rental Unit?_________________ Monthly Rent Received $_____________ Type of Property________________________________ Property’s Location__________________________________ Name(s) on Title and Ownership Percentages___________________________________________________________ Current Value $____________________ Loan or Account No. __________________________ Lender’s Name and Address_________________________________________________________________________ Current Balance On First Mortgage $_______________ Monthly Payment $______________ Other Loan(s) (describe)____________________________________________ Current Balance $_________________ Monthly Payment $__________________ Rental Unit?_________________ Monthly Rent Received $_____________ Page 10 Initials __________ Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2303 Filed 05/24/22 Page 69 of 78 Item 23. Other Assets List all other property, by category, with an estimated value of $2,500 or more, held by the corporation, including but not limited to, inventory, machinery, equipment, furniture, vehicles, customer lists, computer software, patents, and other intellectual property. Property Category Property Location Acquisition Cost Current Value ____________________________ _____________________________________________ $__________ $_________ ____________________________ _____________________________________________ $__________ $_________ ____________________________ _____________________________________________ $__________ $_________ ____________________________ _____________________________________________ $__________ $_________ ____________________________ _____________________________________________ $__________ $_________ ____________________________ _____________________________________________ $__________ $_________ ____________________________ _____________________________________________ $__________ $_________ ____________________________ _____________________________________________ $__________ $_________ ____________________________ _____________________________________________ $__________ $_________ Item 24. Trusts and Escrows List all persons and other entities holding funds or other assets that are in escrow or in trust for the corporation. Trustee or Escrow Agent’s Name & Address Description and Location of Assets Present Market Value of Assets ______________________________________ _______________________________________ $_________________ ______________________________________ _______________________________________ $_________________ ______________________________________ _______________________________________ $_________________ ______________________________________ _______________________________________ $_________________ ______________________________________ _______________________________________ $_________________ ______________________________________ _______________________________________ $_________________ ______________________________________ _______________________________________ $_________________ Page 11 Initials __________ Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2304 Filed 05/24/22 Page 70 of 78 Item 25. Monetary Judgments and Settlements Owed To the Corporation List all monetary judgments and settlements, recorded and unrecorded, owed to the corporation. Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address____________________________________________________ Docket No._____________ Nature of Lawsuit______________________________ Date of Judgment________________ Amount $____________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address____________________________________________________ Docket No._____________ Nature of Lawsuit______________________________ Date of Judgment________________ Amount $____________ Item 26. Monetary Judgments and Settlements Owed By the Corporation List all monetary judgments and settlements, recorded and unrecorded, owed by the corporation. Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address____________________________________________________ Docket No._____________ Nature of Lawsuit_______________________________________ Date______________ Amount $______________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address____________________________________________________ Docket No._____________ Nature of Lawsuit______________________________ Date of Judgment________________ Amount $____________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address____________________________________________________ Docket No._____________ Nature of Lawsuit______________________________ Date of Judgment________________ Amount $____________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address____________________________________________________ Docket No._____________ Nature of Lawsuit______________________________ Date of Judgment________________ Amount $____________ Opposing Party’s Name & Address___________________________________________________________________ Court’s Name & Address____________________________________________________ Docket No._____________ Nature of Lawsuit______________________________ Date of Judgment________________ Amount $____________ Page 12 Initials __________ Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2305 Filed 05/24/22 Page 71 of 78 Item 27. Government Orders and Settlements List all existing orders and settlements between the corporation and any federal or state government entities. Name of Agency ___________________________________________ Contact Person __________________________ Address _____________________________________________________________ Telephone No. _______________ Agreement Date ______________ Nature of Agreement __________________________________________________ Item 28. Credit Cards List all of the corporation’s credit cards and store charge accounts and the individuals authorized to use them. Name of Credit Card or Store Names of Authorized Users and Positions Held __________________________________________ _____________________________________________________ __________________________________________ _____________________________________________________ __________________________________________ _____________________________________________________ __________________________________________ _____________________________________________________ __________________________________________ _____________________________________________________ Item 29. Compensation of Employees List all compensation and other benefits received from the corporation by the five most highly compensated employees, independent contractors, and consultants (other than those individuals listed in Items 5 and 6 above), for the two previous fiscal years and current fiscal year-to-date. “Compensation” includes, but is not limited to, salaries, commissions, consulting fees, bonuses, dividends, distributions, royalties, pensions, and profit sharing plans. “Other benefits” include, but are not limited to, loans, loan payments, rent, car payments, and insurance premiums, whether paid directly to the individuals, or paid to others on their behalf. Name/Position Current Fiscal Year-to-Date 1 Year Ago 2 Years Ago Compensation or Type of Benefits _____________________________ $____________ $___________ $____________ ___________________________ _____________________________ $____________ $___________ $____________ ___________________________ _____________________________ $____________ $___________ $____________ ___________________________ _____________________________ $____________ $___________ $____________ ___________________________ _____________________________ $____________ $___________ $____________ ___________________________ Page 13 Initials __________ Case 2:22-cv-11120-BAF-APP *SEALED* ECF No. 10, PageID.2306 Filed 05/24/22 Page 72 of 78 Item 30. Compensation of Board Members and Officers List all compensation and other benefits received from the corporation by each person listed in Items 5 and 6, for the current fiscal year-to-date and the two previous fiscal years. “Compensation” includes, but is not limited to, salaries, commissions, consulting fees, dividends, distributions, royalties, pensions, and profit sharing plans. “Other benefits” include, but are not limited to, loans, loan payments, rent, car payments, and insurance premiums, whether paid directly to the individuals, or paid to others on their behalf. Name/Position Current Fiscal Year-to-Date 1 Year Ago 2 Years Ago Compensation or Type of Benefits _____________________________ $____________ $___________ $____________ ___________________________ _____________________________ $____________ $___________ $____________ ___________________________ _____________________________ $____________ $___________ $____________ ___________________________ _____________________________ $____________ $___________ $____________ ___________________________ _____________________________ $____________ $___________ $____________ ___________________________ _____________________________ $____________ $___________ $____________ ___________________________ _____________________________ $____________ $___________ $____________ ___________________________ _____________________________ $____________ $___________ $____________ ___________________________ Item 31. Transfers of Assets Including Cash and Property List all transfers of assets over $2,500 made by the corporation, other than in the ordinary course of business, during the previous three years, by loan, gift, sale, or other transfer. Transferee’s Name, Address, & Relationship Property Transferred Aggregate Value Transfer Date Type of Transfer (e.g., Loan, Gift) ______________________________________ ________________ $____________ __________ _________________ ______________________________________ ________________ $____________ __________ _________________ ______________________________________ ________________ $____________ __________ _________________ ______________________________________ ________________ $____________ __________ _________________ ______________________________________ ________________ $____________ __________ _________________ Page [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Aftc%3A76896befeb5ca982. Public record. Not legal advice.