Federal Trade Commission v. Mortgage Relief Advocates LLC et al

Filing 73

FINAL JUDGMENT by Judge Michael W. Fitzgerald. IT IS ORDERED that Defendants are permanently restrained and enjoined. FURTHER ORDERED that Judgment in the amount of $1,834,744.59 is entered in favor of the Commission against Individual Defendant s and Corporate Defendants, jointly and severally, as equitable monetary relief. FURTHER ORDERED that there is no just reason for delay of entry of this judgment, and that, pursuant to FRCP 54(b), the Clerk immediately shall enter this Judgment as a final judgment as to all Defendants. FURTHER ORDERED that this Court retains jurisdiction of this matter for purposes of construction, modification, and enforcement of this Judgment. (MD JS-6, Case Terminated). (jp)

JS-6

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

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Case No. CV14-5434MWF-AGRx
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FEDERAL TRADE COMMISSION
FINAL JUDGMENT AS TO
DEFENDANTS MORTGAGE
RELIEF ADVOCATES, LLC,
NATIONAL FORENSIC LOAN
AUDIT SERVICERS, LLC,
EVERTREE, LLC, KEY STONE
REAL ESTATE, LLC, PABLO
RODRIGUEZ, AND MICHAEL
RODRIGUEZ

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Plaintiff,
v.
MORTGAGE RELIEF ADVOCATES,
LLC, et al.

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Defendants.
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Plaintiff Federal Trade Commission (“FTC” or “Commission”) commenced
this civil action on July 14, 2014, pursuant to Sections 13(b) and 19 of the Federal

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Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b) and 57(b) and the Dodd4
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Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203,
Section 1097, 124 Stat. 1376, 2102-03 (July 21, 2010) (“Dodd-Frank Act”), 12

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U.S.C. § 5538, to obtain preliminary and permanent injunctive and other equitable
relief for Defendants’ violations of Section 5 of the FTC Act and the Mortgage

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Assistance Services Rule, 12 C.F.R. Part 1015, in connection with the marketing
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and sale of mortgage assistance relief services (“MARS”). On August 22, 2014,
after a hearing on the Commission’s request for an order to show cause why a

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preliminary injunction should not be entered against Defendants, the Court entered
an Order for Preliminary Injunction (“PI Order”) in this case enjoining Defendants

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from, among other things, making misrepresentations related to MARS, collecting
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advance fees from consumers, and failing to make required disclosures.
On March 27, 2015, pursuant to Federal Rule of Civil Procedure, Rule 56,

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the FTC moved for summary judgment on all counts of the Complaint for
Equitable and Other Relief (“Complaint”) against all of the Defendants Mortgage

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Relief Advocates, LLC (“MRA”), National Forensic Loan Audit Servicers, LLC
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(“NFLAS”), Evertree, LLC (“Evertree”), Key Stone Real Estate (“Key Stone”),

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Pablo Rodriguez, and Michael Rodriguez (collectively hereinafter referred to as the
“Defendants”).

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The Court, having considered the arguments, memoranda, and exhibits in
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support of the FTC’s Motion for Summary Judgment, and all other pleadings and
files in this action, granted the FTC’s Motion on July 1, 2015.

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NOW, THEREFORE, IT IS ORDERED, ADJUDGED AND

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DECREED as follows:

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DEFINITIONS
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For the purposes of this Judgment, the following definitions shall apply:

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A.

“Assisting others” includes:

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1.

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performing customer service functions, including receiving or
responding to consumer complaints;

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2.

formulating or providing, or arranging for the formulation or

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provision of, any advertising or marketing material, including any

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telephone sales script, direct mail solicitation, or the design, text, or

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use of images of any Internet website, email, or other electronic

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communication;

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3.

formulating or providing, or arranging for the formulation or

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provision of, any marketing support material or service, including web
or Internet Protocol addresses or domain name registration for any

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Internet websites, affiliate marketing services, or media placement

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services;

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providing names of, or assisting in the generation of, potential

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customers;

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performing marketing, billing, or payment services of any kind; or

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acting or serving as an owner, officer, director, manager, or principal

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of any entity.

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B.

“Defendants” means all of the Individual Defendants and the Corporate

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Defendants, individually, collectively, or in any combination.
C.

“Corporate Defendants” means Mortgage Relief Advocates, LLC (d/b/a

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The MRA Group); National Forensic Loan Audit Servicers, LLC; Evertree, LLC;
Key Stone Real Estate, LLC; and their successors and assigns.

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D.

“Financial product or service” means any product, service, plan, or

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program represented, expressly or by implication, to:
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provide any consumer, arrange for any consumer to receive, or assist

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any consumer in receiving, a loan or other extension of credit;

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2.

provide any consumer, arrange for any consumer to receive, or assist

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any consumer in receiving, credit, debit, or stored value cards;
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3.

improve, repair, or arrange to improve or repair, any consumer’s
credit record, credit history, or credit rating; or

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4.

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provide advice or assistance to improve any consumer’s credit record,
credit history, or credit rating.

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E.

“Individual Defendants” means Pablo Rodriguez and Michael Rodriguez.

F.

“Person” means any individual, group, unincorporated association, limited

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or general partnership, corporation or other business entity.

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G.

“Secured or unsecured debt relief product or service” means:
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with respect to any mortgage, loan, debt, or obligation between a

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person and one or more secured or unsecured creditors or debt
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collectors, any product, service, plan, or program represented,
expressly or by implication, to:

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a.

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stop, prevent, or postpone any mortgage or deed of foreclosure
sale for a person’s dwelling, any other sale of collateral, any

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repossession of a person’s dwelling or other collateral, or
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otherwise save a person’s dwelling or other collateral from

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foreclosure or repossession;

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b.

negotiate, obtain, or arrange a modification, or renegotiate,
settle, or in any way alter any terms of the mortgage, loan, debt,

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or obligation, including a reduction in the amount of interest,
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principal balance, monthly payments, or fees owed by a person
to a secured or unsecured creditor or debt collector;

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c.

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obtain any forbearance or modification in the timing of
payments from any secured or unsecured holder or servicer of

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any mortgage, loan, debt, or obligation;
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d.

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negotiate, obtain, or arrange any extension of the period of time
within which a person may (i) cure his or her default on the

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mortgage, loan, debt, or obligation, (ii) reinstate his or her

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mortgage, loan, debt, or obligation, (iii) redeem a dwelling or

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other collateral, or (iv) exercise any right to reinstate the
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mortgage, loan, debt, or obligation or redeem a dwelling or

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other collateral;

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e.

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obtain any waiver of an acceleration clause or balloon payment
contained in any promissory note or contract secured by any

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dwelling or other collateral; or
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f.

negotiate, obtain, or arrange (a) a short sale of a dwelling or
other collateral, (b) a deed-in-lieu of foreclosure, or (c) any

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other disposition of a mortgage, loan, debt, or obligation other
than a sale to a third party that is not the secured or unsecured

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loan holder.
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The foregoing shall include any manner of claimed assistance, including

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auditing or examining a person’s application for the mortgage, loan, debt, or

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obligation.
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2.

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with respect to any loan, debt, or obligation between a person and one
or more unsecured creditors or debt collectors, any product, service,

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plan, or program represented, expressly or by implication, to:

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a.

repay one or more unsecured loans, debts, or obligations; or;

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combine unsecured loans, debts, or obligations into one or

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more new loans, debts, or obligations.

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JUDGMENT

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BAN ON SECURED AND UNSECURED DEBT RELIEF PRODUCTS AND
SERVICES

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I.

IT IS ORDERED that Defendants are permanently restrained and enjoined from:

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A.

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advertising, marketing, promoting, offering for sale, or selling any secured
or unsecured debt relief product or service; and

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B.

assisting others engaged in advertising, marketing, promoting, offering for

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sale, or selling any secured or unsecured debt relief product or service.

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PROHIBITION AGAINST MISREPRESENTATIONS RELATING TO
FINANCIAL PRODUCTS AND SERVICES

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II.

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents,
employees, and attorneys, and all other persons or entities in active concert or

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participation with any of them, who receive actual notice of this Judgment,
whether acting directly or indirectly in connection with advertising, marketing,

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promoting, offering for sale, or selling any financial product or service, are hereby
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permanently restrained and enjoined from misrepresenting or assisting others in
misrepresenting, expressly or by implication, any material fact, including:

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A.

the terms or rates that are available for any loan or other extension of credit,
including:

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closing costs or other fees;

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the payment schedule, monthly payment amount(s), any balloon

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payment, or other payment terms;

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3.

the interest rate(s), annual percentage rate(s), or finance charge(s), and
whether they are fixed or adjustable;

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4.

the loan amount, credit amount, draw amount, or outstanding balance;

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the loan term, draw period, or maturity; or any other term of credit;

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5.

the amount of cash to be disbursed to the borrower out of the

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proceeds, or the amount of cash to be disbursed on behalf of the
borrower to any third parties;

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6.

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whether any specified minimum payment amount covers both interest
and principal, and whether the credit has or can result in negative

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amortization; or
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7.

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that the credit does not have a prepayment penalty or whether
subsequent refinancing may trigger a prepayment penalty and/or other

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fees.

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B.

the savings associated with the loan or other extension of credit;

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the ability to improve or otherwise affect a consumer’s credit record, credit

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history, credit rating, or ability to obtain credit, including that a consumer’s

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credit record, credit history, credit rating, or ability to obtain credit can be

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improved by permanently removing current, accurate negative information

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from the consumer’s credit record or history; or

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D.

that a consumer will receive legal representation.

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PROHIBITION AGAINST MISREPRESENTATIONS
RELATING TO ANY PRODUCTS OR SERVICES

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III.

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents,

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employees, and attorneys, and all other persons in active concert or participation
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with any of them, who receive actual notice of this Judgment, whether acting
directly or indirectly, in connection with advertising, marketing, promoting,

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offering for sale, or selling any product or service are hereby permanently

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restrained and enjoined from misrepresenting or assisting others in
misrepresenting, expressly or by implication, any material fact, including:

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A.

any material aspect of the nature or terms of any refund, cancellation,

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exchange, or repurchase policy, including the likelihood of a consumer

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obtaining a full or partial refund, or the circumstances in which a full or

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partial refund will be granted to the consumer;

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B.

that any person is affiliated with, endorsed or approved by, or otherwise

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connected to any other person; government entity; public, non-profit, or
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other non-commercial program; or any other program;

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C.

the nature, expertise, position, or job title of any person who provides any

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product or service;

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D.

that any person providing a testimonial has purchased, received, or used the

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product or service;
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E.

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that the experience represented in a testimonial of the product or service
represents the person’s actual experience resulting from the use of the

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product or service under the circumstances depicted in the advertisement;

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F.

the total costs to purchase, receive, or use, or the quantity of, the product or

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service;
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G.

any material restriction, limitation, or condition on purchasing, receiving, or
using the product or service; or

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H.

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any other fact material to consumers concerning any product or service,
including any material aspect of the performance, efficacy, nature, or

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characteristics of the product or service.
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MONETARY JUDGMENT

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IV.

IT IS FURTHER ORDERED that:

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A.

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Judgment in the amount of ONE MILLION EIGHT HUNDRED
THOUSAND THIRTY-FOUR THOUSAND SEVEN HUNDRED FORTY-

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FOUR DOLLARS AND FIFTY-NINE CENTS ($1,834,744.59) is entered
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in favor of the Commission against Individual Defendants and Corporate

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Defendants, jointly and severally, as equitable monetary relief.

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B.

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Defendants are ordered to pay to the Commission ONE MILLION EIGHT
HUNDRED THOUSAND THIRTY-FOUR THOUSAND SEVEN

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HUNDRED FORTY-FOUR DOLLARS AND FIFTY-NINE CENTS
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($1,834,744.59). Such payment must be made within 14 days of entry of

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this Judgment by electronic fund transfer in accordance with instructions

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provided by a representative of the Commission.

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ADDITIONAL MONETARY PROVISIONS

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IT IS FURTHER ORDERED that:
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A.

Defendants relinquish dominion and all legal and equitable right, title,

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and interest in all assets transferred pursuant to this Judgment and may not

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seek the return of any assets.

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B.

Defendants acknowledge that their Taxpayer Identification Numbers (Social

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Security Numbers or Employer Identification Numbers), may be used for

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collecting and reporting on any delinquent amount arising out of this

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Judgment, in accordance with 31 U.S.C. § 7701.

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C.

All money paid to the Commission pursuant to this Judgment may be

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deposited into a fund administered by the Commission or its designee to be
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used for equitable relief, including consumer redress and any attendant
expenses for the administration of any redress fund. If a representative of

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the Commission decides that direct redress to consumers is wholly or
partially impracticable or money remains after redress is completed, the

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Commission may apply any remaining money for such other equitable relief
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(including consumer information remedies) as it determines to be reasonably
related to Defendants’ practices alleged in the Complaint. Any money not

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used for such equitable relief is to be deposited to the U.S. Treasury as
disgorgement. Defendants have no right to challenge any actions the

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Commission or its representatives may take pursuant to this Subsection.
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CUSTOMER INFORMATION

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VI.

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents,

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employees, and attorneys, and all other persons in active concert or participation
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with any of them, who receive actual notice of this Judgment, whether acting
directly or indirectly, in connection with advertising, marketing, promoting,

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offering for sale, or selling any financial product or service, are hereby
permanently restrained and enjoined from:

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A.

failing to provide sufficient customer information to enable the

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Commission to efficiently administer consumer redress. Defendants

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represent that they have provided this redress information to the

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Commission. If a representative of the Commission requests in writing any

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information related to redress, Defendants must provide it, in the form

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prescribed by the Commission, within 14 days.
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B.

disclosing, using, or benefitting from customer information, including the
name, address, telephone number, email address, social security number,

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other identifying information, or any data that enables access to a customer’s
account (including a credit card, bank account, or other financial account),

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that any Defendant obtained prior to entry of this Judgment; and
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C.

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failing to destroy such customer information in all forms in their possession,
custody, or control within 30 days after receipt of written direction to do so

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from a representative of the Commission.
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Provided, however, that customer information need not be disposed of, and may be
disclosed, to the extent requested by a government agency or required by law,

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regulation, or court order.

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JUDGMENT ACKNOWLEDGMENTS

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VII. IT IS FURTHER ORDERED that Defendants obtain acknowledgments of
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receipt of this Judgment:
A.

Each Defendant, within 7 days of entry of this , must submit to the

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Commission an acknowledgment of receipt of this Judgment sworn under penalty
of perjury.

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B.

For 10 years after entry of this Judgment, each Individual Defendant for any

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business that such Defendant, individually or collectively with any other
Defendants, is the majority owner or controls directly or indirectly, and each

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Corporate Defendant, must deliver a copy of this Judgment to: (1) all
principals, officers, directors, and LLC managers and members; (2) all

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employees, agents, and representatives who participate in connection with
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the advertising, marketing, promoting, offering for sale, or selling any
financial product or service; and (3) any business entity resulting from any

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change in structure as set forth in the Section titled Compliance Reporting.

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Delivery must occur within 7 days of entry of this Judgment for current

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personnel. For all others, delivery must occur before they assume their
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responsibilities.

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C.

From each individual or entity to which a Defendant delivered a copy of

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this Judgment, that Defendant must obtain, within 30 days, a signed and

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dated acknowledgment of receipt of this Judgment.

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COMPLIANCE REPORTING
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VIII. IT IS FURTHER ORDERED that Defendants make timely submissions to the
Commission:

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A.

One year after entry of this Judgment, each Defendant must submit a
compliance report, sworn under penalty of perjury:

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Each Defendant must: (a) identify the primary physical, postal, and

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email address and telephone number, as designated points of contact,
which representatives of the Commission and may use to

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communicate with Defendant; (b) identify all of that Defendant’s
businesses by all of their names, telephone numbers, and physical,

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postal, email, and Internet addresses; (c) describe the activities of each
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business, including the goods and services offered, the means of
advertising, marketing, and sales, and the involvement of any other

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Defendant (which Individual Defendants must describe if they know

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or should know due to their own involvement); (d) describe in detail

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whether and how that Defendant is in compliance with each Section
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of this Judgment; and (e) provide a list of all domain names held or

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registered by any Defendant; and (f) provide a copy of each Judgment

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Acknowledgment obtained pursuant to this Judgment, unless

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previously submitted to the Commission.

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2.

Additionally, each Individual Defendant must: (a) identify all

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telephone numbers and all physical, postal, email and Internet

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addresses, including all residences; (b) identify all business activities,

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including any business for which such Individual Defendant performs

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services whether as an employee or otherwise and any entity in which

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such Individual Defendant has any ownership interest; and (c)
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describe in detail such Individual Defendant’s involvement in each

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such business, including title, role, responsibilities, participation,

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authority, control, and any ownership.

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B.

For 10 years after entry of this Judgment, each Defendant must submit a

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compliance notice, sworn under penalty of perjury, within 14 days of any
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change in the following:

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1.

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Each Defendant must report any change in: (a) any designated point
of contact; or (b) the structure of any Corporate Defendant or any

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entity that Defendant has any ownership interest in or controls directly
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or indirectly that may affect compliance obligations arising under this

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Judgment, including: creation, merger, sale, or dissolution of the

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entity or any subsidiary, parent, or affiliate that engages in any acts or

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practices subject to this Judgment.

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2.

Additionally, each Individual Defendant must report any change in:

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(a) name, including aliases or fictitious name, or residence address; or

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(b) title or role in any business activity, including any business for

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which such Individual Defendant performs services whether as an

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employee or otherwise and any entity in which such Individual

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Defendant has any ownership interest, and identify the name, physical
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address, and any Internet address of the business or entity.

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C.

Each Defendant must submit to the Commission notice of the filing of any

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bankruptcy petition, insolvency proceeding, or similar proceeding by or

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against such Defendant within 14 days of its filing.

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D.

Any submission to the Commission required by this Judgment to be sworn

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under penalty of perjury must be true and accurate and comply with 28
U.S.C. § 1746, such as by concluding: “I declare under penalty of perjury

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under the laws of the United States of America that the foregoing is true and

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correct. Executed on: _____” and supplying the date, signatory’s full name,

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title (if applicable), and signature.
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E.

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Unless otherwise directed by a Commission representative in writing, all
submissions to the Commission pursuant to this Judgment must be emailed

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to [e-mail] or sent by overnight courier (not the U.S. Postal

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Service) to: Associate Director for Enforcement, Bureau of Consumer

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Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW,
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Washington, DC 20580. The subject line must begin: FTC v. Mortgage

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Relief Advocates, LLC, et al., Case No. 2:14-cv-05434-MWF-AGRx,

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X140046.

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RECORDKEEPING
IX.

IT IS FURTHER ORDERED that Defendants must create certain records for 10

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years after entry of the Judgment, and retain each such record for 5 years.
Specifically, Corporate Defendant and each Individual Defendant for any business

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that such Defendant, individually or collectively with any other Defendants, is a
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majority owner or controls directly or indirectly, must create and retain the
following records:

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A.

accounting records showing the revenues from all goods or services sold;

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B.

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personnel records showing, for each person providing services, whether as
an employee or otherwise, that person’s: name; addresses; telephone

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numbers; job title or position; dates of service; and (if applicable) the reason
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for termination;

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C.

records of all consumer complaints and refund requests, whether received

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directly or indirectly, such as through a third party, and any response;

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D.

all records necessary to demonstrate full compliance with each provision of

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this Judgment, including all submissions to the Commission; and
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E.

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a copy of each unique advertisement or other marketing material.
COMPLIANCE MONITORING

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X.

IT IS FURTHER ORDERED that, for the purpose of monitoring Defendants’
compliance with this Judgment:

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A.

Within 14 days of receipt of a written request from a representative of

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the Commission each Defendant must submit additional compliance
reports or other requested information, which must be sworn under

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penalty of perjury; appear for depositions; and produce documents for
inspection and copying. The Commission is also authorized to obtain

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discovery, without further leave of court, using any of the procedures
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prescribed by Federal Rules of Civil Procedure 29, 30 (including
telephonic depositions), 31, 33, 34, 36, 45, and 69.

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B.

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For matters concerning this Judgment, the Commission is authorized to
communicate directly with each Defendant. Defendant must permit

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representatives of the Commission to interview any employee or other
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person affiliated with any Defendant who has agreed to such an interview.

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The person interviewed may have counsel present.

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C.

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The Commission may use all other lawful means, including posing, through
its representatives as consumers, suppliers, or other individuals or entities, to

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Defendants or any individual or entity affiliated with Defendants, without
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the necessity of identification or prior notice. Nothing in this Judgment

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limits the Commission’s lawful use of compulsory process, pursuant to

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Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1.

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D.

Upon written request from a representative of the Commission, any

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consumer reporting agency must furnish consumer reports concerning
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Individual Defendants, pursuant to Section 604(1) of the Fair Credit

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Reporting Act, 15 U.S.C. § 1681b(a)(1).

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ENTRY OF JUDGMENT

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XI.

IT IS FURTHER ORDERED that there is no just reason for delay of entry of this

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judgment, and that, pursuant to Federal Rule of Civil Procedure 54(b), the Clerk
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immediately shall enter this Judgment as a final judgment as to all Defendants.

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RETENTION OF JURISDICTION
XII. IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for

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purposes of construction, modification, and enforcement of this Judgment.
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SO ORDERED this 23RD day of July, 2015 :

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_______________________________
MICHAEL W. FITZGERALD
United States District Judge

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