Federal Trade Commission v. Automators LLC et al

Filing 98

STIPULATED ORDER for Permanent Injunction and monetary judgment. Signed by Chief District Judge Dana M. Sabraw on 2/26/2024.(jpp)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA

1
2
3

FEDERAL TRADE COMMISSION,

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

Plaintiff,
v.
AUTOMATORS LLC, et al.,

Case No. 23-cv-1444-DMS-BGS
STIPULATED ORDER FOR
PERMANENT INJUNCTION AND
MONETARY JUDGMENT

Defendants,
PEREGRINE WORLDWIDE, LLC,
Relief Defendant.
This matter comes before the Court upon the stipulation of the Plaintiff (the
Federal Trade Commission (“Commission” or “FTC”)); Automators LLC, also d/b/a
Automators AI and Ecom Skool; Empire Ecommerce LLC; Onyx Distribution LLC;
Stryder Holdings LLC; Pelenea Ventures LLC; Roman Cresto; John Cresto; and Andrew
Chapman (collectively, “Defendants”); and Peregrine Worldwide, LLC (“Relief
Defendant”) for the entry of an order for permanent injunction and monetary judgment as
to Defendants and Relief Defendant.
WHEREAS, on August 8, 2023, Plaintiff, the FTC, filed its Complaint for
Permanent Injunction, Monetary Relief, and Other Relief under Sections 13(b) and 19 of
the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b), 57b, the FTC’s
Trade Regulation Rule entitled “Disclosure Requirements and Prohibitions Concerning
Business Opportunities” (“Business Opportunity Rule”), 16 C.F.R. Part 437, as amended,
the Consumer Review Fairness Act of 2016 (“CRFA”), 15 U.S.C. § 45b (Docket No. 1),
and moved, under Fed. R. Civ. P. 65(b), for a temporary restraining order, asset freeze,
other equitable relief, and an order to show cause why a preliminary injunction should
not issue against Defendants and Relief Defendant (Docket No. 5-1).

27
28
1

1

WHEREAS, on August 11, 2023, the Court issued an ex parte Temporary

2

Restraining Order against Defendants and Relief Defendant that includes an asset freeze,

3

appointment of a temporary receiver over the Receivership Entities (as defined below),

4

and other equitable relief (Docket No. 8).

5
6

WHEREAS, each of the Defendants has been properly served with a summons, the
Complaint and the Temporary Restraining Order.

7

WHEREAS, on September 8, 2023, the Court issued a Stipulated Preliminary

8

Injunction Order against Defendants and Relief Defendants that continued, inter alia, the

9

asset freeze over the Defendants and appointed a receiver over the Receivership Entities

10
11

(Docket No. 48).
WHEREAS, Plaintiff, Defendants, and Relief Defendant stipulate to the entry of

12

this Stipulated Order for Permanent Injunction and Monetary Judgment (“Order”) to

13

resolve all matters in dispute in this action between them.

14

THEREFORE, IT IS STIPULATED AND ORDERED as follows:

15

FINDINGS OF FACT

16

A.

This Court has jurisdiction over this matter.

17

B.

The FTC alleges that Defendants have engaged in acts or practices that

18

violate Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), the Business Opportunity Rule,

19

and the CRFA.

20

C.

Defendants and Relief Defendant neither admit nor deny any of the

21

allegations in the Complaint, except as specifically stated in this Order. Only for purposes

22

of this action, Defendants and Relief Defendant admit the facts necessary to establish

23

jurisdiction.

24

D.

Defendants and Relief Defendant waive and release any claims that they

25

may have against the Commission and the Receiver, including against any agent of the

26

Commission or the Receiver, that relate to this action. The parties agree that this Order

27

resolves all allegations in the Complaint.

28
2

1
2

E.

Defendants and Relief Defendant waive all rights to appeal or otherwise

challenge or contest the validity of this Order.

3

DEFINITIONS

4
5
6
7

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.

8

“Assisting Others” includes the following:
1. performing customer service functions, including receiving or responding to

9

consumer complaints;

10

2. formulating or providing, or arranging for the formulation or provision of,

11

any advertising or marketing material, including any telephone sales script,

12

direct mail solicitation, or the design, text, or use of images of any Internet

13

website, email, or other electronic communication;

14

3. formulating or providing, or arranging for the formulation or provision of,

15

any marketing support material or service, including web or Internet

16

Protocol addresses or domain name registration for any Internet websites,

17

affiliate marketing services, or media placement services;

18

4. providing names of, or assisting in the generation of, potential customers;

19

5. performing marketing, billing, payment processing, or payment services of

20

any kind; or

21

6. acting or serving as an owner, officer, director, manager, or principal of any

22
23

entity.
C.

“Business Coaching Program” means any program, plan, good, or service,

24

including those related to business opportunities, that represents, expressly or by

25

implication, to coach, train or teach a participant or Purchaser how to establish, operate,

26

or improve the Purchaser’s business.

27
28

D.

“Business Opportunity” means a commercial arrangement in which:
1. A Seller solicits a prospective Purchaser to enter into a new business; and
3

1

2. The prospective Purchaser makes a required payment; and

2

3. The Seller, expressly or by implication, orally or in writing, represents that

3

the Seller or one or more Designated Persons will:

4

(i)

5

vending machines, or similar devices, owned, leased, controlled, or paid for

6

by the Purchaser; or

7

(ii)

8

accounts, or customers, for the Purchaser’s goods or services; or

9

(iii)

Provide locations for the use or operation of equipment, displays,

Provide outlets, accounts, or customers, including Internet outlets,
Buy back any or all of the goods or services that the Purchaser makes,

10

produces, fabricates, grows, breeds, modifies, or provides, including

11

providing payment for such services as, for example, stuffing envelopes

12

from the Purchaser’s home.

13

E.

“Corporate Defendants” means Automators LLC, also d/b/a Automators AI

14

and Ecom Skool; Empire Ecommerce LLC; Onyx Distribution LLC; Stryder Holdings

15

LLC; Pelenea Ventures LLC, and each of their subsidiaries, affiliates, successors, and

16

assigns.

17

F.

“Covered communication” means a written, oral, or pictorial review,

18

performance assessment, or other similar analysis, including by electronic means, of

19

goods, services, or conduct.

20
21
22

G.

“Defendants” means the Corporate Defendants and the Individual

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

“Defendants’ Products” means products and services offered by

23

Defendants, including Defendants’ own products and services, and products and services

24

of third parties for whom Defendants advertise.

25

I.

“Designated Person” means any Person, other than the Seller, whose goods

26

or services the Seller suggests, recommends, or requires that the Purchaser use in

27

establishing or operating a new business.

28

J.

“Document” is synonymous in meaning and equal in scope to the usage of
4

1

“document” and “electronically stored information” in Federal Rule of Civil Procedure

2

34(a), Fed. R. Civ. P. 34(a), and includes writings, drawings, graphs, charts, photographs,

3

sound and video recordings, images, Internet sites, web pages, websites, electronic

4

correspondence, including e-mail and instant messages, contracts, accounting data,

5

advertisements, FTP Logs, Server Access Logs, books, written or printed records,

6

handwritten notes, telephone logs, telephone scripts, receipt books, ledgers, personal and

7

business canceled checks and check registers, bank statements, appointment books,

8

computer records, customer or sales databases and any other electronically stored

9

information, including Documents located on remote servers or cloud computing

10

systems, and other data or data compilations from which information can be obtained

11

directly or, if necessary, after translation into a reasonably usable form. A draft or non-

12

identical copy is a separate Document within the meaning of the term.

13

K.

“Earnings Claim(s)” means any oral, written, or visual representation to a

14

consumer, prospective purchaser, or investor that conveys, expressly or by implication, a

15

specific level or range of actual or potential sales, or gross or net income or profits,

16

revenues, financial gains, percentage gains, or return on investment. Earnings Claims

17

include, but are not limited to: (1) any chart, table, or mathematical calculation that

18

demonstrates possible results based upon a combination of variables; (2) any statements

19

from which a consumer, prospective purchaser, or investor can reasonably infer that he or

20

she will earn a minimum level of income (e.g., “earn enough money to buy a Porsche,”

21

“earn a six-figure income, or “earn your investment back within one year”); (3)

22

references to quitting one’s job, not having to work, or living off income from online

23

sales; (4) references to increased purchases or savings, including a home, cars, boats,

24

vacations, or travel; (5) any statements, claims, success stories, endorsements, or

25

testimonials about the performance or profitability of representatives, endorsers,

26

instructors or customers; and (6) any representation, even hypothetical, of how much

27

money a consumer could or would earn.

28

L.

“General Media” means all print, electronic, internet, social networking,
5

1
2
3
4
5

radio and other media outlets.
M.

“Individual Defendant(s)” means Roman Cresto, John Cresto, and Andrew

Chapman, individually, collectively, or in any combination.
N.

“Online Marketplace” means any Person or entity that operates a

consumer-directed electronically based or accessed platform that-

6

1. includes features that allow for, facilitate, or enable third party sellers to

7

engage in the sale, purchase, payment, storage, shipping, or delivery of a

8

consumer product in the United States;

9

2. is used by one or more third party sellers for such purposes; and

10

3. has a contractual or similar relationship with consumers governing their use

11
12
13

of the platform to purchase consumer products.
O.

“Person” means any natural Person or any entity, corporation, partnership,

or association of Persons.

14

P.

“Pictorial” includes pictures, photographs, video, illustrations, and symbols.

15

Q.

“Prohibited contract provision” means a standard contract provision used

16

in the course of selling or leasing goods or services that:

17

1. prohibits or restricts the ability of a Person who is a party to the contract to

18

engage in a covered communication;

19

2. imposes a penalty or fee against a Person who is a party to the contract for

20

engaging in a covered communication; or

21

3. transfers, or requires a Person who is a party to the contract to transfer, to

22

any other Person any intellectual property rights in a covered

23

communication, with the exception of a non-exclusive license to lawfully

24

use a covered communication about a Defendant’s goods, services, or

25

conduct.

26

R.

“Providing locations, outlets, accounts, or customers” means furnishing

27

the prospective Purchaser with existing or potential locations, outlets, accounts, or

28

customers; requiring, recommending, or suggesting one or more locators or lead
6

1

generating companies; providing a list of locator or lead generating companies; collecting

2

a fee on behalf of one or more locators or lead generating companies; offering to furnish

3

a list of locations; or otherwise assisting the prospective Purchaser in obtaining his or her

4

own locations, outlets, accounts, or customers.

5
6
7

S.

“Purchaser” means a Person who buys a Business Opportunity or Business

Coaching Program.
T.

“Receiver” means the Stapleton Group, Inc., the receiver appointed in

8

Section XI of the September 8, 2023 Order Granting Joint Motion to Enter Stipulated

9

Preliminary Injunction and Vacating Preliminary Injunction Hearing (Docket No. 48) and

10
11

any deputy receivers that shall be named by the Stapleton Group, Inc.
U.

“Receivership Entities” means Corporate Defendants and Relief Defendant,

12

as well as any other entity that has conducted any business related to the marketing or

13

sale of Defendants’ Products, including receipt of Assets derived from any activity that is

14

the subject of the Complaint in this matter, and that the Receiver determines is controlled

15

or owned by any Defendant.

16
17
18

V.

“Relief Defendant” means Peregrine Worldwide, LLC and each of its

subsidiaries, affiliates, and assigns.
W.

“Receivership Estate” means the Assets identified in Section IV.B.1-3 of

19

this Order and all Assets of the Receivership Entities, including: (a) any Assets of the

20

Receivership Entities currently in the possession of the Receiver; (b) all the funds,

21

property, premises, accounts, Documents, mail, and all other Assets of, or in the

22

possession or under the control of the Receivership Entities, wherever situated, the

23

income and profits therefrom, all sums of money now or hereafter due or owing to the

24

Receivership Entities, and any other Assets or property belonging or owed to the

25

Receivership Entities; (c) any Assets of the Receivership Entities held in asset protection

26

trusts; (d) any reserve funds or other accounts associated with any payments processed on

27

behalf of any Receivership Entities, including such reserve funds held by a payment

28

processor, credit card processor, or bank; and (e) all proceeds from the sale of such
7

1

Assets, except those Assets the sale of which the Receiver determines will not add

2

appreciably to the value of the estate.

3
4

X.

“Seller” means a Person who offers for sale or sells a Business Opportunity

or Business Coaching Program.

5
6

ORDER
I.

7

BAN ON SELLING AND MARKETING OF CERTAIN BUSINESS
OPPORTUNITIES AND BUSINESS COACHING

8

(As to Defendants Automators LLC, Empire Ecommerce LLC, Onyx

9

Distribution LLC, Stryder Holdings LLC, Roman Cresto, and John Cresto)

10

IT IS THEREFORE ORDERED that Defendants Automators LLC, also d/b/a

11

Automators AI and Ecom Skool, Empire Ecommerce LLC, Onyx Distribution LLC,

12

Stryder Holdings LLC, Roman Cresto, and John Cresto are permanently restrained and

13

enjoined from advertising, marketing, distributing, promoting, or offering for sale, or

14

Assisting Others in the advertising, marketing, distributing, promoting, or offering for

15

sale of, any Business Opportunity involving the management or operation of e-commerce

16

stores in an Online Marketplace or any Business Coaching Program regarding how to

17

manage or operate e-commerce stores in an Online Marketplace.
II.

18
19

PROHIBITED BUSINESS ACTIVITIES

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

20

affiliate marketers, employees, and attorneys, and all other Persons in active concert or

21

participation with them, who receive actual notice of this Order by personal service or

22

otherwise, whether acting directly or indirectly, in connection with the advertising,

23

marketing, promoting, or offering for sale of any goods or services, are permanently

24

restrained and enjoined from:

25

A.

Making any Earnings Claims or Assisting Others in making any Earnings

26

Claims, unless the Earnings Claim is non-misleading, and, at the time the Earnings

27

Claims are made, Defendants (1) have a reasonable basis for the claim; (2) have in their

28

possession written materials that substantiate the claimed earnings and that the claimed

8

1

earnings are typical for consumers similarly situated to those to whom the claim is made;

2

and (3) make the written substantiation for Earnings Claims available upon request to the

3

consumer, potential purchaser or investor, and the FTC;

4

B.

Failing to disclose, or failing to disclose adequately in writing, material

5

information pertaining to any Business Coaching Program or Business Opportunity at

6

least seven (7) days before the consumer signs a contract or makes a payment in

7

connection with that Business Coaching Program or Business Opportunity including:

8

1. Basic identifying information of the Seller, including the Seller’s name,

9

business address, and telephone number;

10

2. Any civil or criminal actions against the Seller or affiliates of the Seller

11

for misrepresentation, fraud, or unfair or deceptive acts or practices

12

within the 10 years preceding the date that the Business Coaching

13

Program or Business Opportunity is offered;

14

3. Material terms and conditions of any cancellation or refund policy; or

15

4. A list of Purchasers and contact information of individuals who

16

purchased the Business Coaching Program or Business Opportunity

17

within the last 3 years.

18

C.

Making any Earnings Claims in the General Media or Assisting Others in

19

making any Earnings Claims in the General Media unless Defendants (1) have a

20

reasonable basis for and (2) written substantiation of any Earnings Claims and (3) state in

21

immediate conjunction with the claim the beginning and ending dates when the

22

represented earnings were achieved, and the number and percentage of all Persons who

23

purchased Defendants’ Business Coaching Program or Business Opportunity prior to that

24

ending date who achieved at least the stated level of earnings.

25

D.

Disseminating or Assisting Others in disseminating industry financial,

26

earnings, or performance information in connection with the offering for sale, sale, or

27

promotion of a Business Coaching Program or Business Opportunity while lacking

28

written substantiation demonstrating that the information reflects, or does not exceed, the
9

1

typical or ordinary financial earnings, or performance experience, of purchasers of the

2

Business Coaching Program or Business Opportunity being offered for sale.

3
4

E.

Misrepresenting or Assisting Others in misrepresenting, expressly or by

implication, that Defendants’ Products:

5

1. will allow purchasers to earn a specific level or range of actual or potential

6

sales, or gross or net income or profits, revenues, financial gains, percentage gains,

7

or return on investment with little to no effort on their part; and

8
9
10

2. will use Artificial Intelligence (AI) machine-learning to maximize revenues
or otherwise enhance the profitability or effectiveness of the good or service;
F.

Making or Assisting Others in making false or unsubstantiated testimonials

11

about Defendants, Defendants’ Products, or companies advertised by Defendants, or

12

failing to disclose that positive reviews of, and testimonials about, Defendants,

13

Defendants’ Products, or companies advertised by Defendants, were made by Corporate

14

Defendants’ owners, officers, employees, affiliate marketers or agents;

15

G.

Misrepresenting or Assisting Others in misrepresenting, expressly or by

16

implication, any other material fact concerning Defendants’ Products, such as: the total

17

costs; the amount of time necessary to achieve the represented results; any material

18

restrictions, limitations, or conditions; any material aspect of its performance, efficacy,

19

nature, or central characteristics; or any material aspect of the nature or terms of the

20

refund, cancellation, exchange, repurchase, or remedy policies; and

21

H.

Prohibiting or restricting any consumer, potential purchaser, or investor from

22

communicating reviews, performance assessments, and similar analyses about

23

Defendants’ Products or the conduct of Defendants or companies advertised by

24

Defendants related thereto; or imposing a penalty or fee against any consumer, potential

25

purchaser, or investor who engages in such communications. If otherwise compliant with

26

this Order, a request, made after resolution of a customer’s issue, that the customer post

27

additional truthful information to update a review or comment would not comprise

28

prohibition or restriction of that prior review or comment.
10

1
2

Nothing in this Section shall require a Defendant to publish or host the content of
any Person.

3 III.
4

INJUNCTION AGAINST SUPPRESSING COVERED COMMUNICATIONS
THROUGH PROHIBITED CONTRACT PROVISIONS

5

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

6

employees, and attorneys, and all other Persons in active concert or participation with any

7

of them, who receive actual notice of this Order, whether acting directly or indirectly, are

8

hereby permanently restrained and enjoined from offering, attempting to enforce, or

9

asserting the validity of, any Prohibited contract provision. Nothing in this Section shall

10

affect any other legal duty of a party to a contract or affect any cause of action arising

11

from the breach of such duty.
IV.

12

MONETARY JUDGMENT AND PARTIAL SUSPENSION

13

IT IS FURTHER ORDERED that:

14

A.

Judgment in the amount of Twenty-One Million Seven Hundred and Sixty-

15

Five Thousand Nine Hundred and Two Dollars and Sixty-Five Cents ($21,765,902.65) is

16

entered in favor of the Commission against Defendants and Relief Defendant, jointly and

17

severally, as equitable monetary relief.

18

B.

Immediately upon entry of this Order, Defendants and Relief Defendant are

19

ordered to surrender to Receiver all control, title, dominion, and interest each has to the

20

following Assets:

21

1.

22

All interest the Defendants and Relief Defendant have in funds in any
accounts in the name of the Receivership Entities;

23

2.

All cash held by the Receiver;

24

3.

All Assets owned by the Receivership Entities, including any real,

25

personal, or intellectual property, chattel, goods, instruments,

26

equipment, fixtures, general intangibles, effects, leaseholds, contracts,

27

mail, or other deliveries, shares or stock, securities, inventory, checks,

28

notes, accounts, credits, receivables, insurance policies, lines of credit,
11

1

cash, trusts (including asset protection trusts), lists of consumer names

2

and reserve funds or any other accounts associated with any payments

3

processed by, or on behalf of, any Corporate Defendants;

4

C.

Immediately upon entry of this Order, Defendants and Relief Defendant are

5

ordered to surrender to the Commission all control, title, dominion, and interest each has

6

to the following Assets:

7

1.

All funds held by Wells Fargo Bank, N.A. in the name of:

8

a. Roman Cresto, including the account ending in

9

1805 and 6356;

10

b. John Cresto, including the account ending in 9093;

11

c. Andrew Chapman, including the accounts ending

12
13

in 2167 and 2182;
2.

14
15

Chapman, including the accounts ending in 9680 and 9877;
3.

16
17

All funds held by Fidelity Investments in the name of John Cresto,
including the account ending in 2662;

4.

18
19

All funds held by Charles Schwab & Co. Inc. in the name of Andrew

All funds held by Putnam Investments in the name of John Cresto,
including the account ending in 3638;

5.

20

All funds held by American Express in the name of Andrew
Chapman, including the account ending in 9425;

21

6.

All funds held by CashApp in the name of Roman Cresto;

22

7.

All funds held by Venmo in the name of John Cresto;

23

8.

All funds held by cryptocurrency and trading platforms in the name of

24

Roman Cresto, including Coinbase, Coinbase Wallet, KuCoin,

25

Binance, Uphold, Metamask, Bovada, and Rollbit;

26

9.

All funds held by cryptocurrency and trading platforms in the name of

27

John Cresto, including KuCoin, Metamask, Binance, and Bitrex

28

Incorp;
12

1

The payments and transfers ordered in this subsection must be made by electronic fund

2

transfer in accordance with instructions to be provided by a representative of the

3

Commission.

4

D.

To the extent they are not already in the possession of the Receiver,

5

Defendants and Relief Defendant shall deliver the Assets identified in Subsection B

6

above to the Receiver’s possession within 7 days of the entry of this Order. Defendants

7

and Relief Defendant shall cooperate fully with the Receiver and take such steps as the

8

Receiver may require in Receiver’s sole and absolute opinion and judgment, including

9

executing any Documents and providing any necessary information, to cause the transfer

10

to the Receivership Estate of legal and equitable title to the property and Assets identified

11

in Subsection B above.

12

E.

Except for the lists of consumer names and customer information identified

13

in Section VI below, the Receiver shall, as soon as practicable, commence the sale of the

14

unliquidated Assets identified in Subsection B above and surrendered pursuant to this

15

Order using a commercially reasonable procedure. The Receiver shall hold the

16

surrendered Assets, and the proceeds from the sale of the unliquidated Assets, for future

17

transfer in accordance with further instructions from the Court.

18

F.

Upon the completion of all payments and transfers specified in Subsections

19

B, C, and D, above, the remainder of the judgment is suspended, subject to Subsections

20

G-N below.

21

G.

The Commission’s agreement to the suspension of part of the judgment is

22

expressly premised upon the truthfulness, accuracy, and completeness of Defendants’ and

23

Relief Defendant’s sworn financial statements and related Documents (collectively,

24

“financial representations”) submitted to the Commission, namely:

25

1.

26
27
28

the Financial Statement of Individual Defendant Roman Cresto signed
on August 31, 2023, including the attachments;

2.

the Financial Statement of Individual Defendant John Cresto signed
on September 1, 2023, including the attachments;
13

1

3.

2
3

the Financial Statement of Individual Defendant Andrew Chapman
signed on August 25, 2023, including the attachments;

4.

the Financial Statement of Corporate Defendant Automators LLC,

4

also d/b/a Automators AI and Ecom Skool, signed by Roman Cresto,

5

Owner, on September 1, 2023, including the attachments;

6

5.

the Financial Statement of Corporate Defendant Stryder Holdings

7

LLC, signed by Roman Cresto, Member, on September 1, 2023,

8

including the attachments;

9

6.

the Financial Statement of Corporate Defendant Pelenea Ventures

10

LLC, signed by Andrew Chapman, former Owner, on August 25,

11

2023, including the attachments;

12

7.

the Financial Statement of Relief Defendant Peregrine Worldwide,

13

LLC, signed by Andrew Chapman, Owner, on August 25, 2023,

14

including the attachments;

15

8.

16
17

Chapman, Owner, on September 18, 2023;
9.

18
19

the Financial Statement of Wize Mate LLC, signed by Andrew
the revised Financial Statement of Individual Defendant Roman
Cresto, signed on October 2, 2023, including the attachments;

10.

the additional information submitted by emails from Defendants’

20

counsel Hannah Friedman and Douglas Litvack to Commission

21

counsel Colleen Robbins, Christopher Brown, and Frances Kern dated

22

September 29, 2023;

23

11.

the additional information submitted by email from Defendants’

24

counsel Douglas Litvack to Commission counsel Colleen Robbins,

25

Christopher Brown, and Frances Kern dated October 13, 2023;

26
27

12.

the additional information and documentation submitted by email
from Defendants’ counsel Hannah Friedman to Commission counsel

28
14

1

Colleen Robbins, Christopher Brown, and Frances Kern dated

2

October 23, 2023;

3

13.

4

Cresto signed on November 16, 2023; and

5

14.

6
7

the revised Financial Statement of Individual Defendant Roman
the revised Financial Statement of Individual Defendant John Cresto
signed on November 17, 2023.

H.

The suspension of the judgment will be lifted as to any Defendant or Relief

8

Defendant if, upon motion by the Commission, the Court finds that Defendant or Relief

9

Defendant failed to disclose any material Asset, materially misstated the value of any

10

Asset, or made any other material misstatement or omission in the financial

11

representations identified above.

12

I.

If the suspension of the judgment is lifted, the judgment becomes

13

immediately due as to that Defendant or Relief Defendant in the amount specified in

14

Subsection A above (which the parties stipulate only for purposes of this Section

15

represents the consumer injury alleged in the Complaint), less any payments previously

16

made pursuant to this Section, plus interest computed from the date of entry of this Order.

17
18
19

V.

ADDITIONAL MONETARY PROVISIONS

IT IS FURTHER ORDRED that:
A.

Defendants and Relief Defendant relinquish dominion and all legal and

20

equitable right, title, and interest in all Assets transferred pursuant to this Order and may

21

not seek the return of any Assets.

22

B.

The facts alleged in the Complaint will be taken as true, without further

23

proof, in any subsequent civil litigation by or on behalf of the FTC, including in a

24

proceeding to enforce its rights to any payment or monetary judgment pursuant to this

25

Order, such as a nondischargeability complaint in any bankruptcy case.

26
27

C.

The facts alleged in the Complaint establish all elements necessary to sustain

an action by the FTC pursuant to Section 523(a)(2)(A) of the Bankruptcy Code, 11

28
15

1

U.S.C. § 523(a)(2)(A), and this Order will have collateral estoppel effect for such

2

purposes.

3

D.

Defendants and Relief Defendant acknowledge that their Taxpayer

4

Identification Numbers (Social Security Numbers or Employer Identification Numbers),

5

which Defendants and Relief Defendant previously submitted to the Commission, may be

6

used for collecting and reporting on any delinquent amount arising out of this Order, in

7

accordance with 31 U.S.C. §7701.

8

E.

All money paid to the Commission or Assets ultimately surrendered to the

9

Commission pursuant to this Order (or any subsequent Court order issued in this matter)

10

and further instructions from the Court may be deposited into a fund administered by the

11

FTC or its designee on behalf of the FTC. This fund shall be used for equitable relief,

12

including consumer redress and any attendant expenses for the administration of any

13

redress fund. If a representative of the FTC decides that direct redress to consumers is

14

wholly or partially impracticable or money remains after redress is completed, any

15

money not used for such equitable relief shall be deposited to the U.S. Treasury.

16

Defendants and Relief Defendant have no right to challenge any actions the Commission

17

or its representatives may take pursuant to this subsection.

18

F. The asset freeze imposed by the September 8, 2023 Preliminary Injunction Order

19

(Docket No. 48) is modified to permit the payment and transfers identified in Section IV,

20

Subsections B, C, and D above. Upon completion of those payment and transfers, the

21

asset freeze as to Defendants and Relief Defendant is dissolved.

22
23

VI.

CUSTOMER INFORMATION

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

24

affiliate marketers, employees, and attorneys, and all other Persons in active concert or

25

participation with any of them, who receive actual notice of this Order, whether acting

26

directly or indirectly, are hereby permanently restrained and enjoined from directly or

27

indirectly:

28
16

1

A.

Failing to provide sufficient customer information to enable the FTC to

2

efficiently administer consumer redress. Defendants represent that they have provided

3

this redress information to the FTC. If a representative of the FTC requests in writing any

4

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

5

FTC, within 14 days.

6

B.

Benefiting from, using, selling, renting, leasing, transferring, or otherwise

7

disclosing, the name, address, birth date, telephone number, email address, credit card

8

number, bank account number, Social Security number, or other financial or identifying

9

information of any Person that any Defendant obtained prior to the entry of this Order in

10

connection with any activity involving or related to the sale of any Business

11

Opportunities or Business Coaching Programs; and

12

C.

Failing to destroy such customer information in all forms in their possession,

13

custody, or control within 30 days after receipt of written direction to do so from a

14

representative of the FTC.

15
16
17
18

Provided, however, that Defendants may disclose such identifying information to a
law enforcement agency, as required by any law, regulation, or court order.
VII.

COOPERATION

IT IS FURTHER ORDERED that Defendants and Relief Defendant must fully

19

cooperate with representatives of the FTC in this case and in any investigation related to

20

or associated with the transactions or the occurrences that are the subject of the

21

Complaint. Defendants and Relief Defendant must provide truthful and complete

22

information, evidence, and testimony. Individual Defendants must appear and Corporate

23

Defendants and Relief Defendant must cause their officers, employees, representatives,

24

or agents to appear for interviews, discovery, hearings, trials, and any other proceedings

25

that an FTC representative may reasonably request upon 5 days written notice, or other

26

reasonable notice, at such places and times as an FTC representative may designate,

27

without the service of a subpoena.

28
17

1
2

VIII.

RECEIVERSHIP

IT IS FURTHER ORDERED that the Stapleton Group, Inc. is hereby appointed

3

equity Receiver for the Receivership Entities for the purpose of taking the necessary steps

4

to wind down the businesses of the Receivership Entities, liquidate Assets, and pay any

5

net proceeds to the Commission to satisfy the monetary judgment in this Order. In

6

carrying out these duties, the Receiver shall be the agent of this Court, shall be

7

accountable directly to this Court, and is authorized and directed to:

8
9
10

A.

Take any and all steps that the Receiver concludes are appropriate to wind

down the affairs of the Receivership Entities.
B.

Continue to exercise full control over the Receivership Entities and continue

11

to collect, marshal, and take custody, control, and possession of all the funds, property,

12

premises, accounts, Documents, mail, and other Assets of, or in the possession or under

13

the control of the Receivership Entities, wherever situated, the income and profits

14

therefrom, and all sums of money now or hereafter due or owing to the Receivership

15

Entities.

16

C.

17
18

Continue to have full control over the management and personnel of the

Receivership Entities.
D.

Take all steps necessary or advisable, including issuing subpoenas, to locate

19

and liquidate all other Assets of the Receivership Entities, cancel the Receivership

20

Entities’ contracts, collect on amounts owed to the Receivership Entities, and take such

21

other steps as may be necessary to wind-down the Receivership Entities efficiently.

22

E.

To the extent not already completed, the Receiver shall as soon as

23

practicable after the entry of this Order, take exclusive custody, control, and possession

24

of all Assets identified in Section IV.B of this Order.

25
26
27
28

F.

Sell the nonliquidated Assets of the Receivership Estate using commercially-

reasonable procedure without further order of the Court.
G.

The Receiver shall give reasonable notice to the Commission of any

settlements or compromises by the Receiver concerning the Receivership Estate, before
18

1

the settlement or compromise is consummated. Within 20 days of this notice, the FTC

2

shall have the opportunity to object to any such settlement, by filing a motion with the

3

Court.

4

H.

Make payments and disbursements from the Receivership Estate that are

5

necessary or advisable for carrying out the directions of, or exercising the authority

6

granted by, this Order. The Receiver shall apply to the Court for prior approval of any

7

payment of any debt or obligation incurred by the Receivership Entities prior to the date

8

of entry of the temporary restraining order in this action, except payments that the

9

Receiver deems necessary or advisable to ensure Assets of the Receivership Entities are

10
11

not lost, stolen, or dissipated.
I.

Institute actions or proceedings in state, federal, or foreign courts as the

12

Receiver deems necessary and advisable to preserve or recover the Assets of the

13

Receivership Entities, or that the Receiver deems necessary and advisable to carry out the

14

Receiver’s mandate under this Order, including actions challenging fraudulent or

15

voidable transfers.

16

J.

Defend any or all actions or proceedings instituted against the Receivership

17

Entities, as the Receiver deems necessary and advisable to preserve the Assets of the

18

Receivership Entities.

19
20
21

K.

Continue to maintain accurate records of all receipts and expenditures

incurred as the Receiver.
L.

Perform all acts necessary or advisable to complete an accurate accounting

22

of Assets of the Receivership Estate, and prevent unauthorized transfer, withdrawal, or

23

misapplication of said Assets.

24

M.

Continue to be entitled to reasonable compensation for the performance of

25

the Receiver’s duties pursuant to this Order, including duties performed by the Receiver’s

26

agents, including accountants and lawyers, and for the cost of actual out-of-pocket

27

expenses incurred by them, from the Assets of the Receivership Estate, at the hourly rate

28
19

1

previously agreed to by the Receiver and used as the bases for prior fee applications

2

approved by the Court.

3

IX.

RECEIVER’S FINAL REPORT AND DISBURSEMENTS

4

IT IS FURTHER ORDERED that:

5

A.

No later than 180 days from the date of the entry of this Order, the Receiver

6

shall file and serve on the parties a report (the “Final Report”) to the Court that details the

7

steps taken to dissolve the Receivership Estate. The Final Report must include an

8

accounting of the Receivership Estate’s finances and total Assets and a description of

9

what other actions, if any, must be taken to wind down the Receivership.

10

B.

The Receiver shall mail copies of the Final Report to all known creditors of

11

the Receivership Entities with a notice stating that any objections to paying any Assets of

12

the Receivership Entities to satisfy the Receiver’s costs and expenses and the monetary

13

judgment set forth in this Order must be submitted to the Court and served by mail upon

14

the Receiver and the parties within twenty-eight (28) days of the mailing of the Final

15

Report.

16

C.

No later than fourteen (14) days after submission of the Final Report, the

17

Receiver shall file an application for payment of compensation and expenses associated

18

with his performance of his duties as Receiver.

19
20
21

D.

The Court will review the Final Report and any objections to the report and,

absent a valid objection, will issue an order directing that the Receiver:
1.

Pay the reasonable costs and expenses of administering the Receivership,

22

including compensation of the Receiver and the Receiver’s personnel

23

authorized by Section VIII of this Order or other orders of this Court and the

24

actual out-of-pocket costs incurred by the Receiver in carrying out his

25

duties;

26
27

2.

Pay all remaining funds to the Commission or its designated agent to reduce
the monetary judgment in Section IV.

28
20

1

E.

With Court approval, the Receiver may hold back funds for a specified

2

period as a reserve to cover additional fees and costs related to actions to be addressed in

3

a supplemental application. If the Receiver does not make a supplemental application for

4

fees and expenses within the specified period, or if funds remain in the reserve funds after

5

the payment of fees and expenses approved by the Court in response to such a

6

supplemental application, all funds in the reserve funds shall be immediately paid to the

7

Commission or its designated agents.

8
9

F.

Any and all uncollected judgments obtained for the benefit of the Corporate

Defendants shall be assigned to the Commission for further collection efforts.

10
11
12
13

X. ORDER ACKNOWLEDGEMENTS
IT IS FURTHER ORDERED that Defendants and Relief Defendant obtain
acknowledgments of receipt of this Order:
A.

Each Defendant and Relief Defendant, within 7 days of entry of this Order,

14

must submit to the Commission an acknowledgment of receipt of this Order sworn under

15

penalty of perjury.

16

B.

For 3 years after entry of this Order, Defendant Roman Cresto or Defendant

17

John Cresto for any business that such Defendant, individually or collectively with any

18

other Defendants, is the majority owner or controls directly or indirectly, and Corporate

19

Defendants Automators LLC, also d/b/a Automators AI and Ecom Skool, Empire

20

Ecommerce LLC, Onyx Distribution LLC, and Stryder Holdings LLC must deliver a

21

copy of this Order to: (1) all principals, partners, officers, directors, and LLC managers

22

and members; (2) all employees, agents, and representatives who participate in conduct

23

related to Business Coaching Programs and Business Opportunities; and (3) any business

24

entity resulting from any change in structure as set forth in the Section titled Compliance

25

Reporting. Delivery must occur within 7 days of entry of this Order for current personnel.

26

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

27
28

C.

For 3 years after entry of this Order, Defendant Andrew Chapman for any

business that such Defendant, individually or collectively with any other Defendants, is
21

1

the majority owner or controls directly or indirectly, and Corporate Defendant Pelenea

2

Ventures LLC must deliver a copy of this Order to: (1) all principals, partners, officers,

3

directors, and LLC managers and members; (2) all employees, agents, and representatives

4

who participate in conduct related to Business Coaching Programs regarding how to

5

manage or operate e-commerce stores or Business Opportunities involving the

6

management or operation of e-commerce stores; and (3) any business entity resulting

7

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

8

Delivery must occur within 7 days of entry of this Order for current personnel. For all

9

others, delivery must occur before they assume their responsibilities.

10

D.

From each individual or entity to which a Defendant or Relief Defendant

11

delivered a copy of this Order, that Defendant or Relief Defendant must obtain, within 30

12

days, a signed and dated acknowledgment of receipt of this Order.

13
14
15
16
17
18

XI.

COMPLIANCE REPORTING

IT IS FURTHER ORDERED that Defendants make timely submissions to the
Commission:
A.

One year after entry of this Order, each Defendant must submit a compliance

report, sworn under penalty of perjury:
1.

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

19

email address and telephone number, as designated points of contact,

20

which representatives of the FTC may use to communicate with

21

Defendant; (b) identify all of that Defendant’s businesses by all of

22

their names, telephone numbers, and physical, postal, email, and

23

Internet addresses; (c) describe the activities of each business,

24

including the goods and services offered, the means of advertising,

25

marketing, and sales, and the involvement of any other Defendant

26

(which Individual Defendants must describe if they know or should

27

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

28

and how that Defendant is in compliance with each Section of this
22

1

Order; and (e) provide a copy of each Order Acknowledgment

2

obtained pursuant to this Order, unless previously submitted to the

3

FTC.

4

2.

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

5

telephone numbers and all physical, postal, email and Internet

6

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

7

including any business for which such Defendant performs services

8

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

9

Defendant has any ownership interest; and (c) describe in detail such

10

Defendant’s involvement in each such business, including title, role,

11

responsibilities, participation, authority, control, and any ownership.

12

B.

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

13

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

14

following:

15

1.

Each Defendant must report any change in: (a) any designated point

16

of contact; or (b) the structure of any Corporate Defendant or any

17

entity that Defendant has any ownership interest in or controls directly

18

or indirectly that may affect compliance obligations arising under this

19

Order, including: creation, merger, sale, or dissolution of the entity or

20

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

21

subject to this Order.

22

2.

Additionally, each Individual Defendant must report any change in:

23

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

24

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

25

which such Defendant performs services whether as an employee or

26

otherwise and any entity in which such Defendant has any ownership

27

interest, and identify the name, physical address, and any Internet

28

address of the business or entity.
23

1

C.

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

2

bankruptcy petition, insolvency proceeding, or similar proceeding by or against such

3

Defendant within 14 days of its filing.

4

D.

Any submission to the Commission required by this Order to be sworn under

5

penalty of perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as

6

by concluding: “I declare under penalty of perjury under the laws of the United States of

7

America that the foregoing is true and correct. Executed on: _____” and supplying the

8

date, signatory’s full name, title (if applicable), and signature.

9

E.

Unless otherwise directed by an FTC representative in writing, all

10

submissions to the FTC pursuant to this Order must be emailed to [e-mail] or

11

sent by overnight courier (not the U.S. Postal Service) to: Associate Director for

12

Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600

13

Pennsylvania Avenue NW, Washington, DC 20580. The subject line must begin: FTC v.

14

Automators, et al., X230040.

15
16

XII.

RECORDKEEPING

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

17

years after entry of the Order, and retain each such record for 5 years. Specifically,

18

Corporate Defendants and each Individual Defendant for any business that such

19

Defendant, individually or collectively with any other Defendants, is a majority owner or

20

controls directly or indirectly, must create and retain the following records:

21

A.

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

22

B.

Personnel records showing, for each Person providing services, whether as

23

an employee or otherwise, that Person’s: name; addresses; telephone numbers; job title

24

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

25
26
27
28

C.

Records of all consumer complaints and refund requests, whether received

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

All records necessary to demonstrate full compliance with each provision of

this Order, including all submissions to the FTC; and
24

1

E.

A copy of each unique advertisement or other marketing material.

2
3

XIII.

COMPLIANCE MONITORING

IT IS FURTHER ORDERED that, for the purpose of monitoring Defendants’

4

compliance with this Order, including the financial representations upon which part of

5

the judgment was suspended and any failure to transfer any Assets as required by this

6

Order:

7

A.

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

8

FTC, each Defendant must: submit additional compliance reports or other requested

9

information, which must be sworn under penalty of perjury; appear for depositions; and

10

produce Documents for inspection and copying. The FTC is also authorized to obtain

11

discovery, without further leave of court, using any of the procedures prescribed by

12

Federal Rules of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34,

13

36, 45, and 69.

14

B.

For matters concerning this Order, the FTC is authorized to communicate

15

directly with each Defendant. Defendants must permit representatives of the FTC to

16

interview any employee or other Person affiliated with any Defendant who has agreed to

17

such an interview. The Person interviewed may have counsel present.

18

C.

The FTC may use all other lawful means, including posing, through their

19

representatives, as consumers, suppliers, or other individuals or entities, to Defendants or

20

any individual or entity affiliated with Defendants, without the necessity of identification

21

or prior notice. Nothing in this Order limits the FTC’s lawful use of compulsory process,

22

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

23

D.

Upon written request from a representative of the FTC, any consumer

24

reporting agency must furnish consumer reports concerning Individual Defendants,

25

pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C. §1681b(a)(1).

26
27
28

XIV.

RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this
matter for all purposes.
25

SO ORDERED, this 26th day of February, 2024, at 3:09

1
2

p.m.

3
4
5
6

Hon. Dana M. Sabraw
United States District Judge

7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
26

1

SO STIPULATED AND AGREED:
Dated: January 24, 2024

2
3

FOR PLAINTIFF:

4

FEDERAL TRADE COMMISSION

5
6

____________________________

7

Colleen Robbins
Christopher E. Brown
Frances L. Kern
Federal Trade Commission
600 Pennsylvania Ave, NW, CC8528
Washington, DC 20580
[phone]; [e-mail]
[phone]; [e-mail]
[phone]; [e-mail]
[phone] (fax)
[phone] (fax)

8
9
10
11
12
13
14
15

FOR DEFENDANTS:

16
17
18
19
20
21
22
23
24
25
26
27
28

____________________________
Douglas Litvack
Jenner & Block LLP
1099 New York Avenue NW
Suite 900
Washington, DC 20001
202-637-6357
[e-mail]
Kathleen M. Marcus
Jason De Bretteville
Lisa Northrup
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660-6422
949-725-4000
[e-mail]

27

1
2
3
4

[e-mail]
[e-mail]
Counsel for Defendants Pelenea Ventures LLC, Andrew Chapman and Relief Defendant,
Peregrine Worldwide, LLC

5
6
7
8
9
10
11
12

____________________________
Michael Zweiback
Hannah E. Friedman
ZFZ Law LLP
315 W. 9th Street, Suite 1200
Los Angeles, CA 90015
213-266-5171
[e-mail]
[e-mail]
Counsel for Defendants Roman Cresto and John Cresto

13
14
15
16
17
18
19
20
21

____________________________
Eliot Krieger
Maren B. Hufton
SKT Law, P.C.
7755 Center Avenue, Suite 1225
Huntington Beach, CA 92647
949-523-3333
[e-mail]
[e-mail]
Counsel for Defendants Automators LLC and Stryder Holdings LLC

22
23
24
25

Daniel Cohen
Owner of Empire Ecommerce LLC and Onyx Distribution LLC

26
27
28
28

I jdebretteville
2
3

4

stradlinglaw.com
lnorthrup @ stradlinglaw. com
@

Counsel for Defendants Pelenea Ventures LLC, Andrew Chapmnn and Relief Defendant,
Pere grine Worldwide, LLC

5

6
7
8

9
10
11

t2

Michael Zweiback
Hannatr E. Friedman

ZFZLaw LLP
315 W. 9th Street, Suire 1200
Los Angeles, CA 90015
213-266-517 t
Michael. zweiback @ zfzlaw .com
Hannatr.friedman @ zfzlaw. com

Counselfor Defendants Romnn Cresto and John Cresto

13

t4
15

t6
L7
18

19

20
2L

Eliot Krieger
Maren B. Hufton
SKT Law, P.C.
7755 Center Avenue, Suite 1225
Huntington Beach, CA 92647
949-523-3333
[e-mail]
[e-mail]
Counsel

for Defendants Automntors LLC and Stryder Holdings LLC

22
23

24
25

Daniel Cohen
Owner of Empire Ecommerce LLC and Onyx Distribution LLC

26
27
28

28

1
2
3
4
5
6
7

s/ Diana L. Fitzgerald
Diana L. Fitzgerald
Fitzgerald & Isaacson, LLP
9701 Wilshire Blvd., Suite 1000
Beverly Hills, CA 90212
310-480-0090
Counsel for Daniel Cohen and LCC Enterprises LLC

8
9
10
11

____________________________
Roman Cresto, individually and as an officer and/or owner of Automators LLC and
Stryder Holdings LLC

12
13
14
15

____________________________
John Cresto, individually and as officer and/or owner of Automators LLC and Stryder
Holdings LLC

16
17
18
19

____________________________
Andrew Chapman, individually and as officer and/or owner of Automators LLC and
Pelenea Ventures LLC

20
21
22
23
24
25
26
27
28
29

1
2
3
4
5
6

Diana L. Fitzgerald
Fitzgerald & Isaacson, LLP
9701 Wilshire Blvd., Suite 1000
Beverly Hills, CA 90212
310-480-0090
Counsel for Daniel Cohen and LCC Enterprises LLC

7
8
9
10

____________________________
Roman Cresto, individually and as an officer and/or owner of Automators LLC and
Stryder Holdings LLC

11
12
13
14

____________________________
John Cresto, individually and as officer and/or owner of Stryder Holdings LLC

15
16
17

____________________________
Andrew Chapman, individually and as officer and/or owner of Pelenea Ventures LLC

18
19
20
21
22
23
24
25
26
27
28
29