Federal Trade Commission et al v. Dalbey et al

Filing 317

ORDER granting 312 Motion for Contempt by Judge R. Brooke Jackson on 9/14/15.(jdyne, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge R. Brooke Jackson
Civil Action No. 11-cv-1396-RBJ-KLM
FEDERAL TRADE COMMISSION, and
STATE OF COLORADO, ex rel.
JOHN W. SUTHERS, ATTORNEY GENERAL
Plaintiffs,
v.
RUSSELL T. DALBEY;
DEI, LLLP;
DALBEY EDUCATION INSTITUTE, LLC;
IPME, LLLP; and
CATHERINE L. DALBEY
Defendants.

ORDER

This case is once again before the Court, this time on the government’s motion to hold
the Dalbeys in contempt. To review, on July 22, 2013 the Court approved an “Amended
Stipulated Order for Final Judgment and Order for Permanent Injunction and Other Equitable
Relief as to Russell T. Dalbey and Catherine L Dalbey.” ECF No. 283. The Stipulated Order
purportedly brought an end to the case which was based on a massive telemarketing scam
perpetrated by the Dalbeys. Among other things judgment was entered in favor of the
government plaintiffs and against Mr. and Mrs. Dalbey, jointly and severally, in the amount of
$330,084,354.70, which was characterized as “equitable monetary relief” representing
“consumer injury and disgorgement.” Id. at § V.A.

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Apparently recognizing the miniscule possibility that the government would be able to
collect such a judgment, the parties created an alternative based upon the Dalbeys’ “maximum
ability to pay” or “MAP.” The MAP was to be set by the government following discovery, and
the Dalbeys agreed to pay the MAP amount within 10 days following the government’s
determination. Id. at § V.A. 2. However, the Dalbeys reserved the right to move the Court for a
reduction of the MAP. In that event, the Dalbeys agreed to pay the MAP within 10 days after the
Court’s determination of the MAP. The parties further agreed that the government’s
determination of the MAP “shall be upheld unless the Court finds it objectively unreasonable for
Defendants to pay that amount.” Id. at § V.A. 2, 3. (emphasis added). If the Dalbeys failed to
pay the MAP, after the Court’s final resolution of that amount, the entire judgment in the amount
of $330,084,354.70 would enter against them. Id. at § B.2.
In July 2014 the government notified the Dalbeys that their MAP had been calculated at
$1,715,808.61. On motion by the Dalbeys, and after conducting a hearing on the matter, this
Court held that the MAP was objectively unreasonable. ECF No. 303. However, after making a
number of factual findings, the Court held that it would not be objectively unreasonable if the
MAP were reduced to $858,665. Id. However, the Dalbeys did not make any payment.
The government next filed a motion seeking an order of disgorgement of $858,665 in
partial satisfaction of the judgment. ECF No. 304. On March 6, 2015, after reviewing the
parties’ briefs, I determined that the motion was premature because a final monetary judgment
had not been entered. ECF No. 307. However, I also found explicitly that the Dalbeys had the
present ability to pay $858,665. ECF No. 307 at 2. I ordered them “immediately to disgorge
$858,665,” and authorized the government to enforce the Court’s judgment by moving for civil
contempt at any time after 10 days following entry of the Final Judgment. Id. at 3. Finally, the

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order permitted the Dalbeys to assert any legally permissible defense to a contempt motion,
should one be filed, but the order specified that they could not assert as a defense their inability
to pay $858,665, as that amount had already been fully litigated. Id.
The Dalbeys did not pay that amount. On March 26, 2015 the Dalbeys’ lawyers, who to
that point had represented them vigorously throughout this lengthy litigation, moved to
withdraw, indicating that their services had been terminated. ECF No. 309. The motion was
granted. ECF No. 210.
On May 14, 2015 plaintiff the Federal Trade Commission moved for an order of civil
contempt against Mr. and Mrs. Dalbey for violating this Court’s disgorgement order. ECF No.
312. In the motion the FTC represents that the Dalbeys had offered unliquidated assets,
assignments of interest, checks and wire funds collectively worth no more than $136,708. Id. at
2. The FTC further represents that it accepted checks and wire funds totaling $4,569.00 but
rejected unliquidated assets because the stipulated final judgment required payment by electronic
means. Id. Plaintiffs later supplemented the record with an indication that the Colorado
Attorney General’s Office had received additional funds from “Switch Consignment” of
Scottsdale, Arizona totaling $3,760.62 which they had credited against the Dalbeys’ debt. ECF
No. 316. This brought the Dalbeys’ total payment to $8,329.67.
The Dalbeys, representing themselves, responded that their deal with the government was
that either they would pay their Maximum Ability to Pay or the $330,084,354.70 judgment
would enter, but that in any event, they had relinquished assets worth $2,894,299.41. They
added that they are now living cheaply in Belize. ECF No. 315.
The Dalbeys’ response misses the point, which is that this Court expressly ordered them
to pay $858,665 and found that they had the present ability to pay that amount. I have reviewed

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the Dalbeys’ 67-page attempt to explain how they calculate that they have surrendered assets
worth $2,894,299.41, and the FTC’s analysis of that amount [ECF No. 312 at 7, 10-11], and I
find that the Dalbeys’ representation that they have surrendered assets worth that amount is
devoid of credibility or substance. The only credible evidence in the record is that the Dalbeys
have paid $8,329.67 of the $858,655 they were ordered to pay. They have presented no viable
defense to the contempt motion.
Because the Dalbeys have failed and refused to pay the remainder ($850,325.33) of the
amount the Court found they had the present ability to pay, imposition of a fine as a contempt
sanction makes no sense. The only viable sanction that has any reasonable likelihood of
motivating the Dalbeys to purge themselves of contempt is incarceration.
ORDER
The FTC’s motion to hold the Dalbeys in civil contempt [ECF No. 312] is GRANTED.
A warrant will issue for the arrest of Russell T. Dalbey and Catherine L. Dalbey whose last
known address is Sunset Point No. 6, Placencia, Stann Creek Ca., Belize, and whose last known
contact information is [e-mail], [e-mail], [e-mail] and
[e-mail].
DATED this 14th day of September, 2015.
BY THE COURT:

___________________________________
R. Brooke Jackson
United States District Judge

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