USA v. Intermundo Media, LLC

Filing 6

Stipulated ORDER for Permanent Injunction and Civil Penalty Judgment. Plaintiff United States of Americas Unopposed Motion to Enter Stipulated Order ECF No. 4 is GRANTED, by Judge Wiley Y. Daniel on 10/7/2014. (evana, ) (Additional attachment(s) added on 10/7/2014: # 1 Attachment A) (evana, ).(Modified on 10/7/2014 Added attachment A to the docket entry)(evana, ).

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

UNITED STATES OF AMERICA,

Case No. 1:14-cv-2529-WYD

Plaintiff,

STIPULATED ORDER FOR
PERMANENT INJUNCTION AND
CIVIL PENALTY JUDGMENT

v.
INTERMUNDO MEDIA, LLC, a limited liability
company, also doing business as
DELTA PRIME REFINANCE,
DELTA PRIME MORTGAGES, and
AMERICAN DREAM QUOTES,
Defendant.

Plaintiff United States of America’s Unopposed Motion to Enter Stipulated Order
(ECF No. 4) is GRANTED as set forth below.
Plaintiff, the United States of America, acting upon notification and authorization
to the Attorney General by the Federal Trade Commission (“Commission”), filed its
Complaint for Permanent Injunction And Other Equitable Relief (“Complaint”) seeking a
permanent injunction, civil penalties, and other equitable relief in this matter pursuant to
Sections 5(a), 5(m)(1)(A), 13(b), and 16(a)(1) of the Federal Trade Commission Act
(“FTC Act”), 15 U.S.C. §§ 45(a), 45(m)(1)(A), 53(b), 56(a)(1). Defendant has waived
service of the Summons and the Complaint. Plaintiff and Defendant stipulate to the
entry of this Stipulated Order For Permanent Injunction And Civil Penalty Judgment
(“Order”) to resolve all matters in dispute in this action between them.
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THEREFORE, IT IS ORDERED as follows:
FINDINGS
1.

This Court has jurisdiction over this matter.

2.

The Complaint alleges that Defendant disseminated unsubstantiated and

deceptive commercial communications regarding mortgage credit products in violation
of Section 5 of the FTC Act, 15 U.S.C. § 45; the Mortgage Acts and Practices –
Advertising rule (“MAP Rule”), 16 C.F.R. Part 321; and the Mortgage Acts and Practices
– Advertising rule (Regulation N) (“Regulation N”), 12 C.F.R. Part 1014. The Complaint
further alleges that Defendant stated credit terms other than those actually available
and failed to include required disclosures in its advertisements for mortgage loans, in
violation of the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601-1666j and its
implementing Regulation Z, 12 C.F.R. Part 1026.
3.

Defendant neither admits nor denies any of the allegations in the

Complaint, except as specifically stated in this Order. Only for purposes of this action,
Defendant admits the facts necessary to establish jurisdiction.
4.

Defendant waives any claim that it may have under the Equal Access to

Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through the
date of this Order, and agrees to bear its own costs and attorney fees.
5.

Defendant and Plaintiff waive all rights to appeal or otherwise challenge or

contest the validity of this Order.

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DEFINITIONS
For purposes of this Order, the following definitions shall apply:
1.

“Commercial communication” means any written or oral statement,

illustration, or depiction that is designed to effect a sale or create interest in purchasing
goods or services, whether it appears on or in a label, package, package insert, radio,
television, cable television, brochure, newspaper, magazine, pamphlet, leaflet, circular,
mailer, book insert, free standing insert, letter, catalogue, poster, chart, billboard, public
transit card, point of purchase display, film, slide, audio program transmitted over a
telephone system, telemarketing script, on-hold script, upsell script, training materials
provided to telemarketing firms, program-length commercial (“infomercial”), the internet,
cellular network, or any other medium.
2.

“Commission” means the Federal Trade Commission.

3.

“Closed-end credit” means consumer credit other than open-end credit.

4.

“Credit” means the right to defer payment of debt or to incur debt and

defer its payment.
5.

“Defendant” means Intermundo Media, LLC and its successors and

assigns.
6.

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

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

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a.

provide any consumer, arrange for any consumer to receive, or
assist any consumer in receiving, credit, debit, or stored value
cards;

b.

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

c.

provide advice or assistance to any consumer with regard to any
activity or service the purpose of which is to improve a consumer’s
credit record, credit history, or credit rating; or

d.

provide any consumer, arrange for any consumer to receive, or
assist any consumer in receiving, a loan or other extension of
credit.

7.

“Mortgage credit product” means any form of credit that is secured by

real property or a dwelling and that is offered or extended to a consumer primarily for
personal, family, or household purposes.
8.

“Open-end credit” means consumer credit extended by a creditor under

a plan in which: (i) the creditor reasonably contemplates repeated transactions; (ii) the
creditor may impose a finance charge from time to time on an outstanding unpaid
balance; and (iii) the amount of credit that may be extended to the consumer during the
term of the plan (up to any limit set by the creditor) is generally made available to the
extent that any outstanding balance is repaid.

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9.

“Person” means any natural person, organization, or other legal entity,

including a corporation, partnership, proprietorship, association, or cooperative, limited
or general partnership, corporation, or other business entity.
ORDER
I.

MORTGAGE ACTS AND PRACTICES - ADVERTISING

IT IS HEREBY ORDERED that Defendant, Defendant’s officers, agents,
servants, and employees, and all other persons in active concert or participation with
any of them, who receive actual notice of this Order, whether acting directly or indirectly,
in commercial communications regarding any term of any mortgage credit product, are
permanently restrained and enjoined from:
A.

Misrepresenting, or assisting others in misrepresenting, expressly or by

implication, any term of any mortgage credit product, including but not limited to:
1.

The interest charged for the mortgage credit product, including but
not limited to misrepresentations concerning:
a. The amount of interest that the consumer owes each month that
is included in the consumer’s payments, loan amount, or total
amount due, or
b. Whether the difference between the interest owed and the
interest paid is added to the total amount due from the
consumer;

2.

The annual percentage rate, simple annual rate, periodic rate, or
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any other rate;
3.

The existence, nature, or amount of fees or costs to the consumer
associated with the mortgage credit product, including but not
limited to misrepresentations that no fees are charged;

4.

The existence, cost, payment terms, or other terms associated with
any additional product or feature that is or may be sold in
conjunction with the mortgage credit product, including but not
limited to credit insurance or credit disability insurance;

5.

The terms, amounts, payments, or other requirements relating to
taxes or insurance associated with the mortgage credit product,
including but not limited to misrepresentations about:
a. Whether separate payment of taxes or insurance is required; or
b. The extent to which payment for taxes or insurance is included
in the loan payments, loan amount, or total amount due from the
consumer;

6.

Any prepayment penalty associated with the mortgage credit
product, including but not limited to misrepresentations concerning
the existence, nature, amount, or terms of such penalty;

7.

The variability of interest, payments, or other terms of the mortgage
credit product, including but not limited to misrepresentations using
the word “fixed;”
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8.

Any comparison between:
a. Any rate or payment that will be available for a period less than
the full length of the mortgage credit product; and
b. Any actual or hypothetical rate or payment;

9.

The type of mortgage credit product, including but not limited to
misrepresentations that the product is or involves a fully amortizing
mortgage;

10.

The amount of the obligation or the existence, nature, or amount of
cash or credit available to the consumer in connection with the
mortgage credit product, including but not limited to
misrepresentations that the consumer will receive a certain amount
of cash or credit as part of a mortgage credit transaction;

11.

The existence, number, amount, or timing of any minimum or
required payments, including but not limited to misrepresentations
about any payments or that no payments are required in a reverse
mortgage or other mortgage credit product;

12.

The potential for default under the mortgage credit product,
including but not limited to misrepresentations concerning the
circumstances under which the consumer could default for
nonpayment of taxes, insurance, or maintenance, or for failure to
meet other obligations;
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13.

The effectiveness of the mortgage credit product in helping the
consumer resolve difficulties in paying debts, including but not
limited to misrepresentations that any mortgage credit product can
reduce, eliminate, or restructure debt or result in a waiver or
forgiveness, in whole or in part, of the consumer’s existing
obligation with any person;

14.

The association of the mortgage credit product or any provider of
such product with any other person or program, including but not
limited to misrepresentations that:
a. The provider or the Defendant is, or is affiliated with, the Federal
Housing Administration, the United States Department of
Veterans Affairs, or any other governmental entity or other
organization; or
b. The product is or relates to a government benefit, or is
endorsed, sponsored by, or affiliated with any government or
other program, including but not limited to through the use of
formats, symbols, or logos that resemble those of such entity,
organization, or program;

15.

The source of any commercial communication, including but not
limited to misrepresentations that a commercial communication is
made by or on behalf of the consumer’s current mortgage lender or
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servicer;
16.

The right of the consumer to reside in the dwelling that is the
subject of the mortgage credit product, or the duration of such right,
including but not limited to misrepresentations concerning how long
or under what conditions a consumer with a reverse mortgage can
stay in the dwelling;

17.

The consumer’s ability or likelihood to obtain any mortgage credit
product or term, including but not limited to misrepresentations
concerning whether the consumer has been preapproved or
guaranteed for any such product or term;

18.

The consumer’s ability or likelihood to obtain a refinancing or
modification of any mortgage credit product or term, including but
not limited to misrepresentations concerning whether the consumer
has been preapproved or guaranteed for any such refinancing or
modification;

19.

The availability, nature, or substance of counseling services or any
other expert advice offered to the consumer regarding any
mortgage credit product or term, including but not limited to the
qualifications of those offering the services or advice; or

20.

That Defendant itself provides a product, service, plan, or program;

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B.

Failing to maintain, for a period of twenty-four (24) months from the last

date a person made or disseminated the applicable commercial communication
regarding any term of any mortgage credit product, the following evidence of
compliance:
1.

Copies of all materially different commercial communications as
well as sales scripts, training materials, and marketing materials,
regarding any term of any mortgage credit product, that the person
made or disseminated during the relevant time period;

2.

Documents describing or evidencing all mortgage credit products
available to consumers during the time period in which the person
made or disseminated each commercial communication regarding
any terms of any mortgage credit product available to consumers;
and

3.

Documents describing or evidencing all additional products or
services (such as credit insurance or credit disability insurance) that
are or may be offered or provided with the mortgage credit products
available to consumers during the time period in which the person
made or disseminated each commercial communication regarding
any term of any mortgage credit product, including but not limited to
the names and terms of each such additional product or service
available to consumers;
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C.

Misrepresenting, or assisting others in misrepresenting, expressly or by

implication, any material fact concerning any mortgage credit product; and
D.

Violating the Mortgage Acts and Practices - Advertising rule (“Regulation

N”), 12 C.F.R. Part 1014, a copy of which is attached.
II.

PROHIBITED MISREPRESENTATIONS RELATING TO FINANCIAL RELATED
PRODUCTS OR SERVICES
IT IS FURTHER ORDERED that Defendant, Defendant’s officers, agents,

servants, and employees, and all other persons in active concert or participation with
any of them, who receive actual notice of this Order, whether acting directly or indirectly,
in connection with the advertising, marketing, promotion, offering for sale, or sale of any
financial related product or service or any term of any financial related product or
service, are permanently restrained and enjoined from:
A.

Misrepresenting or assisting others in misrepresenting, expressly or by

implication, any material fact, including but not limited to:
1.

That consumers can reduce the payments they make on any
financial related product or service by purchasing any product
marketed by Defendant, accepting any commercial offer
disseminated by Defendant, or otherwise responding to
Defendant’s advertising;

2.

The consumer’s ability or likelihood to obtain any financial related
product or service, including that such a product or service is

Page 11 of 24

available to a consumer without regard to the consumer’s credit
history;
3.

The terms or rates that are available for any loan, including but not
limited to:
a. the fees or costs associated with the loan, including that
Defendant offers such loan for “free” or with “no hidden fees”;
b. the payment schedule, the monthly payment amount(s), or other
payment terms, or whether there is a balloon payment; interest
rate(s), annual percentage rate(s), or finance charge; the loan
amount, the amount of credit, the draw amount, or outstanding
balance; the loan term, the draw period, or maturity; or any
other term of credit;
c. the savings associated with the credit; and
d. that the interest rate(s) or annual percentage rate(s) are fixed
rather than adjustable or adjustable rather than fixed;

B.

Advertising or assisting others in advertising credit terms other than those

terms that actually are or will be arranged or offered by a creditor or lender; and
C.

Making any representation, expressly or by implication, that consumers

may obtain a financial related product or service with specific terms unless, at the time
of making the representation, Defendant can substantiate such a representation with
regard to each specified term.
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III.

TRUTH IN LENDING ACT

IT IS FURTHER ORDERED that Defendant, Defendant’s officers, agents,
servants, and employees, and all other persons in active concert or participation with
any of them, who receive actual notice of this Order, whether acting directly or indirectly,
in connection with advertising, marketing, promotion, offering for sale, or sale of
closed-end credit, are permanently restrained and enjoined from:
A.

Advertising credit terms other than those terms that actually are or will be

arranged or offered by the creditor;
B.

Advertising a rate of finance charge without disclosing that rate as an

annual percentage rate, using that term or the abbreviation “APR,” and if the annual
percentage rate may be increased after consummation, that fact;
C.

Advertising a rate of finance charge while stating a simple annual rate or

periodic rate more conspicuously than the annual percentage rate;
D.

Advertising the period of repayment of a loan without clearly and

conspicuously stating:
1.

The terms of repayment, which reflect the repayment obligations
over the full term of the loan, including any balloon payment, and

2.

The annual percentage rate, using that term or the abbreviation
“APR,” and, if the annual percentage rate may be increased after
consummation, that fact;

E.

Using the word “fixed” in advertisements for variable-rate mortgages
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where:
1.

The phrase “Adjustable-Rate Mortgage,” “Variable-Rate Mortgage,”
or “ARM” does not appear at all in the advertisement, or not as
conspicuously as the word “fixed;” and

2.

Each use of the word “fixed” is not accompanied by an equally
prominent and closely proximate statement of the time period for
which the payment is fixed, and the fact that the rate may vary or
the payment may increase after that period; and

F.

Violating the Truth In Lending Act, 15 U.S.C. §§ 1601-1666j, and

Regulation Z, 12 C.F.R. Part 1026.
IV.

PROHIBITION ON DISCLOSING CONSUMER INFORMATION

IT IS FURTHER ORDERED that Defendant, Defendant’s officers, agents,
servants, employees, and attorneys, and all other persons in active concert or
participation with any of them, who receive actual notice of this Order, whether acting
directly or indirectly, are permanently restrained and enjoined from directly or indirectly:
A.

Disclosing, using, or benefitting from consumer information, including the

name, address, telephone number, email address, social security number, or other
identifying information, or any data that enables access to a consumer’s account
(including a credit card, bank account, or other financial account), that Defendant
obtained prior to entry of this Order in connection with commercial communications
regarding any term of any mortgage credit product; and
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B.

Failing to destroy such customer information in all forms in their

possession, custody, or control within 30 days after entry of this Order.
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, regulation, or court order.
V.

MONETARY JUDGMENT FOR CIVIL PENALTY

IT IS FURTHER ORDERED that:
A.

Judgment in the amount of Five Hundred Thousand Dollars ($500,000) is

entered in favor of the Plaintiff against Defendant as a civil penalty.
B.

Defendant is ordered to pay to the Plaintiff, by making payment to the

Treasurer of the United States, Five Hundred Thousand Dollars ($500,000). Such
payment shall be made in the following installments: (1) within 7 days of entry of this
Order, Defendant shall pay Two Hundred Fifty Thousand Dollars ($250,000), which, as
Defendant stipulates, its undersigned counsel holds in escrow as of the date of entry of
this Order for no purpose other than payment to the Plaintiff; and (2) by no later than
April 30, 2015, Defendant shall pay an additional Two Hundred Fifty Thousand Dollars
($250,000). All payments shall be made by electronic fund transfer in accordance with
instructions previously provided by a representative of the Plaintiff.
C.

Defendant relinquishes dominion and all legal and equitable right, title,

and interest in all amounts transferred pursuant to this Order and may not seek the
return of any such amounts.
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D.

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

proof, in any subsequent civil litigation by or on behalf of the Commission, including in a
proceeding to enforce its rights to any payment or monetary judgment pursuant to this
Order.
E.

Defendant acknowledges that its Taxpayer Identification Numbers (Social

Security Numbers or Employer Identification Numbers), which Defendant must submit to
the Commission, may be used for collecting and reporting on any delinquent amount
arising out of this Order, in accordance with 31 U.S.C. § 7701.
VI.

ORDER ACKNOWLEDGMENTS

IT IS FURTHER ORDERED that Defendant obtain acknowledgments of receipt
of this Order:
A.

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

Commission an acknowledgment of receipt of this Order sworn under penalty of perjury.
B.

For 3 years after entry of this Order, Defendant must deliver a copy of this

Order to: (1) all principals, officers, directors, and LLC managers and members; (2) all
employees, agents, and representatives who participate in the conduct specified in
Sections I, II, III, and IV of this Order; and (3) any business entity resulting from any
change in structure as set forth in the Section titled Compliance Reporting. Delivery
must occur within 7 days of entry of this Order for current personnel. For all others,
delivery must occur before they assume their responsibilities.
C.

From each individual or entity to which Defendant delivered a copy of this
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Order, Defendant must obtain, within 30 days, a signed and dated acknowledgment of
receipt of this Order.
VII.

COMPLIANCE REPORTING

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

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

report, sworn under penalty of perjury:
1.

Defendant must: (a) identify the primary physical, postal, and
email address and telephone number, as designated points of
contact, which representatives of the Commission and Plaintiff may
use to communicate with Defendant; (b) identify all of that
Defendant’s businesses by all of their names, telephone numbers,
and physical, postal, email, and Internet addresses; (c) describe the
activities of each business, including the goods and services
offered, the means of advertising, marketing, and sales; (d)
describe in detail whether and how that Defendant is in compliance
with each Section of this Order; and (e) provide a copy of each
Order Acknowledgment obtained pursuant to this Order, unless
previously submitted to the Commission.

B.

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

compliance notice, sworn under penalty of perjury, within 14 days of any change in the
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following:
1.

Defendant must report any change in: (a) any designated point of
contact; or (b) the structure of Defendant or any entity that
Defendant has any ownership interest in or controls directly or
indirectly that may affect compliance obligations arising under this
Order, including: creation, merger, sale, or dissolution of the entity
or any subsidiary, parent, or affiliate that engages in any acts or
practices subject to this Order.

C.

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

bankruptcy petition, insolvency proceeding, or similar proceeding by or against
Defendant within 14 days of its filing.
D.

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

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 under the laws of the United
States of America that the foregoing is true and correct. Executed on: _____” and
supplying the date, signatory’s full name, title (if applicable), and signature.
E.

Unless otherwise directed by a Commission representative in writing, all

submissions to the Commission pursuant to this Order must be emailed to
[e-mail] or sent by overnight courier (not the U.S. Postal Service) to:
Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade
Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. The subject line
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must begin: FTC v. Intermundo Media, LLC, Matter No. 1223225.
VIII.

RECORDKEEPING

IT IS FURTHER ORDERED that Defendant must create certain records for 10
years after entry of the Order, and retain each such record for 5 years. Specifically, in
connection with the conduct specified in Sections I, II, III, and IV of this Order,
Defendant must create and retain the following records:
A.

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

B.

Personnel records showing, for each person providing services, whether

as an employee or otherwise, that person’s: name; addresses; telephone numbers; job
title or position; dates of service; and (if applicable) the reason for termination;
C.

Records of all consumer complaints and refund requests related to

mortgage credit products, 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 Commission; and
E.

A copy of each materially different advertisement or other marketing

material related to mortgage credit products.
IX.

COMPLIANCE MONITORING

IT IS FURTHER ORDERED that, for the purpose of monitoring Defendant’s
compliance with this Order, including any failure to transfer any assets as required by
this Order:
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A.

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

Plaintiff, Defendant must: submit additional compliance reports or other requested
information, which must be sworn under penalty of perjury; appear for depositions; and
produce documents for inspection and copying. The Commission and Plaintiff are also
authorized to obtain discovery, without further leave of court, using any of the
procedures prescribed by Federal Rules of Civil Procedure 29, 30 (including telephonic
depositions), 31, 33, 34, 36, 45, and 69, provided that Defendant, after attempting to
resolve a dispute without court action and for good cause shown, may file a motion with
this Court seeking an order for one or more of the protections set forth in Rule 26(c).
B.

For matters concerning this Order, the Commission and Plaintiff are

authorized to communicate directly with Defendant. Defendant must permit
representatives of the Commission and Plaintiff to interview any employee or other
person affiliated with Defendant who has agreed to such an interview. The person
interviewed may have counsel present.
C.

The Commission and Plaintiff may use all other lawful means, including

posing, through its representatives as consumers, suppliers, or other individuals or
entities, to Defendant or any individual or entity affiliated with Defendant, without the
necessity of identification or prior notice. Nothing in this Order limits the Commission’s
lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15
U.S.C. §§ 49, 57b-1.

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X.

RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for
purposes of construction, modification, and enforcement of this Order.
IT IS FURTHER ORDERED that following the entry of this Order, this matter
shall be administratively closed pursuant to D.C.COLO.LCivR 41.2 subject to reopening
for good cause shown.

DATED: October 7, 2014
BY THE COURT:

S/ WILEY Y. DANIEL
WILEY Y. DANIEL,
SENIOR UNITED STATES DISTRICT JUDGE

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SO STIPULATED AND AGREED:
FOR PLAINTIFF:
THE UNITED STATES OF AMERICA
STUART F. DELERY
Assistant Attorney General
JONATHAN F. OLIN
Deputy Assistant Attorney General
Civil Division
MICHAEL S. BLUME
Director
ANDREW E. CLARK
Assistant Director

Trial Attorney
Consumer Protection Branch
U.S. Department of Justice
P.O. Box 386
Washington, D.C. 20044
Phone: [phone]
Fax: [phone]
Email: [e-mail]

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FEDERAL TRADE COMMISSION

Michael White Daniel
Dwyer
Federal Trade Commission
601 New Jersey Ave., NW
Mail Drop NJ-3158
Washington, DC 20001
Tel:
202-326-3196, 202-326-2957
Fax: [phone]
Email:

[e-mail], [e-mail]

Attorneys for Plaintiff
FEDERAL TRADE COMMISSION

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FOR DEFENDANT:

_____________________________________
Adam Edelman
Authorized Agent
Intermundo Media, LLC

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