Federal Trade Commission et al v. Vacation Communications Group, LLC et al

Filing 79

ORDER: Defendant Sheldon Lee Cohen is HELD IN CIVIL CONTEMPT for failure to comply with the Order and Preliminary Injunction (Doc 27). The Clerk is DIRECTED to issue a warrant for the arrest of Defendant Sheldon Lee Cohen. See Order for further details. Signed by Judge Roy B. Dalton, Jr. on 9/18/2013. (VMF)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
FEDERAL TRADE COMMISSION; and
STATE OF FLORIDA, OFFICE OF THE
ATTORNEY GENERAL, DEPARTMENT
OF LEGAL AFFAIRS,
Plaintiffs,
v.

Case No. 6:13-cv-789-Orl-37TBS

VACATION COMMUNICATIONS
GROUP, LLC; GARDNER CLINE
L.L.C.; SHELDON LEE COHEN,
individually and as an owner, officer, or
manager of Vacation Communications
Group, LLC, and d/b/a Universal
Timeshare Sales Associates and
M.G.M. Universal Timeshares; MARK
RUSSELL GARDNER, individually and
as manager/member of Gardner Cline
L.L.C.; and TAMMIE LYNN CLINE,
individually and as manager/member of
Gardner Cline L.L.C.,
Defendants.
ORDER
This cause is before the Court on its Order (Doc. 51) directing Defendant
Sheldon Lee Cohen to show cause why he should not be held in civil contempt for
failing to comply with the requirements of the June 6, 2013 Preliminary Injunction (Doc.
17). Upon consideration, Defendant Sheldon Lee Cohen is due to be held in civil
contempt.
BACKGROUND
On May 20, 2013, the Federal Trade Commission and the State of Florida

(“Plaintiffs”) brought this action alleging that Defendants violated state and federal laws
by defrauding owners of timeshare properties through a national telemarketing scheme.
(Doc. 1, pp. 5–8.) Plaintiffs additionally contend that Defendant Cohen funneled
fraudulently obtained proceeds into offshore bank accounts in the Dominican Republic.
(Doc. 5, pp. 22, 38.)
On May 20, 2013, the Court entered a temporary restraining order and appointed
Brian A. McDowell to serve as Receiver. (Doc. 9.) Plaintiffs served Defendant Cohen
with a copy of the Court’s temporary restraining order, which provided notice of a
June 6, 2013 preliminary injunction hearing. (See Docs. 9, 21, 22, 24.) Despite having
notice, Defendant Cohen failed to appear at the hearing. (See Doc. 27, p. 2.) The Court
subsequently converted the temporary restraining order into a preliminary injunction
directed at Defendant Cohen and Vacation Communication Group, LCC. (Doc. 27.)
In light of Defendant Cohen’s offshore accounts, the Preliminary Injunction
ordered him, inter alia, to repatriate to the United States any funds, documents, or
assets held under the control or for the benefit of any defendant in this action. (See
Doc. 27, p. 25, § XIII.A.) The injunction further ordered Defendant Cohen to provide
Plaintiffs and the Receiver with other relevant financial information, including the names,
locations, and contents of the offshore financial entities that the Defendants utilize. (See
id., p. 25, § XIII.B–D.)
On July 2, 2013, the Receiver filed a Motion for Contempt Against Defendant
Sheldon Lee Cohen for failing to comply with the terms of the Preliminary Injunction.
(Doc. 50.) The Court construed this motion as a motion for an order to show cause why
Defendant Cohen should not be held in civil contempt, granted it, and set the issue for a
hearing to be held on September 6, 2013. (Doc. 51.) Additionally, the Court directed the

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Receiver, by any means necessary, to attempt to notify Defendant Cohen of the Court’s
show-cause order, to serve on Defendant Cohen any documentary evidence upon
which the Receiver intended to rely, and to give Defendant Cohen detailed lists of any
witnesses the Receiver intended to call. (Id. at 3.)
The Receiver went to considerable effort to comply with the Court’s order and
reach Defendant Cohen (See Docs. 55, 68–71), but Defendant Cohen failed to appear
at the September 6 hearing. At the hearing, the Receiver testified that Defendant Cohen
has failed to comply with the terms of the Injunction and appears to be intentionally
avoiding service of process.
STANDARDS
Federal courts have the broad power to coerce compliance with their orders
through civil contempt. See United States v. City of Miami, 195 F.3d 1292, 1298 (11th
Cir. 1999). This coercive power includes the power to impose sanctions, so long as the
sanctions are not “so excessive as to be punitive in nature.” Citronelle-Mobile
Gathering, Inc. v. Watkins, 943 F.2d 1297, 1304 (11th Cir. 1991). “The district court has
wide discretion to fashion an equitable remedy for contempt that is appropriate to the
circumstances.” E.E.O.C. v. Guardian Pools, Inc., 828 F.2d 1507, 1515 (11th Cir. 1987)
(citing McComb v. Jacksonville Paper Co., 336 U.S. 187, 193 (1949)). “The measure of
the court’s power in civil contempt proceedings is determined by the requirements of full
remedial relief . . . [and] may entail the doing of a variety of acts . . . .” Id. Available relief
includes, but is not limited to, coercive fines and incarceration. See Citronelle-Mobile
Gathering, 943 F.2d at 1304.
To hold a person in civil contempt for failure to comply with an order, the party
seeking the contempt order must demonstrate by clear and convincing evidence that:

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“(1) the underlying order allegedly violated was valid and lawful; (2) the underlying order
was clear, definite, and unambiguous; and (3) the contemnor had the ability to comply
with the underlying order.” United States v. Koblitz, 803 F.2d 1523, 1527 (11th Cir.
1986) (citations omitted). “Once a prima facie showing of a violation has been made, the
burden of production shifts to the alleged contemnor, who may defend his failure on the
grounds that he was unable to comply.” Commodity Futures Trading Comm'n v.
Wellington Precious Metals, Inc., 950 F.2d 1525, 1529 (11th Cir. 1992).
DISCUSSION
To begin, the Court finds that the Receiver complied with its Order directing
notice to Defendant Cohen. (Doc. 51, p.3.) The Receiver and his counsel have made
considerable effort to contact Defendant Cohen, as demonstrated by their documentary
evidence and testimony at the hearing, but Defendant Cohen appears to be willfully
avoiding service. (See Docs. 69–71.) Indeed, the Receiver testified that Defendant
Cohen is a flight risk and that he may already be outside of the country.
In its July 16, 2013 Order, the Court determined that the Receiver established a
prima facie case of civil contempt against Defendant Cohen. (Doc. 51, p. 2.) Thus, at
the September 6, 2013 hearing, the burden had shifted to the Defendant to defend his
failure to comply with the terms of the Preliminary Injunction. See Wellington Precious
Metals, 950 F.2d at 1529. As previously noted, Defendant Cohen failed to appear and
therefore declined to defend his noncompliance.1 Accordingly, the Court finds by clear
and convincing evidence that Defendant Cohen is due to be held in civil contempt of
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At the hearing, the Receiver provided supplemental testimony which proved
clearly and convincingly that the preliminary injunction is valid and lawful, that it is clear,
definite, and unambiguous, and that Defendant Cohen has the ability to comply with the
terms of the injunction but continues not to do so. At the time of this Order, a transcript
of the hearing is not available.

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court.
With respect to sanctions, the Receiver is primarily concerned with Defendant
Cohen’s failure to comply with sections IV.A.1 and XIII.A–D of the Preliminary
Injunction, which require Defendant Cohen to repatriate overseas assets and provide
any information the Receiver deems necessary to the discharge of his responsibilities.
(See Doc. 27, pp. 12–14, 25–26.) It is well within the Court’s authority to use its civil
contempt power to coerce repatriation. See In re Lawrence, 279 F.3d 1294, 1300 (11th
Cir. 2002); Fed. Trade Comm. V. Affordable Media, LLC., 179 F.3d 1228, 1239 (9th Cir.
1999). Accordingly, the Court finds that arresting and incarcerating Defendant Cohen
until such time as he complies with the Court’s preliminary injunction is an appropriately
coercive, non-punitive sanction in this case.
CONCLUSION
Accordingly, it is hereby ORDERED AND ADJUDGED:
1.

Defendant Sheldon Lee Cohen is HELD IN CIVIL CONTEMPT for failure
to comply with the Order and Preliminary Injunction as to Defendants
Vacation Communications Group, LCC and Sheldon Lee Cohen (Doc. 27),
filed June 6, 2013.

2.

The Clerk is DIRECTED to issue a warrant for the arrest of Defendant
Sheldon Lee Cohen.

3.

The United States Marshals Service is DIRECTED to immediately detain
and arrest Defendant Sheldon Lee Cohen, DOB: 01/02/1968. All Federal,
state and local law enforcement agencies and officers, INTERPOL, and
any other foreign law enforcement agencies shall additionally have the
authority to and shall immediately detain and arrest Sheldon Lee Cohen.

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4.

The United States Marshals Service is DIRECTED to enter this order and
the accompanying arrest warrant against Sheldon Lee Cohen in whatever
national, state, regional, local, or foreign databases as are necessary to
make the immediate arrest and detention of Sheldon Lee Cohen.

5.

The United States Marshals Service is further DIRECTED to immediately
transmit this order and the arrest warrant against Sheldon Lee Cohen to
INTERPOL, the Police Department of the Dominican Republic, and to any
other law enforcement agency or officer in any foreign or domestic
jurisdiction where Sheldon Lee Cohen may be found. The Court
authorizes the United States Marshals Service and the Receiver and any
of his authorized representatives to request and enlist the assistance of
any such law enforcement agency or officer to carry out the arrest of
Sheldon Lee Cohen and the seizure of any passport or passports, travel
document or documents issued to him.

6.

The arresting entity is DIRECTED to seize any passport or passports,
travel document, or documents Sheldon Lee Cohen may have in his
possession or control.

7.

The United States Department of State is DIRECTED to immediately
cancel any passport or travel document issued to Sheldon Lee Cohen.
The Receiver shall serve a simple copy of this order on the U.S.
Department of State.

8.

The arresting entity is DIRECTED to deliver any passport or passports,
travel document, or documents seized to the United States Marshals
Service at the George C. Young U.S. Courthouse & Federal Building, 401

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West Central Boulevard, Suite 2300, Orlando, Florida, 32801-0230, United
States of America, contact number: [phone]. The United States
Marshals Service shall so notify the Court and the Receiver and deposit
said items or items with the Clerk of this Court and the Receiver.
9.

After arresting Sheldon Lee Cohen, the arresting entity is DIRECTED to
immediately notify the Orlando, Florida, office of the United States
Marshals Service, contact number [phone], who shall take him into
custody. In turn, the United States Marshals Service shall notify this Court
and the Receiver.

10.

After the arrest, the United States Marshals Service is DIRECTED to bring
Sheldon Lee Cohen before this Court within a reasonable amount of time
and during working hours on a regular workday. Sheldon Lee Cohen shall
remain incarcerated until he complies with all the applicable terms of the
Preliminary Injunction entered in this matter or until otherwise directed by
this Court.

DONE AND ORDERED in Chambers in Orlando, Florida, on September 18, 2013.

Copies:
Counsel of Record

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