Federal Trade Commission v. Emerica Media Corporation et al

Filing 287

ORDER as to Defendant Sann. Signed by Judge Dana L. Christensen on 6/28/2017. (ASG)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
MISSOULA DIVISION

FEDERAL TRADE COMMISSION,

CV 13-03-M-DLC

Plaintiff,
ORDER

vs.
AMERICAN EVOICE, LTD., EMERICA
MEDIA CORPORATION, FONERIGHT,
INC., GLOBAL VOICE MAIL, LTD.,
HEARYOU2, INC., NETWORK
ASSURANCE, INC., SECURATDAT,
INC., TECHMAX SOLUTIONS, INC.,
VOICE MAIL PROFESSIONALS, INC.,
STEVE V. SANN, TERRY D. LANE,
a/k/a TERRY D. SANN, NATHAN M.
SANN, ROBERT M. BRAACH,
Defendants.
and
BIBLIOLOGIC, LTD.,
Relief Defendant.

WHEREAS on January 8, 2013, Plaintiff Federal Trade Commission
("FTC" or "Commission") filed its Complaint (Doc. 1) for a permanent injunction
and other equitable relief in this matter pursuant to Section 13(b) of the Federal
Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), against Defendants
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American eVoice, Ltd.; Emerica Media Corp.; FoneRight, Inc.; Global Voice
Mail, Ltd.; HearYou2, Inc.; Network Assurance, Inc.; SecuratDat, Inc.; Techmax
Solutions, Inc.; Voice Mail Professionals, Inc.; Steven V. Sann; Terry D. Sann
(a/k/a Terry D. Sann); Nathan M. Sann; and Robert M. Braach ("Defendants");
and Relief Defendant Bibliologic, Ltd; and
WHEREAS Plaintiff FTC alleges in its Complaint that the Defendants
engaged in deceptive and unfair acts or practices in violation of Section 5 of the
FTC Act, 15 U.S.C. § 45, by placing over $70 million in unauthorized charges on
consumers' telephone bills; and
WHEREAS Plaintiff FTC, in its Complaint, requests that Court award
Plaintiff, among other things, equitable monetary relief such as restitution, the
refund of monies paid, and the disgorgement of ill-gotten assets; and
WHEREAS Defendant Steven V. Sann filed a petition for relief under
Chapter 11 of the Bankruptcy Code on September 29, 2014, In re Steven Vincent
Sann, No. 14-61370 (Bankr. D. Mont.) ("Bankruptcy Case"); and
WHEREAS on April 29, 2015, the Bankruptcy Court entered an order
converting the case to a Chapter 7, and Christy L. Brandon was appointed Chapter
7 Trustee of the bankruptcy estate; and
WHEREAS on March 22, 2017, Defendant Sann filed in his Bankruptcy
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Case a waiver of discharge (attached hereto as Exhibit A); and
WHEREAS the Bankruptcy Court approved the waiver of discharge in a
written order (attached hereto as Exhibit B); and
WHEREAS the Chapter 7 Trustee has entered into a settlement agreement
("Bankruptcy Settlement Agreement") with Defendant Steven V. Sann and the
Montana Department of Revenue ("MT DOR"), that would, among other things,
resolve matters of dispute between and among Defendant Steven V. Sann, the MT
DOR, and the Chapter 7 Trustee; and
WHEREAS the Bankruptcy Settlement Agreement contains substantially
the same asset turnover relief against Defendant Sann set forth in Section IV.B of
this Stipulated Order for Permanent Injunction and Monetary Judgment ("Order");
and
WHEREAS the Bankruptcy Settlement Agreement is subject to Bankruptcy
Court approval; and
WHEREAS the Bankruptcy Settlement Agreement is contingent upon the
District Court's approval and entry of this Order; and
WHEREAS the monetary judgment imposed by Section IV of this Order
represents a debt that arose prior to Defendant Sann's Bankruptcy Case; and
WHEREAS Plaintiff FTC and Defendant Steven V. Sann ("Sann") stipulate
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to the entry of this Order to resolve all matters in dispute in this action between
them;
THEREFORE, IT IS ORDERED as follows:
FINDINGS

1.

This Court has jurisdiction over this matter.

2.

The FTC's Complaint charges that Defendants engaged in deceptive
and unfair acts or practices in violation of Section 5 of the FTC Act,
15 U.S.C. § 45, by placing unauthorized charges on consumers'
telephone bills ("cramming").

3.

Defendant Sann 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 Sann admits the facts necessary to
establish jurisdiction.

4.

Defendant Sann waives any claim that he 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 his
own costs and attorney fees.

5.

Defendant Sann waives 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.

"Bankruptcy Case" means the Chapter 7 Bankruptcy of Defendant

Sann, In re Steven Vincent Sann, No. 14-61370 (Bankr. D. Mont.);
2.

"Clearly and Conspicuously" means that a required disclosure is

difficult to miss (i.e., easily noticeable) and easily understandable by
ordinary consumers, including in all of the following ways:
a.

In any communication that is solely visual or solely audible, the
disclosure must be made through the same means through
which the communication is presented. In any communication
made through both visual and audible means, such as a
television advertisement, the disclosure must be presented
simultaneously in both the visual and audible portions of the
communication even if the representation requiring the
disclosure is made in only one means.

b.

A visual disclosure, by its size, contrast, location, the length of
time it appears, and other characteristics, must stand out from
any accompanying text or other visual elements so that it is
easily noticed, read, and understood.
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c.

An audible disclosure, including by telephone or streaming
video, must be delivered in a volume, speed, and cadence
sufficient for ordinary consumers to easily hear and understand
it.

d.

In any communication using an interactive electronic medium,
such as the Internet or software, the disclosure must be
unavoidable.

e.

The disclosure must use diction and syntax understandable to
ordinary consumers and must appear in each language in which
the representation that requires the disclosure appears.

f.

The disclosure must comply with these requirements in each
medium through which it is received, including all electronic
devices and face-to-face communications.

g.

The disclosure must not be contradicted or mitigated by, or
inconsistent with, anything else in the communication.

h.

When the representation or sales practice targets a specific
audience, such as children, the elderly, or the terminally ill,
"ordinary consumers" includes reasonable members of that
group.

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3.

"Corporate Defendants" means American eVoice, Ltd.; Emerica

Media Corp.; FoneRight, Inc.; Global Voice Mail, Ltd.; HearYou2,
Inc.; Network Assurance, Inc.; SecuratDat, Inc.; Techmax Solutions,
Inc.; Voice Mail Professionals, Inc., as well as any affiliates,
subsidiaries, successors, or assigns, and any fictitious business
entities or business names created or used by these entities, or any of
them.
4.

"Defendants" means the Individual Defendants and the Corporate

Defendants, individually, collectively, or in any combination.
5.

"FTC Claim" means Proof of Claim number 10 filed in the

Bankruptcy Case on January 27, 2015, alleging an unliquidated claim
for equitable monetary relief against Defendant Sann in this
enforcement action.
6.

"Individual Defendants" means Steven V. Sann; Terry D. Lane

(a/k/a Terry D. Sann); Nathan M. Sann; and Robert M. Braach.
7.

"Person" means a natural person, an organization or other legal

entity, including a corporation, partnership, sole proprietorship,
limited liability company, association, cooperative, or any other group
or combination acting as an entity
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ORDER
I. PROHIBITION AGAINST TELEPHONE BILLING
IT IS THEREFORE ORDERED that Defendant Sann is permanently
restrained and enjoined from placing charges on any person's telephone bill,
whether directly or through an intermediary, including by providing any
advertising, marketing, financial, or technical assistance to other persons to place
charges on any person's telephone bill.
II. PROHIBITION AGAINST BILLING WITHOUT AUTHORIZATION
IT IS FURTHER ORDERED that Defendant Sann and his 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 (a)
representing or assisting others in representing, expressly or by implication, that a
consumer is obligated to pay any charge for goods or services, or (b) causing or
assisting others in causing any charge to be billed to a consumer's account, unless:
A.

the consumer provides express verifiable authorization to be charged;
and

B.

all material terms of the offer for which the consumer is billed,
including the number and amount of each charge and the account to
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which each charge will be billed, have been clearly and
conspicuously disclosed prior to the authorization of the charge and
in close proximity to any request that the consumer provide his or her
name, address, telephone number, email address, account number, or
any other payment information.

III. PROHIBITION AGAINST USE OF CONSUMER INFORMATION
IT IS FURTHER ORDERED that Defendant Sann and his 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 hereby restrained and enjoined from:
A.

disclosing, using, or benefitting from customer information, including
the name, address, telephone number, email address, social security
number, other identifying information, or any data that enables access
to a customer's account (including a credit card, bank account, or
other financial account), that any Defendant obtained prior to entry of
this Order in connection with the placement of charges on consumers'
telephone bills; and

B.

failing to destroy such customer information in all forms in their
possession, custody, or control within 30 days after receipt of written
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direction to do so from a representative of the Commission.
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.
IV. MONETARY JUDGMENT AND PARTIAL SUSPENSION
IT IS FURTHER ORDERED that:

A.

Judgment in the amount of forty-one million, nine hundred ten
thousand, four hundred twenty-two dollars ($41,910,422) is hereby
entered in favor of the Commission against Defendant Sann, jointly
and severally, as equitable monetary relief.

B.

Within fourteen days of entry of this Order, Defendant Sann shall
cause the following property to be transferred to the Chapter 7
Trustee:
1.

All funds contained in Defendant Sann's Individual Retirement
Accounts at S.G. Long ending in -1786 and -2272, except for
$50,000 in the -2272 account and $25,000 in the -1876
account, which Defendant Sann may retain subject to
paragraphs C through G of this Section IV.

2.

The 2005 Nissan 350 Z currently titled in the name of
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Defendant Emerica Media Corp.
3.

The 2010 Infinity Q56 currently titled in the name of
Defendant Sann.

C.

Upon the transfers required by Section IV.B, the monetary judgment
contained in Section IV.A is suspended, subject to Sections IV.D
through IV.G below.

D.

The Commission's agreement to the suspension of the monetary
judgment is expressly premised upon the truthfulness, accuracy, and
completeness of Defendant Sann's sworn financial statements and
related documents (collectively, "financial representations")
submitted to the Commission, namely, the Declaration of Defendant
Sann executed on March 31, 201 7, including attachments; and

E.

The suspension of the judgment will be lifted as to Defendant Sann if,
upon motion by the Commission, the Court finds that Defendant Sann
failed to disclose any material asset, materially misstated the value of
any asset, or made any other material misstatement or omission in the
financial representations identified above.

F.

The suspension of the judgment will be lifted as to Defendant Sann if
he defaults on any of his obligations under this Section IV.
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G.

If the suspension of the judgment is lifted as Defendant Sann, the

judgment becomes immediately due as to him in the amount specified
in Section IV.A above (which the parties stipulate, only for purposes
of this Section, represents the consumer injury alleged in the
Complaint), less any payments previously made pursuant to this
Section, plus interest computed from the date of entry of this Order.
V. ADDITIONAL MONETARY PROVISIONS
IT IS FURTHER ORDERED that:

A.

Defendant Sann relinquishes dominion and all legal and equitable
right, title, and interest in all assets transferred pursuant to this Order
and may not seek the return of any assets.

B.

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

C.

Defendant agrees to withdraw his objection to the FTC Claim in the
Bankruptcy Case, and he will not object to the allowance of the FTC
Claim as a general unsecured claim in the amount of $22,500,000.

D.

Defendant Sann acknowledges that his Taxpayer Identification
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Numbers (Social Security Numbers or Employer Identification
Numbers), which Defendant Sann previously submitted 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.
E.

All money paid to the Commission pursuant to this Order may be
deposited into a fund administered by the Commission or its designee
to be used for equitable relief, including consumer redress and any
attendant expenses for the administration of any redress fund. If a
representative of the Commission decides that direct redress to
consumers is wholly or partially impracticable or if money remains
after redress is completed, the Commission may apply any remaining
money for such other equitable relief (including consumer
information remedies) as it determines to be reasonably related to
Defendants' practices alleged in the Complaint. Any money not used
for such equitable relief is to be deposited into the U.S. Treasury as
disgorgement. Defendant Sann has no right to challenge any actions
the Commission or its representatives may take pursuant to this
Section V.E.

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VI. MODIFICATION OF ASSET FREEZE
IT IS FURTHER ORDERED that the freeze imposed on Defendant Sann's

assets pursuant to the Stipulated Preliminary Injunction entered on May 8, 2013
(Doc. 55) is modified to permit the transfers required by Section IV of this Order.
Upon completion of all of the transfers required by Section IV, the asset freeze
shall be dissolved.
VII. ORDER ACKNOWLEDGMENTS
IT IS FURTHER ORDERED that Defendant Sann obtains acknowledgments of

receipt of this Order.
A.

Defendant Sann, 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 5 years after entry of this Order, Defendant Sann, for any business
that he, individually or collectively with any other Defendants, is the
majority owner or controls directly or indirectly, 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 activity relating to the placement of charges on
consumers' telephone bills; and (3) any business entity resulting from
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any change in structure as set forth in Section VIII below. 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 Sann delivered a
copy of this Order, Defendant Sann must obtain, within 30 days, a
signed and dated acknowledgment of receipt of this Order.
VIII. COMPLIANCE REPORTING

IT IS FURTHER ORDERED that Defendant Sann makes timely

submissions to the Commission.
A.

One year after entry of this Order, Defendant Sann must submit a
compliance report, sworn under penalty of perjury.
1.

Defendant Sann must:
a.

identify all of his telephone numbers and all of his
physical, postal, email and Internet addresses, including
residences;

b.

identify the primary physical, postal, and email address
and telephone number, as designated points of contact,
which representatives of the Commission may use to
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communicate with him;
c.

identify all of his business activities, including any
business for which he performs services whether as an
employee or otherwise and any entity in which he has
any ownership interest;

d.

identify all of his businesses by all of their names,
telephone numbers, and physical, postal, email, and
Internet addresses;

e.

describe in detail his involvement in each such business,
including title, role, responsibilities, participation,
authority, control, and any ownership;

f.

describe the activities of each business, including the
goods and services offered, the means of advertising,
marketing, sales, methods of payment, and the
involvement of any other Defendant (which Defendant
Sann must describe if he knows or should know due to
his own involvement);

g.

describe in detail whether and how he is in compliance
with each Section of this Order; and
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h.

provide a copy of each Order Acknowledgment obtained
pursuant to this Order, unless previously submitted to the
Commission.

B.

For 15 years after entry of this Order, Defendant Sann must submit a
compliance notice, sworn under penalty of perjury, within 14 days of
any change in the following:
1.

any designated point of contact;

2.

name, including aliases or fictitious name, or residence address;

3.

title or role in any business activity, including any business for
which he performs services whether as an employee or
otherwise and any entity in which he has any ownership
interest, and identify the name, physical address, and any
Internet address of the business or entity.

4.

the structure of any entity that he 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;
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C.

Defendant Sann must submit to the Commission notice of the filing of
any bankruptcy petition, insolvency proceeding, or similar proceeding
by or against him 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 [date] at [location]."
and supplying the date, location, 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] (with "FTC v. American eVoice,
X130020" in the subject line) 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
RE: FTC v. American eVoice, X130020

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IX. RECORDKEEPING
IT IS FURTHER ORDERED that Defendant Sann must create certain
records for 15 years after entry of this Order, and retain each such record for 5
years. Specifically, Defendant Sann, for any business that he, individually or
collectively with any other Defendants, is a majority owner or controls directly or
indirectly, must create and retain the following records:
A.

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

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, 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 unique advertisement or other marketing material.
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X. COMPLIANCE MONITORING
IT IS FURTHER ORDERED that, for purposes of monitoring Defendant

Sann's compliance with this Order, including the financial representations
identified in Section IV.D and the transfers required by Section IV.B of this Order:
A.

Within 14 days of receipt of a written request from a representative of
the Commission, Defendant Sann 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 is 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.

B.

For matters concerning this Order, the Commission is authorized to
communicate directly with Defendant Sann. Defendant Sann must
permit representatives of the Commission to interview any employee
or other person affiliated with any Defendant who has agreed to such
an interview. The person interviewed may have counsel present.

C.

The Commission may use all other lawful means, including posing,
through its representatives as consumers, suppliers, or other
20

individuals or entities, to Defendant Sann or any individual or entity
affiliated with Defendant Sann, 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-l.

XI. RETENTION OF JURISDICTION
IT IS FURTHER ORDERED that that this Court retains jurisdiction of

this matter for purposes of construction, modification, and enforcement of this
Order.
DATED this 28th day of June, 2017.

Dana L. Christensen, Chief istrict Judge
United States District Court

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SO STIPULATED AND AGREED:

FOR PLAINTIFF FEDERAL TRADE COMMISSION:
Date:- - - - - -

RICHARD McKEWEN, WSBA #45041
Federal Trade Commission
Northwest Regional Office
915 Second Ave., Suite 2896
Seattle, WA 98174
Phone: [phone]
Fax: [phone]
E-mail: [e-mail]
Counsel for Plaintiff Federal Trade Commission

FOR DEFENDANT STEVEN V. SANN:

Date:- - - - - -

STEVEN V. SANN,
individually

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