Federal Trade Commission v. Infusion Media, Inc. et al

Filing 74

STIPULATED CONSENT JUDGMENT in favor of plaintiffs and against defendants. Each defendant, within 5 business days of this Order, must submit to the Commission a truthful sworn statement acknowledging receipt of this Order. Signed by Judge Gloria M. Navarro on 10/4/10. (Copies have been distributed pursuant to the NEF - ECS)

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F e d e r al Trade Commission v. Infusion Media, Inc. et al Do c. 74 1 2 3 4 5 6 7 8 9 10 11 12 13 v. U N IT E D STATES DISTRICT COURT D IS T R I C T OF NEVADA C iv il Action No. 2:09-cv-01112G M N -L R L S T IP U L A T E D FINAL J U D G M E N T AND ORDER F O R PERMANENT I N J U N C T IO N AND OTHER E Q U I T A B L E RELIEF AS TO I N F U S I O N MEDIA, INC.; W E S T COAST INTERNET M E D I A , INC.; TWO W A R N I N G S , LLC; TWO P A R T INVESTMENTS, LLC; P L A T I N U M TELESERVICES, I N C .; JONATHAN EBORN; S T E P H A N I E BURNSIDE; M I C H A E L McLAIN MILLER; A N D TONY NORTON F E D E R A L TRADE COMMISSION, P l a in tif f , IN F U S IO N MEDIA, INC., et al., D e f e n d a n ts . T h is matter comes before the Court on the stipulation of Plaintiff, the Federal 14 T ra d e Commission ("FTC" or the "Commission"), and Defendants Infusion Media, Inc.; 15 W e s t Coast Internet Media, Inc.; Two Warnings, LLC; Two Part Investments, LLC; 16 P latin u m Teleservices, Inc.; Jonathan Eborn; Stephanie Burnside; Michael McLain 17 M ille r; and Tony Norton (collectively, "Defendants"). On June 22, 2009, the 18 C o m m is s io n filed a Complaint for Permanent Injunction and Other Equitable Relief 19 (" C o m p la in t" ) in this matter, alleging violations of Section 5(a) of the Federal Trade 20 C o m m is s io n Act ("FTC Act"), 15 U.S.C. 45(a), Section 907(a) of the Electronic Fund 21 T ra n s f e r Act ("EFTA"), 15 U.S.C. 1693e(a), and Section 205.10(b) of Regulation E, 22 1 2 C.F.R. 205.10(b). The Commission and Defendants have agreed to the entry of this 23 S tip u late d Final Judgment and Order for Permanent Injunction and Other Equitable 24 R e lie f ("Order") as a settlement of the claims against Defendants alleged in the 25 C o m p lain t. Accordingly, the Court makes the following findings and enters judgment in 26 Dockets.Justia.com 1 th is action as set forth below: 2 3 1. FINDINGS T h is Court has jurisdiction of the subject matter of this case and over the 4 p a rtie s. The District of Nevada is a proper venue for this action. 5 2. The activities of Defendants described in the Complaint were in or 6 a f f e c tin g commerce within the meaning of the FTC Act, 15 U.S.C. 44, 45. 7 3. If the factual allegations therein are accepted as true, the Complaint states a 8 c la im upon which relief may be granted against Defendants. 9 4. Defendants enter into this Order freely and without coercion. Defendants 10 a c k n o w le d g e that they have each read, understand, and are prepared to abide by the 11 p rov isio n s of this Order. 12 5. The parties stipulate and agree to this Order, without trial or adjudication 13 o f any issue of fact or law, to settle and resolve all matters in dispute arising from the 14 C o m p la in t to the date of this Order. 15 6. B y entering into this Order, Defendants do not admit to the allegations set 16 f o rth in the Complaint, other than the jurisdictional facts. 17 7. Defendants waive all rights to seek judicial review or otherwise challenge 18 o r contest the validity of this Order. 19 8. Each party shall bear its own costs and attorney fees. Defendants further 20 w a iv e and release any claims they may have against the Commission, its employees, 21 re p re se n ta tiv e s, or agents. Defendants agree that this Order does not entitle them to seek 22 o r to obtain attorney fees as a prevailing party under the Equal Access to Justice Act, 28 23 U .S .C . 2412, amended by Pub. L. No. 104-121, 110 Stat. 847, 86364 (1996), and they 24 f u rth e r waive any rights to attorney fees that may arise under said provision of law. 25 26 -2- 1 9. This Order is in addition to, and not in lieu of, any other civil or criminal 2 re m e d ie s that may be provided by law, including any proceedings that the Commission 3 m ay initiate to enforce this Order. 4 10. This Order should not be construed as providing for payment of a fine, 5 p e n a lty, punitive assessment, or forfeiture, and the monetary judgment provided herein is 6 b a se d on the amount of money the Commission could have sought as restitution for 7 co n su m ers if the parties had not stipulated to this Order. 8 9 10 11 11. Entry of this Order is in the public interest. D E F IN IT IO N S F o r the purpose of this Order, the following definitions shall apply: 1. " A s s e t" means any legal or equitable interest in, right to, or claim to, any 12 re a l and personal property, including but not limited to, "goods," " instruments," 13 " e q u ip m e n t ," "fixtures," "general intangibles," "inventory," "checks," "notes" (as these 14 te r m s are defined in the Uniform Commercial Code), and all chattel, leaseholds, 15 c o n tr a c ts , mail or other deliveries, shares of stock, lists of consumer names, accounts, 16 c re d its , premises, receivables, funds, reserve funds, and cash, wherever located. 17 2. " A s s is tin g Others" includes but is not limited to: (a) performing customer 18 s e rv ic e functions, including but not limited to, receiving or responding to consumer 19 c o m p la in ts ; (b) developing or providing or arranging for the development or provision of 20 s a le s scripts and other marketing materials; (c) providing names of, or arranging for the 21 p ro v is io n of, names of potential customers; or (d) performing marketing services of any 22 k in d . 23 3. "Charge" means any amount charged or debited to a consumer's credit 24 c a rd , debit card, checking, savings, share or similar financial account, or collected from a 25 26 -3- 1 c o n su m e r by any other method. 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 5. c. b. 4. " C lea r and Conspicuous" or "Clearly and Conspicuously" mean that: a. in print communications, the disclosure shall be in a type size and lo c a tio n sufficiently noticeable for an ordinary consumer to read a n d comprehend it, in print that contrasts with the background a g a i n s t which it appears; and in multi-page print communications, th e disclosure shall appear on the cover or first page; in communications disseminated orally, the disclosure shall be d eliv ere d in a volume and cadence sufficient for an ordinary c o n su m e r to hear and comprehend it; and in Internet communications, the disclosure shall be made next to a n y advertised price or cost (including free), and where consumers' f in a n c ia l account information is required, without the use of pop-up w in d o w s or hyperlinks to other electronic pages to display Material in f o r m a tio n . " C o rp o ra te Defendants" means Infusion Media, Inc.; West Coast Internet 17 M e d ia , Inc.; Two Warnings, LLC; Two Part Investments, LLC; and Platinum 18 T e le s e rv i c e s, Inc., and their successors and assigns. 19 6. " D e f e n d a n ts" means all of the Individual Defendants and the Corporate 20 D e f e n d a n ts . 21 7. " D e f en d a n ts ' Financial Statements" means (a) the letter describing the 22 a ss e ts of the Receivership Defendants signed by the Individual Defendants and dated 23 A u g u s t 3, 2009 and (b) the Federal Trade Commission Financial Statement 24 q u e stio n n a ire s concerning each of the Receivership Defendants, signed by the Individual 25 26 -4- 1 D e f en d a n ts , and dated August 13, 2009; (c) the Federal Trade Commission Financial 2 S ta te m e n t questionnaire concerning Jonathan Eborn and Stephanie Burnside, signed by 3 D e f en d a n ts Eborn and Burnside, and dated July 13, 2009; (d) the Federal Trade 4 C o m m is s io n Financial Statement questionnaire concerning Jonathan Eborn and 5 S te p h a n ie Burnside, signed by Defendants Eborn and Burnside, and dated June 6, 2010; 6 (e ) the Federal Trade Commission Financial Statement questionnaire concerning 7 M ic h a el McLain Miller, signed by Defendant Miller, and dated July 15, 2009; (f) the 8 F e d e ra l Trade Commission Financial Statement questionnaire concerning Michael 9 M c L a in Miller, signed by Defendant Miller, and dated June 8, 2010; (g) the Federal 10 T ra d e Commission Financial Statement questionnaire concerning Tony Norton, signed 11 b y Defendant Norton, and dated July 14, 2009; and (h) the Federal Trade Commission 12 F in a n c ia l Statement questionnaire concerning Tony Norton, signed by Defendant 13 N o r to n , and dated June 9, 2010, including any amendments. 14 8. " D o c u m e n t" is synonymous in meaning and equal in scope to the usage of 15 th e term in Federal Rule of Civil Procedure 34(a), and includes writings, drawings, 16 g ra p h s, charts, photographs, audio and video recordings, computer records, and other 17 d a ta compilations from which information can be obtained and translated, if necessary, 18 th r o u g h detection devices into reasonably usable form. A draft or non-identical copy is a 19 s e p a ra te document within the meaning of the term. 20 9. " In d iv id u a l Defendants" means Jonathan Eborn, Stephanie Burnside, 21 M ic h a el McLain Miller, and Tony Norton. 22 10. " M a te ria l" means likely to affect a person's choice of, or conduct 23 r e g a rd i n g , goods or services. 24 25 26 -511. " N e g a tiv e Option Feature" means, in an offer or agreement to sell 1 o r provide any goods or services, a provision under which the customer's silence or 2 f a ilu re to take an affirmative action to reject goods or services or to cancel the agreement 3 is interpreted by the seller or provider as acceptance of the offer. 4 12. "Person" means a natural person, an organization or other legal entity, 5 in c lu d in g a corporation, partnership, sole proprietorship, limited liability company, 6 a s s o c ia tio n , cooperative, or any other group or combination acting as an entity. 7 13. " P re a u th o riz e d Electronic Fund Transfer," as defined by the Electronic 8 F u n d Transfer Act, 15 U.S.C. 1693a(9), means an electronic fund transfer authorized 9 in advance to recur at substantially regular intervals. 10 14. " R e c e iv e r" shall mean Robert G. Wing, the receiver appointed in this 11 a c tio n for the Receivership Defendants. 12 13 15. 16. " R e c e iv e r s h ip Defendants" means the Corporate Defendants. " R e p r e s e n ta tiv e s " means Defendants' successors, assigns, officers, agents, 14 s e rv a n ts , employees, or attorneys, and any Person or entity in active concert or 15 p a rtic ip a tio n with them who receives actual notice of this Order by personal service or 16 o th e rw is e . 17 18 19 20 ORDER I. B A N ON NEGATIVE OPTION PROGRAMS I T IS THEREFORE ORDERED that the Defendants are hereby permanently 21 re stra in e d and enjoined from engaging or participating in the advertisement, marketing, 22 p ro m o tio n , offering for sale, or sale of any product or service with a Negative Option 23 F e a tu re , whether acting directly or through any entity, corporation, subsidiary, division, 24 a f f ilia te, or other device. Nothing in this Order shall be read as an exception to this 25 26 -6- 1 S ec tio n I. 2 3 4 II. P R O H I B I T E D BUSINESS ACTIVITIES IT IS FURTHER ORDERED that, in connection with the advertising, 5 m a rk e tin g , promotion, offering for sale, or sale of any product or service, the Defendants 6 a n d their Representatives, whether acting directly or through any entity, corporation, 7 s u b s id ia ry, division, affiliate, or other device, are hereby permanently restrained and 8 e n jo in e d from failing to disclose, Clearly and Conspicuously, the Material terms and 9 c o n d itio n s of the offer, including but not limited to 10 11 12 13 14 15 16 17 C. B. A. A ll products and/or services that are part of the sales offer, including but n o t limited to products and/or services provided by third parties; T h a t consumers' credit or debit account information will be used to Charge c o n su m e rs for all products and/or services; and T h e cost and quantity of all products and/or services. I I I. P R O H I B I T E D REPRESENTATIONS IT IS FURTHER ORDERED that, in connection with the advertising, 18 m a rk e tin g , promotion, offering for sale, or sale of any product or service, Defendants 19 a n d their Representatives, whether acting directly or through any entity, corporation, 20 s u b s id ia ry, division, affiliate or other device, are hereby restrained and enjoined from 21 22 23 24 25 26 -7A. M a k in g , expressly or by implication, 1. A n y Material representation about the benefits, performance, or e f f ica c y of such product or service, including but not limited to rep rese n tatio n s about income, earnings, or profits that consumers 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 C. B. 2. w h o order such product or service are likely to earn, unless the re p re se n tatio n is true and, at the time that the representation is m a d e , the Defendants possess and rely upon competent and reliable e v id e n c e that substantiates the representation; or A n y false or misleading statement or representation of Material fact a b o u t such product or service, including but not limited to i. F a ls e ly representing an affiliation with, or endorsement or s p o n s o r sh i p by, any person, government entity, or business e n tity, including but not limited to Google Inc.; ii. F a ls e ly representing the total costs to purchase, receive, or u s e , and the quantity of, such products or services; iii. F a ls e ly representing any Material aspect of the nature or c e n tra l characteristics of such product or service; and iv . F a ls e ly representing, expressly or by implication, any M a te ria l aspect of the nature or terms of the refund, c a n c e llatio n , exchange, or repurchase policies applicable to s u c h product or service; A ss is tin g Others in making, expressly or by implication, a representation e n u m e r a te d in Section III.A.1 under circumstances in which the D e f e n d a n ts know or consciously avoid knowing that the representation is u n tru e or unsubstantiated; or A ss is tin g Others in making, expressly or by implication, a representation e n u m e r a te d under Section III.A.2 under circumstances in which the D e f en d a n ts know or consciously avoid knowing that the statement or -8- 1 2 3 4 re p re se n ta tio n is false or misleading. IV . A C T I V IT IE S PROHIBITED PURSUANT TO THE ELECTRONIC FUND T R A N S F E R ACT I T IS FURTHER ORDERED that the Defendants and their Representatives, 5 w h e th e r acting directly or through any entity, corporation, subsidiary, division, affiliate, 6 o r other device, or any of them, in connection with any consumer who purchases any 7 p ro d u c t or service subsequent to the date of this Order and who uses a debit card or other 8 m e a n s of electronic funds transfer, are hereby restrained and enjoined from failing to 9 o b ta in written authorization for Preauthorized Electronic Fund Transfers from the 10 c o n su m e r's account before initiating any Preauthorized Electronic Fund Transfer and 11 f ro m failing to provide a copy of the written authorization to the consumer, as required 12 b y Section 907(a) of EFTA, 15 U.S.C. 1693e(a), and Section 205.10(b) of Regulation 13 E , 12 C.F.R. 205.10(b), and as more fully set out in Section 205.10 of the Federal 14 R ese rve Board's Official Staff Commentary to Regulation E, 12 C.F.R. 205, Supp. I, 15 o r as they may hereafter be amended. 16 V. 17 P R O H IB I T I O N S AGAINST DISCLOSURE OF CUSTOMER INFORMATION 18 I T IS FURTHER ORDERED that the Defendants and their Representatives are 19 p e rm a n e n tly restrained and enjoined from 20 A. 21 n a m e , address, telephone number, e-mail address, social security number, other 22 id e n tif yin g information, or any data that enables access to a customer's account 23 (in c lu d in g a credit card, bank account, or other financial account), of any person that was 24 o b ta in e d by any Defendant in connection with the sale of any product or service during 25 26 -9disclosing, using, or benefitting from customer information, including the 1 th e period from January 1, 2007, through the date of entry of this Order; and 2 B. failing to dispose of such customer information in all forms in their 3 p o s s e ss io n , custody, or control within thirty (30) days after entry of this Order. Disposal 4 s h a ll be by means that protect against unauthorized access to the customer information, 5 s u c h as by burning, pulverizing, or shredding any papers, and by erasing or destroying 6 a n y electronic media, to ensure that the customer information cannot practicably be read 7 o r reconstructed. 8 Provided, however, that customer information need not be disposed of, and may 9 b e disclosed, to the extent requested by a government agency or required by a law, 10 reg u lation , or court order. 11 12 13 V I. M O N E T A R Y JUDGMENT AND SURRENDER OF ASSETS I T IS FURTHER ORDERED that judgment is hereby entered in favor of the 14 C o m m is s io n and against Defendants, jointly and severally, in the amount of twenty-nine 15 m illio n , four hundred thousand, three hundred twenty dollars and fifty-seven cents 16 ($ 2 9 ,4 9 7 ,3 2 0 .5 7 ), except that the judgement against Stephanie Burnside is in the amount 17 o f seven hundred forty-one thousand, nine hundred dollars ($741,900), as equitable 18 m o n e tar y relief for consumer injury; provided, however, subject to the provisions of 19 S e c tio n VIII below, judgment shall be suspended upon Defendants' completion of the 20 re q u ire m e n ts stated in Subsections AC of this Section. 21 A. E f f e c tiv e upon the entry of this Order, Defendants surrender to the FTC all 22 c o n tr o l, title, dominion, and interest in the following assets: 23 24 25 26 -101. T h e Receivership Defendants and all assets of the Receivership D e f e n d a n ts ; 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 2. A ll funds of any of the Defendants in the possession of the R ec eive r; 3. T h e 2008 Infiniti FX titled to Stephanie Burnside with Vehicle Id e n tific a tio n Number JNRAS08WX8X210535 and Utah title n u m b e r UT8712155; 4. T h e 2004 Nissan Titan Crew Cab 4x4 titled to Michael McLain M ille r with Vehicle Identification Number 1N6AA07BX4N585815 a n d Utah title number UT8302058; 5. M ic h a el McLain Miller's interest in the 2004 Harley Davidson R o a d King motorcycle identified in Item 21 of the Federal Trade C o m m is s io n Financial Statement questionnaire concerning Michael M c L a in Miller, signed by Defendant Miller, and dated July 15, 2009; 6. M ic h a el McLain Miller's interest in the Super Air Natique 230 to w b o a t and engine Boat Hull No. CTC 930 821 809, Engine No. 0 2 -6 0 1 V -0 1 -4 8 5 8 6 6 , and Utah Vessel Registration No. UT 5287A F. 7. T h e gun collection owned by Michael McLain Miller and identified in Item 20 of the Federal Trade Commission Financial Statement q u e stio n n a ire concerning Michael McLain Miller, signed by D e f en d a n t Miller, and dated July 15, 2009. The gun collection in c lu d e s the following nine (9) guns, including Armalite AR 50 w ith Leupold scope and accessories; Sig. 556 SWAT; Benelli Super B la c k Eagle II 12 Gauge; Ruger 10/22; Yugo 7.62x39 with folding -11- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 B. 12. 11. 10. 9. 8. sto c k ; Hi Point 9mm Carbine with scope; Glock 23 40SW with tritiu m sights; Springfield XD(m) 40SW Limited; Puma model 9 2 .4 4 mag carbine. A ll funds held by Hedgehog Solutions in the name of Infusion M e d ia , Inc.; A ll funds held by Process America, Inc., in any account in the name o f any Defendant or any corporation, partnership, or other entity d ire c tly or indirectly owned, managed, or controlled by any D ef en d an t, or of which any Defendant is an Officer, Director, M e m b e r, or Manager, including but not limited to those accounts id e n tif ie d with the DBA designations INCOME INITIATIVE PRO, M O N Y TREE SYSTEMS, and SAFELOCK ID and identified by ac co u n t number in Attachment A to this Order; A ll funds held by JPMorgan Chase Bank, N.A., in the name of TDN H o ld in g s, Inc., including but not limited to the accounts ending in 9 4 6 9 and 3537; A ll funds held by Family First Federal Credit Union in the name of M ic h a el McLain Miller and/or M. McLain Miller, including but not lim ite d to the account ending in 5832; and A ll funds held by America First Credit Union in the name of S te p h a n i e Burnside or in accounts to which Stephanie Burnside is a s ig n a to ry, including but not limited to the accounts ending in 37856 and 6017-5. Im m e d ia te ly upon entry of this Order, Defendants Eborn and Burnside -12- 1 s h a ll deliver possession to the Receiver of the assets identified in Section VI.A.3 (the 2 " E b o r n -B u rn s id e Assets"). The Receiver is hereby directed to market and sell the 3 E b o rn -B u rn sid e Assets. Defendants Eborn and Burnside shall take all steps necessary to 4 a ss is t the Receiver in the sale of the Eborn-Burnside Assets and shall not add any 5 e n c u m b r a n c es on the Eborn-Burnside Assets. Defendants Eborn and Burnside shall be 6 re sp o n s ib le for all taxes and fees assessed against them resulting from the sale of the 7 E b o rn -B u rn s id e Assets. 8 C. Im m e d ia te ly upon entry of this Order, Defendant Miller shall deliver 9 p o s s e ss io n to the Receiver of the assets identified in Section VI.A.47 (the "Miller 10 A s s e ts " ). The Receiver is hereby directed to market and sell the Miller Assets. 11 Defendant Miller shall take all steps necessary to assist the Receiver in the sale of the 12 M ille r Assets and shall not add any encumbrances on the Miller Assets. Defendant 13 M ille r shall be responsible for all taxes and fees assessed against him resulting from the 14 s a le of the Miller Assets. 15 D. T o effect the surrender of the funds identified in Section VI.A.89, the 16 C o u rt directs that the entities holding the funds or their successors shall, immediately 17 u p o n receiving notice of this Order, remit the funds to the Commission by certified 18 c h e ck (s ) or other guaranteed funds payable to the Federal Trade Commission, Financial 19 M a n a g em e n t Office, or by wire transfer in accordance with directions provided by 20 c o u n se l for the Commission. To the extent any identified third party cannot comply with 21 th is Subsection without the assistance of Defendants, such party must, within three (3) 22 b u s in e ss days of receiving this Order, notify such Defendant(s) and counsel for the 23 C o m m is s io n of its inability to comply. Such notification shall specify the actions by 24 su c h Defendant(s) that are necessary to comply with this Order. Defendants shall 25 26 -13- 1 im m e d iate ly complete any action necessary to facilitate the identified third party's ability 2 to timely comply with this Subsection, and the failure of such Defendant(s) to complete 3 s u c h action within ten (10) days shall be deemed a violation of the Order and interest at 4 th e rate prescribed in 28 U.S.C. 1961 shall immediately begin to accrue. 5 E. D e f e n d a n ts relinquish all dominion, control, and title to the assets 6 s u rre n d e re d or paid to the fullest extent permitted by law. Defendants shall make no 7 c la im to or demand return of these assets, directly or indirectly, through counsel or 8 o th e rw is e . 9 F. D e f en d a n ts acknowledge and agree that the Receiver has authority under 10 th is Order to take any steps necessary to dissolve and wind down the Receivership 11 D e f en d a n ts and liquidate the assets of the Receivership Defendants, the Eborn-Burnside 12 A s s e ts , and the Miller Assets. 13 G. In the event that it is necessary to execute additional documents to transfer 14 o r liquidate assets of the Receivership Defendants or any other assets that are to be 15 su rre n d e re d under this Order, or to dissolve and wind down the Receivership 16 D e f en d a n ts , Defendants shall execute such documents within three business days of a 17 re q u e s t from the Receiver or the FTC. 18 H. T h e Receiver shall remit the assets of the Receivership Defendants, the 19 p ro c e ed s of the sale of the Eborn-Burnside Assets, and the proceeds of the sale of the 20 M iller Assets in accordance with the provisions of this Order concerning the Receiver's 21 F in a l Report and Disbursement. 22 I. A n y funds transferred or paid to the Federal Trade Commission pursuant to 23 th is Section, Section VII.D, Section X.R, Section XII.D.2, or Section XII.F of this Order 24 s h a ll be deposited into a fund administered by the Commission or its agent to be used for 25 26 -14- 1 e q u ita b le relief, including but not limited to, consumer redress and any attendant 2 e x p e n se s for the administration of any redress fund. In the event that direct redress to 3 c o n su m e rs is wholly or partially impracticable or funds remain after redress is 4 c o m p lete d , the Commission may apply any remaining funds to such other equitable 5 re lief (including consumer information remedies) as it determines to be reasonably 6 re la te d to the acts and practices alleged in the Complaint. Any funds not used for such 7 e q u ita b le relief shall be deposited in the United States Treasury as disgorgement. 8 Defendants shall have no right to challenge the Commission's choice of remedies under 9 th is Section. 10 J. D e f e n d a n ts agree that the facts as alleged in the Complaint filed in this 11 a c tio n shall be taken as true without further proof in any bankruptcy case or subsequent 12 c iv il litigation pursued by the Commission to enforce its rights to any payment or money 13 ju d g m e n t pursuant to this Order, including but not limited to a nondischargeability 14 c o m p lain t in any bankruptcy case. Defendants further stipulate and agree that the facts 15 a lle g e d in the Complaint establish all elements necessary to sustain an action pursuant to, 16 a n d that this Order shall have collateral estoppel effect for purposes of, 17 S e c tio n 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. 523(a)(2)(A). 18 K. In accordance with 31 U.S.C. 7701, Defendants are hereby required, 19 u n le ss they have done so already, to furnish to the Commission their taxpayer 20 iden tifica t io n numbers (Social Security numbers and employer identification numbers), 21 w h ic h shall be used for purposes of collecting and reporting on any delinquent amount 22 a risin g out of Defendants relationship with the government. 23 24 25 26 -15- 1 2 3 V II. E S T A B L IS H M E N T OF ESCROW ACCOUNT AND PAYMENT OF TAX LIABILITY I T IS FURTHER ORDERED that upon entry of this Order, the Receiver shall 4 e sta b lis h an interest-bearing escrow account and/or interest-bearing trust account (the 5 " E s c ro w Account") for the purpose of paying federal and state personal income taxes 6 d u e and owing to the Internal Revenue Service/United States Treasury or the State of 7 U tah for (1) Defendants Eborn and Burnside for tax years 2007, 2008, and 2009, up to 8 th e amount of the funds identified in Section VI.A.12 and Section VII.B, and 9 (2 ) Defendant Miller for tax years 2008 and 2009, up to the amount of the funds 10 iden tified in Section VI.A.11 and Section VII.C, and (3) Defendant Norton for tax years 11 2 0 0 7 , 2008, and 2009, up to the amount of the funds identified in Section VI.A.10 (all 12 c o lle c tiv e ly, the "Tax Liability"). The sole signatory to the account shall be the Escrow 13 A g e n t selected by the Receiver, and access to the funds held in the account shall be 14 so lely through the Escrow Agent. 15 A. 16 C o u rt directs that the entities holding the funds or their successors shall, immediately 17 u p o n receiving notice of this Order, remit the funds to the Escrow Account by certified 18 c h e ck (s ), by other guaranteed funds, or by wire transfer in accordance with directions 19 p ro v id e d by the Receiver. To the extent any identified third party cannot comply with 20 th is Subsection without the assistance of Defendants, such party must, within three (3) 21 b u s in e ss days of receiving this Order, notify such Defendant(s) and counsel for the 22 C o m m is s io n of its inability to comply. Such notification shall specify the actions by 23 su c h Defendant(s) that are necessary to comply with this Order. Defendants shall 24 im m e d iate ly complete any action necessary to facilitate the identified third party's ability 25 26 -16T o effect the surrender of the funds identified in Section VI.A.1012, the 1 to timely comply with this Subsection, and the failure of such Defendant(s) to complete 2 s u c h action within ten (10) days shall be deemed a violation of the Order and interest at 3 th e rate prescribed in 28 U.S.C. 1961 shall immediately begin to accrue. 4 B. W ith in five (5) days of the entry of this Order, Defendants Eborn and 5 B u rn s id e shall, either acting directly or through counsel, deposit $78,000 (seventy-eight 6 th o u sa n d dollars) into the Escrow Account. 7 C. W ith in five (5) days of the entry of this Order, the Receiver shall transfer 8 $ 1 1 8 ,4 8 3 (one hundred eighteen thousand, four hundred eighty-three dollars), 9 re p re se n tin g personal funds of Defendant Miller that were placed in the custody of the 10 R e c e iv e r , into the Escrow Account from the assets of the Receivership Defendants. 11 D. U p o n the Individual Defendants' provision to the Federal Trade 12 C o m m is s io n and the Escrow Agent of proof of filed returns concerning the Tax 13 L iab ility, the Escrow Agent shall remit appropriate payment to the applicable 14 g o v e rn m e n t entity within ten (10) days, provided, however that no such payment shall be 15 m a d e for any tax return submitted to the Escrow Agent after November 1, 2010. Within 16 f o u rte e n (14) days of any such payment, the Escrow Agent shall provide written proof of 17 p a ym e n t to the Federal Trade Commission. Any portion of the Tax Liability not 18 s a tis f ie d by the payments made pursuant to this Subsection shall be solely the 19 re sp o n s ib ility of the Individual Defendants. Upon the earlier of either (1) the payment of 20 th e Tax Liability or (2) November 15, 2010, all funds remaining in the Escrow Account 21 s h a ll be remitted by the Escrow Agent to the Federal Trade Commission. 22 E. T o the extent allowable by the Internal Revenue Service and the taxing 23 a u th o ritie s of any relevant states, the Individual Defendants may take all deductions and 24 o th e r tax benefits that are legally available to them resulting from any payments by one 25 26 -17- 1 o r more of the Defendants pursuant to Section VI of this Order, except that the 2 I n d iv i d u a l Defendants may not take any net operating loss carryforwards or otherwise 3 ta k e deductions or tax benefits resulting from such payments with regard to any tax 4 lia b ility other than the Tax Liability as defined in this Order. If Defendants Eborn, 5 B u rn s id e , Miller, or Norton obtain a credit or refund of any taxes or penalties paid for 6 th e Tax Liability, such defendant shall notify the FTC immediately of such credit or 7 re f u n d and pay to the Commission within five (5) days the amount of such credit or 8 re f u n d , together with any interest such defendant has earned in connection with the 9 c re d it or refund. Within ten (10) days of a request by the FTC to Defendant Eborn, 10 B u rn s id e , Miller, or Norton, such defendant will complete, date, sign, and submit to the 11 In te rn a l Revenue Service, along with the applicable IRS fee, an IRS Form 4506 directing 12 that a copy of such defendant's federal tax return and any amended return for tax years 13 2 0 0 7 , 2008, and 2009 be sent to the FTC. 14 15 16 17 V I I I. R I G H T TO REOPEN I T IS FURTHER ORDERED that: A. T h e Commission's agreement to and the Court's approval of this Order are 18 e x p r e ss ly premised upon the truthfulness, accuracy, and completeness of Defendants' 19 F in a n c ia l Statements, all of which Defendants assert are truthful, accurate, and complete. 20 D e f en d a n ts and the Commission stipulate that Defendants' Financial Statements provide 21 th e basis for the monetary judgment in Section VI of this Order and that the Commission 22 h a s relied on the truthfulness, accuracy, and completeness of Defendants' Financial 23 S ta te m e n t s. 24 25 26 -18B. I f , upon motion by the Commission, this Court finds that any Defendant(s) 1 h a s (1) materially misstated in Defendants' Financial Statements, the value of any asset, 2 (2 ) made any material misrepresentation or omitted material information concerning his 3 o r her financial condition by failing to disclose any asset that should have been disclosed 4 in Defendants' Financial Statements, or (3) made any other material misstatement or 5 o m is s io n in Defendants' Financial Statements, the Court shall terminate, as to the 6 o f f e n d in g Defendant(s), the suspension of the monetary judgment entered in 7 S e c tio n VI.A. The Court, without further adjudication, shall enter a modified judgment 8 h o ld in g the offending Defendant(s) liable to the Commission in the amount of 9 $ 2 9 ,4 9 7 ,3 2 0 .5 7 for consumer redress, less any amounts turned over to the FTC pursuant 10 to Section VI of this Order, provided however that Stephanie Burnside's liability to the 11 C o m m issio n shall not exceed $741,900. Upon such reinstatement of the monetary 12 ju d g m e n t, the Court shall make an express determination that the judgment shall become 13 im m e d ia te ly due and payable by the offending Defendant(s), jointly and severally, and 14 th e Commission shall be entitled to interest computed from the day of entry of this Order 15 a t the rate prescribed under 28 U.S.C. 1961, as amended, on the unpaid balance. The 16 C o m m is s io n shall be permitted to execute on the judgment immediately after the 17 s u s p e n sio n is lifted and engage in discovery in aid of execution. 18 C. D e f e n d a n ts acknowledge and agree that (1) this monetary judgment is 19 e q u ita b le monetary relief, solely remedial in nature, and not a fine, penalty, punitive 20 a ss e ss m e n t, or forfeiture; (2) any proceedings instituted under this Section would be in 21 a d d itio n to, and not in lieu of, any other civil or criminal remedies as may be provided by 22 la w , including any other proceedings that the FTC may initiate to enforce this Order; and 23 (3 ) all money paid to satisfy the monetary judgment is irrevocably paid for purposes of 24 s e ttle m e n t between the parties. 25 26 -19- 1 D. Should this Order be modified pursuant to this Section, this Order, in all 2 o th e r respects, shall remain in full force and effect unless otherwise ordered by the 3 C o u rt. 4 5 6 IX . L I F T I N G OF ASSET FREEZE IT IS FURTHER ORDERED that the freeze against the assets of the 7 D ef en d an t s pursuant to the Amended Temporary Restraining Order entered by this Court 8 o n June 24, 2009, and by the Preliminary Injunction entered on September 9, 2009, shall 9 b e lifted for the sole purpose of transferring assets pursuant to Sections VI and VII of 10 th is Order, and shall be dissolved upon the transfer of all such assets. 11 12 13 I T IS FURTHER ORDERED that Robert G. Wing, the Receiver appointed by 14 p rio r orders of this Court, is hereby appointed Receiver for the Receivership Defendants 15 f o r the purpose of taking the necessary steps to wind down the businesses of the 16 R e c eiv e rs h ip Defendants, liquidate the assets of the Receivership Defendants, the Eborn17 B u rn s id e Assets, and the Miller Assets, and pay any net proceeds to the FTC to satisfy 18 th e monetary judgment in this Order. In carrying out these duties, the Receiver shall be 19 th e agent of this Court, shall be accountable directly to this Court, and is authorized and 20 d ire c te d to: 21 A. 22 d o w n the Receivership Defendants; 23 B. 24 c o n tin u e to collect, marshal, and take custody, control, and possession of all the funds, 25 26 -20C o n tin u e to exercise full control over the Receivership Defendants and T a k e any and all steps that the Receiver concludes are appropriate to wind X. A P P O I N T M E N T OF RECEIVER TO WIND DOWN RECEIVERSHIP DEFENDANTS AND LIQUIDATE ASSETS 1 p ro p e rty, premises, accounts, documents, mail, and other assets of, or in the possession 2 o r under the control of the Receivership Defendants, wherever situated, the income and 3 p ro f its therefrom, and all sums of money now or hereafter due or owing to the 4 R e c e iv e rsh ip Defendants, with full power to collect, receive, and take possession of all 5 g o o d s , chattels, rights, credits, monies, effects, lands, leases, books and records, limited 6 p artne rship records, work papers, and records of accounts, including computer7 m a in ta in e d information, contracts, financial records, monies on hand in banks and other 8 f in a n c ia l institutions, and other papers and documents of other individuals, partnerships, 9 o r corporations whose interests are now held by or under the direction, possession, 10 cu stod y, or control of the Receivership Defendants ("Receivership Estate"); 11 C. C o n tin u e to have full control over the management and personnel of the 12 R e c e iv e rs h ip Defendants, including the authority to remove, as the Receiver deems 13 n e c es s a ry or advisable, any director, officer, independent contractor, employee, or agent 14 o f these Defendants from control of, management of, or participation in, the affairs of 15 th e se Defendants; 16 D. T a k e all steps necessary or advisable, including issuing subpoenas, to locate 17 a n d liquidate all other assets of the Receivership Defendants, cancel the Receivership 18 D e f en d a n ts ' contracts, collect on amounts owed to the Receivership Defendants, and take 19 s u c h other steps as may be necessary to wind-down, terminate and dissolve the 20 R e c e iv e rs h ip Defendants efficiently; 21 E. T a k e all steps necessary or advisable, including issuing subpoenas, to 22 id e n tif y the name, address, telephone number, date of purchase, program or product 23 p u rc h a se d , total amount paid, amount of any full or partial refund or chargeback, and 24 p a ym e n t information for consumers who were charged by the Receivership Defendants, 25 26 -21- 1 a n d provide the FTC, upon request, with any customer records or other business records 2 o f the Receivership Defendants; 3 F. M ak e payments and disbursements from the Receivership estate that are 4 n e c e ss a ry or advisable for carrying out the directions of, or exercising the authority 5 g ra n te d by, this Order. The Receiver shall apply to the Court for prior approval of any 6 p a ym e n t of any debt or obligation incurred by the Receivership Defendants prior to the 7 d a te of entry of the temporary restraining order in this action, except payments that the 8 R e c e iv e r deems necessary or advisable to secure and liquidate assets of the Receivership 9 D e f e n d a n ts , such as rental payments or payment of liens; 10 G. C o n tin u e to perform all acts necessary or advisable to complete an 11 a c co u n tin g of the Receivership assets, and prevent unauthorized transfer, withdrawal, or 12 m isa p p lica tio n of assets; 13 H. C o n tin u e to maintain accurate records of all receipts and expenditures that 14 h e makes as Receiver; 15 I. C o n tin u e to enter into contracts and purchase insurance as advisable or 16 n e c e ss a ry; 17 J. C o n tin u e to defend, compromise, adjust, or otherwise dispose of any or all 18 a c tio n s or proceedings instituted in the past or in the future against the Receiver in his 19 ro le as Receiver, or against the Receivership Defendants, as the Receiver deems 20 n e c e ss a ry and advisable to carry out the Receiver's mandate under this Order; 21 K. C o n tin u e to maintain bank accounts created as designated depositories for 22 f u n d s of the Receivership Defendants, and make all payments and disbursements from the 23 R e c e iv e rsh ip estate from such an account; 24 25 26 -22L. C o n tin u e to perform all incidental acts that the Receiver deems to be 1 a d v is a b le or necessary, which includes retaining, hiring, or dismissing any employees, 2 in d e p e n d e n t contractors, or agents; 3 M. C o n tin u e to cooperate with reasonable requests for information or 4 a s s is ta n c e from any state or federal law enforcement agency; 5 N. D isp o se of, or arrange for the disposal of, the records of the Receivership 6 D e f en d a n ts no later than six months after the Court's approval of the Receiver's final 7 re p o rt, except that: 8 9 10 11 12 13 14 15 16 2. 1. T o the extent that such records are reasonably available, the Receiver s h a ll arrange for records sufficient to ascertain the funds that an in d iv id u a l consumer paid to the Receivership Defendants to be re ta in e d for a minimum of one year from the entry of this Order, and I f state or local law regulating the Receivership Defendants' business re q u ire s the retention of particular records for a specified period, the R e c eiv e r shall arrange for such records to be disposed of after the s p e c if ie d period has expired. T o safeguard the privacy of consumers, records containing personal financial 17 in f o rm a tio n shall be shredded, incinerated, or otherwise disposed of in a secure manner. 18 For records that must be retained, the Receiver may elect to retain records in their original 19 f o rm or to retain photographic or electronic copies so long as said records are: 1) kept in 20 a secure, locked area; 2) stored electronically on a computer network or drive with 21 re stric ted access or an encrypted electronic storage device; or 3) redacted of all personally 22 id e n tif ia b l e information including dates of birth, Social Security numbers, driver's license 23 n u m b e rs or other state identification numbers, passport numbers, financial account 24 n u m b e rs , or credit or debit card numbers. Provided, however, that the Receiver may not 25 26 -23- 1 s e ll, rent, lease, transfer, disclose, use, or otherwise benefit from the name, address, 2 te le p h o n e number, credit card number, bank account number, e-mail address, or other 3 id e n tif yin g information of any person who paid any money to Defendants in connection 4 w ith the advertising, promotion, marketing, offering for sale, or sale of any product or 5 s e rv ic e , except that the Receiver may disclose such identifying information to a law 6 en fo rce m en t agency, or as required by any law, regulation, or court order; 7 O. P e rf o rm all acts necessary to protect, conserve, preserve, and prevent waste 8 o r dissipation of the Eborn-Burnside Assets and the Miller Assets until their sale; 9 P. S e ll the Eborn-Burnside Assets and the Miller Assets without further order 10 o f the Court; 11 Q. E n ter into agreements in connection with the reasonable and necessary 12 p e rf o rm a n c e of the Receiver's duty to sell the Eborn-Burnside Assets and the Miller 13 A s s e ts , including but not limited to the retention of assistants, agents, or other 14 p ro f e ss io n a ls to assist in the sale of the Eborn-Burnside Assets and the Miller Assets; and 15 R. D is trib u te to the Commission, without further order of the Court, the funds 16 r e c e iv e d from the sale of the Eborn-Burnside Assets and the Miller Assets. 17 18 19 X I. C O M P E N S A T I O N OF RECEIVER I T IS FURTHER ORDERED that the Receiver and all personnel hired by the 20 R e c e iv e r, including counsel to the Receiver and accountants, are entitled to reasonable 21 c o m p e n s a tio n for the performance of duties pursuant to this Order and for the cost of 22 a c tu a l out-of-pocket expenses incurred by them, from the assets now held by, in the 23 p o s s e ss io n or control of, or which may be received by, the Receivership Defendants. The 24 R e c eiv e r shall apply to the Court for approval of specific amounts of compensation and 25 26 -24- 1 e x p e n se s and must not increase the hourly rates used as the bases for such fee 2 a p p lica tio n s without prior approval of the Court. 3 4 5 6 X II. R E C E I V E R 'S FINAL REPORT AND DISBURSEMENT I T IS FURTHER ORDERED that: A. N o later than sixty (60) days from the date of the entry of this Order, the 7 R e c eiv e r shall file and serve on the parties a report (the "Final Report") to the Court that 8 d e ta ils the steps taken to dissolve the Receivership estate. The Final Report must include 9 a n accounting of the Receivership estate's finances and total assets and a description of 10 w h a t other actions, if any, must be taken to wind down the Receivership. 11 B. T h e Receiver shall mail copies of the Final Report to all known creditors of 12 th e Receivership Defendants with a notice stating that any objections to paying any assets 13 o f the Receivership Defendants to satisfy the Receiver's costs and expenses and the 14 m o n e ta ry judgment set forth in this Order must be submitted to the Court and served by 15 m a il upon the Receiver and the parties within thirty (30) days of the mailing of the Final 16 R e p o rt. 17 C. N o later than fifteen (15) days after submission of the Final Report, the 18 R e c eiv e r shall file an application for payment of compensation and expenses associated 19 w ith his performance of his duties as Receiver. 20 D. T h e Court will review the Final Report and any objections to the report and, 21 ab sen t a valid objection, will issue an order directing that the Receiver: 22 23 24 25 26 -251. P a y the reasonable costs and expenses of administering the R e c eiv e rs h ip , including compensation of the Receiver and the R e c eiv e r's personnel authorized by Section XI of this Order or other 1 2 3 4 5 E. 2. o rd e rs of this Court and the actual out-of-pocket costs incurred by th e Receiver in carrying out his duties; P a y all remaining funds to the FTC or its designated agent to reduce th e monetary judgment in Section VI. If subsequent actions (such as the completion of tax returns or further 6 a c tio n s to recover funds for the Receivership Estate) are appropriate, the Receiver shall 7 f ile an additional report or reports (the "Supplemental Reports") describing the 8 s u b s e q u e n t actions and a subsequent application for the payment of fees and expenses 9 r e la te d to the subsequent acts. 10 F. W ith Court approval, the Receiver may hold back funds for a specified 11 p e rio d as a reserve to cover additional fees and costs related to actions to be addressed in 12 a Supplemental Report. If the Receiver does not make a supplemental application for 13 f e es and expenses within the specified period, or if funds remain in the reserve fund after 14 th e payment of fees and expenses approved by the Court in response to such a 15 s u p p le m e n ta l application, all funds in the reserve funds shall be immediately paid to the 16 F T C or its designated agent. 17 18 19 X I I I. C O O P E R A T I O N WITH FTC COUNSEL I T IS FURTHER ORDERED that Defendants shall, in connection with this 20 a c tio n or any subsequent investigations related to or associated with the transactions or 21 th e occurrences that are the subject of the FTC's Complaint, cooperate in good faith with 22 th e FTC and appear at such places and times as the FTC shall reasonably request, after 23 w ritte n notice, for interviews, conferences, pretrial discovery, review of documents, and 24 f o r such other matters as may be reasonably requested by the FTC. If requested in 25 26 -26- 1 w riting by the FTC, Defendants shall appear and provide truthful testimony in any trial, 2 d e p o sitio n , or other proceeding related to or associated with the transactions or the 3 o c c u rre n c es that are the subject of the Complaint, without the service of a subpoena. 4 T h e Defendants shall also cooperate fully to assist the Commission in identifying 5 th e name, address, telephone number, date of purchase, program or product purchased, 6 to ta l amount paid, amount of any full or partial refund or chargeback, and payment 7 in f o rm a tio n for consumers who were charged by Defendants, and any further information 8 th e Commission deems necessary to effectuate any redress program for consumers. 9 10 11 X IV . C O M P L IA N C E MONITORING I T IS FURTHER ORDERED that, for the purpose of (1) monitoring and 12 in v e stig a tin g compliance with any provision of this Order and (2) investigating the 13 ac cu rac y of any of Defendants' Financial Statements upon which the Commission's 14 a g re e m e n t to this Order is expressly premised: 15 A. W ith in ten (10) days of receipt of written notice from a representative of the 16 C o m m is s io n , the Defendants each shall submit additional written reports, which are true 17 a n d accurate and sworn to under penalty of perjury; produce documents for inspection 18 a n d copying; appear for deposition; and provide entry during normal business hours to 19 a n y business location in each of the Defendant's possession or direct or indirect control to 20 in s p e c t the business operation; 21 B. I n addition, the Commission is authorized to use all other lawful means, 22 in c lu d in g but not limited to: 23 24 25 26 -271. o b tain in g discovery from any person, without further leave of court, u s in g the procedures prescribed by Rules 30, 31, 33, 34, 36, 45 and 1 2 3 4 5 6 C. 2. 6 9 of the Federal Rules of Civil Procedure; h a v in g its representatives pose as consumers and suppliers to the D e f en d a n ts , their employees, or any other entity managed or c o n tro lle d in whole or in part by any of the Defendants, without the n e c es s ity of identification or prior notice; and D e f e n d a n ts each shall permit representatives of the Commission to 7 in te rv ie w any employer, consultant, independent contractor, representative, agent, or 8 e m p lo ye e who has agreed to such an interview, relating in any way to any conduct subject 9 to this Order. The person interviewed may have counsel present. 10 P r o v id e d however, that nothing in this Order shall limit the Commission's lawful use of 11 c o m p u ls o ry process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. 49, 12 5 7 b -1 , to obtain any documentary material, tangible things, testimony, or information 13 re le v a n t to unfair or deceptive acts or practices in or affecting commerce (within the 14 m e a n in g of 15 U.S.C. 45(a)(1)). 15 16 17 XV. C O M P L IA N C E REPORTING I T IS FURTHER ORDERED that, in order that compliance with the provisions 18 o f this Order may be monitored: 19 20 21 22 23 24 25 26 -28A. F o r a period of five (5) years from the date of entry of this Order, 1. E a c h Individual Defendant shall notify the Commission of the f o llo w in g : a. A n y changes in such Defendant's residence, mailing a d d re ss e s, and telephone numbers, within ten (10) days of the d a te of such change; 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 2. b. A n y changes in such Defendant's employment status (in c lu d in g self-employment), and any change in such D e f en d a n t's ownership in any business entity within ten (10) d a ys of the date of such change. Such notice shall include the n a m e and address of each business that such Defendant is a f f ilia te d with, employed by, creates or forms, or performs s e rv ic e s for; a detailed description of the nature of the b u sin e s s ; and a detailed description of such Defendant's d u tie s and responsibilities in connection with the business or e m p lo ym e n t; and c. A n y changes in such Defendant's name or use of any aliases o r fictitious names within ten (10) days of the date of such c h a n g e; D ef en d an ts shall notify the Commission of any changes in structure o f any business entity that any Defendant directly or indirectly c o n tro ls , or has an ownership interest in, that may affect compliance o b lig a tio n s arising under this Order, including but not limited to in c o rp o ra tio n or other organization; a dissolution, assignment, sale, m e rg e r, or other action; the creation or dissolution of a subsidiary, p a re n t, or affiliate that engages in any acts or practices subject to this O rd e r; or a change in the business name or address, at least thirty (3 0 ) days prior to such change, provided that, with respect to any s u c h change in the business entity about which a Defendant learns le ss than thirty (30) days prior to the date such action is to take place, -29- 1 2 3 B. su c h Defendant shall notify the Commission as soon as is practicable a f te r obtaining such knowledge. O n e hundred eighty (180) days after the date of entry of this Order and 4 a n n u a lly thereafter for a period of five (5) years, Defendants each shall provide a written 5 re p o rt to the FTC, which is true and accurate and sworn to under penalty of perjury, 6 setting forth in detail the manner and form in which they have complied and are 7 c o m p lyin g with this Order. This report shall include, but not be limited to: 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 -302. c. b. 1. F o r each Individual Defendant: a. s u c h Defendant's then-current residence address, mailing a d d r e ss e s , and telephone numbers; s u c h Defendant's then-current employment status (including s e lf -e m p lo ym e n t), including the name, addresses, and tele p h o n e numbers of each business that such Defendant is a f f ilia ted with, employed by, or performs services for; a d e ta ile d description of the nature of the business; and a d e ta ile d description of such Defendant's duties and re sp o n s ib ilitie s in connection with the business or e m p lo ym e n t; and a n y other changes required to be reported under Subsection A o f this Section. F o r all Defendants: a. a copy of each acknowledgment of receipt of this Order, o b ta in e d pursuant to the Section titled "Distribution of O rd e r" ; and 1 2 3 C. b. a n y other changes required to be reported under Subsection A o f this Section. E a c h Defendant shall notify the Commission of the filing of a bankruptcy 4 p e titio n by such Defendant within fifteen (15) days of filing. 5 D. F o r the purposes of this Order, Defendants shall, unless otherwise directed 6 b y the Commission's authorized representatives, send by overnight courier all reports and 7 n o tif ic a tio n s required by this Order to the Commission, to the following address: 8 9 10 A ss o c ia te Director for Enforcement Federal Trade Commission 6 0 0 Pennsylvania Avenue, N.W., Room NJ-2122 W a sh in g to n , D.C. 20580 R E : FTC v. Infusion Media, Inc. 11 P r o v id e d that, in lieu of overnight courier, Defendants may send such reports or 12 n o tif ic a tio n s by first-class mail, but only if Defendants contemporaneously send an 13 e le c tro n ic version of such report or notification to the Commission at DEBrief@ftc.gov. 14 E. F o r purposes of the compliance reporting and monitoring required by this 15 O rd e r, the Commission is authorized to communicate directly with each Defendant. 16 17 18 X V I. R E C O R D K E E P IN G I T IS FURTHER ORDERED that, for a period of eight (8) years from the date of 19 e n try of this Order, the Corporate Defendants, and the Individual Defendants for any 20 b u s in e ss for which they, individually or collectively, are the majority owner or directly or 21 in d ire c tly control, are hereby restrained and enjoined from failing to create and retain the 22 f o llo w in g records: 23 A. A c c o u n tin g records that reflect the cost of goods or services sold, revenues 24 g e n e r a te d , and the disbursement of such revenues; 25 26 -31- 1 B. Personnel records accurately reflecting: the name, address, and telephone 2 n u m b e r of each person employed in any capacity by such business, including as an 3 in d e p e n d en t contractor; that person's job title or position; the date upon which the person 4 c o m m e n c ed work; and the date and reason for the person's termination, if applicable; 5 C. Customer files containing the names, addresses, phone numbers, dollar 6 a m o u n ts paid, quantity of items or services purchased, and description of items or 7 s e rv ic e s purchased, to the extent such information is obtained in the ordinary course of 8 b u s in e s s ; 9 D. Complaints and refund requests (whether received directly or indirectly, 10 su c h as through a third party) and any responses to those complaints or requests; 11 E. Copies of all sales scripts, web pages, training materials, advertisements, or 12 o th e r marketing materials; and 13 F. A ll records and documents necessary to demonstrate full compliance with 14 e a ch provision of this Order, including but not limited to, copies of acknowledgments of 15 re c eip t of this Order required by the Sections titled "Distribution of Order" and 16 " A c k n o w led g m e n t of Receipt of Order" and all reports submitted to the FTC pursuant to 17 th e Section titled "Compliance Reporting." 18 19 20 X V II. D I S T R I B U T IO N OF ORDER I T IS FURTHER ORDERED that, for a period of five (5) years from the date of 21 e n try of this Order, Defendants shall deliver copies of the Order as directed below: 22 A. C o rp o ra te Defendant: Each Corporate Defendant must deliver, through the 23 R e c e iv e r , a copy of this Order to (1) all of its principals, officers, directors, and managers; 24 (2 ) all of its employees, agents, and representatives who engage in conduct related to the 25 26 -32- 1 su b jec t matter of the Order; and (3) any business entity resulting from any change in 2 s tru c tu re set forth in Subsection A.2 of the Section titled "Compliance Reporting." For 3 c u rre n t personnel, delivery shall be within five (5) days of service of this Order upon such 4 D e f e n d a n t. For new personnel, delivery shall occur prior to them assuming their 5 re sp o n sib ilities . For any business entity resulting from any change in structure set forth 6 in Subsection A.2 of the Section titled "Compliance Reporting," delivery shall be at least 7 te n (10) days prior to the change in structure. 8 B. In d iv id u a l Defendant as control person: For any business that an Individual 9 D e f e n d a n t controls, directly or indirectly, or in which such Defendant has a majority 10 o w n e r s h ip interest, such Defendant must deliver a copy of this Order to (1) all principals, 11 o f f ic e rs , directors, and managers of that business; (2) all employees, agents, and 12 re p re se n ta tiv e s of that business who engage in conduct related to the subject matter of the 13 O rd e r; and (3) any business entity resulting from any change in structure set forth in 14 S u b se c tio n A.2 of the Section titled "Compliance Reporting." For current personnel, 15 d e liv e ry shall be within five (5) days of service of this Order upon such Defendant. For 16 n e w personnel, delivery shall occur prior to them assuming their responsibilities. For any 17 b u s in e ss entity resulting from any change in structure set forth in Subsection A.2 of the 18 S e c tio n titled "Compliance Reporting," delivery shall be at least ten (10) days prior to the 19 c h a n g e in structure. 20 C. I n d iv i d u a l Defendant as employee or non-control person: For any business 21 w h e r e an Individual Defendant is not a controlling person of a business but otherwise 22 e n g a g e s in conduct related to the subject matter of this Order, such Defendant must 23 d eliv er a copy of this Order to all principals and managers of such business before 24 e n g a g in g in such conduct. 25 26 -33- I 1 D. D e f en d a n ts must secure a signed and dated statement acknowledging 2 re c eip t of the Order, within thirty (30) days of delivery, from all persons receiving a copy 3 o f the Order pursuant to this Section. 4 5 6 XVIII. A C K N O W L E D G M E N T OF RECEIPT OF ORDER I T IS FURTHER ORDERED that each Defendant, within five (5) business days 7 o f receipt of this Order as entered by the Court, must submit to the Commission a truthful 8 sw o rn statement acknowledging receipt of this Order. 9 10 11 X IX . R E T E N T I O N OF JURISDICTION I T IS FURTHER ORDERED that this Court shall retain jurisdiction of this 12 m atter for purposes of construction, modification, and enforcement of this Order. 13 14 15 16 17 18 D A T E D :_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 19 20 21 22 23 24 25 26 -34_______________________________ ________________________________ H O N . GLORIA M. NAVARRO Gloria M. Navarro U .S . DISTRICT COURT JUDGE T IS SO ORDERED this 4th day IT October, 2010. of IS SO ORDERED. United States District Judge _______________________ I FOR DEFENDANTS TONY NORTON AND PLATINUM , INC. TELESERVI Date: K ON, INDIVIDUALLY AND AS OFFICER OF PLATINUM TELESERVICES, INC. TO 3 4 5 6 FOR THE PLAINTIFF 7 FEDERAL TRADE COMMISSION: 7?fr2 Date: iofi 9 DANIEL 0. HANKS KATHLEEN BENWAY 10 Attorneys Federal Trade Commission 11 Washington. D.C. 20580 (202) 326-2472, -2024 12 (202) 326-3395 (facsimile) dhanks@ftc.gov; kbenwayftc.gov 13 14 15 16 17 18 19 20 21 22 /10 23 24 25 26 -37- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Defendants. v. IN F U S IO N MEDIA, INC., et al., ATTACHM ENT A U N IT E D STATES DISTRICT COURT D IS T R I C T OF NEVADA F E D E R A L TRADE COMMISSION, P l a in tif f , C iv il Action No. 2:09-cv-01112G M N -L R L A C C O U N T SCHEDULE T h e following list identifies the accounts referred to in Section VI.A.9 of the S tip u late d Final Judgment and Order for Permanent Injunction and Other Equitable R e lie f as to Infusion Media, Inc.; West Coast Internet Media, Inc.; Two Warnings, LLC; T w o Part Investments, LCC; Platinum Teleservices, Inc.; Jonathan Eborn; Stephanie B u rn sid e ; Michael Mclain Miller; and Tony Norton: DBA In c o m e Initiative Pro In c o m e Initiative Pro In c o m e Initiative Pro In c o m e Initiative Pro In c o m e Initiative Pro In c o m e Initiative Pro In c o m e Initiative Pro In c o m e Initiative Pro In c o m e Initiative Pro In c o m e Initiative Pro M o n y Tree Systems A c c o u n t Number xxxxxxxxxx383494 xxxxxxxxxx385804 xxxxxxxxxx390564 xxxxxxxxxx391323 xxxxxxxxxx391968 xxxxxxxxxx383551 xxxxxxxxxx386554 xxxxxxxxxx390820 xxxxxxxxxx392388 xxxxxxxxxx393162 xxxxxxxxxx384518 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems -2- xxxxxxxxxx398658 xxxxxxxxxx399466 xxxxxxxxxx400090 xxxxxxxxxx401775 xxxxxxxxxx405404 xxxxxxxxxx405453 xxxxxxxxxx388253 xxxxxxxxxx385135 xxxxxxxxxx397007 xxxxxxxxxx400793 xxxxxxxxxx398104 xxxxxxxxxx402070 xxxxxxxxxx403417 xxxxxxxxxx404373 xxxxxxxxxx405057 xxxxxxxxxx384765 xxxxxxxxxx389798 xxxxxxxxxx400231 xxxxxxxxxx401254 xxxxxxxxxx395878 xxxxxxxxxx403490 xxxxxxxxxx404068 xxxxxxxxxx405263 xxxxxxxxxx383239 xxxxxxxxxx386489 xxxxxxxxxx392347 xxxxxxxxxx395597 xxxxxxxxxx398591 xxxxxxxxxx400041 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems M o n y Tree Systems S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID -3- xxxxxxxxxx401692 xxxxxxxxxx405479 xxxxxxxxxx405503 xxxxxxxxxx383296 xxxxxxxxxx385911 xxxxxxxxxx392099 xxxxxxxxxx392834 xxxxxxxxxx398534 xxxxxxxxxx399995 xxxxxxxxxx401569 xxxxxxxxxx405602 xxxxxxxxxx405610 xxxxxxxxxx384450 xxxxxxxxxx399904 xxxxxxxxxx401973 xxxxxxxxxx403185 xxxxxxxxxx405149 xxxxxxxxxx389442 xxxxxxxxxx404191 xxxxxxxxxx436532 xxxxxxxxxx438058 xxxxxxxxxx438074 xxxxxxxxxx439098 xxxxxxxxxx439130 xxxxxxxxxx442993 xxxxxxxxxx436508 xxxxxxxxxx438595 xxxxxxxxxx438629 xxxxxxxxxx438819 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID S a f e lo c k ID S a

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