Federal Trade Commission v. Ideal Financial Solutions, Inc. et al

Filing 248

ORDER. Plaintiff's Motion for Summary Judgment for monetary and injunctive relief 224 is GRANTED in part to the extent that it is consistent with this order.Plaintiff's Motion for Default Judgment 225 is GRANTED in part to the exte nt that is consistent with this order.The Clerk of Court is instructed to ENTER A PERMANENT INJUNCTION against Jared Mosher; Christopher Sunyich; Melissa Sunyich Gardner; Michael Sunyich; Steven Sunyich; Ascot Crossing, LLC; Avanix, LLC; Brackne ll Shore, Ltd.; Chandon Group, Inc.; Fiscal Fitness, LLC; and Ideal Financial Solutions, Inc. (see Order for terms).The Clerk of Court is instructed to enter FINAL JUDGMENT in the amount of $43,083,720 in equitable monetary relief in favor o f the FTC and against Individual Defendants Christopher Sunyich, Melissa Sunyich Gardner, Michael Sunyich, and Steven Sunyich; and Corporate Defendants Ascot Crossing, LLC; Avanix, LLC; Bracknell Shore, Ltd.; Chandon Group, Inc.; Fiscal Fitness, L LC; and Ideal Financial Solutions, Inc., jointly and severally. The Clerk of Court is instructed to enter FINAL JUDGMENT in the amount of $36,575,542 in equitable monetary relief in favor of the FTC and against defendant Jared Mosher, who is jointly and severally liable with the other defendants. This sum represents the net consumer-loss amount resulting from Mosher's violations of the FTC Act in concert with the other Defendants Signed by Judge Jennifer A. Dorsey on 2/23/16. (Copies have been distributed pursuant to the NEF - PS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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Federal Trade Commission,

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2:13-cv-00143-JAD-GWF

Plaintiff

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v.

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Order Granting in Part Motion for
Summary Judgment and Motion for
Default Judgment, Entering Final
Judgment, and Closing Case

Ideal Financial Solutions, Inc., et al.,
[ECF 224, 225]

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Defendants

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The Federal Trade Commission sued Ideal Financial Solutions, Inc., its related entities, and

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the people who control them alleging a wide-ranging fraud scheme in which Ideal, through a host of

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shell entities, purchased consumer bank and credit card information from payday-loan vendors and

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charged unwitting consumers a fee for financial services never provided.1 Defaults have been

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entered against the corporate defendants,2 and on June 30, 2015, I granted summary judgment on

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liability against the individual defendants.3
The FTC now moves for summary judgment on relief against the individual defendants,4 and

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for default judgment against the corporate defendants.5 The FTC requests a final judgment of over

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$43 million in equitable damages and injunctive relief against all defendants. I find that the FTC has

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carried its burdens to establish the claimed damages and to show that injunctive relief is appropriate,

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but I decline to grant the entirety of the injunctive relief sought by the FTC. Accordingly, I grant the

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ECF 1 (complaint); ECF 32 (amended complaint).

ECF 191 (Clerk’s entry of default against Ascot Crossing, LLC; Avanix, LLC; Bracknell Shore,
Ltd.; Chandon Group, Inc.; Fiscal Fitness, LLC; and Ideal Financial Solutions, Inc.).
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ECF 223 (order granting summary judgment on liability against Jared Mosher Christopher Sunyich,
Melissa Sunyich Gardner, Michael Sunyich, and Steven Sunyich). Consent judgments have been
entered against defendants Kent Brown and Shawn Sunyich. ECF 192, 193.

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ECF 224.

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ECF 225.

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Page 1 of 24

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FTC’s motion for summary judgment and motion for default judgment in part, enter final judgment

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consistent with my findings below, and close this case.6

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Procedural History

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The FTC filed this action against Ascot Crossing, LLC; Avanix, LLC; Bracknell Shore, Ltd.;

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Chandon Group, Inc.; Fiscal Fitness, LLC; and Ideal Financial Solutions, Inc. (corporate defendants);

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and the people who control them: Kent Brown, Jared Mosher,7 Christopher Sunyich, Melissa

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Sunyich Gardner, Michael Sunyich, Shawn Sunyich, and Steven Sunyich (individual defendants),8

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alleging that they orchestrated a fraud scheme using unfair billing practices (count 1), deceptive

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billing practices (count 2), and deceptive statements that consumers authorized payment (count 3),

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all in violation of the FTC Act.9

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Shortly after filing suit, the FTC successfully moved for a temporary restraining

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order—followed by a preliminary injunction—under which it seized defendants’ financial assets,10

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and the court appointed a receiver to oversee the operation of the corporate defendants.11 On June 5,

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2014, a clerk’s default was entered against all of the corporate defendants12 and consent judgments

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were entered against Kent Brown and Shawn Sunyich.13 On June 30, 2015, I granted the FTC’s

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motion for summary judgment on liability14 against the remaining individual defendants. But I

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declined to enter judgment on relief at that time because the FTC had failed to sufficiently prove the

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I find this motion suitable for disposition without oral argument. L.R. 78-2.

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Court mailings to Jared Mosher have been returned undelivered for more than a year because he has
apparently not updated his mailing address. ECF 199, 203, 205, 208, 215, 229, 241, and 244.

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ECF 1. The FTC added Jared Mosher as a defendant in its amended complaint. ECF 32.

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15 U.S.C. § 45.

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23

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ECF 9, 18, 20.

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Id.

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ECF 190, 191.

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13

ECF 192, 193.

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ECF 223. I incorporate that order and its findings and conclusions here and do not revisit them.

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Page 2 of 24

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requested damages.15 This was largely because I declined to consider the unsworn expert report of

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Lisa T. Wilhelm.16 I gave the FTC 30 days to file a motion for summary judgment on relief if it

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could produce sufficient admissible evidence to support its damages calculation.

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The FTC now moves for summary and default judgments that would result in a final

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monetary judgment and permanent injunctive relief against all defendants except Kent Brown and

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Shawn Sunyich.17 In support, the FTC submits two attorney affidavits,18 the affidavit of an FTC data

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analyst,19 and Wilhelm’s now properly-authenticated expert report.20 I thus consider whether—with

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the aid of Wilhelm’s report—the FTC has now sufficiently demonstrated its entitlement to summary

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and default judgments. For the reasons discussed below, I find that the FTC has sufficiently

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established the defendants’ monetary liability and that it is entitled to a narrowly-drawn injunction to

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prevent the defendants from committing future, similar violations of the FTC Act and to monitor

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their compliance.

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Motion for Summary Judgment Against the Individual Defendants
A.

Summary-judgment standards

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Summary judgment is appropriate when the pleadings and admissible evidence “show there

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is no genuine issue [of] any material fact and that the movant is entitled to judgment as a matter of

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law.”21 If the moving party satisfies Rule 56 by demonstrating the absence of any genuine issue of

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Id.

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Id. at 26.

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ECF 224 (motion for summary judgment for monetary and injunctive relief against individual
defendants Jared Mosher, Christopher Sunyich, Melissa Sunyich Gardner, Michael Sunyich, and
Steven Sunyich); ECF 225 (motion for default judgment against corporate defendants Ascot
Crossing, LLC; Avanix, LLC; Bracknell Shore, Ltd.; Chandon Group, Inc.; Fiscal Fitness, LLC; and
Ideal Financial Solutions, Inc.).
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ECF 226-2, 226-3.

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ECF 226-4.

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ECF 226-1.

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21

Kaiser Cement Corp. v. Fishbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir. 1986).

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material fact, the burden shifts to the party resisting summary judgment to “set forth specific facts

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showing that there is a genuine issue for trial.”22 The nonmoving party “must do more than simply

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show that there is some metaphysical doubt as to the material facts”; he “must produce specific

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evidence, through affidavits or admissible discovery material, to show that” there is a sufficient

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evidentiary basis on which a reasonable fact finder could find in his favor.23

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B.

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Monetary liability under the FTC Act
The FTC Act was designed to protect consumers from economic injuries. Courts thus “have

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often awarded the full amount lost by consumers rather than limiting damages to defendant[s’]

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profits.”24 The FTC need not prove that every consumer was injured; it must simply show that the

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defendants’ unlawful practices impacted an overwhelming number of consumers and caused actual

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consumer injury.25 Once the FTC meets this burden, it must then “show that its calculations

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reasonably approximated the amount of customers’ net loss.”26 The burden then “shifts to the

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defendants to show that [the FTC’s] figures [are] inaccurate.”27

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“An individual is personally liable for a corporation’s FTC Act § 5 violations if he

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‘participated directly in the acts or practices or had authority to control them’ and ‘had actual

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knowledge of material misrepresentations, was recklessly indifferent to the truth or falsity of a

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986).

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Bank of Am. v. Orr, 285 F.3d 764, 783 (9th Cir. 2002) (internal citations omitted); Bhan v. NME
Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991); Anderson, 477 U.S. at 248–49.
24

F.T.C. v. Stefanchik, 559 F.3d 924, 931 (9th Cir. 2009) (internal citation omitted); see F.T.C. v.
Publishers Bus. Servs. Inc., 540 Fed. Appx. 555, 557 (9th Cir. 2013) (finding that “the district court
applied an incorrect legal standard when it focused on the defendants’ gain rather than the loss to the
consumers.”).
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See F.T.C. v. Inc21.com Corp., 745 F. Supp. 2d 975, 1011 (N.D. Cal. 2010) (citing Stefanchik, 559
F.3d at 929, n. 12).
26

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F.T.C. v. Commerce Planet, Inc., 878 F. Supp. 2d 1048, 1091 (C.D. Cal. 2012) (internal citations
omitted).

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Id. (internal citation omitted).
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misrepresentation, or had an awareness of a high probability of fraud along with an intentional

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avoidance of the truth.’”28 Having previously determined that the individual defendants are

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personally responsible for the damages caused by the defendant corporations,29 I now consider

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whether there are any genuine issues of material fact as to whether the FTC has carried its burden to

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reasonably approximate consumer losses.

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C.

The FTC is entitled to the equitable monetary relief it requests because the consumerloss amount is not genuinely disputed.

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The FTC submits three declarations with accompanying financial records30 and the expert

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report of Lisa T. Welham to support the amount of its damage request.31 The FTC contends that this

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undisputed evidence shows consumer losses in excess of $43 million.32 To calculate consumer

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injury, the FTC relies on records from Ideal’s own “customer” database, OrangeCRM,33 and two of

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Ideal’s payment processors, Litle & Co. and Payment Data Systems, Inc.34 These payment-processor

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records show that, in addition to the $27 million in charges recorded in the OrangeCRM database,

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defendants charged $5.2 million through Ideal shell company Debt Elimination Systems in 2009 and

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F.T.C. v. Cyberspace.com LLC, 453 F.3d 1196, 1201 (9th Cir. 2006) (quoting F.T.C. v. Publishing
Clearing House, Inc., 104 F.3d 1168, 1170–71 (9th Cir. 1997)).

29

ECF 223 at 19.

30

ECF 226-2 (Waller declaration and Payment Processor Data Systems, Inc. records); ECF 226-3
(Hobbs declaration and Litle & Co. records); ECF 226-4 (Rouge declaration).
31

ECF 226-1.

32

ECF 224-1.

33

See ECF 226-4 (Rouge declaration interpreting data obtained from OrangeCRM database).

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34

Because OrangeCRM contained incomplete transaction data for credit charges in 2009 and 2010
and certain debiting campaigns in 2012, ECF 226-1 at ¶ 41, the FTC supplemented the OrangeCRM
data with records from Litle & Co. And Payment Data Systems, Inc. to fill in the gaps.
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201035 and $10.6 million through Ideal shell company Zeal Money Solutions in 2012.36 These

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charges total $43,083,720 in net consumer losses.37 The FTC argues that defendants Christopher

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Sunyich, Melissa Sunyich Gardener, Michael Sunyich, and Steven Sunyich, all of whom played

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pivotal roles in the scheme from its inception, are jointly and severally liable for the full amount.38

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Defendant Jared Mosher is jointly and severally liable for only $36,575,542—the losses that the

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scheme caused since he joined it in late 2010.39

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I find that the FTC has reasonably approximated the consumer-loss amount attributable to

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defendants: they are jointly and severally liable for $43,083,720, except for Jared Mosher, who is

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jointly and severally liable for $36,575,542.40 The burden thus shifted to the individual defendants to

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raise genuine issues of fact as to the accuracy of these amounts.41

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The individual defendants fail to rebut the FTC’s calculations. Only Melissa Sunyich

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Gardner and Christopher Sunyich offered any response to the FTC’s motion.42 Melissa Sunyich

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Gardner argues that she “did absolutely nothing wrong” and that the court should not order monetary

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35

ECF 226-3 at 4–60 (spreadsheets produced by Litle & Co showing charge and return data for Debt
Elimination Systems).
36

ECF 226-2 at 23–49 (spreadsheets produced by Payment Data Systems showing charges and return
data for Zeal Money Solutions).

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37

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ECF 224-1 (Table). This is the net amount lost by consumers and does not include chargebacks,
refunds, and returns. See ECF 226-1 at ¶ 58; ECF 226-4 at ¶¶ 15, 22; ECF 226-2 at 15, 80.
38

ECF 224-1 at 15.

39

See ECF 223 at 14 (finding that Jared Mosher joined the scheme in late 2010).

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40

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This approximation is not only reasonable, but generous to defendants. It does not include other
costs incurred by the already cash-strapped victims as a result of defendants’ misconduct, like
overdraft fees due to the unexpected charges to their accounts. See ECF 223 at 8 (finding that
“[c]onsumers suffered additional harm in the form of insufficient funds fees and other bank
assessments caused by the unexpected charges. . . .”).

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41

Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 987 (9th Cir. 2006).

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42

ECF 223, 234, 236.

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or injunctive relief,43 but she points to no evidence to show that the FTC’s calculations are

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inaccurate. In his response, Christopher Sunyich likewise disclaims liability for the underlying

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offenses and conclusorily argues that the requested relief is inappropriate.44 Also completely absent

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from his response is any evidence to show that the FTC’s damages calculations are inaccurate.

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The responding defendants dispute their liability for the underlying offenses rather than the

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FTC’s damages calculations. I previously found that the evidence “overwhelmingly” demonstrated

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their liability:45 the lines between the corporate defendants were so blurred that they formed a

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“common enterprise,” making each liable for the deceptive acts and practices of the others;46 and the

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individual defendants controlled the corporate defendants, making each individually liable for the

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violations.47 I decline to reconsider the individual defendants’ liability at this stage in the litigation,

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and they have given me no legitimate reason to do so. Because no individual defendant has satisfied

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his or her burden to demonstrate that the FTC’s damages calculations are genuinely disputed, the

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FTC is entitled to summary judgment on damages.

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D.

Standard for granting permanent injunctive relief under the FTC Act.
The FTC may seek a permanent injunction to prevent future violations of the FTC Act.48 The

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scope of the injunction depends on the facts of the particular case; and its goal is to prevent future,

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similar violations.49 Though the FTC “is not limited to prohibiting the illegal practice in the precise

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form” it existed in the past,50 the injunction must bear a reasonable relation to the defendants’

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43

ECF 234 at 8.

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44

ECF 236 at 2.

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45

ECF 223.

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46

Id. at 20 (quoting F.T.C. v. Grant Connect LLC, 763 F.3d 1094, 1105 (9th Cir. 2014)).

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47

Id. at 21–23 (citing Cyberspace.Com LLC, 453 F.3d at 1202 (internal citation omitted).

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48

15 U.S.C. § 53(b).

49

See F.T.C. v. John Beck Amazing Profits, LLC, 888 F. Supp. 2d 1006, 1012 (C.D. Cal. 2012).

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50

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F.T.C. v. Mandel Bros., 359 U.S. 385, 392 (1959) (quoting F.T.C. v. Ruberoid Co., 343 U.S. 470,
473 (1952)).
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unlawful practices.51 When fashioning injunctive relief, courts consider several factors, including the

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degree of scienter, frequency of violative acts, the defendants’ abilities to commit future violations,

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the degree of harm to consumers, and the defendants’ acceptance of responsibility.52

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E.

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The FTC has shown that permanent injunctive relief is warranted.
The undisputed evidence shows that defendants operated a sophisticated scheme to defraud

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millions of consumers out of tens of millions of dollars over a four-year period.53 Each had full

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knowledge of Ideal’s unlawful plan and practices, and each was fully aware of the alarming rates of

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consumer complaints, charge backs, returns, and terminated merchant accounts.54 None of the

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defendants has acknowledged his or her own culpability for the violations,55 and the methods

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employed by defendants are easily transferrable to other products and services. Because defendants

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have offered no admissible evidence to dispute these key facts, I find that injunctive relief is

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appropriate.

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F.

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Scope of the FTC’s proposed injunction
The FTC seeks to permanently enjoin defendants from (1) purchasing, collecting, or selling

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consumer account information (except in limited circumstances), (2) accepting remotely created

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checks and cash reload mechanisms, (3) charging consumer accounts without making material

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disclosures, and (4) misrepresenting material facts to consumers.56 The FTC also seeks to

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51

Litton Indus., Inc. v. F.T.C., 676 F.2d 364, 370 (9th Cir. 1982) (citing F.T.C. v. Colgate-Palmolive
Co., 380 U.S. 374, 394–95 (1965)).
52

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United States v. Zaken Corp., 57 F. Supp. 3d 1233, 1242 (C.D. Cal. 2014) (citing Commerce
Planet, Inc., 878 F. Supp. 2d at 1086).
53

See ECF 223 at 8 (finding that Ideal’s billing records show that it attempted to take tens of
millions of dollars from more than a million consumers between January 2009 and January 2013);
see also supra at 6 (finding that the FTC reasonably approximated consumer losses in excess of $43
million).
54

ECF 223 at 22.

55

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Except defendants Kent Brown and Shawn Sunyich. ECF 192, 193. They are not named in the
FTC’s motion and are not subject to this order.

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56

ECF 224-2 at 8–11 (proposed order).
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permanently enjoin the scheme’s masterminds—Jared Mosher, Christopher Sunyich, and Steven

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Sunyich—from marketing credit-related products or services.57 Finally, the FTC requests that I

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impose 20-year recordkeeping and compliance-reporting requirements to ensure defendants’

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compliance with these directives.58

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Defendants offer no objection to the scope of the FTC’s proposed injunction, but Melissa

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Sunyich Gardner and Christopher Sunyich filed responses in which they generally argue that

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injunctive relief is not appropriate. I nonetheless consider the reasonableness of the FTC’s proposed

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order granting injunctive relief.

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1.

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Permanent ban on collection of consumer information (all defendants)

Section I of the FTC’s proposed order enjoins defendants from “collecting, selling, renting,

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brokering, purchasing, transferring, or disclosing a consumer’s account number or similar identifier,

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in any form . . . to, from, for, or with any unaffiliated third party,” except if the customer directly

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gives the defendant the information and the disclosure is “for the sole purpose of permitting

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[d]efendant to authorize and complete a specific transaction expressly authorized by the consumer,”

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and “[d]efendant destroys consumer account information within 30 days of processing a transaction

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for that consumer.”59

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I find that section I of the FTC’s proposed order is reasonable under the circumstances. The

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collection of consumer-account information was central to the defendants’ unlawful scheme: Ideal

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purchased consumer account numbers and data, which it then imported into its consumer databases

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for the purpose of making unauthorized charges.60 Permanently enjoining defendants from collecting

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and disclosing consumer-account information without the consumer’s authorization is reasonably

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related to defendants’ violations and appropriately drawn to prevent future, similar violations.

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57

Id. at 8–9.

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58

Id. at 18–20.

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59

ECF 224-2 at 8.

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60

ECF 223.

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2.

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Section II of the FTC’s proposed order enjoins defendants from “creating or causing to be

Permanent ban on remotely created checks and payment orders (all defendants)

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created” a “[r]emotely [c]reated [c]heck or a [r]emotely [c]reated [p]ayment [o]rder as payment for

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any product or service” and “[a]ccepting from a consumer, directly or indirectly, or assisting others

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in accepting from a consumer, directly or indirectly a [c]ash-to-[m]oney [t]ransfer or [c]ash [r]eload

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[m]echanism as payment for any product or service.”61 The FTC argues that this provision is

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appropriate because these payment methods are “little-regulated and ripe for abuse;”62 because

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defendants “moved among payment methods to avoid accountability, they should be ‘fenced out’

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from using these novel payment methods.”63

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Though it may be true that these forms of payment are more loosely regulated than other

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payment methods, I decline to prohibit defendants from making or accepting payments with them on

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that basis. Because the FTC has not shown that section II’s prohibition is reasonably related to

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defendants’ misconduct, I decline to adopt it.

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3.
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Permanent ban on providing credit-related products and services (defendants Jared
Mosher, Christopher Sunyich, and Steven Sunyich)

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In section III, the FTC seeks to permanently enjoin the three main perpetrators from

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“marketing, providing, or assisting others in marketing or providing any [c]redit-[r]elated [p]roduct

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or [s]ervice or attempting to collect, sell, or assign a right to collect money from a consumer who

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purportedly agreed to purchase a [c]redit-[r]elated [p]roduct or [s]ervice.”64 The FTC argues that this

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provision is necessary because these defendants “directed many of the scheme’s most unscrupulous

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practices, including posing as a lender to purchase declined payday loan applications” and “falsely

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held themselves out as consumer credit experts” and lenders in order to purchase consumer account

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61

ECF 224-2 at 9.

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62

ECF 224-1 at 23.

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63

Id. at 24.

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64

ECF 224-2 at 9.

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information.65

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Section III of the FTC’s proposed order is reasonably related to Jared Mosher, Christopher

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Sunyich, and Steven Sunyich’s misconduct. This relief is especially appropriate in light of their

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high-level involvement in the scheme, which preyed on vulnerable customers—i.e. payday loan

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applicants—in need of financial assistance while purporting to offer nonexistent financial counseling

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and services. For these reasons, I grant the relief requested in section III.

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4.

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Section IV of the FTC’s proposed order enjoins defendants from “[c]harging or attempting

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Injunction requiring consumer authorization (all defendants)

to [c]harge any consumer’s [f]inancial [a]ccount for any product or service” unless, “[b]efore

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obtaining the consumer’s [f]inancial [a]ccount information,” they make extensive disclosures to the

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consumer and the consumer expressly consents to the transaction.66

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I decline to grant the relief requested in section IV because it is overly broad, and requiring

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defendants to make these extensive disclosures would unduly interfere with their abilities to earn a

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living and pay restitution, even in non-managerial positions. There are also laws in place to prevent

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unauthorized consumer electronic payments that defendants may be prosecuted under if they

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continue to make unauthorized transactions, so I find section IV unnecessary to prevent future

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violations and I decline to enter it.

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5.

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In section V of the FTC’s proposed order, the FTC seeks to enjoin defendants from

Injunction against misrepresentations (all defendants)

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misrepresenting any material fact “in connection with the advertising, marketing, promotion, offering

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for sale or sale of any product or service or the [c]harging of any [f]inancial [a]ccount.”67 This

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section also requires defendants to make a laundry-list of disclosures when engaged in these

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activities.68

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65

ECF 224-1 at 26.

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66

ECF 224-2 at 9–10.

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67

Id. at 11.

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68

Id.

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I find that section V, like section IV, is overly broad, not reasonably related to defendants’

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misconduct, and not necessary to prevent future, similar violations of the FTC Act by defendants.

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There are laws in place that guard against misleading sales and marketing campaigns that the FTC

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does not need an injunction to enforce. This provision would also unduly interfere with defendants’

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ability to find suitable employment to pay restitution. For these reasons, I also decline to enter the

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relief requested in section V of the FTC’s proposed order.

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6.

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Sections XI through XIV of the FTC’s proposed order contain various recordkeeping and

Recordkeeping and compliance-reporting requirements (all defendants)

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compliance-reporting requirements. These provisions require the defendants to respond to written

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requests, submit compliance reports, create and maintain certain records, and distribute this court’s

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final order to future employees.69 Courts routinely order this kind of recordkeeping and compliance-

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reporting in FTC cases,70 and I find that these provisions are reasonable under the circumstances.

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However, I reduce the reporting term from 20 to 10 years. Because defendants do not have a history

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of prior violations, I find that a ten-year reporting period is reasonable under the circumstances.71

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In sum, I decline to enter the relief requested in sections II, IV, and V of the FTC’s proposed
order, but I grant the rest of the requested relief to the extent that it is consistent with this order.

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Motion for Default Judgment Against the Corporate Defendants
A.

19

FRCP 55 standards
Federal Rule of Civil Procedure 55 provides a mechanism for obtaining a default judgment

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against parties who have failed to plead or otherwise respond to claims brought against them. After

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a clerk’s entry of default, the movant must request a default judgment from the court under Rule

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69

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70

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26
27
28

ECF 224-1 at 24.

See e.g. F.T.C. v. Wellness Support Network, Inc., 2014 WL 644749, at *21–22 (N.D. Cal. Feb. 19,
2014) (entering 20-year reporting requirement); F.T.C. v. Gil, 71 F. Supp. 2d 1030, 1051–52 (C.D.
Cal. 1999) (imposing three-year reporting requirement).
71

John Beck, 888 F. Supp. 2d at 1013–1016 (upholding a 20-year reporting period for defendants
who had extensive personal involvement in illegal scheme and had “long history of blatantly
disregarding the law” but reducing the reporting period to ten years for other defendants who “did
not have the same history.”).
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55(b)(2).72 A district court has discretion to enter a judgment by default, which typically turns on the

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consideration of the seven Eitel v. McCool factors: (1) potential prejudice to the plaintiff, (2) the

3

merits of the plaintiff’s substantive claim, (3) sufficiency of the complaint, (4) the amount of money

4

at stake in the action, (5) the potential disputes of material facts, (6) whether the default was due to

5

excusable neglect, and (7) the strong federal policy favoring adjudications on the merits.73 All but

6

the final factor, which is neutral, weigh in favor of entering default judgment against defendants

7

Ascot Crossing, LLC; Avanix, LLC; Bracknell Shore, Ltd.; Chandon Group, Inc.; Fiscal Fitness,

8

LLC; and Ideal Financial Solutions, Inc.

9

B.

10

The Eitel factors favor default judgments against the corporate defendants.
The first, second, and third Eitel factors all weigh in favor of default judgment on each of the

11

FTC’s claims. The FTC may suffer prejudice if default judgment is not entered because the

12

defaulted corporate defendants have failed—despite numerous opportunities—to retain counsel and

13

file a proper answer to the FTC’s complaint.74 As to the second and third factors, the FTC’s claims

14

are both sufficient and have merit. The allegations in the FTC’s amended complaint, except for

15

damages allegations, were all deemed admitted by virtue of the clerk’s entry of default. And I

16

previously found that the FTC had met its burden to demonstrate that the corporate defendants

17

engaged in the alleged misconduct.75 Thus, the first three Eitel factors favor default judgment.

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19
20
21

72

Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986); Trustees of the Bricklayers & Allied
Craftworkers Local 13 Defined Contribution Pension Trust for S. Nevada v. Tumbleweed Dev., Inc.,
2013 WL 143378, at * 2 (D. Nev. Jan 11, 2013) (citing Eitel).
73

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23
24
25
26
27
28

See Eitel, 782 F.2d at 1471–72.

74

See ECF 99 (warning defendants that corporate entities may only appear in federal court through a
licensed attorney, denying the FTC’s first motion to strike without prejudice, and giving corporate
defendants 20 days to retain attorneys and file an answer to the FTC’s complaint); see also ECF 190
(granting the FTC’s second motion to strike and striking the defendants’ April 25, 2013, answer to
the extent it was filed on behalf of the corporate defendants).
75

See ECF 223 at 18 (finding that the evidence “overwhelmingly” established that the corporate
defendants made unauthorized charges as alleged in count one); see also id. at 18–19 (finding that
the FTC satisfied its burden to demonstrate that the corporate defendants engaged in false billing and
made material misrepresentations as alleged in counts two and three).
Page 13 of 24

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The fourth Eitel factor considers the amount of money at stake and the seriousness of the

2

defendants’ conduct, which involves an assessment of whether the recovery sought is proportional to

3

the harm caused by defendants.76 The amount of money at stake attributable to the conduct alleged

4

in the complaint and proven on summary judgment—$43,083,720—is plainly significant. But the

5

recovery sought is also directly proportional to the harm caused by defendants’ conduct. As

6

discussed supra, the FTC has offered detailed evidence to show how it arrived at the $43 million

7

figure, which represents the net consumer-loss amount attributable to defendants. The fourth Eitel

8

factor thus also supports default judgment.

9

The fifth and sixth Eitel factors likewise support entry of default judgment. The fifth factor

10

supports default judgment because a number of material facts are deemed admitted as a matter of law

11

by virtue of the corporate defendants’ default.77 And I found other material facts establishing their

12

guilt to be undisputed when I granted the FTC’s motion for summary judgment on liability against

13

the individual defendants.78 The sixth factor also weighs in favor of default judgment because there

14

is no evidence to suggest excusable neglect: Each corporate defendant was served with the FTC’s

15

amended complaint and the FTC’s motion for entry of default;79 but, despite numerous opportunities

16

to properly respond, they never did.80

17

Finally, the seventh Eitel factor—favorability of decision on the merits—is neutral. Federal

18

courts generally favor decisions on the merits. However, although default has been entered against

19

the corporate defendants, I necessarily decided the merits of the claims against them when I granted

20

the FTC’s motion for summary judgment on liability against the individual defendants. The record

21
22
76

23

See Trustees of the Bricklayers, 2013 WL 143378, at * 3 (citations omitted).

77

24
25
26

FED R. CIV. PROC. 8(b)(6) (stating that “[a]n allegation—other than one relating to the amount of
damages—is admitted if a responsive pleading is required and the allegation is not denied.”).

78

See ECF 223.

79

27

ECF 190 at 4 (finding that the FTC filed proof of service on all the corporate defendants); ECF
145, 146, 146-1–146-5 (proof of service).

28

80

See ECF 99, 190.
Page 14 of 24

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facts establishing their guilt are thus much more fully developed than in the usual default-judgment

2

case. In sum, I find that the Eitel factors weigh heavily in the FTC’s favor, grant the FTC’s motion

3

to the extent it is consistent with this order, and enter a default judgment against the corporate

4

defendants.

5

As discussed supra, the FTC has sufficiently proven the requested damages, and like the

6

individual defendants, the corporate defendants offer no evidence to dispute the FTC’s calculations.

7

Accordingly, the corporate defendants are jointly and severally liable for $43,083,720. The FTC’s

8

proposed order against the corporate defendants is nearly identical to the one that it submitted against

9

the individual defendants.81 Therefore, for the reasons discussed above, I decline to enter the relief

10

requested under sections II-IV of the FTC’s proposed order against the corporate defendants; but I

11

grant the remainder of the requested relief to the extent that it is consistent with this order.

12

Final Judgment and Permanent Injunction Order

13

Accordingly, with good cause appearing and no reason to delay, IT IS HEREBY ORDERED,

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ADJUDGED, and DECREED that:

15

I.

16
17

is GRANTED in part to the extent that it is consistent with this order;
II.

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19

Plaintiff’s motion for summary judgment for monetary and injunctive relief [ECF 224]

Plaintiff’s motion for default judgment [ECF 225] is GRANTED in part to the extent
that is consistent with this order.

III.

The Clerk of Court is instructed to ENTER A PERMANENT INJUNCTION against Jared

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Mosher; Christopher Sunyich; Melissa Sunyich Gardner; Michael Sunyich; Steven Sunyich;

21

Ascot Crossing, LLC; Avanix, LLC; Bracknell Shore, Ltd.; Chandon Group, Inc.; Fiscal

22

Fitness, LLC; and Ideal Financial Solutions, Inc. on the following terms:

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A.

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For purposes of this order:

25

1.

26

Definitions

“Charge” means any claimed obligation to pay against a financial account and any
debit or other withdrawal from a financial account.

27
28

81

Compare ECF 224-2 with ECF 225-2.
Page 15 of 24

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2.

“Defendants” means Jared Mosher; Christopher Sunyich; Melissa Sunyich Gardner;

2

Michael Sunyich; Steven Sunyich; Ascot Crossing, LLC; Avanix, LLC; Bracknell

3

Shore, Ltd.; Chandon Group, Inc.; Fiscal Fitness, LLC; and Ideal Financial Solutions,

4

Inc. individually, collectively, or in any combination.

5

a.

Jared Mosher; Christopher Sunyich; Melissa Sunyich Gardner; Michael

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Sunyich; Steven Sunyich are also referenced collectively as the “Individual

7

Defendants,” and

8

b.

9

Ascot Crossing, LLC; Avanix, LLC; Bracknell Shore, Ltd.; Chandon Group,
Inc.; Fiscal Fitness, LLC; and Ideal Financial Solutions, Inc. are also

10

referenced collectively as the “Corporate Defendants.”

11

3.

“Credit-related product or service” means a product or service that is represented,

12

expressly or by implication, to: (a) provide any consumer or assist any consumer in

13

receiving credit in any form; (b) provide any consumer or assist any consumer in

14

receiving debit, prepaid, or stored-value cards; (c) improve, or arrange to improve,

15

any consumer’s credit record, credit history, or credit rating; (d) provide any

16

consumer or assist any consumer in receiving any advice or assistance with obtaining

17

payday loans or any other form of credit; or (e) manage the debt between a consumer

18

and one or more services or debt collectors.

19

4.

20

“Financial account” means a credit card, debit card, a pre-paid or stored-value card,
bank account, or other account through which a consumer can be charged.

21

5.

“Receiver” means Thomas McNamara, who was appointed as permanent equity

22

receiver over corporate defendants and receivership entities under section IV of this

23

court’s February 15, 2013, preliminary-injunction order.82

24

6.

“Receivership entity” means the corporate defendants and their successors and assigns

25

and any entities that are part of defendants’ common enterprise, including: AFAB

26

Corp.; Bunker Hillside, LLC; Debt Elimination Systems, LLC; Debt to Wealth, LLC

27
28

82

ECF 18.
Page 16 of 24

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(Nevada); Debt to Wealth LLC (St. Kitts); Dollars West, LLC; Fluidity, LLC;

2

Financial Fitness, LLC; Funding Guarantee, LLC; Ideal Merchant Services; Ideal

3

Goodness, LLC; IWB Services (St. Kitts); Money Mastery, LLC; Money Online

4

Saver; New Day Solutions; Newline Cash, LLC; Newport Sails, LLC; Pathfinder

5

Enterprises; PK Travel, LLC; Shaw Shank, LLC; Trademark Media, LLC; US Debt

6

Assistance Corp.; US Debt Relief, LLC; Wealth Fitness, LLC; and Zeal Funding

7

Services, LLC.

8

B.

Permanent injunctive relief

9

1.

Permanent ban on collection of consumer account information (all defendants)

10

Defendants are permanently enjoined from collecting, selling, purchasing, transferring, or

11

otherwise disclosing a consumer’s account number or similar identifier to, from, for, or with any

12

unaffiliated third party and from assisting others in doing so.

13

A defendant may disclose a consumer’s account number or other identifier that a consumer

14

gives directly to that defendant if disclosure is necessary to process or complete a specific transaction

15

expressly authorized by the consumer. The defendant must then destroy the consumer account

16

information within 30 days of processing that transaction, except as necessary to comply with section

17

7 below (recordkeeping).

18
2.
19

Permanent ban on credit-related products or services (defendants Jared Mosher,
Christopher Sunyich, and Steven Sunyich)

20

Defendants Jared Mosher, Christopher Sunyich, and Steven Sunyich are permanently

21

enjoined from marketing, providing, or assisting others in marketing or providing any credit-related

22

product or services or attempting to collect, sell, or assign a right to collect money from a consumer

23

who purportedly agreed to purchase a credit-related product or service.

24

3.

25

Defendants and persons acting in concert with any of them who receive actual notice of this

26
27
28

Permanent ban regarding consumer information (all defendants)

order are permanently enjoined from:
a.

Failing to provide sufficient consumer information to enable the FTC to
efficiently administer consumer redress. If a representative of the FTC
Page 17 of 24

1

requests in writing any information related to redress, defendants must provide

2

it in the requested form within 14 days of receipt of the request.

3

b.

Disclosing, using, or benefitting from consumer information, including

4

identifying information and any data that enables access to a customer’s

5

account, that any defendant obtained before entry of this order in connection

6

with any business of a receivership entity; and

7

c.

Failing to destroy consumer information in all forms in their possession,

8

custody, or control within 30 days of this order. Except that consumer

9

information need not be disposed of, and may be disclosed to, the extent

10

requested by a government agency or as required by law, regulation, or court

11

order.

12

4.

13

Defendants are instructed that they may not interfere with the Receiver’s performance of his

14

Cooperation with Receiver

duties and must cooperate fully with the Receiver in:

15

a.

Pursuing any related claims by the Receiver against other persons or entities;

16

b.

Pursing any funds or assets of a receivership entity;

17

c.

Defending any related actions or claims brought against the Receiver, the

18

receivership estate, or any receivership entity by other persons or entities; and

19

d.

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21

Executing any documents necessary to transfer assets or ownership interests to
the Receiver.

If it becomes necessary to execute additional documents to transfer or liquidate assets of a

22

receivership entity or any other assets that are surrendered under this order, or to dissolve and wind

23

up the receivership entities, defendants must execute the requested documents within 5 days of

24

receipt of the Receiver or the FTC’s request.

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26

5.

Order acknowledgments
a.

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Each defendant must submit to the FTC a sworn acknowledgment of receipt of
this order within 7 days of its entry.

b.

For 10 years after entry of this order, each defendant (for any business that the
Page 18 of 24

1

defendant is the majority owner of, or directly or indirectly controls) must

2

deliver a copy of this order to:

3

(i) all principals, officers, directors, and LLC managers and members;

4

(ii) all employees, agents, and representatives who participate in online

5

commerce;

6

(iii) any business entity resulting from any change in structure as set forth in

7

section 6 below (compliance reporting); and

8

(iv) any third-party facilitator for charges, including payment processors and

9

list brokers.

10

Defendants must deliver a copy of this order to their current personnel within 7 days of its

11

entry; for all others, delivery must be made before they assume their responsibilities. Defendants

12

must then obtain and submit a signed, dated acknowledgment of receipt of this order from each

13

recipient within 30 days.

14

6.

15

Defendants must make these submissions to the FTC:

16

Compliance reporting

a.

Within one year of this order, each defendant must submit a compliance

17

report, sworn under penalty of perjury, in which each defendant must:

18

i.

(a) identify that defendant’s primary physical, postal, and email

19

address and telephone number as a point of contact for the

20

FTC;

21

(b) identify all of that defendant’s businesses by all of their

22

names and telephone numbers and physical, postal, email, and

23

internet addresses;

24

(c) describe the activities of each business, including the goods

25

and services offered, the means of advertising, marketing, and

26

sales, and the involvement of any other defendant;

27

(d) describe in detail how that defendant is in compliance with

28

each section of this order, and
Page 19 of 24

1

(e) submit any outstanding order acknowledgments as required

2

under section 5 of this order.

3

ii.

Each Individual Defendant must also:

4

(a) submit all telephone numbers and all physical, postal, email

5

and internet addresses, including all residences;

6

(b) identify all business activities, including any business for

7

which that defendant performs services and any entity in which

8

the defendant has any ownership interest; and

9

(c) describe in detail that defendant’s involvement in the

10

business, including title, role, responsibilities, participation,

11

authority, control, and ownership.

12

b.

For 10 years after entry of this order, each defendant must submit a

13

sworn compliance notice within 14 days of any change in the

14

following:

15

i.

(a) any designated point of contact; or (b) the structure of any

16

entity in which that defendant has any ownership interest, or

17

that he or she controls directly or indirectly, that may affect

18

compliance obligations arising under this order.

19

ii.

Each Individual Defendant must also report any change in:

20

(a) name or residence address; or (b) title or role in any

21

business activity, including any business for which that

22

defendant performs services or has any ownership interest, and

23

any change in that business’s name, physical address, or

24

internet address.

25

c.

Each defendant must also submit to the FTC notice of the filing of any

26

bankruptcy petition or insolvency proceeding by or against that defendant

27

within 14 days of its filing.

28

d.

Any submission to the FTC required by this order must be sworn under
Page 20 of 24

1

penalty of perjury and comply with 28 U.S.C. § 1746 by concluding “I

2

declare under penalty of perjury under the laws of the United States of

3

America that the foregoing is true and correct. Executed on:____” and

4

supplying the date, signatory’s full name, title (if applicable), and

5

signature.

6

e.

Unless otherwise directed by the FTC representative in writing, all

7

submissions to the FTC under this order must be emailed to [e-mail]

8

or sent by overnight courier (not the U.S. Postal Service) to: Associate

9

Director for Enforcement, Bureau of Consumer Protection, Federal

10

Trade Commission, 600 Pennsylvania Avenue, NW Washington, D.C.

11

20580. The subject line must begin: FTC v. Ideal Financial Solutions, et

12

al., X130044.

13

7.

14

Defendants must create certain records for 10 years after entry of this order, and must retain

Recordkeeping

15

them for 5 years after creation. For any business that a defendant controls or is, individually or

16

collectively with any other defendant, a majority owner, the defendant must create and retain:

17

a.

Proof of consumer’s consent and confirmation to a charge, including the

18

consumer’s name, phone number, and address; the manner, time, place, and

19

method of the consent; and supporting electronic data;

20

b.

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

21

c.

Personnel records showing, for each person providing services, whether as an

22

employee or otherwise, that person’s name, addresses, telephone numbers, job

23

title or position, dates of service, and (if applicable) reason for termination;

24

d.

25
26

directly or indirectly, and any response;
e.

27
28

Records of all consumer complaints and refund requests, whether received

All records necessary to demonstrate full compliance with each provision of
this order, including all submissions to the FTC;

f.

A copy of each unique advertisement or other marketing material, including
Page 21 of 24

1

affiliate network materials; and

2

g.

3

Any documentation of commercial transactions or contracts with payment
processors or list brokers.

4

8.

5

For purposes of monitoring defendants’ compliance with this order:

6

Compliance monitoring

a.

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

7

FTC, each defendant must: submit additional compliance reports or other

8

requested information, which must be sworn under penalty of perjury; appear

9

for depositions; and produce documents for inspection and copying. The FTC

10

is also authorized to obtain discovery, without further leave of court, using any

11

of the procedures prescribed by the Federal Rules of Civil Procedure 29, 30

12

(including telephonic depositions), 31, 33, 34, 36, 45, and 69.

13

b.

For matters concerning this order, the FTC may communicate directly with

14

each defendant, and defendants must permit FTC representatives to interview

15

any employee or other affiliate of that defendant who has agreed to be

16

interviewed. The interviewee may have counsel present.

17

c.

The FTC may use all other lawful means to monitor defendants’ compliance

18

with this order, and nothing in this order limits the FTC’s lawful use of

19

compulsory process under sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49,

20

57b-1.

21
22

IV.

Monetary judgment
A.

The Clerk of Court is instructed to enter FINAL JUDGMENT in the amount of

23

$43,083,720 in equitable monetary relief in favor of the FTC and against Individual

24

Defendants Christopher Sunyich, Melissa Sunyich Gardner, Michael Sunyich,

25

and Steven Sunyich; and Corporate Defendants Ascot Crossing, LLC; Avanix,

26

LLC; Bracknell Shore, Ltd.; Chandon Group, Inc.; Fiscal Fitness, LLC; and

27

Ideal Financial Solutions, Inc., jointly and severally. This sum represents the net

28

consumer-loss amount resulting from defendants’ violations of the FTC Act.
Page 22 of 24

1

2.

The Clerk of Court is instructed to enter FINAL JUDGMENT in the amount of

2

$36,575,542 in equitable monetary relief in favor of the FTC and against defendant

3

Jared Mosher, who is jointly and severally liable with the other defendants. This sum

4

represents the net consumer-loss amount resulting from Mosher’s violations of the

5

FTC Act in concert with the other Defendants.

6

3.

This judgment against the defendants will be reduced by funds turned over to the FTC

7

by the Receiver, but all taxes and fees assessed against the defendants or Receiver

8

from the sale or transfer of assets will not reduce the amount of the judgment.

9

4.

All funds paid to the FTC under this section must be deposited into a fund

10

administered by the FTC or its designee to be used for equitable relief. Any money

11

not used for equitable relief must be deposited to the U.S. Treasury as disgorgement.

12

Defendants have no right to challenge any actions taken by the FTC under this

13

subsection.

14

5.

Defendants must submit their taxpayer identification numbers to the FTC within 10

15

days of this order, and these numbers may be used for collecting and reporting on any

16

delinquent amount arising out of this order, in accordance with 31 U.S.C. § 7701.

17

V.

18

Lifting the asset freeze
The freeze against defendants’ assets under the temporary restraining order entered on

19

January 30, 2013,83 by the preliminary injunction entered on February 15, 2013,84 and by the

20

preliminary injunction entered on May 10, 2013,85 is lifted for the sole purpose of transferring assets

21

as provided in this order, and will dissolve once the transfer has been completed.

22
23
24
25
26

83

ECF 10.

27

84

ECF 18.

28

85

ECF 49.
Page 23 of 24

1

VI.

2

Receivership wrap up and termination
The Receiver must complete all duties within 180 days of this order, but any party or the

3

Receiver may request an extension or shortening of the Receiver’s term for good cause. The

4

Receiver may petition the court for reasonable compensation from the receivership estate for

5

performance of his duties and for costs.

6

VII.

7
8
9
10
11

Retention of jurisdiction
This court retains jurisdiction over this matter for construction, modification, and

enforcement of this order.
The Clerk of Court is instructed to enter final judgment consistent with this order and
Close this Case.
DATED February 23, 2016

12
13
14

_________________________________
______________________
_
_ __ _
_
Jennifer A. Dorsey
ennifer A.
nif
i
United States District Judge
d States District Judge
ta
ict u

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