Federal Trade Commission v. Adept Management, Inc. et al

Filing 738

AMENDED ORDER For Permanent Injunction and Monetary Judgment. Please access entire text by document number hyperlink. Ordered and Signed on 07/10/2019 by Magistrate Judge Mark D. Clarke. (rsm)

Krista K. Bush, WSBA 30881
[e-mail]
Laura M. Solis, WSBA 36005
[e-mail]
Connor B. Shively, WSBA 44043
[e-mail]
Richard McKewen, WSBA 45041
[e-mail]
Sophia Calderon, CA Bar No. 27813 5
[e-mail]
W. Stuart Hirschfeld, WSBA 23532
[e-mail]
Stephen T. Fairchild, WSBA 41214
[e-mail]
Federal Trade Commission
915 Second Ave., Suite 2896
Seattle, WA 98174
Phone: [phone]
Fax: [phone]
Attorneys for Plaintiff
Federal Trade Commission

UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
MEDFORD DIVISION

FEDERAL TRADE COMMISSION,
Plaintiff,
V.

Case No: 1:16-cv-00720-CL

AMENDED ORDER FOR PERMANENT
INJUNCTION AND MONETARY
JUDGMENT

ADEPT MANAGEMENT, INC., et al.,
Defendants.

AMENDED ORDER FOR PERMANENT INJUNCTION AND MONETARY JUDGMENT
1

Having considered the Plaintiff Federal Trade Commission's ("Commission" or FTC")
proposed form of permanent injunction and monetary judgment, any opposition thereto, and the
entire record established in this case, the Court enters this Order for Permanent Injunction and
Monetary Judgment.
IT IS THEREFORE ORDERED as follows:
DEFINITIONS
For the purpose of this Order, the following definitions apply:
1.

"Corporate Defendants" means: Hoyal & Associates, Inc., Reality Kats, LLC,

Adept Management, Inc., Anchor Publishing Group, Inc., Associated Publishers Network, Inc.,
Atlas Business Consulting LLC, Clarity Group, Inc., Consolidated Publishers Exchange, Inc.,
Crown Resource Management LLC, Customer Access Services, Inc., Express Publishers Service,
Inc., HCG, Inc., Henry Cricket Group, LLC, Liberty Publishers Service, Inc., Magazine Clearing
Exchange, Inc., Magazine Link, Inc., Maximillian, Inc., North West Data Services LLC, PPP
Magazines, Inc., Publishers Payment Processing, Inc., Publishers Payment Processing, Inc.,
Specialties, Inc., Subscription House Agency, Inc., United Publishers Exchange, Inc., and
Wineoceros Wine Club, Inc., and their DBAs, subsidiaries, affiliates, successors, and assigns.
2.

"Defendants" means all of the Individual Defendants and the Corporate

Defendants, individually, collectively, or in any combination.
3.

"Direct Mail" includes any solicitation or other marketing effort that uses the U.S.

Postal Service, a foreign postal service, or a commercial mail carrier to communicate directly with
consumers through printed materials.
4.

"Individual Defendants" means:
(1)

Linda Babb;

AMENDED ORDER FOR PERMANENT INJUNCTION AND MONETARY JUDGMENT
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(2)

Shannon Bacon, a/k/a Shannon Balero, a/k/a Shannon Gordon;

(3)

Jeffrey Hoyal;

(4)

Lori Hoyal;

(5)

Colleen Kaylor;

(6)

Laura Lovrien, a/k/a Laura Babb;

(7)

Noel Parducci, a/k/a Noel Littlefield, a/k/a/ Noelle Littlefield;

(8)

Lydia Pugsley, a/k/a Lydia Babb;

(9)

Dennis Simpson; and

(10)

William Strickler.

ORDER
I.

BAN ON DIRECT MAIL MARKETING

IT IS ORDERED that Defendants are permanently restrained and enjoined from
advertising, marketing, promoting, offering for sale, or selling, or assisting others in the
advertising, marketing, promoting, offering for sale, or selling, of any good or service by Direct
Mail, whether directly or indirectly.

If an Individual Defendant believes a prospective job or position may run afoul of Section
I, that Defendant may make a written submission, sworn under penalty of perjury, for an FTC staff
advisory opinion. Such request must describe, in detail, the proposed relevant circumstances,
including by specifically identifying the basis for the Individual Defendant's belief about possible
violations of Section I. Any subsequent change in circumstances that an Individual Defendant
knows, or should know, may violate Section I must be immediately identified to FTC staff by a
second such submission, or the Defendant will have constructive notification ofrevocation of the
opinion. An FTC staff opinion is advisory only, may be rescinded, and does not bind the FTC.

AMENDED ORDER FOR PERMANENT INJUNCTION AND MONETARY JUDGMENT
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II.

PROHIBITION AGAINST MISREPRESENTATIO NS

IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, employees,
and attorneys, and all other persons in active concert or participation with any of them, who
receive actual notice of this Order, whether acting directly or indirectly, in connection with the
advertising, marketing, promotion, offering for sale, sale, or distribution of any good or service,
are permanently restrained and enjoined from misrepresenting or assisting others in
misrepresenting, expressly or by implication:
A.

That Defendants' marketing materials are newspaper or magazine subscription

notices from, or authorized by, the publishers of the publ~cations identified in the marketing
materials;

B.

That a consumer's existing or "regular" newspaper or magazine subscriptions are

due for renewal or will expire unless payment is made;
C.

That newspaper or magazine subscriptions are "automatic," in that the specified

newspaper or magazine subscription will be provided in all instances;
D.

That consumers will receive the specified newspaper or magazine subscription at a

price offered or authorized by the publishers; and
E.

Any other fact material to consumers concerning any good or service, such as: the

total costs; any material restrictions, limitations, or conditions; or any material aspect of its
performance, efficacy, nature, or central characteristics.

III.

CUSTOMER INFORMATION

IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, employees,
and attorneys, and all other persons in active concert or participation with any of them, who
receive actual notice of this Order, are permanently restrained and enjoined from directly or
indirectly:
AMENDED ORDER FOR PERMANENT INJUNCTION AND MONETARY JUDGMENT
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A.

Failing to provide sufficient customer information to enable the Commission to

efficiently administer consumer redress. If a representative of the Commission requests in
writing any information related to redress, Defendants must provide it, in the form prescribed by
the Commission, within 30 days;

B.

Disclosing, using, or benefitting from customer information, including the name,

address, telephone number, email address, social security number, other identifying information,
or any data that enables access to a customer's account (including a credit card, bank account, or
other financial account, or a subscription account), that any Defendant obtained prior to entry of
this Order from consumers in connection with the advertising, marketing, promotion, offering for
sale, sale, or distribution of newspaper or magazine subscriptions; and
C.

Failing to destroy such customer information in all forms in their possession,

custody, or control within 30 days after receipt of written direction to do so from a representative
of the Commission.
This provision does not prevent any Defendant from responding to government inquiries
from any agency with the authority to request such information.

IV.

MONETARY JUDGMENT

IT IS FURTHER ORDERED that:

A.

Judgment in the amount of eight million, nine hundred forty-two thousand, seven

hundred seventy-four dollars and two cents ($8,942,774.02) is entered in favor of the Commission
against the Corporate Defendants, Individual Defendant Dennis Simpson, Individual Defendant
Jeffrey Hoyal, and Individual Defendant Lori Hoyal, jointly and severally, as equitable monetary
relief.

B.

Each Corporate Defendant, Individual Defendant Dennis Simpson, Individual

AMENDED ORDER FOR PERMANENT INJUNCTION AND MONETARY JUDGMENT
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Defendant Jeffrey Hoyal, and Individual Defendant Lori Hoyal must submit to the Commission
their Taxpayer Identification Numbers (Social Security Numbers or Employer Identification
Numbers), which may be used for collecting and reporting on any delinquent amount arising out of
this Order, in accordance with 31 U.S.C. § 7701.
C.

All money paid to the Commission pursuant to this Order may be deposited into a

fund administered by the Commission or its designee to be used for equitable relief, including
consumer redress and any attendant expenses for the administration of any redress fund. If a
representative of the Commission decides that direct redress to consumers is wholly or partially
impracticable or money remains after redress is completed, the Commission may apply any
remaining money for such other equitable relief (including consumer information remedies) as it
determines to be reasonably related to Defendants' practices alleged in the Complaint.

V.

ORDER ACKNOWLEDGMENTS

IT IS FURTHER ORDERED that Defendants obtain acknowledgments ofreceipt of this
Order:
A.

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

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

B.

For 5 years after entry of this Order, each Individual Defendant for any business

that such Defendant, individually or collectively with any other Defendants, is the majority owner
or controls directly or indirectly, and each Corporate Defendant, must deliver a copy of this Order
to:·
(1) all principals, officers, directors, and LLC managers and members;
(2) all employees having managerial responsibilities for advertising of, marketing of,
promotion of, offering for sale, sale, distribution of, receiving, processing, clearing, or submitting

AMENDED ORDER FOR PERMANENT INJUNCTION AND MONETARY JUDGMENT
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of newspaper or magazine subscription orders, and all agents and representatives who participate
in the advertising of, marketing of, promotion of, offering for sale, sale, distribution of, receiving,
processing, clearing, or submitting of newspaper or magazine subscription orders; and
(3) any business entity resulting from any change in structure as set forth in the Section
titled Compliance Reporting.
C.

In any other business, such as one in which the Individual Defendant is an

employee without any ownership or control, that Individual Defendant must deliver a copy of this
Order to all principals and managers of the business before participating in the advertising,
marketing, promotion, offering for sale, sale, distribution of, receiving, processing, clearing, or
submitting of newspaper or magazine subscription orders. Note that if the Defendant is an
employee and has no participation or involvement with any newspaper or magazine subscription
orders, this subsection does not apply.
D.

Delivery must occur within 30 days of entry of this Order for current personnel.

For all others, delivery must occur before they assume their responsibilities.
E.

From each individual or entity to which a Defendant delivered a copy of this Order,

that Defendant must obtain, within 30 days, a signed and dated acknowledgment ofreceipt of this
Order.

VI.

COMPLIANCE REPORTING

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

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

report, sworn under penalty of perjury:
1.

Each Defendant must: (a) identify the primary physical, postal, and email

address and telephone number, as designated points of contact, which representatives of the
AMENDED ORDER FOR PERMANENT INJUNCTION AND MONETARY JUDGMENT
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Commission may use to communicate with the Defendant; (b) identify all of that Defendant's
businesses by all of their names, telephone numbers, and physical, postal, email, and Internet
addresses; (c) describe the activities of each business, including the goods and services offered, the
means of advertising, marketing, and sales, and the involvement of any other Defendant (which
Individual Defendants must describe if they know or should know due to their own involvement);
(d) describe in detail whether and how the Defendant is in compliance with each Section of this
Order; and (e) provide a copy of each Order Acknowledgment obtained pursuant to this Order,
unless previously submitted to the Commission.
2.

Additionally, each Individual Defendant must: (a) identify all telephone

numbers and all physical, postal, email and Internet addresses, including all residences;
(b) identify all business activities, including any business for which such Defendant performs
services whether as an employee or otherwise and any entity in which such Defendant has any
ownership interest; and (c) describe in detail such Defendant's involvement in each such business,
including title, role, responsibilities, participation, authority, control, and any ownership.

B.

For 20 years after entry of this Order, Defendants must submit a compliance notice,

sworn under penalty of perjury, within 3 0 days of any change in the following:
1.

Each Defendant must report any change in: (a) any designated point of

contact; or (b) the structure of any Corporate Defendant or any entity that the Defendant has any
ownership interest in or controls directly or indirectly that may affect compliance obligations
arising under this Order, including: creation, merger, sale, or dissolution of the entity or any
subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order.
2.

Additionally, each Individual Defendant must report any change in:

(a) name, including aliases or fictitious name, or residence address; or (b) title or role in any

AMENDED ORDER FOR PERMANENT INJUNCTION AND MONET ARY JUDGMENT
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business activity, including any business for which such Defendant performs services whether as
an employee or otherwise and any entity in which such Defendant has any ownership interest, and
identify the name, physical address, and any Internet address of the business or entity.
C.

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

bankruptcy petition, insolvency proceeding, or similar proceeding by or against such Defendant
· within 30 days of its filing.
D.

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

penalty of perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by
concluding: "I declare under penalty of perjury under the laws of the United States of America that
the foregoing is true and correct. Executed on: _ _" and supplying the date, signatory's full
name, title (if applicable), and signature.
E.

Unless otherwise directed by a Commission representative in writing, all

submissions to the Commission pursuant to this Order must be emailed to [e-mail] or sent
by overnight courier (not the U.S. Postal Service) to: Associate Director for Enforcement, Bureau
of Consumer Protection, Federal Trade Commission, 600 Pennsylvania A venue NW, Washington,
DC 20580. The subject line must begin: FTC v. Adept Management, Inc., No. X160035.

VII.

RECORDKEEPING

IT IS FURTHER ORDERED that Defendants must create certain records for 20 years after
entry of the Order, and retain each such record for 5 years. Specifically, Corporate Defendants, in
connection with the advertising, marketing, promotion, offering for sale, or sale of any newspaper
or magazine subscription, and each Individual Defendant for any business that such Defendant,
individually or collectively with any other Defendants, is a majority owner or controls directly or
indirectly, must create and retain the following records:
A.

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

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B.

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

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

Records of all consumer complaints and refund requests, whether received directly

or indirectly, such as through a third party, and any response;
D.

All records necessary to demonstrate full compliance with each provision of this

Order, including all submissions to the Commission; and
E.

A copy of each unique advertisement, mailer, or other marketing material.

VIII. COMPLIANCE MONITORING
IT IS FURTHER ORDERED that, for the purpose of monitoring Defendants' compliance
with this Order and any failure to transfer any assets as required by this Order:
A.

Within 30 days of receipt of a written request from a representative of the

Commission, each Defendant must: submit additional compliance reports or other requested
information, which must be sworn under penalty of perjury; appear for depositions; and produce
documents for inspection and copying. The Commission is also authorized to obtain discovery,
without further leave of court, using any of the procedures prescribed by Federal Rules of Civil
Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 45, and 69.
B.

The Commission may use all lawful means, including posing, through its

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

Upon written request from a representative of the Commission, any consumer

AMENDED ORDER FOR PERMANENT INJUNCTION AND MONETARY JUDGMENT
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reporting agency must furnish consumer reports concerning Individual Defendants, pursuant to
Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C. §1681b(a)(l).

IX.

RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for purposes
of construction, modification, and enforcement of this Order.

SO ORDERED this

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MARK D. CLARKE
UNITED STATES MAGISTRATE JUDGE

AMENDED ORDER FOR PERMANENT INJUNCTION AND MONETARY JUDGMENT
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