Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—D. Nev.: $133 million final judgment entered against business coaching and telemarketing enterprise, (Jul 8, 2013)
Organizations Mentioned:Cherrytree Holdings, LLC | Dream Financial | Federal Trade Commission | Ivy Capital, Inc. | Koch & Scow, LLC | Mowab, Inc. | Oxford Financial, LLC | Snell & Wilmer, LLP
By Tobias J. Gillett, J.D., LL.M.
The federal district court in Las Vegas has entered a final judgment and order for permanent injunction and monetary relief in an FTC action against defendants involved in an operation that engaged in misleading and abusive telemarketing of business coaching services (FTC v. Ivy Capital, Inc., July 5, 2013, Mahan, J.). The order requires Benjamin Hoskins and Dream Financial to pay, jointly and severally with other defendants that previously settled the FTC’s claims, over $133 million in monetary relief and bars them from selling business coaching programs or engaging in abusive telemarketing practices.
In a previous decision, the court determined that Benjamin Hoskins and Dream Financial violated the FTC Act and the Telemarketing Sales Rule (TSR) by representing that consumers were likely to earn thousands of dollars per month after purchasing a business coaching program; by making misleading and deceptive representations about the products and services offered; by misrepresenting and failing to disclose material aspects of their refund policy; and by initiating telephone calls to numbers on the National Do Not Call Registry. The court also found Leanne Hoskins liable as a relief defendant because an entity called Oxford Financial, LLC, which received profits from the telemarketing and business coaching enterprise, was the alter ego of her and Benjamin Hoskins. On June 26, 2013, the court denied their motion for reconsideration of the decision.
The final order bans the defendants from “[a]dvertising, marketing, promoting, offering for sale, or selling any business coaching program,” or assisting others in doing so. The order also prohibits the defendants from misrepresenting that they will make a refund to consumers that request one within a given time period, from failing to disclose material aspects of any refund policies, and from requiring consumers to sign a non-disparagement agreement as a condition of receiving a refund.
The order also bars the defendants from violating the FTC’s Telemarketing Sales Rule by committing various deceptive and abusive telemarketing practices, including misrepresenting the performance, efficacy, nature, or essential characteristics of their products and services; failing to conspicuously disclose the conditions of their refund policy; misrepresenting the nature and terms of a refund policy; initiating calls to telephone numbers on the National Do Not Call Registry, in the absence of express consent or an established business relationship; and calling numbers on the Do Not Call Registry without paying the annual fee required to access the Registry.
In addition, the court entered a judgment of $130,375,057.52 against Benjamin Hoskins and Dream Financial, jointly and severally with other defendants that previously settled the FTC’s claims, as well as prejudgment interest in the amount of $3,589,426.92, for a total of $133,964,484.44. The order also requires relief defendant Oxford Financial to pay $1,529,292.25, plus prejudgment interest of $9,254.48; requires relief defendant Leanne Hoskins to pay $1,128,795.78, plus prejudgment interest of $6,830.89; and requires relief defendant Mowab, Inc. to pay $203,118.40, plus prejudgment interest of $1,229.17.
The defendants are also prohibited from disclosing or benefitting from customer information obtained through the telemarketing operation, and requires them to dispose of the information within 30 days of entry of the order. The order continues an asset freeze imposed by a preliminary injunction “until further order of the court,” to be lifted only as necessary to turn over assets to satisfy the judgment.
The order also appoints Robb Evans & Associates, LLC as receiver for the corporate defendant to wind down the business, liquidate its assets, and pay any net proceeds to the FTC to satisfy the monetary judgment. For 20 years after entry of the order, the defendants must also engage in various compliance reporting activities, and must deliver a copy of the order to all principals, officers, directors, and managers of businesses they control.
The case is No. 2:11-cv-00283-JCM-GWF.
Attorneys: Daniel O. Hanks for Federal Trade Commission. Casey G. Perkins (Snell & Wilmer, LLP) for Ivy Capital, Inc. Daniel H. Stewart (Koch & Scow, LLC) for Dream Financial.
Companies: Ivy Capital, Inc.; Cherrytree Holdings, LLC; Dream Financial; Oxford Financial, LLC; Mowab, Inc.
Cases: ConsumerProtection FederalTradeCommissionNews