Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—DNev: FTC Allowed to Add Relief Defendants to Suit Against Marketers of Alleged Government Grant, Internet Business Opportunity Scam, (Feb 25, 2013)
Organizations Mentioned:KV Electric, Inc. | Orange Cat Investments, LLC | Zibby Flight Services, LLC | Zibby, LLC
By E. Darius Sturmer, J.D.
In an FTC enforcement action against an operation that allegedly offered deceptive trial memberships in government grant and money-making opportunities through the Internet, the Commission was permitted by the federal district court in Las Vegas to file an amended complaint adding relief defendants (FTC v. Johnson, February 22, 2013, Foley, G.).
The agency sought to add the relief defendants—three individuals related to the principal defendant, along with five corporate entities—in order to preserve assets for the possibility of redress to the alleged victims, after a court-appointed receiver’s report on the assets of the alleged ringleader indicated transfers to his assets to them.
The proposed amended complaint would clarify that the relief defendants did not participate in the scheme but did profit from it, and would seek to recover more than $22 million from those defendants. The recoveries would include, among other things, at least $5 million in funds and property, including a multi-million dollar mansion, from the wife of the alleged ringleader.
This case involves alleged violation of the FTC Act, 15 U.S.C. § 41 et seq., the Electronic Fund Transfer Act, 15 U.S.C. § 1693o(c), and Regulation E, 12 C.F.R. § 205.10(b). The FTC filed the original complaint on December 21, 2010, naming ten individual defendants and 61 corporate defendants. The operation allegedly received more than $275 million from consumers.
The plaintiff FTC did not unduly delay seeking leave because the instant motion was filed before the amendment deadline, the court said. Granting leave to amend the complaint would not prejudice defendants because the discovery cutoff in this case was not until April 2, 2013, the court also noted. The court also found that the FTC did not file the instant motion in bad faith. Therefore, justice required leave for the Commission to file an amended complaint.
The case is No. 2:10-cv-02203-MMD-GWF.
Companies: Orange Cat Investments, LLC; Zibby, LLC; Zibby Flight Services, LLC; KV Electric, Inc.
Attorneys: Collot Guerard for the FTC.
Cases: ConsumerProtection FederalTradeCommissionNews