Memorandum in Support of TRO, Asset Freeze, and Other Relief

This is the FTC's Memorandum in Support of an ex parte Temporary Restraining Order, an Asset Freeze, and Other Relief.

====================

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

FEDERAL TRADE COMMISSION,
Plaintiff,

v.

SPEAR SYSTEMS, INC., a Wyoming corporation; BRUCE PARKER, individually, and as an officer or director of Spear Systems, Inc.; LISA KIMSEY, individually, and as an officer of Spear Systems, Inc.; and XAVIER RATELLE, individually, and doing business as eHealthyLife.com, Defendants.

MEMORANDUM SUPPORTING PLAINTIFF'S EX PARTE MOTION FOR A TEMPORARY RESTRAINING ORDER WITH ASSET FREEZE, OTHER EQUITABLE RELIEF, AND ORDER TO SHOW CAUSE WHY A PRELIMINARY INJUNCTION SHOULD NOT ISSUE

-2-
I. INTRODUCTION

Defendants are an international operation that deceptively market and sell dietary supplements on Internet Web sites utilizing a flood of illegal "spam" email messages. One of their products is a "human growth hormone" pill that Defendants claim reverses the aging process and causes users to look and feel younger. Another product is a diet pill purportedly made from an African plant called Hoodia gordonii that supposedly causes substantial weight loss. Analyses by medical experts, however, demonstrate that Defendants' product claims are totally false and that the products have no effect on users whatsoever. Since 2006, Defendants' false claims have defrauded thousands of consumers out of approximately $1 million.

To direct potential customers to dozens of Web sites selling their products, Defendants employ massive amounts of illegal commercial email messages. The spam messages violate federal law and harm consumers in many ways. The messages falsify information that would identify the true sender, contain false subject lines designed to fool people into opening the messages, and fail to offer any mechanism by which consumers can opt-out from receiving further email messages. Since July 2006, the FTC has received over 185,000 complaints about Defendants' spam messages.

The FTC respectfully asks this Court to bring Defendants' harmful practices to a swift end. The FTC brings this motion ex parte to obtain a temporary freeze of Defendants' assets in order to preserve the possibility of redress for victimized consumers who bought Defendants' products. Defendants, who are located in the United States, Canada, and Australia, have taken great efforts to hide their illegal practices by utilizing anonymous Web sites and spam. Moreover, after depositing sales proceeds into U.S. bank accounts, they have transferred significant amounts of money to overseas accounts and converted other funds into anonymous
-3-
pre-paid debit cards. Defendants' pattern of fraud, as well as their avid attempts to conceal their identity, indicates that they are likely to hide assets if they receive notice of this action.

II. JURISDICTION AND VENUE

The Court has subject matter jurisdiction over the FTC's claims pursuant to 28 U.S.C. §§ 1331, 1337(a) and 1345. Personal jurisdiction over Defendants is established pursuant to the FTC Act's nationwide service of process provision. See 15 U.S.C. § 53(b). "Where a federal statute provides for nationwide service of process, personal jurisdiction may be obtained over any defendants having minimum contacts with the United States as a whole." FTC v. Bay Area Bus. Counsel, Inc., No. 02 C 5762, 2003 WL 1220245, at *2 (N.D. Ill. March 14,2003).

Venue is proper in the Northern District of Illinois. First, two of the defendants are foreigners who are subject to venue in any district. See 28 U.S.C. § 1391(d). Moreover, pursuant to the FTC Act, an action may be brought where a corporation or person "resides or transacts business." 15 U.S.C. § 53(b). Defendants have advertised and sold products to consumers in this district. (See PX 1 ¶¶ 6-24 (undercover purchases of Defendants' products in this district); id. ¶ 35 (telephone calls from consumers in this district to Defendants' customer service telephone number)).

III. BACKGROUND

A. The Scheme

Defendants are three individuals -one in the United States, one in Australia, and one in Canada -and the Wyoming corporate entity that they use to sell various dietary supplement products on Internet Web sites. They sell pills called "HGHLife" and "HGHPlus" that purportedly elevate a user's level of human growth hormone (collectively, "HGH Products"). (PX 1 ¶¶ 19-24, Atts. N-S.) They also sell diet pills called "Hoodial.ife" and "HoodiaPlus" that supposedly contain Hoodia gordonii, a cactus-like plant found in Africa (collectively, "Hoodia
-4-
Products"). (Id. ¶¶ 6-18, Atts. A-M.) A single bottle ofeach ofthese products costs $55.95, plus $9.99 for shipping and handling. (Id. ¶¶ 8, 14,21.)

Defendants' products appear to be marketed solely by spam email messages. (PX 1 ¶¶ 6, 12, 19,27-31, Atts. A,G,N; PX 13 ¶ 17, Att. B (examples of email messages).) The email messages contain links that, ifclicked, direct-consumers to Web sites where consumers can purchase Defendants' products with a credit card. (PX 1 ¶¶ 6-8, 12-14, 19-21.) The FTC has identified over 140 Internet Web sites advertising Defendants' products in spam messages. (Id. ¶¶ 27-28, Att. V.) None of the Web sites identify Defendants as the seller or provide any contact information. (Id.) If consumers purchase the products, their credit card bills either identify the seller as "Herbal Sales" or "IP-Ehealthylife.com." (Id. ¶¶ 10, 16,23, Atts. D,J,Q.) Since April 2006, credit card sales of Defendants' products have generated over $940,000. (PX 4 ¶ 5;PX 1 ¶ 34; PX5 ¶ 2, Att. A at VIS002.)1

[1 Defendants have relationships with at least two credit card processors. They have processed over $620,000 in credit card charges using a processor in the United States (PX 4 ¶ 5;PX 1 ¶ 34), and they have processed over $320,000 in charges utilizing a Caribbean bank (PX 5 ¶ 2, Art. A at VIS002).]

Consumers who purchase a product from one of Defendants' Web sites receive an email message from help@ehealthylife.com. (PX 1 ¶¶ 9, 15,22, Atts. C, I, P.) The message contains a telephone number and directs customers to the Web site, www.ehealthylife.com. (Id.) The ehealthylife.com Web site advertises and sells HoodiaLife and HGHLife. (Id. ¶ 26, Att. D.) Defendants' products are shipped from a fulfillment center in Michigan, and the return address identifies the seller as "eHealthyLife." (Id. ¶¶ 11, 18,24, Atts. E, L, R.) The labels on the products received by consumers identify the company manufacturing the products as "eHealthy Life." (Id. ¶¶ 11, 18,24, Atts. F, M, S.)

-5-
B. The Defendants

Defendants are the three key individuals behind this enterprise and the corporate entity that is used to perpetuate the scheme:

1. Spear Systems, Inc. ("Spear") is a Wyoming corporation with a business address in Birmingham, Alabama.2 (PX 1 ¶ 25, Att. T.) In March 2006, Spear contracted with a U.S. credit card processor to accept credit cards to sell "herbal products." (PX 4 ¶ 3, Au. A at FIROOl.) Using this connection into the credit card system, Spear processed at least $620,000 in credit card sales for Defendants' products. (Id.; PX 1 ¶¶ 34.) The proceeds from those transactions were deposited into an account at U.S Bank in the name of Spear. (pX 4 ¶ 3, AU. A at FIR006; PX 6.) Spear then converted roughly $600,000 into anonymous pre-paid debit cards. (PX6;PX 1 ¶¶ 32-33.) In addition, Spear is the entity that responds when customers request that credit card charges for Defendants' products be reversed. (PX 4 ¶ 4, AU. A at FIR0131, 138, 142, 158, 164, 169, 177, 182, 186, 243, 245, 328.)

[2 Spear's Birmingham business address is actually a virtual office, which provides clients with a business address, answering services, voicemail technology, mail and package handling, and administrative support. (See PX 8.)]

2. Bruce Parker resides in Brisbane, Australia, and is listed as the sole officer on Spear's incorporation documents. (PX 6 ¶ 3;PX 1 ¶ 25, AU. T.) He is the only signatory on Spear's account at U.S Bank, which receives the proceeds from product sales. (PX 6 ¶ 3, AU. A at USB04-5.) He signed the contract with, and paid the bills to, the company operating Spear's virtual office. (PX 8 ¶¶ 3-4, Att. A at YOU003-4, 14.)

3. Lisa P. Kimsey is a resident of Caldwell, Idaho. Kimsey signed the merchant account application on behalf of Spear so that it could accept credit cards for the product sales. (PX 4 ¶ 3, Au. A at FIROOI-4, 7.) In the application, Kimsey held herself out as the "CFO" of Spear. (Id. at FIROOl, 4.) Kimsey also is a signatory on a Spear bank account at
-6-
Wachovia Bank, identifying herself again as Spear's CFO. (PX 7 ¶¶ 2, 3, Att. A at WAC004-6.) She also received monthly payments from that bank account. (Id. ¶ 5.)

4. Xavier Ratelle is a resident of Montreal, Quebec. Ratelle purchased the domain name ehealthylife.com, which is identified as the seller in the confirmation email messages, on the product label, and on shipment labels received by consumers who purchase Defendants' products from the spam Web sites. (PX 9 'il3, Att. A at INT003-11.) Ratelle is also the subscriber for the telephone number included in the email messages consumers receive after making purchases. (PX 11 ¶¶ 2-3, Att. A at GOTOOI1-12.) The Web site ehealthylife.com contains advertisements for HoodiaLife and HGHLife essentially identical to those in the Web sites linked to the spam messages. (PX 1 ¶ 26, Art. D.)

IV. DEFENDANTS' ILLEGAL BUSINESS PRACTICES

A. Defendants' False and Unsubstantiated Product Claims

1. Defendants deceptively promote their HGH Products

The Web sites promoting Defendants' HGH Products make a variety of explicit claims about the products' ability to tum back or reduce the aging process by altering the amount of human growth hormone in a user's body. For example, the Web sites state the HGH Products will help:

"shed unwanted pounds, increase muscle mass and density, restore bone health, give your skin and hair natural shine and enjoy more invigorating energy to burn;"

"take a decade or two off your face in only months;" and

"aid your body in almost every function that it performs, from regulating metabolism and burning fat to maintaining bone density, muscle mass, mental functions, digestive functions, irnmuno-defense activity and skin and organ repair. You will have a whole new body in only a few short months!" (PX 1 ¶ 20, Att. 0 at FTC 113-114, 117-118.)

-7-
Defendants' claims about their HGH Products are false and unsubstantiated. In fact, according to a medical expert in endocrinology from Northwestern University, Defendants' HGH Products have no effect on a person whatsoever. (See PX 2.) The products do not contain human growth hormone and cannot produce effects similar in nature to any form of growth hormone. (See id. ¶¶ 17,27-28.)3 There is no credible medical evidence to support the claims made by Defendants. (Id. ¶¶ 22, 25.) In sum, contrary to the claims made on their Web sites, Defendants' HGH products have no physiological effect on users. (Id. ¶ 27.)

[3 Human growth hormone ("GH") is produced by the pituitary gland and is integral to the human growth process. (PX 2 ¶¶ 6-7.) In normal individuals, the production of GH naturally drops off with the increase in age. (Id. ¶ 7.) The FDA has approved the use ofa synthetic recombinant growth hormone, injected into the bloodstream as a replacement for the body's own GH for individuals with an abnormal GH deficiency. (Id ¶¶ 11-13.) Defendants' products, however, are tablets containing amino acids that, taken orally in the doses prescribed, have no effect on GH levels. (Id.¶ 17.)]

2. Defendants deceptively promote and sell Hoodia Products

The Web sites and email messages promoting Defendants' Hoodia Products make extravagant weight loss claims, relying on purported scientific studies about the Hoodia gordonii plant. Email messages touting Defendants' Hoodia Products claim that users will safely lose 25 pounds in a month. (PX 1 ¶ 6, Att. A.) Defendants' Web sites make similar claims, stating, among other things: "[w]hat if you could actually shed 10, 15, or even 25 pounds quickly and safely in less than 30 days? Now you can[.]" (Id. ¶ 7, Att. B at FTC 7.) Defendants further represent that the Hoodia Products will "keep the weight offpermanently." (Id. at FTC 13.)

Defendants' claims about their Hoodia Products are also false and unsubstantiated. According to a medical expert in nutrition and obesity with Northwestern University's Feinberg School of Medicine, there is no credible medical evidence to support the claim that Hoodia gordonii (or any other ingredient in Defendants' Hoodia Products) causes weight loss. (PX 3 ¶ 14.) Furthermore, Defendants' claim that the Hoodia Products can cause users safely to lose up to 25 pounds a month is patently false because it is not safe or healthy to lose three pounds or
-7-
more each week for several weeks. (Id. ¶ 19.) Given that the Hoodia Products do not cause weight loss in the first place, their claim of pennanent weight loss is also deceptive. (Id. ¶ 20.) Indeed, without a change in dietary or exercise habits, it is not feasible for users to experience permanent weight loss. (Id. ¶ 21.)

B. Defendants' Illegal Spamming Practices

Defendants are responsible for likely millions of illegal commercial email messages promoting their products. Since July 2006, consumers have forwarded over 185,000 email messages advertising Defendants' products to an email address at which the FTC accepts spam complaints. (PX 1 ¶ 28, Att. V.) The FTC has submitted several examples of the spam as exhibits. (See PX 1 ¶ 29-31; PX 13 ¶ 17, Att. B)4 All of the messages blatantly disregard one or more of the protections Congress provided in the CAN-SPAM Act, 15 U.S.C. § 7701, et seq., the federal law regulating commercial email (discussed infra §V.B.2).5 The messages falsify information that would identify the real sender, contain false subject lines designed to fool people into opening the messages, and fail to include an opt-out mechanism by which consumers could stop the spam messages from continuing. These illegal actions cause significant harm to consumers and Internet service providers.

[4 The spam examples submitted were obtained by the FTC from a secure database run by Microsoft Corporation, which operates the free email service Hotmail, (PX 12.) The Microsoft database contains unsolicited email messages received by thousands of Hotmail "trap" accounts," i.e., unused email accounts that receive unsolicited spam messages. (Id.)

5 Congress passed CAN-SPAM after finding that spamming imposes significant costs on the email system, which are passed along to subscribers in the form of higher prices and reduced convenience. See 15 U.S.C. §§ 7701(a)(3), (4). Congress found that unsolicited commercial email messages -most of which are fraudulent or deceptive in one or more respects -threaten the convenience and efficiency of email an ..extremelyimportantandpopularmeansofcommunication... ld.at §§ 7701(a)(1), (2). The law does not make all commercial email messages illegal; it simply proscribes the most abusive practices. For example, it requires that commercial email messages correctly identify their source, allow consumers to unsubscribe, and contain a physical postal address at which the recipient may contact the sender. Id. at § 7704.]

-9-
1. Defendants' spam falsifies information that would identify the real sender

The spam messages touting Defendants' products insert the email addresses of unwitting third parties in the "from" fields of the spam,'a practice often referred to as "spoofing." This practice conceals the true identity of the sender and makes it seem that the spam is corning from a variety of innocent parties. Because the email messages also fail to provide the physical address of Defendants, it is essentially impossible for a recipient of the email messages to identify who is responsible for the message. (Id. ¶¶ 19-16, 22.)6

[6 In addition to cloaking the identity of the real sender, changing the address of the email message's return path causes harm to individual users and Internet service providers. When spammers send out email messages, a number of them are undeliverable because of wrong addresses or other reasons. (PX 13 ¶ 8.) The flood of undeliverable email messages is returned to the "reply-to" address of the innocent party, not the spammer, causing the innocent party and its Internet service provider to deal with additional bandwidth and transaction costs. (Id.)]

2. The spam attempts to fool people into opening the messages

Subject lines of email messages contain information that consumers use to evaluate whether to open the messages. The subject lines of many of the spam messages touting Defendants' products deceptively suggest that the recipients have a prior relationship with the sender. The messages include subject lines such as "Fwd: Warning," "Re: Help," "re: answer," and "Re: Hi!" (PX 13 ¶ 17, Att. B at HOTMAIL 36, 44, 53, 61.) In fact, Defendants do not have prior relationships with the recipients (see PX 12 (email messages sent to "trap accounts")), and the subject lines presumably are used to trick consumers into opening messages they otherwise would delete.

3. The spam fails to provide consumers with an opt-out mechanism

A key feature ofCAN-SPAM is the requirement that commercial email messages sent to consumers contain a mechanism that consumers can use to opt-out of receiving future messages. Defendants' spam messages, however, fail to provide consumers with the opportunity to opt-out.
-10-
Indeed, Defendants' spam messages invariably do not include any notification to recipients of their ability to decline receiving further email messages from Defendants. (See PX 13 ¶ 17, Att. B.) Thus, once consumers receive unwanted messages, there is no mechanism by which consumers can stop the messages.

V. ARGUMENT

In order to protect the public from Defendants' illegal activities and to prevent Defendants from continuing to make unlawful profits, the FTC requests that the Court enter a TRO with an asset freeze and additional ancillary relief to ensure the availability of restitution to defrauded consumers. Courts in this district have repeatedly exercised their authority to grant TROs in similar FTC actions.7

A. Injunctive Relief Standard

A district court may issue injunctions to enjoin violations of the FTC Act. See 15 U.S.C. § 53(b); FTC v. Febre, 128 F.3d 530, 534 (7th 1997); FTC v. World Travel Vacation Brokers, Inc., 861 F.2d 1020, 1028 (7th Cir. 1988). To obtain a temporary restraining order, the FTC must merely demonstrate: (1) a likelihood of success on the merits, and (2) that the balance of the equities tips in its favor. World Travel, 861 F.2d at 1029. "[T]he FTC need not prove irreparable injury to obtain a preliminary injunction." Kinney v. Int 'l Union of Operating Eng'rs, 7 See, e.g., FTC v. Sili Neutraceuticals, LLC, 07C 4541 (N.D. Ill. Aug. 13,2007) (Kennelly, J.) (ex parte TRO and asset freeze for violations of FTC Act and CAN-SPAM); FTC v. Kinion, 05C 6737 (N.D. Ill. Dec. 7, 2005) (Hibbler, J.) (TRO and asset preservation for violations of CAN-SPAM Act); FTC v. Cleverlink Trading Limited, 05 C 2889 (N.D. Ill. May 15,2005) (St. Eve., J.) (ex parte TRO and asset freeze for violations of CAN-SPAM Act); FTC v. International Research & Dev. Corp. ofNevada, 04C 6901 (N.D. Ill. Nov. 10,2004) (Hibbler, J.) (TRO and asset preservation for violations of FTC Act and CAN-SP AM); FTC v. Harry, 04 C 4790 (N.D. Ill. July 27, 2004) (Manning, J.) (ex parte TRO and asset freeze for violations of FTC Act and CAN-SPAM); FTC v. Phoenix Avatar LLC, No. 04 C 2897 (N.D. Ill. April 23, 2004) (Holderman, J.) (ex parte TRO and asset freeze for violations of FTC Act and CAN-SPAM); FTC v. Stuffingforcash.com, Inc., 02 C 5022 (N.D. Ill. July 16, 2002) (Norgle, J.) (ex parte TRO and asset freeze for violations of FTC Act concerning commercial email marketing work-at-home scheme): FTC v. TLD Network ua., No. 02 C 1475 (N.D. Ill. Feb. 28. 2002) (Holderman, J.) (ex parte TRO with asset freeze for violations of FTC Act for commercial email marketing deceptive sale of domain names).
-11-
994 F.2d 1271, 1277 (7th Cir. 1993). The threshold showing of a likelihood to succeed under the Seventh Circuit's test for injunctive relief is a "better than negligible" chance of success on the merits. See Cooper v. Salazaar, 196 F.3d 809, 813 (7th Cir. 1999).

B. The FTC Is Overwhelmingly Likely to Prevail On the Merits

The FTC Act prohibits "unfair or deceptive acts or practices." 15 U.S.C. § 45(a). As shown above in Section IV, the evidence clearly shows that Defendants have committed repeated violations of the FTC Act by making material misrepresentations to consumers about their products and have engaged in email practices that violate CAN-SPAM.

1. Defendants' product claims are deceptive

Defendants' false claims about their products are "deceptive acts or practices" prohibited by Section 5 of the FTC Act. See 15 U.S.C. § 45(a): The FTC can establish corporate liability under Section 5 of the FTC Act by demonstrating "material representations likely to mislead a reasonable consumer." FTC v. Bay Area Bus. Council, Inc., 423 F.3d 627, 635 (7th Cir. 2005); see also FTC v. Phoenix Avatar, No. 04 C 2897, 2004 WL 1746698, at *9 (N.D. Ill. July 30, 2004). The FTC is not required to prove intent to deceive. Bay Area, 423 F.3d at 635. The FTC may demonstrate the deceptive nature of advertising claims by either: (1) demonstrating the falsity of the claims; or (2) showing that the defendant lacked a reasonable basis for making the claims, i.e., "substantiation." See, e.g., FTC v. Sabal, 32 F. Supp. 2d 1004, 1007 (N.D. Ill. 1998); FTC v. US Sales Corp., 785 F. Supp. 737, 748 (N.D. Ill. 1992).

As described in Sections IV.A.1 and 2 above, Defendants' Web sites and email messages are replete with express representations that promise consumers amazing physical and cognitive affects. Expert analyses by medical doctors demonstrate that there is no scientific basis for the claims, and the products have no discemable effect on users. Thus, Defendants' representations are both false and unsubstantiated. Defendants' deception is not only likely to mislead
-12-
consumers, but undoubtedly has caused (and continues to cause) significant monetary loss to consumers. Consumers simply would not spend $65.94 on Defendants' products if they knew that the products did not work as claimed. Thus, Defendants have violated the FTC Act, and a temporary restraining order against Defendants' misleading advertising is warranted.

2. Defendants initiate email messages that violate CAN-SPAM

Defendants' violations of the CAN-SPAM are well-documented and widespread. Defendants are directly responsible for compliance with the law, and therefore they are liable for the systematic violations of it.8

[8 A violation of CAN-SPAM is a violation of Section 5 of the FTC Act. Pursuant to Section 7(a) of CAN-SPAM, the Act "shall be enforced by the [FTC] as if the violation of this Act were an unfair or deceptive act or practice proscribed under Section] 8(a)(1)(B) of the [FTC] Act (15 U.S.C. 57a(a)(1)(B))." A violation of a rule proscribed pursuant to ]5 U.S.C. § 57a(a)(1)(B) constitutes an "unfair or deceptive act or practice in violation of § 45(a)(1) [of the FTC Act]." See ]5 U.S.C. § 57a(d)(3).]

a. Defendants are "initiators" of commercial email

Defendants are legally responsible for the email messages promoting their products. CAN-SPAM imposes liability for a commercial email message upon"initiators" of the messages. 15 U.S.C. § 7704(a)(1). The definition includes not only those who "originate or transmit" the message, i.e., the button pushers, but also those who "procure" the transmission of the message. 15 U.S.C. § 7709(9). CAN-SPAM defines procurers as those who "intentionally payor provide other consideration to, or induce, another person to initiate" a message on their behalf. 15 U.S.C. § 702(12). See also Phoenix Avatar, 2004 WL 1746698, at *13 ("Liability [under CAN-SPAM] is not limited to those who physically cause spam to be transmitted, but also extends to those who 'procure the origination' of offending spam.'').

Here, Defendants "initiate" the commercial email messages at issue. The email messages market Defendants' products and include hyperlinks in the text of the messages that direct consumers to Web sites from which Defendants directly profit. Under these circumstances, it is
-13-
axiomatic that Defendants either send the messages themselves, or they procure someone to do it on their behalf. See Phoenix Avatar, 2004 WL 1746698, at *13 (granting preliminary injunction after finding it "quite likely" that the defendants who utilized Web sites to sell diet patches, and profited from those sites, "initiated the transmission ofthe spam advertising the Web sites").

b. Defendants' commercial email messages violate CAN-SPAM

i. False or misleading header information

Defendants initiate commercial email messages that contain "header information that is materially false or materially misleading" in violation of CAN-SPAM. 15 U.S.C. § 7704(a)(1 ).9 As described above, in §IV.B.1, Defendants' messages falsify the routing information. This practice impairs the ability of consumers and law enforcement to determine the sender's true identity. By initiating spam messages containing materially false and misleading header information, Defendants violate CAN-SPAM.

[9 CAN-SPAM defines "header information" as the "source, destination and routing information attached to an electronic mail message, including the originating domain name and originating electronic mail address, and any other information that appears in the line identifying, or purporting to identify, a person initiating the message." 15 U.s.c. § 7702(8). For purposes of 15 U.S.C. § 7704(a)(1), "materially" including "the alteration or concealment of header information in a manner that would impair the ability of ... a law enforcement agency to identify, locate or respond to a person who initiated the email message or to investigate the alleged violation, or the ability of a recipient of the message to respond to a person who initiated the electronic message." 15 U.s.c. § 7704(a)(6).]

ii. Deceptive subject headings

Defendants initiate commercial email messages that contain subject headings that are "likely to mislead a recipient ... about a material fact regarding the contents or subject matter of the message" in violation of CAN-SPAM. 15 U.S.C. § 7704(a)(2). As demonstrated in §IV.B.2, subject headings of Defendants' spam like as "Fwd: Warning," "Re: Help," "re: answer," and "Re: Hi!" deceptively suggest a prior relationship with the recipient.

-14-
iii. Failure to include opportunity to decline further email messages

Defendants initiate commercial email messages that fail to include a "clear and conspicuous" notice of the opportunity ... to 'decline to receive further commercial electronic mail messages from the sender in violation of CAN-SPAM.’ 15 U.S.C.§7704(a)(5)(A). As discussed in §IV.B.3, Defendants violate this provision by initiating messages that do not contain any mechanism at all to decline future email messages.

IV. Failure to include a postal address

CAN-SP AM requires that senders provide a physical postal address where the sender can be reached. See 15 U.S.C. § 7704(a)(5). A review of the email message demonstrates that Defendants also fail to include the required valid postal address. (See PX 13, Att. B.)

C. The Balance of the Equities Favors the FTC

The FTC respectfully requests that this Court enter a narrowly tailored TRO that brings Defendants' illegal practices to a swift end, and that preserves Defendants' assets in order to prevent ill-gotten gains from being dissipated or transferred. In fashioning appropriate injunctive relief, this Court has authority to "to grant any ancillary relief necessary to accomplish complete justice[.]" World Travel, 861 F.2d at 1026; see also Febre, 128 F.3d at 534 (district court has authority in FTC action to "order any ancillary equitable relief necessary to effectuate the exercise of granted powers"). If a district court determines that it is probable that the FTC will prevail on the merits, the court has a "duty to ensure that the assets ... [are] available to make restitution to injured consumers." World Travel, 861 F.2d at 1031.

J. The FTC seeks a narrowly-tailored TRO

The FTC requests that the Court issue a IRO that prospectively prohibits law violations and preserves assets and documents to ensure that the Court can grant effective final relief at the
-15-
conclusion of this case. Sections I-IV of the Proposed TRO contain conduct prohibitions to ensure further compliance with the FTC Act and CAN-SPAM. Sections V-IX contain asset preservation and accounting provisions aimed at identifying and preserving funds obtained unlawfully by Defendants, and identifying individuals or entities who have acted in concert or participation with Defendants. The remainder of the Proposed TRO contains reporting and discovery provisions to obtain information relevant to a preliminary injunction hearing; These are necessary provisions to identify the scope of the unlawful practices, other participants, and the location of ill-gotten gains. Defendants have no legitimate right to continue unlawful conduct, dissipate their unlawful profits, or conceal information needed to effectuate relief in this case.10

[10 The TRO provisions, including the asset preservation provisions, should apply to the individual defendants, as well as Spear. An individual may be held liable for corporate practices where he or she has authority to control the business affairs, such as by assuming the duties of a corporate officer, and has or should have had knowledge of the deceptive practices of the business. See Bay Area, 423 F.3d at 636; World Travel, 861 F.2d at 1031. Here, as explained above in Section III.B, each of the individual defendants has intimate knowledge and extensive participation in the business affairs.]

2. The TRO would work no valid hardship on Defendants

The balance of equities tips strongly in the FTC's favor. The FTC's proposed TRO would prohibit Defendants from making false claims about products, would stop Defendants and their agents from sending commercial email messages that violate CAN-SPAM, and would preserve assets for equitable monetary relief. The TRO would work no valid hardship on Defendants, as they have no right to engage in, or profit from, practices that violate the law. See, e.g., FTC v. World Wide Factors, 882 F.2d 344, 347 (9th Cir. 1989) (upholding finding of "no oppressive hardship to defendants in requiring them to comply with the FTC Act, refrain from fraudulent representation or preserve their assets from dissipation or concealment").

In balancing equities, the Court must assign "far greater" weight to the public interest advanced by the FTC than to any of Defendants' private concerns. World Travel, 861 F.2d at
-16-
1030; see also FTC v. Weyerhaeuser Co., 665 F.2d 1072, 1083 (D.C. Cir. 1981). The balance of equities also strongly favors the FTC because of the strong likelihood of success on the merits of its claims. See Phoenix Avatar, 2004 WL 1746698, at *15; Sabal, 32 F. Supp. 2d at 1009.

3. Ex parte relief is necessary

Ex parte relief is necessary here. An ex parte TRO is warranted where facts show that irreparable injury, loss, or damage may result before defendants may be heard in opposition. See Fed. R. Civ. P. 65(b). Here, as in similar FTC actions in this district where courts have granted an ex parte TRO, 11 there is a tangible risk that assets from the illegal activity, as well as relevant documents, will disappear if Defendants receive prior notice. Defendants already have demonstrated their ability to hide their identities. They use false addresses and routing information in their email messages. They utilize Web sites that provide no contact information.

[11 Courts in this district have recently granted ex parte TROs under similar circumstances. Most recently, Judge Kennelly sitting as emergency judge, entered an ex parte TRO with asset freeze this August in a matter involving similar hoodia and HGH products being marketed by spam email. See FTC v. Sili Neutraceuticals, LLC, 07 C 4541 (N.D. Ill. Aug. 13,2007) (Kennelly, J.). Other courts have entered similar orders in similar circumstances. See, e.g., FTC v. Harry, 04 C 4790 (N.D. Ill. July 27, 2004) (Manning, 1.) (granting ex parte TRO and asset freeze in matter involving false HGH claims and CAN-SPAM violations); FTC v. Phoenix Avatar LLC, No. 04 C 2897 (N.D. Ill. April 23, 2004) (Holderman, J.) (granting ex parte TRO and asset freeze in matter involving false claims concerning diet patches and CAN-SPAM violations).]

In addition, Defendants regularly transfer funds overseas and convert funds to anonymous debit cards. Since 2006, Spear has transferred approximately $260,000 to a bank account in Hong Kong. (PX 1 ¶ 33.) Moreover, Spear has transferred over $600,000 to an account with a company that issues pre-paid MasterCard debit cards. (PX 1 ¶ 32-33.) And recently, Defendants have used a Caribbean bank to process their credit card sales. In sum, ex parte relief is necessary to preserve the status quo and ensure that Defendants cannot move assets and records outside of this Court's reach.

-17-
VI. CONCLUSION

Defendants have caused and are likely to continue to cause consumer injury because of FTC Act and CAN-SPAM violations. Therefore, the FTC respectfully requests that this Court issue the requested injunctive and ancillary equitable relief to halt Defendants' illegal practices and ensure the availability of effective final relief
Respectfully submitted,

William Blumenthal
General Counsel

s\____________________
Steven M. Wemikoff
Marissa J. Reich
Federal Trade Commission
55 W. Monroe St., Ste. 1825
Chicago, IL 60603

Attachment	Date	Size
FTCMemo_ex_parte_TRO.pdf	06/28/09 1:05 pm	874.8 KB
WernikoffTROAff.pdf	06/28/09 1:05 pm	132.56 KB

Temporary Restraining Order, Asset Freeze, and Other Relief

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

FEDERAL TRADE COMMISSION,
Plaintiff,
v.
SPEAR SYSTEMS, INC., a Wyoming corporation; BRUCE PARKER, individually, and as an officer or director of Spear Systems, Inc.; LISA KIMSEY, individually, and as an officer of Spear Systems, Inc.; and XAVIER RATELLE, individually, and doing business as eHealthyLife.com,
Defendants.

TEMPORARY RESTRAINING ORDER WITH ASSET FREEZE, OTHER EQUITABLE RELIEF, AND ORDER TO SHOW CAUSE WHY A PRELIMINARY INJUNCTION SHOULD NOT ISSUE

Plaintiff, Federal Trade Commission ("FTC" or "Commission"), having filed its Complaint for Injunctive and Other Equitable Relief in this matter, pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and Section 7(a) of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of2003 ("CAN-SPAM" or "CAN-SPAM Act"), 15 U.S.C. § 7706(a), and having moved ex parte for a Temporary Restraining Order, Other Equitable Relief, and Order To Show Cause Why a Preliminary Injunction
-2-
Should Not Issue pursuant to Rule65 of the Federal Rules of Civil Procedure, and the Court having considered the Complaint, declarations, exhibits, and memorandum of law filed in support thereof, and,now being advised in the premises, finds that:

1. This Court has jurisdiction over the subject matter of this case, and there is good cause to believe that it has jurisdiction over the parties;

2. Venue properly lies with this Court;

3. There is good cause to believe that Defendants have engaged in and are likely to continue to engage in acts and practices that violate Section 5 of the FTC Act, 15 U.S.C. § 45 and Sections 5(a) of CAN-SPAM, 15 U.S.C. § n04(a), and that the Commission is therefore likely to prevail on the merits of this action;

4. There is good cause to believe that immediate and irreparable damage to the Court's ability to grant effective final relief for consumers in the form of monetary redress or disgorgement will occur from the sale, transfer, or other disposition or concealment by Defendants of their assets or records unless Defendants are immediately restrained and enjoined by Order of this Court. The evidence set forth in Plaintiff's Memorandum in Support of its Motion for Temporary Restraining Order, Order to Show Cause and Other Equitable Relief, and in the accompanying declarations and exhibits, demonstrates that Defendants have engaged in a concerted course of illegal activity by deceptively marketing products in violation of Section 5 of the FTC Act and by sending commercial email messages in violation of Section 5 of the CAN-SPAM, 15 U.S.C. § 7704 et seq. Defendants' practices have regularly involved the concealment of their identities to avoid detection. Defendants have retained ill-gotten gains derived from these and other practices. There is good cause to believe that unless they are restrained from doing so by order of this Court, Defendants will continue with
-3-
these illegal actions, and they will attempt to conceal the scope of their illegal actions through the destruction of evidence and secreting of assets. There is thus good cause for relieving Plaintiff of the duty to provide Defendants with prior notice of Plaintiffs motion;

5. Weighing the equities and considering the Plaintiffs likelihood of success,this Order is in the public interest; and

6. No security is required of any agency of the United States for the issuance of a temporary restraining order. See Fed. R. Civ. P. 65(c).

DEFINITIONS

1. "Asset" or "Assets" mean any legal or equitable interest in, right to, or claim to, any real and personal property, including but not limited to chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, premises, contracts, mail or other deliveries, shares of stock, lists of consumer names, inventory, checks, notes, accounts, credits, receivables, funds, and all cash, wherever located.

2. "Clear and conspicuous" or "clearly and conspicuously" with regard to the display of a notice means that the information shall be presented in writing, in a type size, color, and location sufficient for an ordinary consumer to read and comprehend it, and shall be disclosed in a manner that would be easily recognizable and understandable in language and syntax to an ordinary consumer. If the information is contained in a multi-page print document, the disclosure shall appear on the first page.

3. "Commercial electronic mail message" (or "commercial email") "means any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a
-4-
commercial product or service (including content on an Internet website operated for a commercial
purpose)." 15 U.S.C. § 7702(2) (A) (2004).

4. . "Defendants" means Spear Systems, Inc.; Bruce Parker; Lisa Kimsey; and Xavier Ratelle, individually and doing business as eHealthylife.com; or each of them.

5. "Document" is synonymous in meaning and equal in scope to the usage of the term in Federal Rule of Civil Procedure 34(a), and includes writing, drawings, graphs, charts, Internet sites, Web pages, Web sites, electronic correspondence, photographs, audio and video recordings, computer records, and other data compilations from which information can be obtained and translated, if necessary, through detection devices into reasonably usable form, A draft or nonidentical copy is a separate document within the meaning of the term.

6. "Electronic mail address" "means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the "local part") and a reference to an Internet domain (commonly referred to as the "domain part"), whether or not displayed, to which an electronic mail message can be sent or delivered." 15 U.S.C. § 7702(5).

7. "Header information" "means the source, destination, and routing information attached to an electronic mail message, including the originating domain name and originating electronic mail address, and any other information that appears in the line identifying, or purporting to identify, a person initiating the message." 15 U.S.C. § 7702(8).

8. "HGH Products" shall refer to any products that are advertised, marketed, promoted, offered for sale, distributed, or sold with express or implied representations that the product contains any form of Human Growth Hormone and/or may cause a statistically significant and clinically
-5-
meaningful increase in a consumer's growth hormone levels, and include, but are not limited to, "HGHLife," "HGHPlus," or any other substantially similar products.

9. "Hoodia Products" shall refer to any products that are advertised, marketed, promoted, offered for sale, distributed, or sold with express or implied representations that the product contains any form of Hoodia gordonii, and include, but are not limited to, "HoodiaLife," "HoodiaPlus," or any other substantially similar products.

10. "Initiate," "when used with respect to a commercial email message, means to 'originate or transmit such message or to procure the origination or transmission of such message." 15 U.S.C. § 7702(9).

11. "Procure," "when used with respect to the initiation of a commercial email message, means intentionally to pay or provide other consideration to, or induce, another person to initiate such a message on one's behalf." 15 U.S.C. § 7702(12).

12. "Protected computer" means a computer which is used in interstate or foreign commerce or communication, including a computer located outside the United States that is used in a manner that affects interstate or foreign commerce or communication of the United States. 15 U.S.C. § 7702(13); 18 U.S.C. § 1030(e)(2)(B).

13. "Sender" means a person who initiates a commercial electronic mail message and whose product, service, or Internet website is advertised or promoted by the message. 15 U.S.C. § 7702(16).

I. PROHIBITED BUSINESS ACTIVITIES PURSUANT TO THE FTC ACT

IT IS THEREFORE ORDERED that Defendants, and their officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with them
-6-
who receive actual notice of this Order by personal service, facsimile, or otherwise, whether acting directly or through any trust, corporation, subsidiary, division, or other device, or any of them, are hereby temporarily restrained and enjoined from making, or assisting others in making, expressly or by implication, including through the use of a trade name or endorsement, any false or misleading oral or written statement or representation in connection with the marketing, advertising, promotion, offering for sale, sale or provision of any Hoodia-or HGH-related products, or any other products or services, including, but not limited to:

A. Misrepresenting that the Hoodia Products cause rapid and substantial weight loss, including as much as twenty-five pounds in a month;

B. Misrepresenting that the Hoodia Products cause users to lose safely three or more pounds per week for multiple weeks;

C. Misrepresenting that the Hoodia Products cause permanent weight loss;

D. Misrepresenting that scientific research establishes that the Hoodia Products cause substantial weight loss;

E. Representing that the HGH Products contain human growth hormone and/or cause a statistically significant and clinically meaningful increase in a consumer's growth hormone levels;

F. Misrepresenting that the HGH Products will tum back or reverse the aging process, including, but not limited to, causing effects such as: (i) reducing cellulite, (ii) improving vision, (iii) causing new hair growth, (iv) improving emotional stability, (v) increasing muscle mass, and (vi) causing fat and weight loss;

G. Misrepresenting that any product, or any ingredient contained in it, is effective in the diagnosis, cure, mitigation, treatment, or prevention of any disease;
-7-
H. Making any representation about the health benefits, performance, efficacy, or safety of any product unless, at the time of making such representation, Defendants possess and rely upon competent and reliable scientific evidence that substantiates the representation;
I. Misrepresenting any other fact material to a consumer's decision to purchase any product; and

J. Assisting others who violate any provision of Paragraphs A through I of this Section.

II. PROHIBITED BUSINESS ACTIVITIES UNDER THE CONTROLLING THE ASSAULT OF NON-SOLICITED PORNOGRAPHY AND :MARKETING ACT OF 2003

IT IS FURTHER ORDERED that Defendants, and their officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with them who receive actual notice of this Order by personal service, facsimile, or otherwise, whether acting directly or through any trust, corporation, subsidiary, division, or other device, or any of them, are hereby temporarily restrained and enjoined from violating, or assisting others in violating, the provisions contained in the Controlling the Assault of Non-Solicited Pornography and Marketing Act of2003 ("CAN-SPAM Act"), 15 U.S.C. §§ 7704 and 7705, as currently promulgated or as it may hereafter be amended, or any rule, regulation, or requirement adopted pursuant thereto,
including, but not limited to, initiating the transmission of a commercial electronic mail message that:

A. Contains, or is accompanied by, false or misleading header information;

B. Contains subject headers that misrepresent the content or subject matter of the
message;

-8-
C. Fails to include a clear and conspicuous notice of the opportunity to decline to receive further electronic mail messages from the sender; and/or

D. Fails to include a valid physical postal address of the sender.

III. INJUNCTION AGAINST NEW ACCOUNT REGISTRATIONS \VITHOUT REPORTING

IT IS FURTHER ORDERED that in connection with the promotion, advertising, marketing, sale, or offering for sale of any product or service, Defendants and their officers, agents, servants, employees, and attorneys, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, are temporarily restrained and enjoined from registering or creating any new domain names, Web sites, Web pages, email accounts, Internet service accounts, or online payment service accounts, without notifying counsel for the Commission within 72 hours of such registrations. The notice shall be sent in accordance with Section XVIII of this Order, and shall include:

A. The true identity of the registrant, account holder, or user, including the complete and accurate physical mailing address, email address, and telephone number;

B. The means and source of payment for the registration, including the credit card number or bank account number used;

C. The name and address of the person or entity to whom such registration was submitted;

D. The date and time the registration was created; and

E. The purpose of the domain names, Web sites, Web pages, or email accounts, Internet service accounts, or online payment sen/ice accounts registered.

-9-
IV. INJUNCTION AGAINST USING ANY PERSONS OR ENTITIES TO SEND COMMERCIAL EMAIL WITHOUT REPORTING

IT IS FURTHER ORDERED that in connection with the solicitation of consumers for personal information or in the promotion, advertising, marketing, sale, or offering for sale of any product or service, Defendants are temporarily restrained and enjoined from using any affiliates, subaffiliates, agents, mailers, vendors, .employees, contractors, or other persons or entities to send commercial email on their behalf without notifying counsel for the Commission prior to the initiation of any commercial email message by such persons or entities. The notice shall be sent in accordance with Section XVIII of this Order, and shall include:

A. The identity of the affiliate, sub-affiliate, agent, mailer, vendor, employee, contractor, or other person or entity including the name of an individual, the complete and. accurate physical mailing address, a working email address, a working telephone number, and any identification codes associated with or used by such person or entity;

B The amount of payment and information necessary to process such payment for the affiliate, sub-affiliate, agent, mailer, vendor, employee, contractor, or other person or entity, including the account name and number used;

C. A copy of the body and subject line of each unique commercial email being sent by the affiliate, sub-affiliate, agent, mailer, vendor, employee, contractor, or other person or entity;
-10-
D. A list of each of the email addresses from which the affiliate, sub-affiliate, agent, emailer, vendor, employee, contractor, or other person or entity will send the commercial email message;

E. A list of the Web site addresses and/or domain names promoted in the commercial email message;

F. A description of the procedures Defendants have to ensure that:

1. Such person or entity does not send commercial email messages to recipients who have previously requested not to receive commercial email messages from Defendants; and

2. Defendants will receive all requests received by such persons or entities from email recipients who request not to receive commercial email messages from Defendants; and

G. A certification that such person or entity has agreed, in writing, to comply with this Order and the provisions of the CAN-SPAM Act.

V. ASSET PRESERVATION

IT IS FURTHER ORDERED that Defendants and their officers, agents, servants, employees, and attorneys, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, are hereby temporarily restrained and enjoined from:

A. Transferring, converting, encumbering, selling, concealing, dissipating, disbursing, assigning, spending, withdrawing, perfecting a security interest in, or otherwise disposing of any assets wherever located, inside or outside the United States of America, that are owned, controlled or held by, or for the benefit of, in
-11-
whole or in part, any Defendant, or in the actual or constructive possession of any Defendant, including, but not limited to,

1. all accounts held in the name of Spear Systems, Inc., at U.S. Bank;

2. all accounts held in the name of Spear 'Systems, Inc., at Wachovia Bank;

3. all accounts held in the name of Spear Systems, Inc., at First Data;

4. accounts held in the name of any Defendant at Privacash; and/or

5. any assets held in any account at any bank or savings and loan institution, or any credit card processing agent, customer service agent, commercial mail receiving agency, or mail holding or forwarding company, or any credit union, online payment service, IRA custodian, money market or mutual fund, storage company, trustee, or with any broker-dealer, escrow agent, title company, commodity trading company, precious metal dealer, or other financial institution or depository of any kind;

B. Opening or causing to be opened any safe deposit boxes, commercial mail boxes, or storage facilities titled in the name of any Defendant, or subject to access by any Defendant or under any Defendant's control, without providing the Commission prior notice and an opportunity to inspect the contents in order to determine that they contain no assets covered by this Section; and

C. Incurring liens or encumbrances on real property, personal property, or other assets in the name, singly or jointly, of any Defendant.

D. Transferring any funds or other assets subject to this Order for attorney's fees or living expenses; provided, however, that, notwithstanding the above,any Defendant
-12-
may pay, from funds subject to this Order, reasonable, usual, ordinary, and necessary living expenses and attorney's fees, not to exceed $1,000, prior to the Show Cause Hearing set forth in Section XVII of this Order. No such expenses, however, shall be paid from funds subject to this Order except from cash on the person of any Defendant, or from an account designated by written notice to counsel for the Commission; provided further that, any Defendant may pay reasonable, usual, ordinary, and necessary living expenses, and reasonable attorney's fees, but only after written prior approval by the Commission or as otherwise authorized by the Court.

VI. FINANCIAL REPORTS

IT IS FURTHER ORDERED that each Defendant, at least three (3) calendar days prior to the Show Cause Hearing set forth in Section XVI of this,Order, and in no event later than ten (10) days after entry of this Order, shall prepare and deliver to counsel for the Commission completed financial statements on the forms attached to this Order as Attachments A and B, for themselves individually and for each business entity under,which they conduct business, or of which they are an officer, and for each trust of which they are a trustee. The financial statements shall be accurate as of the date of their completion.

VII. IDENTIFICATION OF MARKETERS

IT IS FURTHER ORDERED that Defendants, at least three (3) calendar days prior to the Show Cause Hearing set forth in Section XVII of this Order, and in no event later than ten (l0) calendar days after entry of this Order, shall prepare and deliver to counsel for the Commission a completed statement identifying all affiliates, sub-affiliates, agents, mailers, vendors, employees, contractors, or other persons or entities who have sent commercial email
-13-
promoting Defendants' products since January 1,2004, on the form attached to this Order as Attachment C. The statement shall be accurate as of the date of its completion.

VIII. REPATRIATION OF FOREIGN ASSETS AND DOCUMENTS

IT IS FURTHER ORDERED that within five (5) days following service of this Order, each Defendant shall:
A. Repatriate to the United States all assets and all documents located in foreign countries held, directly or indirectly:

1. by any Defendant;

2. for any Defendant's benefit; or

3. under any Defendant's direct or indirect ownership or control;

B. On the same business day as any repatriation under Paragraph A above, notify the Commission of the name and location of the financial institution or other entity that is the recipient of such assets or documents and the corresponding account names or numbers; and

C. Hold and retain all repatriated assets and documents and prevent any transfer, disposition, or dissipation whatsoever of any such assets. Provided, however, Defendants may transfer any repatriated documents to the Commission as required by this Order.

Provided further, that each Defendant shall provide the Commission access to Defendants' records and documents held by financial institutions or other institutions outside the territorial United States, by signing the Consent to Release of Financial Records attached to this Order as Attachment D.

-14-
IX. INTERFERENCE WITH REPATRIATION

IT IS FURTHER ORDERED that Defendants are hereby temporarily restrained and enjoined from taking any action, directly or indirectly, which may result in the transfer, encumbrance, or dissipation of foreign assets, or in the hindrance of the repatriation required by Section VIII of this Order including but not limited to:

A. Sending any statement, letter, fax, email or wire transmission, telephoning or engaging in any other act, directly or indirectly, that results in a determination by a foreign trustee or other entity that a "duress" event has occurred under the terms of a foreign trust agreement until such time that all assets have been fully repatriated pursuant to Section VII of this Order; and

B. Notifying any trustee, protector or other agent of any foreign trust or other related entities of either :the existence of this Order, or of the fact that repatriation is required pursuant to a court order, until such time that all assets have been fully repatriated pursuant to Section VIII of this Order.

X. PRESERVATION AND l\1AINTENANCE OF RECORDS AND NOTICE OF NEW VENTURES IT IS

FURTHER ORDERED that Defendants and their officers, agents, servants, employees, and attorneys, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, are hereby temporarily restrained mid enjoined from:

A. Destroying, erasing, mutilating, falsifying, concealing, writing over, altering, transferring, or otherwise disposing of, in any manner, directly or indirectly, any documents or records, including but not limited to, any and all computerized files,
-15-
storage media (including but not limited to floppy disks, hard drives, CD-ROMs, Zip disks, punch cards, magnetic tape, backup tapes, and computer chips) on which information has been saved (including any and an equipment needed to read any such material), contracts, accounting data, registrations, correspondence, advertisements (including, but not limited to, advertisements placed on the World Wide Web or the Internet or sent via email), FTP logs, Service Access Logs, USENET Newsgroups postings, World Wide Web pages, email messages, books, written or printed records, handwritten notes, telephone logs, telephone scripts, receipt books, ledgers, personal and business canceled checks and check registers, bank statements, appointment books, copies of federal, state or local business or personal income or property tax returns, and other documents or records of any kind that relate to the business practices, or business or personal finances, of any Defendant;

B. Failing to create and maintain documents that, in reasonable detail, accurately, fairly, and completely reflect their incomes, disbursements, transactions, and use of money; and

C. Creating, operating, or exercising any control over any business entity,including any partnership, limited partnership, joint venture, sole proprietorship or corporation, without first providing the Commission with a written statement disclosing:

1. the name of the business entity;

2. the address, telephone number, email address, and Web site address of the
-15-
business entity;

3. the names of the business entity's officers, directors, principals, managers, and employees;

4. the names and addresses of any persons or entities providing online marketing, advertising, or mail~ng services for the business entity; and

5. a detailed description of the business entity's intended activities.

XI. DUTIES OF PERSONS OR ENTITIES HOLDING DEFENDANTS' ASSETS

IT IS FURTHER ORDERED that, pending determination of the Commission's request for a preliminary injunction, any financial or brokerage institution, escrow agent, title company, commodity trading company, entity, trust, or person t?at holds, controls or maintains accounts or assets of, or on behalf of, any Defendant, or has held, controlled or maintained any account or asset of, or on behalf of, any Defendant at any time since January 1, 2004, that has been served with a copy of this Order, or otherwise has actual or constructive knowledge of this Order, shall:
A. Hold and retain within its control and prohibit the withdrawal, removal, assignment, transfer, pledge, encumbrance, disbursement, dissipation, conversion, sale, or other disposal of any such asset except by further Order of the Court;

B. Deny Defendants access to any safe deposit box that is:

1. titled in any Defendant's name, individually or jointly; or

2. otherwise subject to access by any Defendant; and

C. Provide the Commission, within five (5) days of receiving a copy of this Order, a sworn statement setting forth:

-17-
1. the identification number of each such account or asset titled in the name, individually or jointly, of any Defendant; or held on behalf of, or for the benefit of the Defendant;

2. the balance of each such account, or a description of the nature and value of such asset as of the close of business on the day on which this Order was received, and, if the account or other asset has been closed or removed, the date closed or removed, the total funds removed in order to close the account, and the name of the person or entity to whom such account or other asset was remitted; and

3. the identification of any safe deposit box that is titled in the name, individually or jointly, of any Defendant, or is otherwise subject to access by any Defendant; and

D. Upon request by the Commission, promptly provide the Commission with copies of all records or other documentation pertaining to each such account or asset, including but not limited to, originals or copies of account applications, account statements, signature cards, checks, drafts, deposit tickets, transfers to and from the accounts, all other debit and credit instruments or slips, currency transaction reports, 1099 forms, and safe deposit box logs.

XII. DISTRIBUTION OF ORDER BY DEFENDANTS

IT IS FURTHER ORDERED that Defendants shall immediately provide a copy of this Order to each affiliate, subsidiary, division, sales entity, successor, assign, officer, director, employee, independent contractor, client company, agent, attorney, spouse, and representative of
-18-
Defendants, and shall, within ten (10) days from the date of entry of this Order, provide the II Commission with a sworn statement that Defendants have complied with this provision of the Order, which statement shall include the names and addresses of each such person or entity who received a copy of the Order.

XIII. SERVICE OF ORDER

IT IS FURTHER ORDERED that copies of this Order may be served by any means, including transmission by facsimile or electronic mail message, upon any financial institution or other entity or person that may have possession, custody, or control of any documents or assets of any Defendant, or that may otherwise be subject to any provision of this Order. Service upon any branch or office of any financial institution shall effect service upon the entire financial institution.

XIV. CONSUMER CREDIT REPORTS

IT IS FURTHER ORDERED that pursuant to Section 604(1) ofthe Fair Credit Reporting Act, 15 U.S.C. § 1681b(1), any consumer reporting agency may furnish a consumer report concerning any Defendant to the Commission.

XV. EXPEDITED DISCOVERY

IT IS FURTHER ORDERED that the parties are granted leave at any time after service of this Order and pursuant to Federal Rules of Civil Procedure 30(a), 34 & 45 to: (1) take the deposition of any person or entity for the purpose of discovering the nature, status, extent, location or other relevant information relating to Defendants' assets and the nature and location of documents reflecting the business transactions of Defendants or their affiliates; and (2) demand the production of documents from any person or entity relating to the nature, status,
-19-
extent, and location or other relevant information relating to Defendants' assets and the location of documents reflecting the business transactions of Defendants. Seventy-two (72) hours notice shall be deemed sufficient for any such deposition and production of documents from Defendants and any other person or entity, including but not limited to financial institutions, accountants, stock brokers, and financial planners.

The limitations and conditions set forth in Fed. R. Civ. P. 30(a)(2)(B) and 31(a)(2)(B) regarding subsequent depositions of an individual shall not apply to depositions taken pursuant to this Section. Any such depositions taken pursuant to this Section shall not be counted toward any limit on the number of depositions under the Federal Rules of Civil Procedure, including those set forth in Fed. R. Civ. P. 30(a)(2)(A) and 31(a)(2)(A) or the Local Rules. Additionally, the production of documents submitted pursuant to this provision shall not in any way waive the Commission's rights to seek the production of additional documents.

XVI. DURATION OF TEMPORARY RESTRAINING ORDER

IT IS FURTHER ORDERED that the Temporary Restraining Order granted herein shall expire on October 15,2007 at 5 pm., unless within such time, the Order, for good cause shown, is extended for all additional period not to exceed ten (10) days, or unless it is further extended pursuant to Federal Rule of Civil Procedure 65.

XVII. ORDER TO SHOW CAUSE REGARDING PRELIMINARY INJUNCTION

IT IS FURTHER ORDERED, pursuant to Federal Rule of Civil Procedure 65, that each Defendant shall appear before this Court on the 11th day of October, 2007, at 9 o'clock a.m., at the Dirksen Federal Courthouse, 219 S. Dearborn St., Chicago, Illinois, Courtroom, Room M, to show cause, if there is any, why this Court should not enter a Preliminary Injunction,
-20-
pending final ruling on the complaint against Defendants, enjoining them from further violations of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a) and Section 5 of the CAN-SPAM Act, 15 U.S.C. § 7704, continuing the freeze oftheir assets, and imposing such additional relief as may be appropriate. Provided that, Defendants must file with the Clerk's Office and deliver to the counsel for the Commission any brief responding to the order to show cause why a preliminary injunction' should not be entered no later than forty-eight (48) hours before the time scheduled for the hearing. An evidentiary hearing on the Commission's request for a preliminary injunction is not necessary unless Defendants demonstrate that they have, and intend to introduce, evidence that raises a genuine and material factual issue. See, e.g.i In re Aimster, 334 F.3d 643, 653-54 (7th Cir. 2003); Promatek Indus., Ltd. v. Equitrac Corp., 300 F.3d 808, 814 (7th Cir. 2002).

Provided further that, if any party to this action intends to present the testimony of any witness at the hearing on a Preliminary Injunction in this matter, that party shall, at least 24 hours prior to the scheduled date and time of hearing, file with this Court and serve on all other parties a statement disclosing the name, address, and telephone number of any such witness, and either a summary of the witness' expected testimony, or the witness' affidavit revealing the substance of such witness' expected testimony.

XVIII. SERVICE UPON THE COMMISSION

IT IS FURTHER ORDERED, with regard to any correspondence or pleadings related to this Order that service on Plaintiffs shall be performed by overnight mail delivery, facsimile, or electronic mail message to the attention of:
Steven M. Wernikoff
Marissa J. Reich
-21-
Federal Trade Commission
55 W. Monroe St., #1825
Chicago, IL 60603
facsimile transmission to: (312) 960-5600

XVII. RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes.

SO ORDERED,this 3rd day of October, 2007, at 4 p.m

United States District Judge

Attachment	Date	Size
SpearTRO.pdf	06/28/09 1:05 pm	779.26 KB

ORDER on MOTION for Preliminary Injunction as to Xavier Ratelle

This is what happens when you avoid service of process and continue to do what you were doing.

Xavier Ratelle has now been hit with a Preliminary Injunction (that will remain in force until the conclusion of the case or the judge lifts it).

Included in this order are takedown orders for:

www.ehealthylife.com (redirected to: http://www.ultraherbal.com/)
www.ehghlife.com ()
www.ehghlife.net ()
www.ehoodialife.com (redirected to: http://www.hooditrim.com/)
www.purevie.com (redirected to: http://www.ultraherbal.com/)

This means that the websites have to come down and the registrars have to lock them down so Ratelle can't move them.

[UPDATE: The takedown orders are now in effect (and have been since shortly after I wrote down the redirected sites). I have changed the language above to reflect that.

UPDATE, Part 2: I have spoken with people affiliated with the place that ehghlife.com and ehghlife.net redirected to and am convinced that they aren't involved in this, so I've removed those links.]
=====================================
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

FEDERAL TRADE COMMISSION,
Plaintiff,

v.

SPEAR SYSTEMS, INC., a
BRUCE PARKER, individually, and as an officer
or director of Spear Systems, Inc.;
LISA KIMSEY, individually, and as an officer
of Spear Systems, Inc.; and
XAVIER RATELLE, individually, and doing
business as eHealthyLife.com,
Defendants.

PRELIMINARY INJUNCTION ORDER WITH ASSET FREEZE AND OTHER.EQUITARLE RELIEF AS TO XAVIER RATELLE

WHEREAS, on October 3, 2007, Plaintiff Federal Trade Commission ("FTC" or "Commission") filed a Complaint for Injunctive and Other Equitable Relief in this matter pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and Section 7(a) of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 ("CAN-SPAM" or "CAN-SPAM Act"), 15 U.S.C. § 7706(a);

WHEREAS, on October 3, 2007, this Court granted the FTC's Ex Parte Motion for a Temporary Restraining Order With Asset Freeze, Other Equitable Relief, and Order To Show Cause
-2-
Why a Preliminary Injunction Should Not Issue pursuant to Rule 65 of the Federal Rules of Civil Procedure ("TRO");

WHEREAS, on October 5, 2007, and on subsequent occasions, Defendant Xavier Ratelle was apprised of the proceedings in this Court, served with a copy of the TRO, and notified of the FTC's application for entry of a preliminary injunction;

WHEREAS, the Court having considered the pleadings, memoranda, declarations and other exhibits filed herein, and being fully advised in the premises, it is now ORDERED, ADJUDGED, AND, AND DECREED as follows:

FINDINGS

1. This Court has jurisdiction over the subject matter of this case and over Defendant Xavier Ratelle.

2. Venue is proper in this District.

3. There is good cause to believe that Defendant Xavier Ratelle has engaged in and is likely to continue to engage in acts and practices that violate Section 5 of the FTC Act, 15 U.S.C. § 45 and Sections 5(a) of CAN-SPAM, 15 U.S.C, § 7704(a), and that the Commission is therefore likely to prevail on the merits of this action.

4. There is good cause to believe that immediate and irreparable damage to the Court's ability to grant effective final relief to consumers in the form of monetary redress or disgorgement will occur from the sale, transfer, or other disposition or concealment by Defendant Xavier Ratelle of his assets or records unless he is restrained and enjoined by Order of this Court. The evidence set forth in the FTC's Memorandum in Support of its Motion for TRO, and in the accompanying declarations and exhibits, demonstrates that Defendant Xavier Ratelle has engaged in a concerted
-3-
course of illegal activity by deceptively marketing products in violation of Section 5 of the FTC Act and by initiating commercial email messages in violation of Section 5 of the CAN-SPAM, 15 U.S.C. § 7704 et seq. Xavier Ratelle's practices have regularly involved the concealment of his identity to avoid detection. He has retained ill-gotten gains derived from these and other practices. There is good cause to believe that unless he is restrained from doing so by order of this Court, he will continue with these illegal actions, and he will attempt to conceal the scope of his illegal actions through the destruction of evidence and secreting of assets.

5. Weighing the equities and considering the FTC's likelihood of success, this preliminary injunction is in the public interest.

6. No security is required of any agency of the United States for the issuance of a temporary restraining order. See Fed. R. Civ. P. 65(c).

DEFINITION

1. "Asset" or "Assets" mean any legal or equitable interest in, right to, or claim to, any real and personal property, including but not limited to chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, premises, contracts, mail or other deliveries, shares of stock, lists of consumer names, inventory, checks, notes, accounts, credits, receivables, funds, and all cash, wherever located.

2. "Clear and conspicuous" or "clearly and conspicuously" with regard to the display of a notice means that the information shall be presented in writing, in a type size, color, and location sufficient for an ordinary consumer to read and comprehend it, and shall be disclosed in a manner that would be easily recognizable and understandable in language and syntax to an ordinary
-4-
consumer. If the information is contained in a multi-page print document, the disclosure shall appear on the first page.

3. "Commercial electronic mail message" (or "commercial email") "means any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service (including content on an Internet website operated for a commercial purpose)." 15 U,S.C. § 7702(2) (A) (2004).

4. "Defendant" means Xavier Ratelle, individually and doing business as eHealthylife.com.

5. "Document" is synonymous in meaning and equal in scope to the usage of the term in Federal Rule of Civil Procedure 34(a), and includes writing, drawings, graphs, charts, Internet sites, Web pages, Web sites, electronic correspondence, photographs, audio and video recordings, computer records, and other data compilations from which information can be obtained and translated, if necessary, through detection devices into reasonably usable form. A draft or nonidentical copy is a separate document within the meaning of the term.

6. "Electronic mail address" "means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the "local part") and a reference to an Internet domain (commonly referred to as the "domain part"), whether or not displayed, to which an electronic mail message can be sent or delivered." 15 U.S.C. § 7702(5). 7. "Header information" "means the source, destination, and routing information attached to an electronic mail message, including the originating domain name and originating electronic mail address, and any other information that appears in the line identifying, or purporting to identify, a person initiating the message." 15 U.S.C. § 7702(8).

-5-
8. "HGH Products" shall referto anyproducts that are advertised, marketed, promoted, offered for sale, distributed, or sold with express or implied representations that the product contains any form of Human Growth Hormone and/or may cause a statistically significant and clinically meaningful increase in a consumer's growth hormone levels, and include, but are not limited to, "HGHLife," "HGHPIus," or any other substantially similar products.

9. "Hoodia Products" shall refer to any products that are advertised, marketed, promoted, offered for sale, distributed, or sold with express or implied representations that the product contains any form of Hoodia gordonii, and include, but are not limited to, "HoodiaLife," "HoodiaPlus," or any other substantially similar products.

10. "Initiate," "when used with respect to a commercial email message, means to originate or transmit such message or to procure the origination or transmission of such message." 15 U.S.C. § 7702(9).

11. "Procure," "when used with respect to the initiation of a commercial email message, means intentionally to pay or provide other consideration to, or induce, another person to initiate such a message on one's behalf." 15 U.S.C. § 7702(12).

12. "Protected computer" means a computer which is used in interstate or foreign commerce or communication, including a computer located outside the United States that is used in a manner that affects interstate or foreign commerce or communication of the United States. 15 U.S.C. § 7702(13); 18 U.S.C. § 1030(e)(2)(B).

13. "Sender" means a person who initiates a commercial electronic mail message and whose product, service, or Internet website is advertised or promoted by the message. 15 U.S.C. § 7702(16).

-6-
I. PROHIBITED BUSINESS ACTIVITIES PURSUANT TO THE FTC ACT
IT IS THEREFORE ORDERED that Defendant, and his officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with him who receive actual notice of this Order by personal service, facsimile, or otherwise, whether acting directly or through any trust, corporation, subsidiary, division, or other device, or any of them, are hereby temporarily restrained and enjoined from making, or assisting others in making, expressly or by implication, including through the use of a trade name or endorsement, any false or misleading oral or written statement or representation in connection with the marketing, advertising, promotion, offering for sale, sale or provision of any Hoodia- or HGH-related products, or any other products or services, including, but not limited to:

A. Misrepresenting that the Hoodia Products cause rapid and substantial weight loss, including as much as twenty-five pounds in a month;

B. Misrepresenting that the Hoodia Products cause users to lose safely three or more pounds per week for multiple weeks;

C. Misrepresenting that the Hoodia Products cause permanent weight loss;

D. Misrepresenting that scientific research establishes that the Hoodia Products cause substantial weight loss;

E. Representing that the HGH Products contain human growth hormone and/or cause a statistically significantand clinically meaningful increase in a consumer's growth hormone levels;

F. Misrepresenting that the HGH Products will turn back or reverse the aging process, including, but not limited to, causing effects such as: (i) reducing cellulite, (ii) improving vision, (iii)
-7-
causing new hair growth, (iv) improving emotional stability, (v) increasing muscle mass, and (vi) causing fat and weight loss;

G. Misrepresenting that any product, or any ingredient contained in it, is effective in the diagnosis, cure, mitigation, treatment, or prevention of any disease;

H. Making any representation about the health benefits, performance, efficacy, or safety of any product unless, at the time of making such representation, Defendant possesses and relies upon competent and reliable scientific evidence that substantiates the representation;

I. Misrepresenting any other fact material to a consumer's decision to purchase any product; and

J. Assisting others who violate any provision of Paragraphs A through l of this Section.

II. PROHIBITED BUSINESS ACTIVITIES UNDER THE CONTROLLING THE ASSAULT OF NON-SOLICITED PORNOGRAPHY AND MARKETING ACT OE 2003
IT IS FURTHER ORDERED that Defendant, and his officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with him who receive actual notice of this Order by personal service, facsimile, or otherwise, whether acting directly or through any trust, corporation, subsidiary, division, or other device, or any of them, are hereby temporarily restrained and enjoined from violating, or assisting others in violating, the provisions contained in the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 ("CAN-SPAM Act"), 15 U.S.G. § § 7704 and 7705, as currently promulgated or as it may hereafter be amended, or any rule, regulation, or requirement adopted pursuant thereto, including, but not limited to, initiating the transmission of a commercial electronic mail message that:

A. Contains, or is accompanied by, false or misleading header information;

-8-
B. Contains subject headers that misrepresent the content or subject matter of the message;

C. Fails to include aclearand conspicuous notice of the opportunityto decline to receive further electronic mail messages from the sender; and/or

D. Fails to include a valid physical postal address of the sender.

III. DISABLEMENT OF WEB SITES
IT IS FURTHER ORDERED that, pending further Order of this Court:

A. Any party hosting the Web sites www.ehealthylife.com, www.ehghlife.com, www.ehghlife.net, www.ehoodialife.com and www.purevie.com, including but not limited to Xsventures, LLC, dlb/a Alcolo.com, shall immediately take whatever steps may be necessary to ensure that the Web site www.ehealthylife.com cannot be accessed by the public; and

B. Any domain name registrar, including but not limited to Intercosmos Media Group, Inc., d/b/a DirectNlC, shall immediately suspend the registration and prevent the transfer of the domain names www.ehealthylife.com, www.ehghlife.com, www.ehghlife.net, www.ehoodialife.com and www.purevie.com by any and all means, including by removing name server records for the domain names from the registry root file.

IV. INJUNCTION AGAINST NEW ACCOUNT REGISTRATIONS WITHOUT REPORTING
IT IS FURTHER ORDERED that in connection with the promotion, advertising, marketing, sale, or offering for sale of any product or service, Defendant and his officers, agents,
-9-
servants, employees, and attorneys, and those persons in active concert or participation with him who receive actual notice of this Order bypersonal service or otherwise, are restrained and enjoined from registering or creating any new domain names, Web sites, Web pages, email accounts, Internet service accounts, or online payment service accounts, without notifying counsel forthe Commission within 72 hours of such registrations. The notice shall include:

A. The true identity ofthe registrant, account holder, or user, including the complete and accurate physical mailing address, email address, and telephone number;

B. The means and source of payment for the registration, including the credit card number or bank account number used,

C. The name and address of the person or entity to whom such registration was submitted;

D. The date and time the registration was created; and

E. The purpose of the domain names, Web sites, Web pages, or email accounts, Internet service accounts, or online payment service accounts registered.

V. INJUNCTION AGAINST USING ANY PERSONS OR ENTITIES TO SEND COMMERCIAL EMAIL WITHOUT REPORTING
IT IS FURTHER ORDERED that in connection with the solicitation of consumers for personal information or in the promotion, advertising, marketing, sale, or offering for sale of any product or service, Defendant is restrained and enjoined from using any affiliates, sub-affiliates, agents, mailers, vendors, employees, contractors, or other persons or entities to send commercial email on his behalf without notifying counsel for the Commission prior to the initiation of any commercial email message by such persons or entities. The notice shall include:

-10-
A. The identity of the affiliate, sub-affiliate, agent, mailer, vendor, employee, contractor, or other person or entity including the name of an individual, the complete and accurate physical mailing address, a working email address, a working telephone number, and any identification codes associated with or used by such person or entity;

B The amount of payment and information necessary to process such payment for the affiliate, sub-affiliate, agent, mailer, vendor, employee, contractor, or other person or entity, including the account name and number used;

C. A copy of the body and subject line of each unique commercial email being sent by the affiliate, sub-affiliate, agent, mailer, vendor, employee, contractor, or other person or entity;

D. A list of each of the email addresses from which the affiliate, sub-affiliate, agent, mailer, vendor, employee, contractor, or other person or entity will send the commercial email message;

E. A list of the Web site addresses and/or domain names promoted in the commercial email message;

F. A description of the procedures Defendant has to ensure that:

1. Such person or entity does not send commercial email messages to recipients who have previously requested not to receive commercial email messages from Defendant; and

2. Defendant will receive all requests received by such persons or entities from email recipients who request not to receive commercial email messages from Defendant; and

-11-
G. A certification that such person or entity has agreed, in writing, to comply with this Order and the provisions of the CAN-SPAM Act.

VI. ASSET PRESERVATION
IT IS FURTHER ORDERED that Defendant and his officers, agents, servants, employees, and attorneys, and thosepersons in active concert or participation with him who receive actual notice of this Order by personal service or otherwise, are hereby restrained and enjoined from:

A. Transferring, converting, encumbering, selling, concealing, dissipating, disbursing, assigning, spending, withdrawing, perfecting a security interest in, or otherwise disposing of any assets wherever located, inside or outside the United States of America, that are owned, controlled or held by, or for the benefit of, in whole or in part, Defendant, or in the actual or constructive possession of Defendant, including, but not limited to,

1. accounts held with ePassporte;

2. accounts held with PayPal;

3. accounts held with Privacash; and/or

4. any assets held in any account at any bank or savings and loan institution, or any credit card processing agent, customer service agent, commercial mail receiving agency, or mail holding or forwarding company, or any credit union, online payment service, IRA custodian, money market or mutual fund, storage company, trustee, or with any broker-dealer, escrow agent, title company, commodity trading company, precious metal dealer, or other financial institution or depository of any kind;

-12-
B. Opening or causing to be opened any safe deposit boxes, commercial mail boxes, or storage facilities titled in the name of Defendant, or subject to access by Defendant or under Defendant's control, without providing the Commission prior notice and an opportunity to inspect the contents in order to determine that they contain no assets covered by this Section;

C. Incurring liens or encumbrances on real property, personal property, or other assets in the name, singly or jointly, of any Defendant; and

D. Transferring any funds or other assets subject to this Order for attorney's fees or living expenses, provided, however, that, Defendant may pay reasonable, usual, ordinary, and necessary living expenses, and reasonable attorney's fees, but only after written prior approval by the Commission or as otherwise authorized by the Court.

VII. FINANCIAL REPORTS
IT IS FURTHER ORDERED that Defendant, if he has not done so already as required by the Court's TRO entered on October 3, 2007, immediately shall prepare and deliver to counsel for the FTC a completed financial statement on the form attached to the Court's TRO Order as Attachment A.

VIII. IDENTIFICATION OF MARKETERS
IT IS FURTHER ORDERED that, to the extent that he has not already done so as required by the Court's TRO entered on October 3, 2007, Defendant shall immediately prepare and deliver to counsel for the FTC a completed statement identifying all affiliates, sub-affiliates, agents, mailers, vendors, employees, contractors, or other persons or entities that have sent
-13-
commercial email on Defendant's behalf since January 1, 2004, on the form attached to this Order as Attachment C. The statement shall be accurate as of the date of its completion.

IX. REPATRIATION OF FOREIGN ASSETS AND DOCUMENTS
IT IS FURTHER ORDERED that within five (5) days following service of this Order, Defendant shall:

A. Repatriate to the United States all assets and all documents located in foreign countries held, directly or indirectly:

1. by Defendant;

2. for Defendant's benefit; or

3. under Defendant's direct or indirect ownership or control;

B. On the same business day as any repatriation under Paragraph A above, notify the FTC of the name and location of the financial institution or other entity that is the recipient of such assets or documents and the corresponding account names or numbers; and

C. Hold and retain all repatriated assets and documents and prevent any transfer, disposition, or dissipation whatsoever of any such assets. Provided, however, Defendant may transfer any repatriated documents to the FTC as required by this Order.

Provided further, that Defendant shall provide the FTC access to his records and documents held by financial institutions or other institutions outside the territorial United States, by signing the Consent to Release of Financial Records attached as Attachment D to the TRO signed by this Court on October 3, 2007.

-14-
X. INTERFERENCE WITH REPATRIATION
IT IS FURTHER ORDERED that Defendant is hereby restrained and enjoined from taking any action, directly or indirectly, which may result in the transfer, encumbrance, or dissipation of foreign assets, or in the hindrance of the repatriation required by Section IX of this Order, including but not limited to:

A. Sending any statement, letter, fax, email or wire transmission, telephoning or engaging in any other act, directly or indirectly, that results in a determination by a foreign trustee or other entity that a "duress" event has occurred under the terms of a foreign trust agreement until such time that all assets have been fully repatriated pursuant to Section IX of this Order; and

B. Notifying any trustee, protector or other agent of any foreign trust or other related entities of either the existence of this Order, or of the fact that repatriation is required pursuant to a court order, until such time that all assets have been fully repatriated pursuant to Section IX of this Order.

XI. PRESERVATION AND MAINTENANCE OF RECORDS AND NOTICE OF NEW VENTURES
IT IS FURTHER ORDERED that Defendant and his officers, agents, servants, employees, and attorneys, and those persons in active concert or participation with him who receive actual notice of this Order by personal service or otherwise, are hereby temporarily restrained and enjoined from:

A. Destroying, erasing, mutilating, falsifying, concealing, writing over, altering, transferring, or otherwise disposing of, in any manner, directly or indirectly, any documents or records, including but not limited to, any and all computerized files,
-15-
storage media (including but not limited to floppy disks, hard drives, CD-ROMs, Zip disks, punch cards, magnetic tape, backup tapes, and computer chips) on which information has been saved (including any and all equipment needed to read any such material), contracts, accounting data, registrations, correspondence, advertisements (including, but not limited to, advertisements placed on the World Wide Web or the Internet or sent via email), FTP logs, Service Access Logs, USENET Newsgroups postings, World Wide Web pages, email messages, books, written or printed records, handwritten notes, telephone logs, telephone scripts, receipt books, ledgers, personal and business canceled checks and check registers, bank statements, appointment books, copies of federal, state or local business or personal income or property tax returns, and other documents or records of any kind that relate to the business practices, or business or personal finances, of Defendant;

B. Failing to create and maintain documents that, in reasonable detail, accurately, fairly, and completely reflect their incomes, disbursements, transactions, and use of money; and

C. Creating, operating, or exercising any control over any business entity, including any partnership, limited partnership, joint venture, sole proprietorship or corporation, without first providing the FTC with a written statement disclosing:

1. the name of the business entity;

2. the address, telephone number, email address, and Web site address of the business entity;

-16-
3. the names of the business entity's officers, directors, principals, managers, and employees;

4, the names and addresses of any persons or entities providing online marketing, advertising, or mailing services for the business entity; and 5. a detailed description of the business entity's intended activities.

XII. DUTIES OF PERSONS OR ENTITIES HOLDING DEFENDANT'S ASSETS
IT IS FURTHER ORDERED that any financial or brokerage institution, escrow agent, title company, commodity trading company, entity, trust, or person that holds, controls or maintains accounts or assets of, or on behalf of, Defendant, or has held, controlled or maintained any account or asset of, or on behalf of, Defendant at any time since January 1, 2004, that has been served with a copy of this Order, or otherwise has actual or constructive knowledge of this Order, shall:

A. Hold and retain within its control and prohibit the withdrawal, removal, assignment, transfer, pledge, encumbrance, disbursement, dissipation, conversion, sale, or other disposal of any such asset except by further Order of the Court;

B. Deny Defendant access to any safe deposit box that is:

1. titled in Defendant's name, individually or jointly; or

2. otherwise subject to access by Defendant; and

C. Provide the FTC, within five (5) days of receiving a copy of this Order, a sworn statement setting forth:

-17-
1. the identification number of each such account or asset titled in the name, individually or jointly, of Defendant, or held on behalf of, or for the benefit of Defendant;

2. the balance of each such account, or a description of the nature and value of such asset as of the close of business on the day on which this Order was received, and, if the account or other asset has been closed or removed, the date closed or removed, the total funds removed in order to close the account, and the name of the person or entity to whom such account or other asset was remitted; and

3. the identification of any safe deposit box that is titled in the name, individually or jointly, of Defendant, or is otherwise subject to access by Defendant; and

D. Upon request by the Commission, promptly provide the FTC with copies of all records or other documentation pertaining to each such account or asset, including but not limited to, originals or copies of account applications, account statements, signature cards, checks, drafts, deposit tickets, transfers to and from the accounts, all other debit and credit instruments or slips, currency transaction reports, 1099 forms, and safe deposit box logs.

XIII. DISTRIBUTION OF ORDER BY DEFENDANT
IT IS FURTHER ORDERED that Defendant shall immediately provide a copy of this Order to each affiliate, subsidiary, division, sales entity, successor, assign, officer, director, employee, independent contractor, client company, agent, attorney, spouse, and representative of
-18-
Defendant, and shall, within ten (10) days from the date of entry of this Order, provide the FTC with a sworn statement that Defendant has complied with this provision of the Order, which statement shall include the names and addresses of each such person or entity who received a copy of the Order.

XIV. SERVICE OF ORDER
IT IS FURTHER ORDERED that copies of this Order may be served by any means, including transmission by facsimile or electronic mail message, upon any financial institution or other entity or person that may have possession, custody, or control of any documents or assets of Defendant, or that may otherwise be subject to any provision of this Order. Service upon any branch or office of any financial institution shall effect service upon the entire financial institution.

XV. CONSUMER CREDIT REPORTS
IT IS FURTHER ORDERED that pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C, § 1681b(1), any consumer reporting agency may furnish a consumer report concerning Defendant to the FTC.

XVI. EXPEDITED DISCOVERY
IT IS FURTHER ORDERED that, notwithstanding the provisions of Fed. R. Civ. P. 26(d) and (f), the parties may seek discovery from any source at any time after entry of this Order.

-19-
XVII. RETENTION OF JURISDICTION
IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes.

SO ORDERED, this 25th day of October 2007

Honorabl Wayne R. Andersen
United States District Judge

Attachment	Date	Size
PI_RatelleOrder.pdf	06/28/09 1:05 pm	406.49 KB