Support the Site
Temporary Restraining Order, Asset Freeze, and Other Relief
UNITED STATES DISTRICT COURT
FEDERAL TRADE COMMISSION,
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
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
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).
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. . "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
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
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;
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,
A. Contains, or is accompanied by, false or misleading header information;
B. Contains subject headers that misrepresent the content or subject matter of the
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.
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;
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
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
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
VIII. REPATRIATION OF FOREIGN ASSETS AND DOCUMENTS
IT IS FURTHER ORDERED that within five (5) days following service of this Order, each Defendant shall:
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.
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,
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
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:
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:
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
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,
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,
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:
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
Subscribe to Spamsuite