UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF GEORGIA
FEDERAL TRADE COMMISSION,
Plaintiff,
v.
INTERNATIONAL TELEMEDIA ASSOCIATES, INC.,
also doing business as ITA; ARJUNA DIAZ, a/k/a RONALD P. DIAZ, individually and as an
officer of International Telemedia Associates, Inc.; GERARD ROBERT ENGLE, individually and
as an officer of International Telemedia Associates, Inc.; ONLINE CONSULTING GROUP, INC.;
and DAVID PETERSON, JR., individually and as an officer of Online Consulting Group, Inc.,
Defendants.
CIVIL ACTION NO.
1:98-CV-1935
TEMPORARY RESTRAINING ORDER
WITH OTHER EQUITABLE RELIEF
Plaintiff, the 51本色
("Commission"), having filed its complaint for a permanent injunction and other
relief in this matter, pursuant to Sections 13(b) and 19(a) of the Federal Trade
Commission Act ("51本色Act"), 15 U.S.C. Ё 53(b) and 57b(a), and the Telephone
Disclosure and Dispute Resolution Act of 1992 ("TDDRA"), 15 U.S.C. � 5701
et. seq., having moved for an ex parte Temporary Restraining Order pursuant
to Rule 65 of the Federal Rules of Civil Procedure, (Fed. R. Civ. P. 65), and for other
equitable relief, including appointment of a receiver, an asset freeze, expedited
discovery and an order to show cause why a preliminary injunction should not issue, 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 of the subject matter of
this case and there is good cause to believe it has jurisdiction of all parties hereto;
2. There is good cause to believe that the Commission will
ultimately succeed in establishing that defendants have engaged and are likely to engage
in acts and practices that violate Section 5(a) of the 51本色Act, 15 U.S.C. � 45(a), and
the 51本色 Trade Regulation Rule entitled "Trade Regulation Rule
Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992" (the
"900-Number Rule"), 16 C.F.R. Part 308;
3. There is good cause to believe that immediate and
irreparable damage to the Commission's ability to achieve effective final relief for
consumers in the form of monetary redress will occur from the sale, transfer, or other
disposition or concealment by defendants of their assets or corporate records unless
defendants are immediately restrained and enjoined by Order of this Court. There is thus
good cause for relieving the Commission of the duty to provide defendants with prior
notice of the Commission's motion;
4. There is good cause to appoint a temporary receiver for
defendant Online Consulting Group, Inc.;
5. Weighing the equities and considering the Commission's
likelihood of ultimate success, a temporary restraining order with asset freeze and other
equitable relief would be in the public interest; and
6. No security is required of any agency of the United
States for issuance of a restraining order. Fed. R. Civ. P. 65(c).
Definitions
For purposes of this temporary restraining order, the
following definitions shall apply:
1. "ITA defendants" means International
Telemedia Associates, Inc., Arjuna Diaz, a/k/a Ronald P. Diaz, and Gerard Robert Engle,
and each of them and their successors, assigns, officers, agents, servants, employees, and
those persons in active concert or participation with them who receive actual notice of
this Order by personal service or otherwise, whether acting directly or through any
corporation, subsidiary, division, or other device.
2. "Online defendants" means Online Consulting
Group, Inc, David Peterson, Jr., and each of them and their successors, assigns, officers,
agents, servants, employees, and those persons in active concert or participation with
them who receive actual notice of this Order by personal service or otherwise, whether
acting directly or through any corporation, subsidiary, division, or other device.
3. "Audiotext services" means information and
entertainment services offered over the telephone through any dialing pattern or through
return calls to a telephone.
4. "Enhanced services" means any offering over
the telecommunications network which is more than a basic transmission service. The
term"enhanced services" includes, but is not limited to audiotext services.
5. "Assets" means all real and personal property
of any defendant, or held for the benefit of any defendant, including but not limited to
"goods," "instruments," "equipment," "fixtures,"
"general intangibles," "inventory," "checks," or
"notes," (as these terms are defined in the Uniform Commercial Code), and all
cash, wherever located.
Conduct Prohibitions
I. IT IS THEREFORE ORDERED
that, in connection with the advertising, promotion, offering or provision of any
audiotext or other enhanced services, the Online defendants are hereby restrained and
enjoined from making or assisting others in making, directly or by implication, orally or
in writing, any misrepresentation of material fact, including, but not limited to:
- A. Any misrepresentation that any such service is free; or
-
- B. Any misrepresentation that through any such service a
consumer can make contact with any individual in that consumer's local area.
II.
IT IS FURTHER ORDERED that, in connection
with the advertising, promotion, offering or provision of audiotext or other enhanced
services, the Online defendants are hereby restrained and enjoined from failing to
disclose, clearly and conspicuously, before any consumer incurs charges for any such
service, all information material to a consumer's decision with respect to such service,
including but not limited to:
- A. That a consumer who calls any telephone number will
receive a service via a return call, if such is the case, and a description of the service
that the consumer will receive;
-
- B. That a consumer who calls any telephone number will
receive a service via multiple return calls, if such is the case, and a description of the
service that the consumer will receive;
-
- C. The charge for any such service, and that such charge
will be billed to the telephone from which a call t any Online defendant is placed, if
such is the case, or to which any return call call is placed, if such is the case.
III.
IT IS FURTHER ORDERED that, in connection
with the billing and collection for audiotext or other enhanced services, the ITA
defendants and the Online defendants are hereby restrained and enjoined from making or
assisting others in making, directly or my implication, orally or in writing, any
misrepresentation of material fact, including but not limited to:
- A. Any misrepresentation that any line subscriber must pay
for any audiotext or other enhanced service ordered or received by any person other than
the line subscriber using such line subscriber's telephone;
-
- B. Any misrepresentation that audiotext or other enhanced
services have been provided to any telephone line or to the subscriber to such telephone
line; and
-
- C. Any misrepresentation in the description of the service
for which the line subscriber is being billed.
IV.
IT IS FURTHER ORDERED that the ITA
defendants and the Online defendants are hereby restrained and enjoined from billing line
subscribers or causing line subscribers to be billed for any audiotext service delivered
via any return call initiated, or purportedly initiated, as the result of any call to an
800 or other telephone number generally understood to be toll-free.
V.
IT IS FURTHER ORDERED that, the Online
defendants and their agents, employees, officers, servants, and attorneys, and those
persons in active concert or participation with them are hereby restrained and enjoined
from violating the 900-Number Rule, including but not limited to:
- A. Using an 800 or other telephone number advertised or
widely understood to be toll-free in a manner that would result in the calling party being
called back collect for the provision of audiotext services; or
-
- B. Referring in advertisements to an 800 telephone number,
or any other telephone number advertised or widely understood to be toll-free, if use of
that number violates any of the 900-Number Rule prohibitions against use of 800 or other
toll-free numbers.
Receivership Provisions
VI.
IT IS FURTHER ORDERED that Jane W.
Moscowitz , at
Jane W. Moscowitz, P.A. , is appointed as temporary
receiver (the "receiver"), with the full power of an equity receiver, for
corporate defendant Online Consulting Group, Inc., and its affiliates and subsidiaries
(hereinafter referred to as "the receivership defendant"), and of all the funds,
properties, premises, accounts and other assets directly or indirectly owned, beneficially
or otherwise, by the receivership defendant, with directions and authority to accomplish
the following:
- A. Assume full control of the receivership defendant by
removing defendant David Peterson, Jr. and any other officer, independent contractor,
employee, or agent of the receivership defendant, as the receiver deems necessary, from
control and management of the affairs of the receivership defendant;
-
- B. Collect, marshal, and take custody, control and
possession of all the funds, property (real or personal), premises, accounts, mail and
other assets of, or in the possession or under the control of, the receivership defendant,
wherever situated. The receiver shall also assume control over the income and profits
therefrom, and all sums of money now or hereafter due or owing to the receivership
defendant, with full power to sue for, collect, receive and take possession of all goods,
chattels, rights, credits, moneys, effects, lands, leases, books and records, work papers,
records of accounts, including computer-maintained information, and other papers and
documents of the receivership defendant, wherever situated;
-
- C. Perform all acts that the receiver deems necessary to
conserve, hold, manage, and preserve the value of all receivership assets, including, but
not limited to, suspending business operations;
-
- D. Take all steps, as the receiver deems necessary or
advisable, to secure the business premises of the receivership defendant, including but
not limited to all such premises located at 550 Fairway Drive, Suite #210, Deerfield
Beach, Florida. Such steps may include, but are not limited to, the following: (1) serving
and filing this Order; (2) completing a written inventory of all receivership assets; (3)
obtaining pertinent information from all employees and other agents of the receivership
defendant, including, but not limited to, the name, home address, social security number,
job description, method of compensation, and all accrued and unpaid commissions and
compensation of each such employee; (4) videotaping all portions of the location; (5)
securing the location by changing the locks and disconnecting any computer modems or other
means of access to the computer or other records maintained at that location; and (6)
requiring any persons present on the premises at the time the Order is served to leave the
premises, to provide the receiver with proof of identification, or to demonstrate to the
satisfaction of the receiver that such persons are not removing from the premises
documents or assets of the receivership defendant;
-
- E. Prevent the withdrawal or misapplication of funds
entrusted to the receivership defendant and obtain an accounting thereof;
-
- F. Manage and administer the business of the receivership
defendant until further order of this Court, by performing all acts necessary or
incidental thereto, including the hiring or dismissing of all personnel the receiver deems
appropriate;
-
- G. Disburse funds that the receiver deems necessary and
advisable to preserve the properties of the receivership defendant or that the receiver
deems necessary and advisable to carry out the receiver's mandate under this Order;
-
- H. Collect any monies owed the receivership defendant;
-
- I. Enter into such agreements in connection with
administration of the receivership, including, but not limited to: (1) retaining
investigators, attorneys or accountants of the receiver's choice, including, without
limitation, members and employees of the receiver's firm, to assist, advise, and represent
the receiver, and (2) moving and storing of equipment, furniture, records, files or other
physical property of the receivership defendant;
-
- J. Institute, defend, prosecute, compromise, adjust,
intervene in or become party to such actions or proceedings in state, federal or foreign
courts that the receiver deems necessary and advisable to preserve the value of the
properties of the receivership defendant or that the receiver deems necessary and
advisable to carry out the receiver's mandate under this Order;
-
- K. Take all steps, the receiver deems necessary and
advisable, to ensure the receivership defendant and all and its agents, employees,
officers, servants, and attorneys, are in full compliance with the terms of this and all
subsequent orders of this Court;
-
- L. Prepare and submit a Report to this Court and to the
parties, not less than three (3) days prior to any scheduled Preliminary Injunction
Hearing, describing the receivership defendant's business activities, including, but not
limited to, the role of David Peterson and any other officers or directors of the
receivership defendant and the scope of the receivership defendant's activities.
VII.
IT IS FURTHER ORDERED that, immediately
upon service of this Order upon them, the Online defendants and the ITA defendants, and
any other person or entity served with a copy of this Order, shall forthwith or within
such time as permitted by the receiver in writing, deliver over to the receiver:
- A. Possession and custody of all funds, assets, property
owned beneficially or otherwise, and all other assets, wherever situated, of the
receivership defendant;
-
- B. Possession and custody of all book and records of
accounts, all financial and accounting records, balance sheets, income statements, bank
records (including monthly statements, canceled checks, records, wire transfers, and check
registers), client lists, title documents and other papers of the receivership defendant;
-
- C. Possession and custody of all funds and other assets
belonging to members of the public now held by the receivership defendant;
-
- D. All keys, computer passwords, entry codes, combinations
to locks required to open or gain access to any of the property or effects, and all monies
in any bank deposited to the credit of the receivership defendant, wherever situated;
-
- E. Information identifying the accounts, employees,
properties, or other assets or obligations of the receivership defendant; and
-
- F. A statement identifying all complaints received by the
receivership defendant, its subsidiaries or affiliates and any of their offices, agents,
servants or employees, about thee business practices of the receivership defendant or its
subsidiaries or affiliates and their officers, agents, servants, or employees, and further
providing all documents relating to such complaints.
VIII.
IT IS FURTHER ORDERED that, except by
leave of this Court, during the pendency of the receivership ordered herein, the
defendants and all customers, principals, investors, creditors, stockholders, lessors, and
other persons seeking to establish or enforce any claim, right or interest against or on
behalf of the receivership defendant, or any of its subsidiaries or affiliates, and all
others acting for or on behalf of such persons, including attorneys, trustees, agents,
sheriffs, constables, marshals, and other officers and their deputies, and their
respective attorneys, servants, agents and employees be and are hereby stayed from:
- A. Commencing, prosecuting, continuing or enforcing any
suit or proceeding against the receivership defendant, or any of its subsidiaries or
affiliates, except that such actions may be filed to toll any applicable statute of
limitations;
-
- B. Commencing, prosecuting, continuing or entering any suit
or proceeding in the name or on behalf of the receivership defendant, or any of its
subsidiaries or affiliates;
-
- C. Accelerating the due date of any obligation or claimed
obligation, enforcing any lien upon, or taking or attempting to take possession of, or
retaining possession of, a property of the receivership defendant, or any of its
subsidiaries or affiliates or any property claimed by any of them or attempting to
foreclose, forfeit, alter or terminate any of the receivership defendant's interests in
property, including, without limitation, the establishment, granting, or perfection of any
security interest, whether such acts are part of a judicial proceeding or otherwise;
-
- D. Using self-help or executing or issuing, or causing the
execution or issuance of any court attachment, subpoena, replevin, execution or other
process for the purpose of impounding or taking possession of or interfering with, or
creating or enforcing a lien upon any property, wheresoever located, owned by or in the
possession of the receivership defendant, or any of its subsidiaries or affiliates, or the
receiver appointed pursuant to this Order or any agent appointed by said receiver; and
-
- E. Doing any act or thing whatsoever to interfere with the
receiver taking control, possession or management of the property subject to this
receivership, or to in any way interfere with the receiver, or to harass or interfere with
the duties of the receiver; or to interfere in any manner with the exclusive jurisdiction
of this Court over the property and assets of the receivership defendant, or its
subsidiaries or affiliates.
IX.
IT IS FURTHER ORDERED that, in light of
the appointment of a receiver herein, the defendants or the creditors of the receivership
defendant are hereby prohibited from filing a petition for relief under the United States
Bankruptcy Code, 11 U.S.C. � 101 et seq., as to the receivership
defendant without prior permission from this Court.
X.
IT IS FURTHER ORDERED that the receiver
and all personnel hired by the receiver are entitled to reasonable compensation for the
performance of duties pursuant to this Order and for the cost of actual out-of-pocket
expenses incurred by them, from the assets now held by or in the possession or control of
or which may be received by the receivership defendant. The receiver shall file with the
court and serve on the parties periodic requests for the payment of such reasonable
compensation, with the first such request filed no more than sixty days after the date of
this Order. The receiver shall not increase the hourly rates used as the bases for such
fee applications without prior approval of the Court.
XI.
IT IS FURTHER ORDERED that the receiver
shall file with the Clerk of this Court a bond in the sum of $_______________, with
sureties to be approved by the Court, conditioned that the receiver will well and truly
perform the duties of the office and abide by and perform all acts the Court directs.
Asset Freeze
XII.
IT IS FURTHER ORDERED that the Online
defendants and the ITA defendants are hereby temporarily restrained and enjoined from:
- A.Transferring, converting, encumbering, selling,
concealing, dissipating, disbursing, assigning, spending, withdrawing, granting a lien or
other interest in, or otherwise disposing of any funds, property, accounts, contracts,
shares of stock or other assets of the Online defendants, wherever located, that are
1. Owned or controlled by any Online defendant or its
affiliates or its subsidiaries, their successors and assigns, in whole or in part; or
2. In the actual or constructive possession of either
Online defendant or of the Online defendants' affiliates or its subsidiaries, their
successors and assigns,; or
3. Owned, controlled by, or in the actual constructive
possession of any corporation, partnership, or other entity directly or indirectly owned,
managed, or controlled by, or under common control with, either of the Online defendants
or their affiliates or its subsidiaries, their successors and assigns, including, but not
limited to, any assets held by or for either of the Online defendants or their affiliates
or subsidiaries, their successors and assigns, or subject to access by either of the
Online defendants or their affiliates or subsidiaries, their successors and assigns, at
any bank or savings and loan institution, 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 box
titled in the name of either of the Online defendants or their affiliates or subsidiaries,
their successors and assigns, or subject to access by either of the Online defendants,
their affiliates or subsidiaries, their successors or assigns.
XIII.
IT IS FURTHER ORDERED that,
pending determination of the plaintiff's request for a preliminary injunction, any
financial or brokerage institution, or other entity or person, after having been provided
with notice of this Order shall:
A. Hold and retain within such entity's or
person's control, and prohibit the withdrawal, removal, assignment, transfer, pledge,
encumbrance, disbursement, dissipation, conversion, sale, or other disposal of, any funds,
documents, property or other assets held by or under such entity's or person's control:
1. On behalf of or for the benefit of
either of the Online defendants and their successors and assigns;
- 2. In any account maintained in the name of, or subject to
withdrawal or access by, either of the Online defendants and their successors and assigns,
in whole or in part; or
-
- 3. That are subject to access or use by either of the
Online defendants or their successors and assigns;
Provided, however, that this Order shall not prohibit
transfers:
a. As directed by further order of the Court; or
b. For assets held in the name or for the benefit of the
receivership defendant, as directed by the receiver appointed herein;
B. Deny defendants and their successors and assigns,
access to any safe deposit box that is:
1. Titled in the name of either Online defendant and their
successors and assigns, either individually or jointly; or
2. Otherwise subject to access by either Online defendant
and their successors and assigns;
C. Provide counsel for the Commission and the receiver
appointed herein, within five (5) business days of receiving a copy of this Order, a sworn
statement setting forth:
1. The identification number of each such account or asset
titled in the name, individually or jointly, of either of the Online defendants, or held
on behalf of, or for the benefit of, either of the Online defendants;
2. The balance of each such account, or a description of
the nature and value of such asset as of the time this Order is served, 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
either titled in the name, individually or jointly, of either Online defendant, or is
otherwise subject to access by either Online defendant;
D. Upon the request by the receiver or the Commission,
promptly provide the receiver or the Commission with copies of all records or other
documentation pertaining to 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;
and
E. Cooperate with all reasonable requests of the receiver
relating to implementation of this Order, including transferring funds at the receiver's
direction and producing records related to the accounts of the Online defendants and their
successors and assigns.
Record Keeping
XIV.
IT IS FURTHER ORDERED that defendants are
hereby temporarily restrained and enjoined from:
- A. Failing to create and maintain books, records, accounts,
and data which, in reasonable detail, accurately, fairly, and completely reflect their
incomes, disbursements, transactions, and use of monies; and
-
- B. Destroying, erasing, mutilating, concealing, altering,
transferring, or otherwise disposing of, in any manner, directly or indirectly, any
contracts, accounting data, correspondence, advertisements, computer tapes, discs, or
other computerized records, 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 their business practices or business or personal
finances from January 1, 1997 to the present.
Preparation for Preliminary
Injunction Hearing
XV.
IT IS FURTHER ORDERED that, at least (3)
three days prior to any preliminary injunction hearing in this matter, and in no event
later than two weeks after entry of this Order, each defendant shall provide the
Commission and the receiver with a completed financial statement, verified under oath, on
the forms attached to this Order, accurate as of the date of service of this Order upon
such defendant.
XVI.
IT IS FURTHER ORDERED that the parties
and the temporary receiver shall (1) respond to any requests for admissions within four
business days after service of the requests for admissions; (2) respond to any
interrogatory requests within four business days after the service of interrogatories; and
(3) respond to requests for production of documents within four business days after
service of the requests for production of documents.
XVII. IT IS FURTHER
ORDERED that, not less than two (2) business days before any preliminary
injunction hearing in this matter, all parties shall file with this Court and serve on all
opposing parties, a witness list that shall include 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 substances of such witness' expected testimony.
Defendants shall serve copies of all such materials on counsel for the Commission by
delivery to Elizabeth A. Hone, 51本色, Sixth Street & Pennsylvania
Avenue, NW, Room 238, Washington, D.C. 20580.
XVIII.
IT IS FURTHER ORDERED that all parties
shall serve on opposing parties affidavits, memoranda, and other evidence on which they
intend to rely not less than two (2) business days before any preliminary injunction
hearing in this matter. Defendants shall serve copies of all such materials on counsel for
the Commission by delivery to Elizabeth A. Hone, 51本色, Sixth Street
& Pennsylvania Avenue, NW, Room 238, Washington, DC 20580, prior to 4:45 p.m. of that
day, or as otherwise directed by plaintiff's counsel.
XIX.
IT IS FURTHER ORDERED that, pursuant to
Section 604 of the Fair Credit Reporting Act, 15 U.S.C. � 1681b, any consumer credit
reporting agency may furnish the Commission or the receiver with a credit report
concerning any defendant.
XX.
IT IS FURTHER ORDERED that agents of the
Commission and the receiver may serve copies of this Order upon any financial institution
or person or entity that may be in possession of any assets, property, or property rights
of defendants or that may be subject to any provision of this Order.
XXI.
IT IS FURTHER ORDERED that each of the
defendants shall appear before this Court on the 16th day of July , 1998, at
10:00 o'clock a.m. at the United States Courthouse, Room 2106 , to
show cause, if any there be, why this Court should not enter a preliminary injunction,
pending final ruling on the Complaint, against said defendants enjoining them from further
violations of Section 5(a) of the 51本色 Act, 15 U.S.C. � 45(a), and
the 900-Number Rule, 16 C.F.R. Part 308, continuing the freeze of the Online defendants'
assets, appointing a permanent receiver for Online, and imposing such additional relief as
may be appropriate.
XXII.
IT IS FURTHER ORDERED that this Court
retains jurisdiction of this matter for all purposes.
SO ORDERED, this 10 day of July
, 1998, at 3:10 p.m.
/s/ Jack Camp
United States District Judge |