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FEDERAL TRADE COMMISSION v. MEDICOR, LLC, et al.
Consuelo B. Marshall, United States District Judge.
Order For Permanent Injunction And Other Relief As To Defendants Medicor LLC, Andrew Rubin, And Matthew Rubin
The matter before the Court, the Honorable Consuelo B. Marshall, United States District Judge presiding, is Plaintiff Federal Trade Commission's ("FTC") Motion for Summary Judgment. Consistent with the Court's Order granting Plaintiff Federal Trade Commission's Motion for Summary Judgment, the Court HEREBY ORDERS:
For purposes of this Order, the following definitions shall apply:
"Medical billing work-at-home opportunity" means any program, plan, product or service that enables a participant or purchaser to earn money by working at home processing medical claims.
"Work-at-home opportunity" means any program, plan, product or service that enables a participant or purchaser to earn money by working at home.
"Business of telemarketing" means any activity (including, but not limited to, initiating or receiving telephone calls, managing others who initiate or receive telephone calls, operating an enterprise that initiates or receives telephone calls, owning an enterprise that initiates or receives telephone calls, or otherwise participating as an officer, director, employee, independent contractor, or consultant in or for an enterprise that initiates or receives telephone calls) that involves attempts to induce consumers to purchase any item, product, good, service, investment, partnership interest, trust interest, or other beneficial interest, to make a charitable contribution, or to enter a contest for a prize, by means of telephone sales presentations, either exclusively or in conjunction with the use of other forms of marketing; provided, however, that the term "business of telemarketing" shall not include transactions that are not completed until after a face-to-face contact between the seller or solicitor and the consumer solicited, and the consumer is not required to pay or authorize payment until after such a presentation.
"Assisting others engaged in the business of telemarketing" means providing any of the following goods or services to any person or entity engaged in the business of telemarketing: (a) performing customer service functions, including but not limited to receiving or responding to consumer complaints; (b) formulating, providing, or arranging for the formulation or provision of any telephone sales script or any other written marketing material; (c) providing training, instruction, advice, or information for use in telemarketing; (d) procuring or providing office space, equipment, or financial support; or (e) processing any credit card, debit card, or bank debit payments.
I. PROHIBITED BUSINESS ACTIVITIES
A. IT IS HEREBY ORDERED that Defendants Medicor LLC, Andrew Rubin and Matthew Rubin, and each of them, are hereby
(1) Permanently restrained and enjoined from engaging in deceptive acts or practices in the business of telemarketing, or from assisting others in engaging in deceptive acts or practices in the business of telemarketing, or from engaging in deceptive acts or practices in assisting others engaged in the business of telemarketing; and
(2) Permanently restrained and enjoined from the promotion, advertising, marketing, sale, or offering for sale of any medical billing work-at-home opportunity.
B. IT IS FURTHER ORDERED THAT Defendants Medicor, Andrew Rubin, and Matthew Rubin, and each of them, and their officers, directors, agents, servants, employees, salespersons, attorneys, corporations, trusts, subsidiaries, affiliates, successors, assigns, and other entities or persons directly or indirectly under their control, and all persons or entities in active concert or participation with them who receive actual notice of this Order by personal service, facsimile or otherwise, are hereby permanently restrained and enjoined from making, or assisting others in making, directly or by implication, any false or misleading oral or written statement or representation in connection with the promotion, advertising, marketing, sale, or offering for sale of any work-at-home opportunity, product, service, or investment, including, but not limited to:
(1) Falsely representing, directly or by implication, the likely profits to be made through any work-at-home opportunity, product, service or investment;
(2) Falsely representing, directly or by implication, the costs associated with the advertising, promotion, offer for sale, or sale of any work-at-home opportunity, product, service, or investment;
(3) Falsely representing, directly or by implication, the risk, liquidity, market value, resale value, or expected income or profit associated with any work-at-home opportunity, product, service, or investment;
(4) Falsely representing, directly or by implication, the amount of time or effort required to make the expected income or profit associated with any work-at-home opportunity, product, service, or investment;
(5) Falsely representing, directly or by implication, or failing to disclose, any policy concerning refund of monies paid to the Defendants;
(6) Falsely representing, directly or by implication, any fact material to a consumer's decision to purchase any work-at-home opportunity, product, service, or investment from Defendants.
II. MONETARY RELIEF
IT IS FURTHER ORDERED that:
A. Judgment is hereby entered against the Defendants jointly and severally, in the amount of $16,562,364.51 with post-judgment interest at the legal rate, for equitable monetary relief, including but not limited to consumer redress and disgorgement, and for paying any attendant expenses of administering any redress fund. In conjunction with the claims process previously ordered by the Court, such funds shall be (1) distributed as redress to consumers, and/or (2) paid to the U.S. Treasury as equitable disgorgement. Any funds not used for such equitable relief shall be deposited to the Treasury as disgorgement. Defendants shall have no right to challenge the Commission's choice of remedies under this Paragraph.
B. All amounts the Receiver has in Receivership accounts and in segregated trust accounts in this matter may be used in partial satisfaction of this judgment. The monetary judgment set forth in Paragraph A of this section is enforceable against any asset(s) owned jointly by or held on behalf of, for the benefit of, or in trust by or for, Medicor, Andrew Rubin or Matthew Rubin.
III. RECORD-KEEPING PROVISIONS
IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, in connection with any business where (1) any Defendant is the majority owner of the business, or directly or indirectly manages or controls the business, such Defendant and his assigns, agents, servants, employees, salespersons, and all other persons or entities directly or indirectly under his control, and all other persons or entities in active concert or participation with him, who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, are hereby permanently restrained and enjoined from failing to create and retain the following records:
A. Accounting records that reflect the cost of any work-at-home opportunity, product, good, service, or investment sold, revenues generated, and the disbursement of such revenues;
B. Personnel records accurately reflecting the name, address, and telephone number of each person employed in any capacity by such business, including as an independent contractor; that person's job title or position; the date upon which the person commenced work; and the date and reason for the person's termination, if applicable;
C. Customer files containing the names, addresses, telephone numbers, dollar amounts paid, quantity of goods or services purchased, and description of goods or services purchased, to the extent that such information is obtained in the ordinary course of business;
D. Complaint and refund requests (whether received directly, indirectly, or through a third party) and any responses to those complaints or requests; and
E. Copies of all sales scripts, training materials, advertisements, or other marketing materials, including but not limited to such materials distributed on the Internet or otherwise through Web sites or Web pages.
IV. COMPLIANCE REPORTING BY DEFENDANTS
IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Order may be monitored:
A. For a period of five (5) years from the date of entry of this Order, each Defendant shall notify the Commission in writing of the following:
1. Any changes in the Defendant's residential address, mailing address, and telephone numbers, within ten (10) days of the date of such change;
2. Any changes in the Defendant's employment status, including self-employment, within ten (10) days of such change. Such notice shall include the name and address of each business that Defendant is affiliated with or employed by, a statement of the nature of the business, and a statement of Defendant's duties and responsibilities in connection with the business or employment; and
3. Any proposed changes in the structure of any business entity owned or controlled by any Defendant, such as creation, incorporation, dissolution, assignment, sale, creation or dissolution of subsidiaries, or any other change that may affect compliance obligations arising out of this Order, thirty (30) days prior to the effective date of any proposed change.
B. One hundred eighty (180) days after the date of entry of this Order, each Defendant shall provide a written report to the Commission, sworn under penalty of perjury, setting forth in detail the manner and form in which such Defendant has complied and is complying with this Order. This report shall include, but not be limited to:
1. Defendant's then-current residential address and telephone number;
2. Defendant's then-current employment, business address and telephone numbers, a description of the business activities of each such employer, and Defendant's title and responsibilities for each employer;
3. A copy of each acknowledgment of receipt of this Order obtained by Defendant, pursuant to Section V below; and
4. A statement describing the manner in which Defendant has complied and is complying with the provisions set forth in Sections I-III above.
C. Upon written request by a representative of the Commission, each Defendant shall submit additional written reports (under oath, if requested) and produce documents on fifteen (15) days' notice with respect to any conduct subject to this Order.
D. For the purposes of this Order, each Defendant shall, unless otherwise directed by the Commission's authorized representatives, mail all written notifications to the Commission to:
Associate Director Division of Marketing Practices Federal Trade Commission 600 Pennsylvania Avenue, N.W., H-238 Washington, D.C. 20580 Re: FTC v. Medicor LLC, et al
E. For the purposes of this Section, "employment" includes the performance of services as an employee, consultant, or independent contractor; and "employer" includes any individual or entity for whom any Defendant performs services as an employee, consultant, or independent contractor.
F. For the purposes of the compliance reporting required by this Section, the Commission is authorized to communicate directly with any Defendant.
V. COMMISSION'S AUTHORITY TO MONITOR COMPLIANCE
IT IS FURTHER ORDERED that the Commission is authorized to monitor any Defendant's compliance with this Order by all lawful means, including, but not limited to, the following:
A. The manner provided by Sections 9 and 20 of the FTC Act, 15 U.S.C. Sections 49, 57b-1;
B. The Commission is authorized to use representatives posing as consumers or suppliers to any Defendant, Defendant's employees, or any other entity managed or controlled in whole or in part by any Defendant, without the necessity of identification or prior notice; and
C. Nothing in this Order shall limit the Commission's lawful use of compulsory process.
VI. ACCESS TO BUSINESS PREMISES
IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, for the purpose of further determining compliance with this Order, each Defendant shall permit representatives of the Commission, within three (3) business days of receipt of written notice from the Commission:
A. Access during normal business hours to any office, or facility storing documents, of any business where Defendant is the majority owner of the business or directly or indirectly manages or controls the business;
B. In providing such access, Defendant shall:
1. Permit representatives of the Commission to inspect and copy all documents relevant to any matter contained in this Order; and shall permit Commission representatives to remove documents relevant to any matter contained in this Order, for a period not to exceed three (3) business days, so that the documents may be inspected, inventoried, and copied; and
2. To interview the officers, directors, and employees, including all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors, or otherwise, of any business to which Paragraph A of this Section applies, concerning matters relating to compliance with the terms of this Order. The person interviewed may have counsel present.
Provided that, upon application of the Commission and for good cause shown, the Court may enter an ex parte order granting immediate access to any Defendant's business premises for the purposes of inspecting and copying all documents relevant to any matter contained in this Order.
VII. DISTRIBUTION OF ORDER BY DEFENDANTS
IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, each Defendant shall:
A. Provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of same from, each officer or director, each individual serving in a management capacity, all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, immediately upon employing or retaining any such persons, for any business where Defendant is the majority owner of the business or directly or indirectly manages or controls the business;
B. Maintain for a period of three (3) years after creation, and upon reasonable notice, make available to representatives of the Commission, the original signed and dated acknowledgments of the receipt of copies of this Order, as required in this Section.
VIII. ACKNOWLEDGMENT OF RECEIPT OF ORDER BY DEFENDANTS
IT IS FURTHER ORDERED that within five (5) business days after receipt by each Defendant of this Order as entered by the Court, each Defendant shall submit to the Commission a truthful sworn statement, in the form shown on the attachment to this Order, that shall acknowledge receipt of this Order.
IX. RETENTION OF JURISDICTION
IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for the purpose of enabling any party to this Order to apply to the Court at any time for such further orders or directives as may be necessary or appropriate for the interpretation or modification of this Order, for the enforcement of compliance therewith, or the punishment of violations thereof.
SO ORDERED, this 18th day of July, 2002.
CONSUELO B. MARSHALL
UNITED STATES DISTRICT JUDGE
AFFIDAVIT OF RECEIPT OF ORDER
I, , being duly sworn, hereby state and affirm as follows:
1. My name is . My current residence address is . I am a citizen of the United States and am over the age of eighteen. I have personal knowledge of the facts set forth in this Affidavit.
2. I am a defendant in the above captioned case.
3. On , I received a copy of the Order for Permanent Injunction and Other Relief, which was signed by the Hon. Consuelo B. Marshall and entered by the Court on . A true and correct copy of the Order I received is appended to this Affidavit.
I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct.
Executed on , at , California.
The matter before the Court, the Honorable Consuelo B. Marshall, United States District Judge presiding, is Plaintiff's Motion for Summary Judgment. In accordance with Federal Rule of Civil Procedure 58, and consistent with the Court's Order of July 18, 2002, granting Plaintiff's Motion for Summary Judgment, IT IS ORDERED AND ADJUDGED that judgment be entered in favor of Plaintiff Federal Trade Commission, against Defendants Medicor LLC, Andrew Rubin and Matthew Rubin, as to the entire action.
DATE: July 18, 2002
CONSUELO B. MARSHALL
UNITED STATES DISTRICT JUDGE
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