United States District Court, D. Maryland
March 24, 2014
FEDERAL TRADE COMMISSION, Plaintiff,
MANUEL AND LOLA ALBAN, et al., Defendants.
MEMORANDUM AND ORDER RE: INJUNCTIVE RELIEF
MARVIN J. GARBIS, District Judge.
The Court issues this Memorandum and Order as its statement of reasons in support of the injunctive relief provided hereby against Defendants Manuel Alban and Lola Alban ("the Albans") and Loma International Business Group, Inc. ("Loma") in compliance with Rule 65(d) of the Federal Rules of Civil Procedure.
In the Bench Trial Decision [Document 181], the Court found:
1. That Defendants Manuel Alban and Lola Alban and Loma International Business Group, Inc. violated Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
2. That Defendants Manuel Alban and Lola Alban and Loma International Business Group, Inc. are jointly and severally liable.
3. That the Court shall grant injunctive relief against Defendants Manuel Alban and Lola Alban and Loma International Business Group, Inc. pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b).
4. That the Court shall include within the said injunctive relief, appropriate monetary obligations.
5. That further proceedings... are necessary to address:
a. The terms of the said injunctive relief, and
b. Issues pertaining to the monetary obligations to be imposed.
Id. at 1-2 (footnote number modified).
The Court has conducted further proceedings, including an evidentiary hearing, has considered the evidence presented at trial and the supplemental hearing and the arguments of counsel. The Court has made its factual findings based on its evaluation of the evidence and the reasonable inferences drawn therefrom.
The FTC presented a Proposed Final Judgment and Order for Monetary Relief Against Loma International Business Group, Inc., Manuel Alban, and Lola Alban (the "Proposed Order")[filed herewith as the Proposed Order] including:
Introductory statement with findings
An Order with eleven sections:
I. Ban on Providing Immigration Services
II. Prohibition Against Misrepresentations
III. Monetary Judgment
IV. Customer Information
V. Monitorship Termination
VI. Updating Customer Contact Information
VII. Order Acknowledgments
VIII. Compliance Reporting
X. Compliance Monitoring
XI. Retention of Jurisdiction
The Proposed Order was reviewed with counsel on the record of the supplemental hearing. The objections asserted by the Albans are addressed herein as are certain modifications to the Proposed Order made by the Court in the Permanent Injunction issued herewith.
A. Injunction Sections
For reasons stated on the record of proceedings held, as supplemented herein:
Introductory statement with findings: The section has been replaced with a Findings section containing a statement of jurisdiction and the violation found.
Definitions: No change.
I. Ban on Providing immigration Services: No changes.
II. Prohibition Against Misrepresentations: Clarification of part II.A. that the reference therein is to the Defendants' education, etc.
III. Monetary judgment: See Section B below.
IV. Customer Information: Modified pursuant to discussion with counsel. Because the monitor took over all records, reference to customer information was modified to refer to any form that Defendants may now have in their possession.
V. Monitorship Termination: Modified pursuant to discussion with counsel. The Monitor shall turn over records and information it has to the Commission rather than destroy it. The reference to payment of funds was removed.
VI. Updating Customer Contact Information - removed pursuant to discussion and modifications of section V.
VII. Order Acknowledgments - VII.B.: The Albans' request for a "carve out" of World Class Packaging is denied.
VIII. Compliance Reporting - 15 years reduced to 10 years.
IX. Recordkeeping - 15 years reduced to 10 years.
X. Compliance Monitoring - Plaintiff shall communicate with the Albans through counsel if they have counsel. There will be no provision regarding Plaintiff's interviews with employees or affiliated persons. The Court will neither expand nor reduce the Plaintiff's rights in this regard. There will be no provision regarding Plaintiff's ability to use lawful means or compulsory process. The Court will neither expand nor reduce the Plaintiff's rights in this regard.
XI. Retention of Jurisdiction: Unchanged
B. Monetary Section
Starting in about 2001, the Albans provided Spanishspeaking customers immigration services, which required qualifications that they lacked. The services were provided in an office in which the Albans also provided tax return preparation and, for a time, court-related substance abuse counselling. On June 1, 2011, the FTC filed the instant lawsuit and obtained a sealed Temporary Restraining Order [Document 13] authorizing a "raid" of the Albans' office, the seizure of documents and the services of a Temporary Monitor. The authorized "raid" was conducted and effectively closed the Albans' office, which also prevented the provision of services not at issue.
Ultimately, the Temporary Monitor, utilizing the services of a forensic investigator, estimated that the gross revenues obtained by the Albans from immigration services of the type at issue for the approximately ten-year period from April 2001 to June 2011 would have been in the range of $479, 000 to $753, 406. Memorandum of Decision [Document 183] at 21-22. The Court found the estimate to provide a "reasonable approximation" of the gross revenues and, therefore, found as a fact that the pertinent gross revenues received by the Albans were within the estimated range. Id . at 23-24.
In the Memorandum of Decision, the Court stated:
[T]he amount of disgorgement to be ordered does not necessarily equate to the revenue derived from the services.
The Court, considering an equitable remedy, finds it appropriate to take into account the Defendants' current financial circumstances because disgorgement is designed to be remedial and not punitive. Moreover, it may be appropriate to consider the ultimate disposition of any amount of disgorgement paid. Therefore, the Court finds a need to hear further evidence and argument regarding the amount of disgorgement to be required.
Id. at 24 (internal citations omitted, footnote number modified). Having heard such further evidence and arguments of counsel, the Court must now exercise its discretion to determine an appropriate amount of disgorgement to require from the Albans.
Courts are "clothed with large discretion" to create remedies to suit the circumstances of the case. FTC v. Whole Foods Mkt., Inc. , 548 F.3d 1028, 1033 (D.C. Cir. 2008) (quoting Ford Motor Co. v. United States , 405 U.S. 562, 573 (1972)). The decision to order disgorgement of ill-gotten gains, and the calculation of those gains, lie within the discretion of the trial court, which "must be given wide latitude in these matters." S.E.C. v. Patel , 61 F.3d 137, 140 (2d Cir. 1995).
In exercising its discretion in the instant case, the Court finds it appropriate to consider the Albans' present circumstances and future prospects. In this regard, the Albans are both well into their 70's, in less than perfect health and have no realistic prospect of any material future incomeproducing activity. Moreover, their actual income received from the actions for which they are being sanctioned was not, realistically viewed, particularly great. Using, for illustration, the middle of the range the Court found reasonable, the average per year over the period from 2001 to 2011 was less than $61, 000. Assuming a minimal estimate of $1, 000 per month of the expenses (including office rent) incurred to generate the income, they netted - for the personal services of two people - less than $50, 000 per year.
Of course, the starting point for consideration of a disgorgement order is gross receipts without reduction for expenses. See FTC v. Washington Data Resources, Inc. , 704 F.3d 1323, 1327 (7th. Cir. 2013). However, in the circumstance of the instant case, net revenue is the start, not the end, of the discretionary determination of the amount of disgorgement that the Albans shall be required to pay.
The instant case was filed pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), which authorizes the Court to issue a permanent injunction. The authority to grant the injunction includes the authority to grant ancillary relief. F.T.C. v. Ross, ___ F.3d ___, 2014 WL 703739, *2 (4th Cir. Feb. 25, 2014). There is no specified limitations period. Hence, the FTC seeks, and the court could order - should it exercise its discretion to do so - disgorgement taking into account the Albans' gross receipts for the ten-year, two-month period, from April 2001 to the June 1, 2011 filing date.
However, it is appropriate to consider in connection with the exercise of discretion, that the FTC Act does specify a three-year limitations period when the FTC sues for monetary relief pursuant to Section 19(b), which permits "such relief as the court finds necessary to redress injury to consumers, " including "the refund of money or return of property, [and] the payment of damages." 15 U.S.C. § 57b(b).
It is also pertinent for the Court to consider the fact that the Albans have already been required to pay, and have paid, in excess of $110, 000 to finance the Temporary Monitor and an additional $6, 500 to fund the Temporary Monitor's financial assistant.
Furthermore, in view of the non-punitive nature of the equitable monetary remedy, it is appropriate to seek to provide for compensatory reimbursement to customers.
Under the circumstances, the Court shall exercise its discretion to require the Albans to make a payment or a series of payments - up to $616, 203 (the middle of the estimated range of their gross receipts at issue) to fund reimbursement to customers, with jurisdiction retained to adjust the obligation in light of future circumstances.
Therefore, the monetary section of the injunction shall provide that:
The Albans shall, by July 1, 2014, make an initial payment of $75, 000 to a fund managed by the FTC or its designee, and such payments as shall be required by further Order, so that the total payments are no greater than $616, 203.
The FTC, or its designee, shall manage the fund and repay Defendants' customers to the extent that the customers can be located and provide statements, under oath, supporting their entitlement to repayment.
At such time, if any, that the reimbursements to customers reduce the fund to less than $10, 000, the Court shall, absent a showing of good cause not to do so, require an additional payment from the Albans in an amount to be determined in light of then existing circumstances.
If, by a date that is two years after the making of the initial payment or, if later, any subsequent payment, the fund has not been reduced below $10, 000, the fund (and payments hereunder) shall be terminated, and the remaining balance in the fund shall be paid to the FTC or such recipient(s) as the FTC may designate.
For the foregoing reasons:
1. The Court shall grant Plaintiff injunctive relief, including prohibition against certain conduct and a monetary obligation as discussed herein.
2. The Court shall issue the Injunction herewith.
UNITED STATES DISTRICT COURTDISTRICT OF MARYLAND NORTHERN DIVISION
[PROPOSED] FINAL JUDGMENT AND ORDER FOR MONETARY RELIEF AGAINST LOMA INTERNATIONAL BUSINESS GROUP, INC., MANUEL ALBAN, AND LOLA ALBAN
The Federal Trade Commission ("Commission") brought this action for injunctive and monetary equitable relief against Loma International Business Group, Inc. ("Loma"), Servicios LatinoAmericanos de Maryland, Inc. ("Servicios"), Manuel E. Alban, and Lola P. Alban for deceptive acts and practices. In the Complaint, the FTC asserted one count against the Defendants for deceptive practices in violation of Section 5(a) of the Federal Trade Commission Act (the "FTC Act" or "Act"), 15 U.S.C. §45(a). The FTC requested injunctive and monetary equitable relief against the Defendants under Section 13(b) of the FTC Act, 15 U.S.C. §53(b).
The Court conducted a six-day bench trial on May 7-15, 2012. On March 28, 2013, the Court issued a Bench Trial Decision holding Loma, Manuel Alban, and Lola Alban jointly and severally liable for violating Section 5(a) of the FTC Act, 15 U.S.C. §45(a). On June 5, 2013, the Court issued a Memorandum of Decision by which it issued its findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a). After carefully reviewing all of the evidence, testimony, and arguments presented by the parties' counsel, the Court explained that the FTC had proven by a preponderance of the evidence that Loma, Manuel Alban, and Lola Alban were jointly and severally liable for deceptive acts and practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. §45(a), because they had misrepresented they were authorized to provide immigration services. The Court found that a permanent injunction against Loma, Manuel Alban, and Lola Alban is appropriate because there is a reasonable likelihood of future violations. The Court also found that monetary equitable relief against all Defendants is proper in the amount of $_________________. Based upon the record established in this case, and for the reasons set forth in the Court's Order and Memorandum of Decision, the Court enters this Final Judgment and Order for Permanent Injunction and Other Equitable Relief ("Order").
THEREFORE, IT IS ORDERED as follows:
1. "Individual Defendants" means Manuel E. Alban and Lola P. Alban.
2. "Corporate Defendant" means Loma International Business Group, Inc. and its successors and assigns.
3. "Defendants" means all of the Individual Defendants and the Corporate Defendant, individually, collectively, and in any other combination.
4. "Immigration-Related Documents" means (a) original documents provided by or on behalf of a customer or other person, such as passports and marriage and birth certificates; (b) any applications, petitions, or other papers filed on a customer's behalf, but does not include incomplete forms; and (c) any documents from the United States Department of Homeland Security or the United States Department of Justice received by the Defendants on behalf of any customer.
5. "Immigration services" means any service purporting to aid any person in any immigration matter involving the United States government, such as by: (a) appearing in any immigration case, either in person or through the preparation or filing of any brief, paper, application, petition, form, or other document, on behalf of another person, before any branch of the United States Department of Homeland Security or the United States Department of Justice; (b) selecting which visa, work permit, temporary protective status, residency, citizenship, or other immigration status or benefit to apply for, or which application or other form to use, or providing advice regarding these selections; (c) advising a person regarding the requirements for obtaining a visa, a work permit, temporary protective status, residency, citizenship, or any other immigration status or benefit; or (d) advising a person regarding his or her answers on any immigration-related document, paper, application, petition, or other form.
6. "Customer" means any person who purchased or agreed to purchase, or any person on whose behalf a person purchased or agreed to purchase, immigration services from any Defendant prior to the entry of this Order.
7. "Customer Contact Information" means a customer's last known name, address, and telephone number.
I. BAN ON PROVIDING IMMIGRATION SERVICES
IT IS ORDERED that Defendants are permanently restrained and enjoined from advertising, marketing, promoting, or offering for sale, or assisting in the advertising, marketing, promoting, or offering for sale of, any immigration services.
II. PROHIBITION AGAINST MISREPRESENTATIONS
IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with promoting or offering for sale any good or service are permanently restrained and enjoined from misrepresenting, expressly or by implication:
A. their education, training, or credentials, or that they are qualified or authorized to provide immigration services or tax preparation services;
B. the total costs to purchase, receive, or use, or the quantity of, the good or service;
C. any material restriction, limitation, or condition to purchase, receive, or use the good or service; and
D. Any material aspect of the performance, efficacy, nature, or central characteristics of the good or service.
III. MONETARY JUDGMENT
IT IS FURTHER ORDERED that:
A. Judgment in the amount of seven hundred fifty-three thousand four hundred six U.S. Dollars ($753, 406) is entered in favor of the Commission against Individual Defendants and Corporate Defendant, jointly and severally, as equitable monetary relief.
B. Defendants are ordered to pay to the Commission seven hundred fifty-three thousand four hundred six U.S. Dollars ($753, 406). Within 180 days of entry of this Order, Defendants are directed to obtain the reverse mortgage specified in Paragraph C of this Section. Within 7 days of entry of this Order, Defendants are ordered to authorize Sun Trust Investment Services to sell all the shares in Defendants' accounts as outlined in Paragraph D of this Section.
C. In partial satisfaction of the monetary judgment, the asset freeze is partially lifted to the extent necessary to permit Defendants Manuel Alban and Lola Alban to secure the maximum amount allowed as a reverse mortgage on their residence located at 2711 Wesleyan Drive, Churchville, Maryland 21201. Upon obtaining such reverse mortgage, Defendants shall direct the mortgage company to send the proceeds of such reverse mortgage, less any amount necessary to pay annual property taxes, via wire transfer in accordance with instructions to be provided by the Commission.
D. In partial satisfaction of the monetary judgment, the asset freeze is partially lifted to the extent necessary to permit Sun Trust Investment Services to sell:
1. all the shares in Manuel Alban's retirement account ending 7740, such sum shall be sent via wire in accordance with instructions to be provided by the Commission; and
2. all the shares in Manuel and Lola Alban's account ending 7813, such sum shall be sent via wire transfer in accordance with instructions to be provided by the Commission.
E. In the event that it is necessary to execute additional documents to transfer or liquidate assets of any Defendant under this Order, Defendants shall execute such documents within 3 days of a written request from the Commission.
F. All money paid to the Commission pursuant to this Order may be deposited into a fund administered by the Commission or its designee to be used for equitable relief, including consumer redress and any attendant expenses for the administration of any redress fund. If a representative of the Commission decides that direct redress to consumers is wholly or partially impracticable or money remains after redress is completed, the Commission may apply any remaining money for such other equitable relief (including consumer information remedies) as it determines to be reasonably related to Defendants' practices alleged in the Complaint. Any money not used for such equitable relief shall be deposited to the United States Treasury as disgorgement. Defendants have no right to challenge any actions the Commission or its representatives may take pursuant to this Subsection.
IV. CUSTOMER INFORMATION
IT IS FURTHER ORDERED that Defendants, and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with any of them who receive actual notice of this Order by personal service or otherwise, are permanently restrained and enjoined from:
A. Disclosing, using, or benefitting from customer information, including the name, address, telephone number, email address, Social Security Number, other identifying information ( e.g., passport, marriage certificate), or any data that enables access to a customer's account (including a credit card, bank account, or other financial account), that any Defendant obtained prior to entry of this Order in connection with the offering for sale of immigration services; and
B. Failing to destroy such customer information in all forms in their possession, custody, or control within 30 days after receipt of written direction to do so from a representative of the Commission. Provided, however, that customer information need not be disposed of, and may be disclosed, to the extent requested by a government agency or required by a law, regulation, or court order.
V. MONITORSHIP TERMINATION
IT IS FURTHER ORDERED that the Monitor must complete all duties within 120 days after entry of this Order, but any party may, or the Monitor may request, that the Court extend that Monitor's term for good cause.
Within 30 days after receipt of written direction to do so from a representative of the Commission, the Monitor shall destroy all forms of customer information in his possession, custody, or control.
Upon completion of the responsibilities described in this Section and Section VI, the Monitor shall submit a final report and application for fees and expenses. Upon the Court's approval of the Monitor's final report, and the payment of any remaining funds to the Commission under Section III, the Monitor's role shall be terminated. Payment to the Commission under Section III shall not be reduced by any amount paid to the Monitor.
VI. UPDATING CUSTOMER CONTACT INFORMATION
IT IS FURTHER ORDERED that the Monitor shall provide to the Commission a list containing customers' contact information, including Alien registration number, that is available to the Monitor. The Commission shall then provide the customer contact list to the United States Citizenship and Immigration Service (USCIS), which shall utilize the customer contact list to provide updated customer contact information to the Commission available to USCIS within 90 days of receipt of this Order. The Commission shall protect customers' personally identifiable information from disclosure to third parties, except where necessary to effect customer redress.
VII. ORDER ACKNOWLEDGMENTS
IT IS FURTHER ORDERED that Defendants obtain acknowledgments of receipt of this Order:
A. Each Defendant, within 7 days of entry of this Order, must submit to the Commission an acknowledgment of receipt of this Order sworn under penalty of perjury.
B. For 5 years after entry of this Order, each Individual Defendant, for any business that such Defendant, individually or collectively with any other Defendant, is the majority owner or controls, directly or indirectly, and the Corporate Defendant, must deliver a copy of this Order to: (1) all principals, officers, directors, and LLC managers and members; (2) all employees, agents, and representatives who participate in conduct related to the subject matter of this Order; and (3) any business entity resulting from any change in structure as set forth in the Section titled Compliance Reporting. Delivery must occur within 7 days of entry of this Order for current personnel. For all others, delivery must occur before they assume their responsibilities.
C. From each individual or entity to which a Defendant delivers a copy of this Order, that Defendant must obtain, within 30 days, a signed and dated acknowledgment of receipt of this Order.
VIII. COMPLIANCE REPORTING
IT IS FURTHER ORDERED that Defendants make timely submissions to the Commission:
A. One year after entry of this Order, each Defendant must submit a compliance report, sworn under penalty of perjury:
1. Each Defendant must: (a) identify the primary physical, postal, and email address and telephone number, as designated points of contact, which representatives of the Commission may use to communicate with Defendant; (b) identify all of that Defendants businesses by all of their names, telephone numbers, and physical, postal, email, and Internet addresses; (c) describe the activities of each business, including the goods and services offered, the means of advertising, marketing, and sales, and the involvement of any other Defendant (which Individual Defendants must describe if they know, or should know, due to their own involvement); (d) describe in detail whether and how that Defendant is in compliance with each Section of this Order; and (e) provide a copy of each Order Acknowledgment obtained pursuant to this Order, unless previously submitted to the Commission.
2. Additionally, each Individual Defendant must: (a) identify all telephone numbers and all physical, postal, email and Internet addresses, including all residences; (b) identify all business activities, including any business for which such Defendant performs services, whether as an employee or otherwise, and any entity in which such Defendant has any ownership interest; and (c) describe in detail such Defendant's involvement in each such business, including title, role, responsibilities, participation, authority, control, and any ownership.
B. For 15 years after entry of this Order, each Defendant must submit a compliance notice, sworn under penalty of perjury, within 14 days of any change in the following:
1. Each Defendant must report any change in: (a) any designated point of contact; or (b) the structure of Corporate Defendant or any entity that Defendant has any ownership interest in or controls, directly or indirectly, that may affect compliance obligations arising under this Order, including: creation, merger, sale, or dissolution of the entity or any subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order.
2. Additionally, each Individual Defendant must report any change in: (a) name, including aliases or fictitious name, or residence address; or (b) title or role in any business activity, including any business for which such Defendant performs services whether as an employee or otherwise, and any entity in which such Defendant has any ownership interest, and identify the name, physical address, and any Internet address of the business or entity.
C. Each Defendant must submit to the Commission notice of the filing of any bankruptcy petition, insolvency proceeding, or any similar proceeding by or against such Defendant within 14 days of its filing.
D. Any submission to the Commission required by this Order to be sworn under penalty of perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by concluding: I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on: _______ and supplying the date, signatory's full name, title (if applicable), and signature.
E. Unless otherwise directed by a Commission representative in writing, all submissions to the Commission pursuant to this Order must be emailed to Debrief@ftc.gov or sent by overnight courier (not the U.S. Postal Service) to:
The subject line must begin: FTC v. Loma Intl. Business Group, Inc., et al., X110035.
IT IS FURTHER ORDERED that Defendants must create certain records for 15 years after entry of the Order, and to retain each such record for 5 years. Specifically, the Corporate Defendant and each Individual Defendant for any business in which that Defendant, individually or collectively with any other Defendants, is a majority owner or controls directly or indirectly, must create and retain the following records:
A. Accounting records showing the revenues from all goods or services sold;
B. Personnel records showing, for each person providing services, whether as an employee or otherwise, that person's: name; addresses; telephone numbers; job title or position; dates of service; and, if applicable, the reason for termination;
C. Records of all consumer complaints and refund requests, whether received directly or indirectly, such as through a third party, and any response;
D. All records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Commission; and
E. A copy of each unique advertisement or other marketing material.
X. COMPLIANCE MONITORING
IT IS FURTHER ORDERED that, for the purpose of monitoring Defendants' compliance with this Order and any failure to transfer any assets required by this Order:
A. Within 14 days of receipt of a written request from a representative of the Commission, each Defendant must: submit additional compliance reports or other requested information, which must be sworn under penalty of perjury; appear for depositions; and produce documents, for inspection and copying. The Commission is also authorized to obtain discovery, without further leave of court, using any of the procedures described by Federal Rules of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 45, and 69.
B. For matters concerning this Order, the Commission is authorized to communicate directly with each Defendant. Defendant must permit representatives of the Commission to interview any employee or other person affiliated with any Defendant who has agreed to such an interview. The person interviewed may have counsel present.
C. The Commission may use all other lawful means, including posing, through its representatives as consumers, suppliers, or other individuals or entities, to Defendants or any individual or entity affiliated with Defendants, without the necessity of identification or prior notice. Nothing in this Order limits the Commission's lawful use of compulsory process, under Sections 9 and 20 of the FTC Act, 15 U.S.C. § § 49, 57b-1.
D. Upon written request from a representative of the Commission, any credit reporting agency must furnish consumer reports concerning Individual Defendants, pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C. § 1681b(a)(1).
XI. RETENTION OF JURISDICTION
IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order.
IT IS SO ORDERED.