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In re Sanctuary Belize Litigation

United States District Court, D. Maryland

August 2, 2019

In re SANCTUARY BELIZE LITIGATION

          MEMORANDUM OPINION IN SUPPORT OF PRELIMINARY INJUNCTION

          PETER J. MESSITTE, UNITED STATES DISTRICT JUDGE

         On October 31, 2018, the Federal Trade Commission ('"FTC") filed a Complaint in this Court, alleging that certain named Defendants were perpetrating a large-scale land sales scam on its consumer base of largely U.S. customers, seeking, as part of its requested relief, a Preliminary Injunction. Defendants are a web of corporate entities and individuals that, the FTC says, comprise, direct, and control what the FTC collectively terms the Sanctuary Belize Enterprise ("SBE"), located in Belize. The entities comprising SBE include Global Property Alliance. Inc. ("GPA"), Eco-Futures Development, Eco-Futures Belize, Ltd. ("Eco-Futures (BZ)"), Sittee River Wildlife Reserve ("SRWR"), Buy International, Inc. ("Buy International"), Buy Belize, LLC ("Buy Belize"), Foundation Development Management, Inc. ("FDM"), Power Haus Marketing ("Power Haus"), Ecological Fox, LLC ("Ecological Fox"), Belize Real Estate Affiliates, LLC ("BREA"), Southern Belize Realty, LLC ("SBR"), Exotic Investor, LLC ("EI"), Foundation Partners ("FP"). BG Marketing, LLC ("BG Marketing"), Prodigy Management Group, LLC ("Prodigy"), Newport Land Group, LLC, and the Sanctuary Belize Property Owners' Association ("SBPOA," aka "The Reserve Property Owners' Association"). The FTC also sued Atlantic International Bank, Ltd. ("AIBL"), located in Belize, for allegedly assisting in the deceptive telemarketing, sales, and development practices of SBE.[1]

         The individual Defendants are Andris Pukke and Peter Baker, as well as Luke Chadwick, John Usher, Brandi Greenfield, Rod Kazazi, Frank Costanzo, and Michael Santos. The Complaint also names Angela Chittenden. Deborah Connelly, John Vipulis, [2] the Estate of John Pukke, and Beach Bunny Holdings, LLC ("Beach Bunny Holdings"') as Relief Defendants. On February 13, 2019. Greenfield, Kazazi, Costanzo, Santos, Chittenden, Connelly, FP, BG Marketing, Ecological Fox, and Beach Bunny Holdings stipulated to the entry of the Preliminary Injunction.[3] ECF No. 195. Pukke and Baker have filed written oppositions to the Motion for Preliminary Injunction. No other individual Defendants have stipulated to the entry of a Preliminary- Injunction, but none have filed oppositions to the Motion. Chadwick, however, has moved to dismiss the claims against him for lack of personal and subject matter jurisdiction. ECF No. 475.[4]

         From March 11 to March 22, 2019, the Court held an evidentiary hearing on the FTC's Motion. Based on the evidence, oral argument presented at the end of that hearing, and the Proposed Findings of Fact and Conclusions of Law submitted by various parties post-hearing, the Court GRANTS the FTC's Motion for Preliminary Injunction as to all Defendants who have not at this time settled their claims with the FTC.

         I. Factual and Procedural Background

         A. Alleged Concealment of the Belizean Parcel from the Receiver in FTC v. AmeriDebt

         The case involves a large mass of land in Southern Belize, roughly the size of Manhattan, where individual lots in a planned residential and commercial community have been marketed to thousands of consumers and sold to residents of the United States.

         Some critical history precedes the current litigation.

         In 2003, the FTC sued Pukke under Section 5 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 45(a), in connection with what it alleged were fraudulent activities related to two credit counseling companies he owned and/or operated. Civ. No. PJM-03-3317, FTC v. Ameridebt, Inc. et al ("AmeriDebt" since consolidated with the present, case). The Court entered a preliminary injunction against Pukke and other defendants in that case, FTC v. Ameridebt. Inc., 373 F.Supp.2d 558 (D. Md. 2005), following which Pukke agreed to a Stipulated Final Judgment and Permanent Injunction. AmeriDebt, ECF Nos. 408, 411, 473. Pursuant to the Final Order of Judgment in AmeriDebt, the Court appointed a Receiver, Robb Evans & Associates, LLC, [5] to marshal and liquidate up to $35, 000, 000 of Pukke's assets in order to provide the FTC with funds to compensate Pukke"s victims. AmeriDebt, ECF No. 473 at 13.

         At the time of the AmeriDebt action, Pukke and Baker, along with several other associates and family members, owned interests in two Belizean entities: Dolphin Development, LLC ("Dolphin") and Sittee River Wildlife Reserve ("SRWR"). PX 358; PX 359; PX 361. Through Puck Key Investments L-8, LLC ("Puck Key 8"), an entity he wholly owned, Pukke held a 60% interest in Dolphin (Baker, his mother, and his stepfather held the remaining 40%). PX 358. While serving as an SRWR director, Pukke loaned it $1.5 million to buy 11, 755 acres in southern Belize and loaned Dolphin $1.5 million to buy 350 adjacent acres. PX 356 ¶ 11. In May 2005, SRWR also bought a five-acre island, now known as "Sanctuary Caye." PX 378; PX 192 ¶ 3, Att. 24 at 11 (copy of the minutes of the 2016 Annual General Meeting of SRWR, signed by "Peter Baker, Chairman"). These land acquisitions collectively formed the parcel of land (the "Belizean Parcel") on which Pukke, Baker, and the other Defendants in the present case have collaborated to develop and market the community at issue today-Sanctuary Belize (also known as Sanctuary Bay Estates or the Reserve). In 2005, throughout the United States, Dolphin commenced telemarketing lots on the Belizean Parcel as part of the Sanctuary Belize residential and commercial development plan, and in August 2005 Dolphin sold its first lot in the development. PX 363 (lot sale contract for Dolphin, dated August 1, 2005).

         After the Final Order of Judgment in the AmeriDebt case was entered, Pukke apparently retained control of the Reserve, but actively concealed his interest in the property from the Receiver. Pukke was alleged to have misrepresented to the Receiver both his ownership stake in and the fiscal solvency of Dolphin. Pukke also transferred Dolphin's development rights and a portion of the Belizean Parcel to two entities controlled by Baker in an apparent effort to make SRWR appear to be without assets. PX 361; PX 371; PX 372; PX 373; PX 374; PX 375; PX 376; PX 377: PX 379; PX 380. When the Receiver became aware of this legerdemain, it moved to have both Pukke and Baker held in contempt of court for, among other things, refusing to turn over the land and for taking steps to remove it from the Receiver's control.

         On March 30, 2007, following an evidentiary hearing held in February and March of 2007. the Court found Pukke and Baker in civil contempt for their refusal to turn over receivership assets and ordered them to immediately turn over control of the Belizean Parcel to the Receiver. AmeriDebt, ECF No. 571. To facilitate the Receiver's ability to control the Belizean Parcel, the Court issued a second order unwinding the alleged sales of Pukke's interests in Dolphin (i.e., his interests in Sanctuary Belize) and ordering these assets re-vested in Dolphin (which the Receiver controlled). AmeriDebt, ECF No. 572.

         Pukke and Baker, however, failed to comply with the Court's Orders, i.e., to purge their contempt. Accordingly, on April 30, 2007, the Receiver moved to have both men incarcerated in order to coerce their compliance with the Court's Orders directing the turnover of their interests in the Belizean Parcel and related documents.[6] AmeriDebt, ECF Nos. 596, 597. On May 4, 2007, the Court again found Pukke and Baker in Contempt, remanded them to custody of the U.S. Marshal and had them incarcerated. AmeriDebt. ECF No. 604. Baker and Pukke were eventually released from custody after serving approximately two weeks and one month in custody, respectively. Their release was conditioned on cooperating in the turn-over of Pukke"s assets to the Receiver, including the Belizean Parcel AmeriDebt, ECF Nos. 614, 622, which, in part at least, they did do.

         Approximately one year later, on March 27. 2008, realizing that it would be exceedingly difficult and costly to enforce its rights to control the Belizean Parcel, the Receiver undertook to cash out its claims to ownership over it. AmeriDebt, ECF No. 682. In consequence, an agreement was reached whereby the Receiver would sell the land to SRWR for $2 million. Id. No party objected to the sale, and on April 15, 2008 the Court approved it without comment. AmeriDebt, ECF Nos. 684, 686.

         Notwithstanding the foregoing, the FTC alleges in the present litigation that it was Baker who raised the funds to purchase the Belizean Parcel from the Receiver, and that Pukke, through Baker, retained effective control of the development and marketing operations for Sanctuary Belize, which, after the Receiver's involvement terminated, allegedly continued to operate under the name Defendant Eco-Futures Belize, Ltd. PX 192 ¶ 3. Att. 24 at 12 (2016 SRWR General Annual Meeting minutes, detailing the 2008 purchase of the Belizean Parcel for $2 million from the AmeriDebt Receiver); PX 395 (emails between Baker and Greenfield discussing sales tours of the Reserve scheduled for February 2009, also forwarded to Pukke in 2011); Baker Dep. Tr., 2/19/19, 123:17-124:1 (Baker testifying that Pukke's ownership and involvement was reinstated "[a]s soon as we were ready to go to, call it, start marketing and sales").

         In short, the FTC contends that at all relevant times Pukke effectively controlled the Belizean Parcel-the land on which Sanctuary Belize has been developed-as well as the associated marketing and sales operations, all the while concealing the fact of his affiliation with the enterprise from the AmeriDebt Receiver. The nexus between FTC v. AmeriDebt and the Belizean Parcel purportedly gave rise to a multitude of violations the FTC says characterize the present litigation.

         B. Marketing and Development of Sanctuary Belize

         Through his control over the SBE entities, says the FTC, Pukke participated in and directed the fraudulent behavior of other individual Defendants in their capacities as principals of various SBE enterprises. The core of the FTC's allegations is that Defendants perpetrated an unlawfully deceptive telemarketing scheme through which they attempted to convince, and in many instances did convince, American consumers to buy lots at Sanctuary Belize. Those purchases were allegedly accomplished by making promises to consumers that Pukke, the SBE entities, and other Defendants knew to be false and contrary to the experiences of other lot purchasers. Beyond that, revenue from lot sales at Sanctuary Belize is alleged to have been redirected by several Defendants to their own personal use and for projects unrelated to the development of Sanctuary Belize.

         The FTC identifies six "core claims" Defendants purportedly made to customers, knowing they were false and misleading: (1) that SBE's "no debt" business model made Sanctuary Belize a less risky investment than one in which the developer would have to make payments to mortgage lenders and creditors; (2) that in part because of the "no debt" model, every dollar the developer collected from lot sales would be reinvested in the development; (3) that this funding stream meant the developer would finish the development quickly, i.e., within two to five years; (4) that the finished development would boast luxury amenities including, among other things, a hotel, an American-caliber hospital, and a nearby airport; (5) that those amenities meant that the lots would appreciate in value from 200% to 300% within two to three years; and (6) that consumers would realize this rapid appreciation without difficulty because there would be a robust market for resale of the lots.

         Since 2005, SBE has sold over 1, 000 lots at the Belizean Parcel, including some that have been sold more than once. PX 816 at 20-23. SBE's marketing team has employed extreme advertising techniques across the United States, including promotions on such television channels as Fox News and Bloomberg. PX 205 ¶ 13; PI Hrg Tr., 3/11/19 Afternoon, 82:8-16. SBE has also maintained websites to which consumers could and did navigate, which urged potential customers to submit contact information to SBE in order to learn more. PI Hrg Tr. 3/11/19 Morning. 48-49; PI Hrg Tr. 3/19/19 Afternoon, 59:9-12: PX 399.

         The marketing process operated more or less as follows:

         California-based telemarketers would call consumers who responded to SBE's initial various marketing efforts. PI HrgTr., 3/11/19 Afternoon, 82:17-24; PI Hrg Tr., 3/19/19 Afternoon 59:17-21. Pukke. in particular, but other SBE principals as well, coached sales employees to "create a sense of urgency" and a "fear of loss" on the part of prospective purchasers, techniques that the telemarketers then used in their calls with consumers. PX 207 ¶ 5 and Att. 3 at 1; PI Hrg Tr., 3/19/19 Afternoon, 60:22-61:10; PX 196 ¶ 10. After capturing the interest of prospective consumers, typically by touting as enticements the promises reflected in the Core Claims, SBE telemarketers encouraged consumers to participate in a webinar during which a higher-level sales agent would speak with them over the telephone, often transmitting slick development photos and graphics to the consumers' computers. PX 307; PX 308; PX 309; PX 310; PX 200 ¶¶ 8:5-6, 17:13; PX 186 ¶ 8; PX 205 ¶ 14: PX 336; PX 337; PX 186 ¶ 9:3 (attaching webinar). The presenters during the webinars varied, but at different points both Costanzo and Chadwick were definitely participants. PX 814 ¶ 8 PX 186 ¶ 9:3; PX 184. Att. 43 at 186 (notes on webinar taken by lot purchaser).

         The purpose of the webinars was to persuade customers to travel to Belize and tour the Reserve in person. The consumer would pay his or her own airfare to and from Belize, but for $999, the consumer would receive an all-inclusive tour, including lodging at a resort nearby the Reserve, free food, meals, drinks, and internal transportation. PX 184 ¶ 11; PX 186 ¶ 21: PX 191 ¶ 13; PX 193f 13: PX 194 ¶¶ 5, 6, 61; PX 195 ¶¶ 11.46;PX 196 ¶ 17; PX 198 ¶ 8: PX 200 ¶r12-13, 47; PI Hrg Tr., 3/11/19 Afternoon, 86:3-18; PI Hrg Tr., 3/11/19 Morning, 54-55; PX 182 ¶ 9; PX 202 «; 7; PX 183 ¶ 9; PI Hrg Tr., 3/11/19 Morning, 55; PI Hrg Tr., 3/11/19 Afternoon, 86:12-87:1; PI Hrg Tr., 3/19/19 Afternoon, 62:5-10. Before going to Belize to tour the Reserve, consumers were encouraged to sign "non-binding lot reservation agreements." PX 410; PX 205r14; PX 605: PX 821; PI Hrg Tr., 3/11/19 Afternoon, 87:12-23. Pursuant to those agreements, again before departing, some consumers paid between $2, 000 and $10, 000 to SBE to obtain the right of first refusal on particular lots. PX 410; PX 181 ¶ 8:3 (attaching lot reservation agreement); PX 205 ¶ 18, Att. 17 (same); PX 186 ¶ 21; PX 198 ¶ 8; 5-6; PI Hrg Tr., 3/11/19 Afternoon, 87:12-88:7; PI Hrg Tr., 3/19/19 Afternoon, 61:11-16 (in at least one case a consumer made a $20, 000 down payment on a lot and signed a memorandum of sale before visiting the property or meeting with a telemarketer face to face). Their deposits were either credited toward the purchase price of the reserved lot or the purchase of another lot, but would be refunded if the consumer decided not to complete the sale. PX 200 ¶ 13; PX 198 ¶ 25; PX 202 ¶ 7; PX 188 ¶ 8; PX 205 ¶ 18, Att. 17. Finally, some consumers, albeit a relative few, agreed to purchase lots outright either before going on the tour or without ever going on the tour. PX 254 ¶ 14 (authenticating PX 258, attachment 4 to the Batal Declaration, a sales script from 2012); PX 258 at 11 (SBE marketing script, stating "You have 4 choices:... Purchase a home site sight unseen (23% of our owners have done this)."); PX 819-828 (emails, lot purchase agreements, and SBE spreadsheets showing that some consumers purchased prior to a tour).

         Tours in Belize typically gathered five to ten couples, who as a group toured the Reserve, visited lots, and attended sales presentations. During the sales presentations and tours, SBE employees would reiterate promises incorporating one or more of the six Core Claims. PX 312; PX 198 ¶ 12, Atts. 9-10; PX 191 ¶ 16-26; PX 182 ¶ 15-24. PI Hrg Tr.. 3/19/19 Afternoon, 69:4-70:1. Presenters in Belize would vary, but at various times definitely included Usher, Chadwick, and Costanzo. PX 194 ¶¶ 7, 11, 14; PX 195 ¶¶ 7-10; PX 196 ¶ 22; PI Hrg Tr., 3/19/19 Afternoon, 67:5-18; PI Hrg Tr., 3/11/19 Morning, 57-58 (testifying that Chadwick gave property tour and reiterated that the development was debt free). Sometimes sales presentations in Belize would include presentations by local service-providers such as Coldwell Banker Southern Belize (the local office of Defendant Southern Belize Realty), who assured consumers, by advertising their own services, that the Belizean community was ready, willing, and able to satisfy consumer needs. PX 752 ¶¶ 9-10; PI Hrg Tr., 3/11/19 Afternoon, 89:14-22; PI Hrg Tr., 3/11/19 Afternoon, 102:25-103:6; PI Hrg Tr., 3/19/19 Afternoon, 69:20-70:23. Consumers were not always able to visit the specific lots on which they had placed a deposit, often because of terrain issues such as overgrown jungle on uncleared lots or the flooding of unpaved roads. PX 202 ¶ 34; PX 199 ¶ 5; PX 195 ¶ 7.

         From the beginning of the sales process, SBE represented to consumers that if they purchased a lot, they would "own" that lot. PX 205 ¶ 16 (Declaration of SBE sales employee: "We said that once a customer purchased a lot, they would own it. We also called everyone who purchased 'owners.'"); PX 203 ¶ 13 (Declaration of SBE sales employee: SBE told prospective consumers "they would own their lot"). As such, after returning to the United States from the tours where they purchased lots, the new "owners'* began to receive invoices for monthly payments on the lots (payable to SBE) as well as from a homeowner's association (HOA) for dues in the amount of $100 per month per lot. PX 183 ¶ 39, Att. 21; PX 181c 40, Att. 10; PX 186 ¶ 34, Att. 26; PX 184 ¶ 48, Att. 42; PX 202 ¶ 39, Att. 32; PI Hrg Tr., 3/11/19 Morning, 77-78 (lot purchaser testifying about invoices for homeowners' association fees). Purchasers were advised that these payments were subject to a 12.5% Belizean General Sales Tax ("GST"). PX 409; PX 456; PX 457; PX 458; PX 459; PX 460; PI Hrg Tr., 3/11/19 Afternoon. 103:18-104:8, PX 881; PX 882; PI Hrg Tr., 3/11/19 Morning, 68-69 (lot purchaser testifying that he made monthly payments of approximately $3, 000 to Eco-Futures in California). SBE explained to purchasers that the GST was charged on all sales of goods and services, which meant that, dating from the purchase of their lot to the final construction of their home, the tax would be applicable. PX 196 ¶ 38 and Atts. 41, 42; PX 456; PX 458; PX 459; PX 460; see also PX 457 (representing in marketing materials that GST is "charged on [the sale of] goods and services"); PX 459 (stating, in a "Sanctuary Bulletin" marketing email, that GST 'is a consumer tax (12.5%), applied to most goods and services). Customers made these payments to SBE in California and to the HOA's address in Texas, respectively.

         The development of Sanctuary Belize, however, began to lag behind the timeline SBE had projected, and as it did, a number of purchasers attempted to mitigate their losses by seeking to sell back their lots to SBE or by suing it. Some owners simply stopped making payments on their lots, as a result of which SBE threatened them with "foreclosure, '" meaning it would simply take the lots back unless the consumer resumed making monthly payments. That apparently is precisely what some owners intended to happen. PX 462; PX 463; PX 464; PX 186 ¶ 72, Att. 89, ¶ 74, Att. 92, ¶ 75; PX 789 ¶¶ 10-11. Occasionally SBE was willing to buy back a lot from a consumer, but almost always it did so at a loss to the purchaser, never at a profit, and never via a lump sum payment, only through payments made over time. PX 814 ¶ 47; PX 816 at 14; see also PX 466 and PX 519 (various buyback and termination agreements). Typically. SBE would undertake to re-market the bought-back lots to new consumers. PX 471; PX 636; PX 637; PX 638; cf. PX 816 ¶ 14.

         In 2016, a group of 200 dissatisfied consumers known as the Independent Owners of Sanctuary Belize ("IOSB") sued SBE in Belize.[7] PX 202 ¶ 46-54, Atts. 17, 31. Since then, dissatisfied owners have filed at least seven actions in California state courts, in general alleging that various SBE entities defrauded them into purchasing lots, luring them on the basis of one or more of the Core Claims. Since SBE's Lot Sale Agreements contain forum selection clauses that require litigation, if any, to take place in Belize, some California courts have dismissed the consumer actions without prejudice at the pleading stage based on those clauses.[8] Other cases in California courts apparently settled before the SBE entities could file motions to dismiss based on the choice of forum clauses.[9] As of this writing, motions to dismiss in California courts based on the choice of forum clauses are pending in two remaining actions.[10]

         II. Personal Jurisdiction over Luke Chadwick

         Except for the Motion to Dismiss filed by Luke Chadwick, the motions to dismiss of all other parties have been denied.[11] Only Chadwick's Motion to Dismiss, partially on the basis of lack of personal jurisdiction, remains. ECF No. 475. Chadwick and the FTC have jointly requested a hearing on his Motion, but the Court decides the personal jurisdiction issue now on the papers without a hearing.[12]

         Personal jurisdiction over a defendant may be general or specific. General personal jurisdiction can be exercised when a defendant has "continuous and systematic general business contacts" with a forum state. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984). In that event, the defendant's contacts must be "so constant and pervasive as to render it essentially at home in the forum state." Daimler AG v. Bauman, 571 U.S. 117. 122 (2014) (citations omitted). The place of incorporation and the location of a corporation's principal place of business are paradigmatic examples of contacts sufficient to support general personal jurisdiction in a given forum. Id. at 137 (citations omitted).

         Specific jurisdiction may be exercised over a defendant where "the suit arises out of or relates to the defendant's contacts with the forum." Id. at 127 (citations omitted). The present case is clearly one of specific personal jurisdiction inasmuch as it arises out of a specific transaction that the various Defendants, Chadwick included, had with the relevant forum, namely, the United States at large.

         Ordinarily, in determining whether a federal court may exercise specific personal jurisdiction over a defendant, the court considers "(1) the extent to which the defendant has purposefully availed [himself or] itself of the privilege of conducting activities in the state; (2) whether the [plaintiffs] claims arise out of those activities directed at the state; and (3) whether the exercise of personal jurisdiction would be constitutionally 'reasonable."' Careftrst of Maryland, Inc. v. Carefirst Pregnancy Centers. Inc., 334 F.3d 390, 397 (4th Cir. 2003).

         However, if a statute authorizes nationwide service of process, so long as the assertion of jurisdiction over a defendant is compatible with due process, service of process sufficient to establish personal jurisdiction over the defendant. See ESAB Grp., Inc. v. Centricut, Inc., 1 26 F.3d 617, 626 (4th Cir. 1997). Accordingly, a statute providing for nationwide service expands a district court's jurisdiction to the entire country, altering the traditional minimum contacts test that focuses on a defendant's contacts with a particular state and becomes "a national contacts test." See United States v. Batato, 833 F.3d 413, 423 n.3 (4th Cir. 2016) (citation and internal quotation marks omitted). Because the FTC has statutory authority to effect service of process nationwide, see 15 U.S.C. § 53(a), the minimum contacts inquiry focuses on a defendant's contacts with the United States as a whole, rather than a specific state, such as Maryland.

         Chadwick argues that he has not had nor does he presently have sufficient minimum contacts with Maryland, which he claims is the forum state in this case. ECF No. 475-1 at 9-10. However, Chadwick's contacts with the United States as a whole-not with a particular state- determine whether the Court may exercise personal jurisdiction over him. As explained earlier, a statute providing for nationwide service, such as the FTC Act, converts the minimum contacts test from one focused on a particular forum state to one focused on a defendant's contacts with the entire country. See Batato, 833 F.3d at 423 n.3; ESAB Grp., 126 F.3d at 626. The Court finds that Chadwick had ample minimum contacts with the United States throughout the existence of the Sanctuary Belize Enterprise. He was physically present and active in real estate sales and brokerage in California and Nevada beginning in 2002 and 2005. respectively. ECF No. 475-1 at 4. From 2009 to 2014, he also worked for SBE as the sales manager and as a "Principal," and, until 2015. he maintained an office at the same address in Irvine, California as numerous other SBE Defendants. Id. at 6-7. Chadwick's personal residence is also located in California. Id. at I..[13]

         Chadwick contends that requiring him to appear in Maryland would be overly burdensome, even while acknowledging his residence in California. The Court is not persuaded.

         In determining whether it is constitutionally reasonable for a district court to exercise personal jurisdiction over a defendant, courts weigh factors such as

(1) the burden on the defendant of litigating in the forum; (2) the interest of the forum state in adjudicating the dispute; (3) the plaintiffs interest in obtaining convenient and effective relief; (4) the shared interest of the states in obtaining efficient resolution of disputes; and (5) the interests of the states in furthering substantive social policies.

Consulting Eng'rs Corp. v. Geometric Ltd., 561 F.3d 273, 278 (4th Cir. 2009).

         While litigating in a district other than in the one in which he resides would undoubtedly burden Chadwick to some extent, the Court finds that, insofar as this may be inconvenient, it is not sufficiently burdensome to defeat personal jurisdiction. Cf. In re Chase & Sanborn Corp.. 835 F.2d 1341, 1346 (11th Cir. 1988) (stating that "[m]odern means of communication and transportation have lessened the burden of defending a lawsuit in a distant forum1'). Further, the Court has already denied an attempt by Pukke to transfer this case to California on similar grounds that litigating there would be more convenient and less burdensome on the SBE Defendants. ECF No. 261.

         The other reasonableness factors strongly favor the Court's exercise of personal jurisdiction over Chadwick without violating his right to due process. The District of Maryland has a strong interest in adjudicating the case, given that it traces back to the concealment of the Belizean Parcel from the Receiver in the AmeriDebt litigation that was tried here. Although Chadwick was not personally involved in the AmeriDebt proceeding, he knew that Pukke and Baker had been defendants in that case and were subject to a receivership involving assets in Belize, see ECF No. 475-1 at 5. As such, he could reasonably have foreseen that working with them on Sanctuary Belize sales in California might lead to further proceedings in the District of Maryland.

         Additionally, the FTC-which represents the public-has a strong interest in obtaining convenient and effective relief in the District of Maryland, since it initiated the case in this Court following the alleged concealment by Pukke of property from the AmeriDebt Receiver. Since courts in both Maryland and California have similar interests in resolving disputes efficiently and furthering social policies, neither of those factors definitively weigh against the reasonableness of exercising personal jurisdiction over Chadwick in the District of Maryland.

         In sum, because Chadwick has had sufficient minimum contacts with the United States, and the FTC has nationwide power of service of process, it would not violate his due process rights for the Court do exercise personal jurisdiction over him.

         III. Analysis

         A. Legal Standards for Preliminary Injunction

         Before granting a preliminary injunction under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), a court must (1) consider the likelihood that the FTC will succeed on the merits of the case, and (2) weigh the appropriate equities. AmeriDebt, 373 F.Supp.2d at 563 (citing FTC v. Food Town Stores, Inc., 539 F.2d 1339. 1343 (4th Cir. 1976)). The FTC does not need to demonstrate the likelihood of irreparable harm in order to obtain a preliminary injunction. Because its Motion is brought pursuant to a statute that authorizes injunctive relief, irreparable harm is presumed. See F.T.C. v. Consumer Defense, LLC, 926 F.3d 1208, 1212-13 (9th Cir. 2019) (citing F. T.C v. World Wide Factors, Ltd., 882 F.2d 344, 346-47 (9th Cir. 1989)).

         At the preliminary injunction stage, the FTC demonstrates the likelihood of success on the merits if it '"shows preliminarily, by affidavits or other proof, that it has a fair and tenable chance of ultimate success on the merits."' AmeriDebt, 373 F.Supp.2d at 563 (quoting F. T.C v. Beatrice Foods Co., 587 F.2d 1225, 1229 (D.C. Cir. 1978)).

         In balancing the public and private equities associated with deciding to impose a preliminary injunction, the public interest is given greater weight. See Id. at 564 (citing F.T.C. v. World Travel Vacation Brokers, Inc., 861 F.2d 1020, 1030 (7th Cir. 1988)). Indeed, the Fourth Circuit has suggested that any potential private injuries that may be caused by granting a motion for preliminary injunction "are not proper considerations for granting or withholding injunctive relief under Section 13(b)." See Id. (citing Food Town Stores, 539 F.2d at 1346).

         B. Legal Standards for Liability on FTC's Claims against Defendants

         i. Liability for Violations of FTC Act

         Section 5 of the FTC Act bars "unfair or deceptive acts or practices in or affecting commerce.'* 15 U.S.C. § 45(a). An individual may be found liable under Section 5 if it or he

(1) participated directly in the deceptive practices or had authority to control those practices, and (2) had or should have had knowledge of the deceptive practices. The second prong of the analysis may be established by showing that the individual had actual knowledge of the deceptive conduct, was recklessly indifferent to its deceptiveness, or had an awareness of a high probability of deceptiveness and intentionally avoided learning the truth.

F.T.C. v. Ross, 743 F.3d 886, 892 (4th Cir. 2014).

         As to the second prong, "the degree of participation in business affairs is probative of knowledge." F.T.C. v. Innovative Mktg., Inc., 654 F.Supp.2d 378, 387 (D. Md. 2009) (quoting F.T.C. v. Amy Travel Serv., Inc., 875 F.2d 564, 574 (7th Cir. 1989)) (internal quotation marks omitted).

         ii. Liability for Violations of Telemarketing Sales Rule

         In addition to claiming that all the SBE Defendants violated the FTC Act, the agency also alleges that they violated the Telemarketing Sales Rule ("TSR"), which prohibits deceptive telemarketing acts or practices. 16 C.F.R. § 310.3. Among other prohibitions, the TSR forbids sellers and telemarketers from misrepresenting, directly or by implication, "[a]ny material aspect of the performance, efficacy, nature, or central characteristics of goods or services that are the subject of a sales offer," or "'[a]ny material aspect of an investment opportunity including, but not limited to, risk, liquidity, earnings potential, or profitability." Id. at §§ 310.3(a)(2)(iii), (vi).

         The TSR also provides that any person, defined as "any individual, group, or unincorporated association, limited or general partnership, corporation, or other business entity," 16 C.F.R. § 3lO.2(y), who "provide[s] substantial assistance or support to any seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that violates §§ 310.3(a), (c) or (d), or § 310.4" of the TSR has committed a "deceptive telemarketing act or practice" and violated the Rule itself or himself. 16 C.F.R. § 310.3(b). The standard for individual liability under the TSR is the same as the standard for individual liability under the FTC Act. See 15 U.S.C. § 57a(d)(3); see also., F.T.C. v. WV Universal Mgmt., LLC, 877 F.3d 1234. 1240 (11th Cir. 2017) (holding that "by violating the TSR, [the defendant] violated the FTC Act and is subject to its penalties.").

         iii. Liability as a Common Enterprise

         The FTC has alleged that all Defendants, save for AIBL, operated as a common enterprise under the umbrella of "Sanctuary Belize Enterprise" ("SBE"). "[W]here corporate entities operate together as a common enterprise, each may be held liable for the deceptive acts and practices of the others." FTC v. Grant Connect, LLC, 763 F.3d 1094. 1105 (9th Cir. 2014); see also Rowe v. Brooks, 329 F.2d 35, 39-40 (4th Cir. 1964) (noting that joint ventures operate like a partnership, wherein partners have joint and several liability for losses incurred in furtherance of common enterprise). To determine whether a group of defendants operated as a common enterprise, courts "look to a variety of factors, including: common control, the sharing of office space and officers, whether business is transacted through a maze of interrelated companies, the commingling of corporate funds and failure to maintain separation of companies, unified advertising, and evidence which reveals that no real distinction existed between the Corporate Defendants." CFTC v. Noble Wealth Data Info. Servs. Inc., 90 F.Supp.2d 676; 691 (D. Md. 2000) (quoting FTC v. Wolf, No. 94-5119. 1996 WL 812940. *7 (S.D. Fla. Jan. 31, 1996) (citations omitted). FTC Act liability for members of a common enterprise is joint and several. See, e.g., FTC v. Pointbreak Media, LLC, No. 18-61017-CIV, 2019 WL 1650101, *6 (S.D. Fla. Apr. 4. 2019).

         iv. Liability for Monetary Relief under the FTC Act

         Once the FTC establishes an enterprise's liability for misrepresentations to consumers pursuant to Section 5 of the FTC Act, the enterprise is liable for restitution if the FTC shows consumer reliance. "[C]onsumer reliance on express misrepresentations'" is "presumptively reasonable." F.T.C v. Five-Star Auto Club, 97 F.Supp.2d 502, 528 (S.D.N.Y.2000). Reliance is presumed if "(1) the business entity made material misrepresentations likely to deceive consumers. (2) those misrepresentations were widely disseminated, and (3) consumers purchased the entity's products." FTC v. Loma Int'l Bus. Grp. Inc., No. 11-cv-1483, 2013 WL 2455986, at *7 (D. Md. June 5, 2013). As to all the ...


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