Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 1 of 49 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

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1 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 1 of 49 FEDERAL TRADE COMMISSION, v. Plaintiff, PRIME LEGAL PLANS LLC, et al., and Defendants, THE 2007 SAN LAZARO IRREVOCABLE LIFE INSURANCE TRUST, et al., Relief Defendants. UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA Case No. 12-CV SCOLA/SNOW STIPULATED FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AND MONETARY RELIEF AS TO DEFENDANTS DEREK B. RADZIKOWSKI; JASON C. DESMOND; PRIME LEGAL PLANS LLC; FREEDOM LEGAL PLANS, LLC; FRONTIER LEGAL PLANS, LLC; AMERICAN HARDSHIP, LLC; BACK OFFICE SUPPORT SYSTEMS LLC; LEGAL SERVICING AND BILLING PARTNERS LLC; AND RELIEF DEFENDANT SHELIE DESMOND Plaintiff, the Federal Trade Commission ( Commission ) filed its Complaint, as amended ( Complaint ), for a permanent injunction and other equitable relief in this matter, pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act ( FTC Act ), 15 U.S.C. 53(b) and 57b, the Telemarketing and Consumer Fraud and Abuse Prevention Act ( Telemarketing Act ), 15 U.S.C et seq., and the 2009 Omnibus Appropriations Act, Public Law 111-8, Section 626, 123 Stat. 524, 678 (Mar. 11, 2009) ( Omnibus Act ), as clarified by the Credit Card Accountability Responsibility and Disclosure Act of 2009, Public Law , Section 511, 123 Stat. 1734, (May 22, 2009) ( Credit Card Act ), and amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law , Section Page 1 of 34

2 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 2 of , 124 Stat. 1376, (July 21, 2010) ( Dodd-Frank Act ), 12 U.S.C The Commission and Defendants Derek B. Radzikowski; Jason C. Desmond; Prime Legal Plans LLC; Freedom Legal Plans, LLC; Frontier Legal Plans, LLC; American Hardship, LLC; Back Office Support Systems LLC; and Legal Servicing and Billing Partners LLC ( Settling Defendants ); and Relief Defendant Shelie Desmond ( Settling Relief Defendant ) stipulate to entry of this Final Judgment and Order for Permanent Injunction and Monetary Relief as to Defendants Derek B. Radzikowski; Jason C. Desmond; Prime Legal Plans LLC; Freedom Legal Plans, LLC; Frontier Legal Plans, LLC; American Hardship, LLC: Back Office Support Systems LLC; Legal Servicing and Billing Partners LLC; and Relief Defendant Shelie Desmond ( Order ) to resolve all matters in dispute in this action between them. FINDINGS By stipulation of the parties and being advised of the premises, the Court finds: 1. This Court has jurisdiction over this matter. 2. The Complaint charges that Defendants participated in deceptive acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. 45; the FTC s Telemarketing Sales Rule ( TSR ), 16 C.F.R. Part 310, and the Mortgage Assistance Relief Services Rule ( MARS Rule ), 16 C.F.R. Part 322, recodified as Mortgage Assistance Relief Services (Regulation O), 12 C.F.R. Part 1015, in connection with the marketing and sale of mortgage assistance relief services. 3. Settling Defendants and Settling Relief Defendant neither admit nor deny any of the allegations in the Complaint, except as specifically stated in this Order. Only for purposes of this action, Settling Defendants and Settling Relief Defendant admit the facts necessary to establish jurisdiction. Page 2 of 34

3 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 3 of Settling Defendants and Settling Relief Defendant waive any claim that they may have under the Equal Access to Justice Act, 28 U.S.C. 2412, concerning the prosecution of this action through the date of this Order, and agree to bear their own costs and attorney fees. 5. Settling Defendants, Settling Relief Defendant, and the Commission waive all rights to appeal or otherwise challenge or contest the validity of this Order. DEFINITIONS For the purposes of this Order, the following definitions shall apply: 1. Assisting others includes, but is not limited to: A. performing customer service functions, including, but not limited to, receiving or responding to consumer complaints; B. formulating or providing, or arranging for the formulation or provision of, any advertising or marketing material, including, but not limited to, any telephone sales script, direct mail solicitation, or the design, text, or use of images of any Internet website, , or other electronic communication; C. formulating or providing, or arranging for the formulation or provision of, any marketing support material or service, including but not limited to, web or Internet Protocol addresses or domain name registration for any Internet websites, affiliate marketing services, or media placement services; D. providing names of, or assisting in the generation of, potential customers; E. performing marketing, billing, or payment services of any kind; and F. acting or serving as an owner, officer, director, manager, or principal of any entity. Page 3 of 34

4 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 4 of Competent and reliable evidence means tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that has been conducted and valuated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results. 3. Corporate Defendants means Prime Legal Plans LLC; Consumer Legal Plans LLC (Nevada); Consumer Legal Plans, LLC (Wyoming), also d/b/a CLP Associates; Freedom Legal Plans, LLC; Frontier Legal Plans, LLC; Reaching U Network, Inc., also d/b/a Legal Billing Services, Legal Servicing Partners, Forensic Auditor Services, 123 Save Our Home, Save Our Home Plan, Home Savers, Legal Network Association, and Homeowners Rescue Mission; 123 Save a Home, Inc.; American Hardship, LLC; Back Office Support Systems LLC; and Consumer Acquisition Network, LLC, also d/b/a Consumer Legal Network, Legal Servicing & Billing Partners, Forensic Auditor Services, Telefunding Services, Mortgagesavers.org, First Capital Land Trust, and Florida Land Trust Consultants; Legal Servicing and Billing Partners LLC; and their successors and assigns. 4. Customer means any person who has paid, or may be required to pay, for products, services, plans, or programs offered for sale or sold by any other person. 5. Debt relief product or service means any product, service, plan, or program represented, expressly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt or obligation, including but not limited to a tax debt or obligation, between a person and one or more unsecured creditors or debt collectors, including but not limited to, a reduction in the balance, interest rate, or fees owed by a person to an unsecured creditor or debt collector. Page 4 of 34

5 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 5 of Defendants means all of the Individual Defendants and the Corporate Defendants, individually, collectively, or in any combination. 7. Established business relationship means a relationship between the seller and a person based on: (a) the person s purchase, rental, or lease of the seller s goods or services or a financial transaction between the person and seller, within the eighteen (18) months immediately preceding the date of the telemarketing call; or (b) the person s inquiry or application regarding a product or service offered by the seller, within the three (3) months immediately preceding the date of a telemarketing call. 8. Federal homeowner relief or financial stability program means any program (including its sponsoring agencies, telephone numbers, and Internet websites) operated or endorsed by the United States government to provide relief to homeowners or stabilize the economy, including but not limited to: A. the Making Home Affordable Program; B. the Financial Stability Plan; C. the Troubled Asset Relief Program and any other program sponsored or operated by the United States Department of the Treasury; D. the HOPE for Homeowners program, any program operated or created pursuant to the Helping Families Save Their Homes Act, and any other program sponsored or operated by the Federal Housing Administration; or E. any program sponsored or operated by the United States Department of Housing and Urban Development ( HUD ), the HOPE NOW Alliance, the Homeownership Preservation Foundation, or any other HUD-approved housing counseling agency. Page 5 of 34

6 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 6 of Financial-related product or service means any product, service, plan, or program represented, expressly or by implication, to: A. provide any consumer, arrange for any consumer to receive, or assist any consumer in receiving, credit, debit, or stored value cards; B. improve, or arrange to improve, any consumer s credit record, credit history, or credit rating; C. provide advice or assistance to any consumer with regard to any activity or service the purpose of which is to improve a consumer s credit record, credit history, or credit rating; D. provide any consumer, arrange for any consumer to receive, or assist any consumer in receiving a loan or other extension of credit; or E. provide any consumer, arrange for any consumer to receive, or assist any consumer in receiving any service represented, expressly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of any debt or obligation (other than a debt or obligation secured by a mortgage on a consumer s dwelling), including but not limited to a tax debt or obligation, between a consumer and one or more secured creditors, servicers, or debt collectors. 10. Individual Defendants means Lazaro Dinh, a/k/a Mario Lazaro Sopena a/k/a Lazaro Sopena; Kim E. Landolfi; Derek B. Radzikowski; Andrew Primavera; Christopher N. Edwards; and Jason C. Desmond. 11. Mortgage assistance relief product or service means any product, service, plan, or program, offered or provided to a consumer in exchange for consideration, that is Page 6 of 34

7 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 7 of 49 represented, expressly or by implication, to assist or attempt to assist the consumer with any of the following: A. stopping, preventing, or postponing any mortgage or deed of trust foreclosure sale for the consumer s dwelling, any repossession of the consumer s dwelling, or otherwise saving the consumer s dwelling from foreclosure or repossession; B. negotiating, obtaining, or arranging a modification of any term of a dwelling loan, including a reduction in the amount of interest, principal balance, monthly payments, or fees; C. obtaining any forbearance or modification in the timing of payments from any dwelling loan holder or servicer on any dwelling loan; D. negotiating, obtaining, or arranging any extension of the period of time within which the consumer may (i) cure his or her default on a dwelling loan, (ii) reinstate his or her dwelling loan, (iii) redeem a dwelling, or (iv) exercise any right to reinstate a dwelling loan or redeem a dwelling; E. obtaining any waiver of an acceleration clause or balloon payment contained in any promissory note or contract secured by any dwelling; or F. negotiating, obtaining, or arranging (i) a short sale of a dwelling, (ii) a deed-inlieu of foreclosure, (iii) or any other disposition of a dwelling other than a sale to a third party that is not the dwelling loan holder. The foregoing shall include any manner of claimed assistance, including, but not limited to, land trust services, auditing or examining a consumer s mortgage or home loan application and offering to provide or providing legal services, or offering to sell a consumer a plan or subscription to a service that provides such assistance. Page 7 of 34

8 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 8 of National Do Not Call Registry means the National Do Not Call Registry, which is the do-not-call registry maintained by the Commission pursuant to 16 C.F.R (b)(1)(iii)(B). 13. Outbound telephone call means a telephone call initiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable contribution. 14. Person means any natural person, organization, or other legal entity, including a corporation, partnership, proprietorship, association, cooperative, or any other group or combination acting as an entity. 15. Seller means any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration whether or not such person is under the jurisdiction of the Commission. 16. Settling Corporate Defendants shall mean Prime Legal Plans LLC; Freedom Legal Plans, LLC; Frontier Legal Plans, LLC; American Hardship, LLC; Back Office Support Systems LLC; and Legal Servicing and Billing Partners LLC. 17. Settling Individual Defendants shall mean Derek B. Radzikowski and Jason C. Desmond. 18. Telemarketer means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor. 19. Telemarketing means a plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call. The term does not include the solicitation of sales through the mailing of a catalog which: contains a Page 8 of 34

9 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 9 of 49 written description or illustration of the goods or services offered for sale; includes the business address of the seller; includes multiple pages of written material or illustrations; and has been issued not less frequently than once a year, when the person making the solicitation does not solicit customers by telephone but only receives calls initiated by customers in response to the catalog and during those calls takes orders only without further solicitation. For purposes of the previous sentence, the term further solicitation does not include providing the customer with information about, or attempting to sell, any other item included in the same catalog which prompted the customer s call or in a substantially similar catalog. 20. Telemarketing Sales Rule means the FTC Rule entitled Telemarketing Sales Rule, 16 C.F.R. Part 310, attached hereto as Appendix A or as may be hereafter amended. ORDER I. BAN ON MORTGAGE ASSISTANCE RELIEF PRODUCTS OR SERVICES IT IS THEREFORE ORDERED that Settling Defendants, whether acting directly or through any other person, are permanently restrained and enjoined from: A. Advertising, marketing, promoting, offering for sale, or selling any mortgage assistance relief product or service; and B. Assisting others engaged in advertising, marketing, promotion, offering for sale, or selling any mortgage assistance relief product or service. II. BAN ON DEBT RELIEF PRODUCTS AND SERVICES IT IS FURTHER ORDERED that Settling Defendants, whether acting directly or through any other person, are permanently restrained and enjoined from: Page 9 of 34

10 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 10 of 49 A. Advertising, marketing, promoting, offering for sale, or selling any debt relief product or service; and B. Assisting others engaged in advertising, marketing, promoting, offering for sale, or selling any debt relief product or service. III. PROHIBITED MISREPRESENTATIONS RELATING TO FINANCIAL-RELATED PRODUCTS OR SERVICES IT IS FURTHER ORDERED that Settling Defendants and their officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with any of them who receive actual notice of this Order by personal service, facsimile transmission, , or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering for sale, or sale of any financial-related product or service, are hereby permanently restrained and enjoined from: A. Misrepresenting or assisting others in misrepresenting, expressly or by implication, any material fact, including but not limited to:. 1. The terms or rates that are available for any loan or other extension of credit, including but not limited to: a. closing costs or other fees; b. the payment schedule, the monthly payment amount(s), or other payment terms, or whether there is a balloon payment; interest rate(s), annual percentage rate(s), or finance charge; the loan amount, the amount of credit, the draw amount, or outstanding balance; the loan term, the draw period, or maturity; or any other term of credit; Page 10 of 34

11 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 11 of 49 c. the savings associated with the credit; d. the amount of cash to be disbursed to the borrower out of the proceeds, or the amount of cash to be disbursed on behalf of the borrower to any third parties; e. whether the payment of the minimum amount specified each month covers both interest and principal, and whether the credit has or can result in negative amortization; f. that the credit does not have a prepayment penalty or that no prepayment penalty and/or other fees or costs will be incurred if the consumer subsequently refinances; and g. that the interest rate(s) or annual percentage rate(s) are fixed rather than adjustable or adjustable rather than fixed; 2. Any person s ability to improve or otherwise affect a consumer s credit record, credit history, credit rating, or ability to obtain credit; 3. That any person can improve any consumer s credit record, credit history, or credit rating by permanently removing negative information from the consumer s credit record, credit history, or credit rating, even where such information is accurate and not obsolete; 4. That any person can obtain a reduction of any secured tax debt by renegotiating, settling, or in any other way altering the terms of a debt owed to any taxing entity; or 5. That a consumer will receive legal representation. Page 11 of 34

12 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 12 of 49 B. Advertising or assisting others in advertising credit terms other than those terms that actually are or will be arranged or offered by a creditor or lender. IV. PROHIBITED MISREPRESENTATIONS RELATING TO ANY PRODUCTS OR SERVICES IT IS FURTHER ORDERED that Settling Defendants and their officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with any of them who receive actual notice of this Order by personal service, facsimile transmission, , or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering for sale, or sale of any product, service, plan, or program are hereby permanently restrained and enjoined from misrepresenting or assisting others in misrepresenting, expressly or by implication, any material fact, including but not limited to: A. Any material aspect of the nature or terms of any refund, cancellation, exchange, or repurchase policy, including, but not limited to, the likelihood of a consumer obtaining a full or partial refund, or the circumstances in which a full or partial refund will be granted to the consumer; B. That any person is affiliated with, endorsed or approved by, or otherwise connected to any other person; government entity; any federal homeowner relief or financial stability program; public, non-profit, or other non-commercial program; or any other program; C. That they themselves provide the product, service, plan, or program; D. That any person providing a testimonial has purchased, received, or used the product, service, plan, or program; Page 12 of 34

13 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 13 of 49 E. That the experience represented in a testimonial of the product, service, plan, or program represents the person s actual experience resulting from the use of the product, service, plan, or program under the circumstances depicted in the advertisement; F. The total costs to purchase, receive, or use, or the quantity of, the product, service, plan, or program; G. Any material restriction, limitation, or condition on purchasing, receiving, or using the product, service, plan, or program; or H. Any material aspect of the performance, efficacy, nature, or characteristics of the product, service, plan, or program. V. SUBSTANTIATION FOR BENEFIT, PERFORMANCE, AND EFFICACY CLAIMS IT IS FURTHER ORDERED that Settling Defendants and their officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with any of them who receive actual notice of this Order by personal service, facsimile transmission, , or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering for sale, or sale of any financial-related product or service are hereby permanently restrained and enjoined from making any representation or assisting others in making any representation, expressly or by implication, about the benefits, performance, or efficacy of any financial-related product or service, unless at the time such representation is made, Settling Defendant possesses and relies upon competent and reliable evidence that substantiates that the representation is true. Page 13 of 34

14 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 14 of 49 VI. PROHIBITION AGAINST ABUSIVE TELEMARKETING PRACTICES IT IS ORDERED that, in connection with telemarketing, Settling Defendants and their officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with any of them who receive actual notice of this Order by personal service, facsimile transmission, , or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, are hereby permanently restrained and enjoined from engaging in, causing other persons to engage in, and assisting other persons to engage in, violations of the Telemarketing Sales Rule, including, but not limited to: A. Initiating any outbound telephone call to any person at a telephone number on the National Do Not Call Registry unless the seller proves that: 1. the seller has obtained the express agreement, in writing, of such person to place calls to that person. Such written agreement shall clearly evidence such person s authorization that calls made by or on behalf of a specific party may be placed to that person, and shall include the telephone number to which the calls may be placed and the signature of that person; or 2. the seller has an established business relationship with such person and that person has not previously stated that he or she does not wish to receive outbound telephone calls made by or on behalf of the seller; B. Initiating any outbound telephone call to a telephone number within a given area code when the annual fee for access to the telephone numbers within that area code that are on the National Do Not Call Registry has not been paid by or on behalf of the seller on whose behalf the telephone call is made, unless the telephone call is: Page 14 of 34

15 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 15 of a solicitation to induce charitable contributions; 2. to a business; or 3. on behalf of a seller who initiates, or causes others to initiate, telephone calls solely to (i) persons who have given the seller their express agreement, in writing and signed, to receive calls from that seller, or (ii) persons who have an established business relationship with that seller pursuant to 16 C.F.R (o); Provided, however, that if the Commission promulgates rules that modify or supersede the Telemarketing Sales Rule, in whole or part, Defendants shall comply fully and completely with all applicable requirements thereof, on and after the effective date of any such rules. VII. PROHIBITION AGAINST DISCLOSING CONSUMER INFORMATION IT IS FURTHER ORDERED that Settling Defendants and their officers, agents, servants, employees, and attorneys, and those persons or entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, are hereby permanently restrained and enjoined from: A. Disclosing, using, or benefitting from consumer information, including the name, address, telephone number, address, social security number, other identifying information, or any data that enables access to a consumer s account (including a credit card, bank account, or other financial account) of any person that any Defendant obtained prior to entry of this Order in connection with the advertising, marketing, promotion, offering for sale, sale, or provision of any financial-related product or service, and Page 15 of 34

16 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 16 of 49 B. Failing to destroy such consumer information in all forms in their possession, custody, or control within thirty days after entry of this Order. Provided, however, that consumer 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. VIII. MONETARY JUDGMENT AND PARTIAL SUSPENSION IT IS FURTHER ORDERED that: A. Judgment in the amount of TWENTY-FIVE MILLION ONE HUNDRED AND FOUR THOUSAND, TWO HUNDRED AND SIXTY-SIX DOLLARS ($25,104,266) is entered in favor of the Commission against the Settling Corporate Defendants and the Settling Individual Defendants, jointly and severally, as equitable monetary relief. 1. Subject to Subsections VIII.C through VIII.E, this judgment shall be suspended as to the Settling Corporate Defendants upon completion of Subsection VIII.A.1.a, below: a. The following financial institutions are ordered to transfer to the Commission or its designated agent within 10 days of the date of receipt of this Order all funds held in the following accounts: i. Bank of America shall transfer all funds held in the following accounts: xxxxxxxx5418, xxxxxxxx5421, and xxxxxxxx5434 (American Hardship, LLC); xxxxxxxx6182 and xxxxxxxx7386 (Automated Debt); xxxxxxxx6205 (Debt Soft, LLC); xxxxxxxx9562 (Executive Holding Page 16 of 34

17 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 17 of 49 Offices, LLC); xxxxxxxx9177 (Frontier Legal Plans, LLC); xxxxxxxx9517 and xxxxxxxx9546 (UKLI Holdings, LLC); and xxxxxxxx9520 (US Ventures, LLC). ii. Citibank shall transfer all funds held in the following accounts: xxxxxx4535 (Affiliate Management Group, LLC); xxxxxx9663, xxxxxx2155, and xxxxxx2168 (Attorney Network, LLC); xxxxxx5829, xxxxxx0131, xxxxxx0186, xxxxxx0209, xxxxxx6342, and xxxxxx2918 (Back Office Support Systems LLC); xxxxxx5256 (Continental Legal Plan, Inc.); xxxxxx1374 (Distribution & Processing, LLC); xxxxxx3675, xxxxxx3082, xxxxxx3095, xxxxxx3105, xxxxxx3118, xxxxxx3134, and xxxxxx0726 (Free Assets WY, LLC); xxxxxx3587 and xxxxxx0184 (Freedom Legal Plans, LLC); xxxxx73600 (Legal Servicing & Billing Partners LLC); xxxxxx3125 and xxxxxx2428 (Management Solutions WY, LLC); xxxxxx3138 (Office One WY LLC); and xxxxxx9728 (Software Solutions WY, LLC). iii. Marquis Bank shall transfer all funds held in account number xxxxx5700 in the name of Charles H. Lichtman as Receiver for Prime Legal Plans LLC, Back Office Support Systems LLC, et al. Page 17 of 34

18 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 18 of Subject to Subsections VIII.C through VIII.E, this judgment shall be suspended as to Defendant Radzikowski upon completion of Subsections VIII.A.2.a through VIII.A.2.c, below: a. The following financial institutions are ordered to transfer to the Commission or its designated agent within 10 days of the date of receipt of this Order all funds held in the following accounts: i. Bank of America shall transfer all funds held in the following accounts: xxxxxxxx9532 in the name of DBR Design & Developments Corp. (which had a balance of $20, as of October 31, 2012 before transfer to Marquis Bank account number xxxxx5700 in the name of Charles H. Lichtman as Receiver for Prime Legal Plans LLC, Back Office Support Systems LLC, et al.); xxxxxxxx6886 and xxxxxxxx6899 in the name of Derek B. Radzikowski, Inc. (which had balances of $6,864 and $16,085.36, respectively, as of October 31, 2012 before transfer to Marquis Bank); xxxxxxxx1901 in the name of Please Reduce My Debt, LLC (which had a balance of $1, as of October 31, 2012 before transfer to Marquis Bank); xxxxxxxx5160 in the name of Derek B. Radzikowski (which had a balance of $4, as of October 31, 2012 before transfer to Marquis Bank); fifty percent of any funds remaining in xxxxxxxx3911 in the Page 18 of 34

19 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 19 of 49 name of J&D Real Estate Development (which had a balance of $37, as of October 31, 2012 before transfer to Marquis Bank); and fifty percent of any funds remaining in xxxxxxxx9532 in the name of United Capital Partners, Inc. (which had a balance of $4, as of October 31, 2012 before transfer to Marquis Bank). ii. Citibank shall transfer all funds held in the following accounts: xxxxxx6408 in the name of Bush & Brenner, LLC (which had a balance of $ as of October 31, 2012 before transfer to Marquis Bank); xxxxxx9638 in the name of Derek B. Radzikowski, Inc. (which had a balance of $9,765 as of October 31, 2012 before transfer to Marquis Bank); xxxxxx9401 in the name of Derek B. Radzikowski (which had a balance of $87, as of October 31, 2012 before transfer to Marquis Bank); and fifty percent of any remaining balance in xxxxxx3301 in the name of Think Outside The Box Software, LLC (which had a balance of $ as of October 31, 2012 before transfer to Marquis Bank). iii. First Southwest shall liquidate and transfer all funds held in account number xxxx8722 in the name of Derek B. Radzikowski, which had a balance of $6, as of August 7, Page 19 of 34

20 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 20 of 49 iv. City County Credit Union shall transfer all funds held in account number xx0823 in the name of Derek B. Radzikowski, which had a balance of $ as of September 28, v. E-trade shall liquidate all assets held in account number xxxx1932 in the name of Bush & Brenner, LLC, which had a net balance of $235, as of August 7, E-trade shall transfer 90 percent of the net proceeds to the Commission or its designated agent, and shall transfer the remaining 10 percent of the net proceeds to Karen A. Radzikowski via check or wire transfer, with instructions to be provided by counsel to the Commission. vi. Optionsxpress shall liquidate and transfer the net proceeds of all assets held in account number xxxx7214 in the name of Derek B. Radzikowski, which had a balance of $79.05 as of October 19, vii. Northern Trust Bank shall transfer $250,000 held on behalf of Derek Radzikowski in account number xxxxx0347 in the name of Berger Singerman LLP Trust Account. b. In addition to the payments set forth in Subsection VIII.A.2.a above, Defendant Radzikowski is ordered to pay the Commission or its designated agent $10,000 within 30 days of the date of entry of this Order. Page 20 of 34

21 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 21 of 49 c. In addition to the payments set forth in Subsections VIII.A.2.a and VIII.A.2.b above, Defendant Radzikowski is ordered to pay to the Commission or its designated agent $225,000 within 365 days of the date of entry of this Order. 3. Subject to Subsections VIII.C through VIII.E, this judgment shall be suspended as to Defendant Jason C. Desmond upon completion of Subsections VIII.A.3.a through VIII.A.3.c, below: a. The following financial institutions are ordered to transfer to the Commission or its designated agent within 10 days of the date of receipt of this Order all funds held in the following accounts: i. Citibank shall transfer all funds held in account number xxxxxx6877 in the name of Jason Desmond (which had a balance of $7, as of October 31, 2012 before transfer to Marquis Bank account number xxxxx5700 in the name of Charles H. Lichtman as Receiver for Prime Legal Plans LLC, Back Office Support Systems LLC, et al.) and fifty percent of any remaining balance in account number xxxxxx3301 in the name of Think Outside The Box Software, LLC (which had a balance of $ as of October 31, 2012 before transfer to Marquis Bank). ii. HSBC shall transfer all funds held in account number xxxxxxxx1062 in the name of Jason Desmond, which had a balance of $ as of September 28, Page 21 of 34

22 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 22 of 49 iii. E-trade shall liquidate and transfer the net proceeds of all assets held in account number xxxx2031 in the name of Jason Desmond, which had a balance of $5,254 as of June 30, iv. TD Ameritrade shall liquidate and transfer the net proceeds of all assets held in account number xxxxx9263 in the name of Jason Desmond, which had a balance of $1, as of September 30, v. Investrade shall liquidate and transfer the net proceeds of all assets held in the name of Jason C. Desmond, which had a balance of $20 as of October 22, vi. Northern Trust Bank shall transfer $47,000 held on behalf of Jason Desmond in account number xxxxx0347 in the name of Berger Singerman LLP Trust Account. vii. Bank of America shall transfer fifty percent of all remaining funds held in: account number xxxxxxxx3911 in the name of J&D Real Estate Development (which had a balance of $37, as of October 31, 2012 before transfer to Marquis Bank); and account number xxxxxxxx9532 in the name of United Capital Partners, Inc. (which had a balance of $4, as of October 31, 2012 before transfer to Marquis Bank). Page 22 of 34

23 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 23 of 49 b. In addition to the payments set forth in Subsection VIII.A.3.a above, Defendant Desmond is ordered to pay to the Commission or its designated agent $86,000 within 10 days of the date of entry of this Order. c. In addition to the payments set forth in Subsections VIII.A.3.a and VIII.A.3.b above, Defendant Desmond is ordered to pay to the Commission or its designated agent $108,000 within 30 days of the date of entry of this Order. B. Judgment in the amount of ONE HUNDRED AND TEN THOUSAND DOLLARS ($110,000) is entered in favor of the Commission against Relief Defendant Shelie Desmond, as equitable monetary relief. 1. Within 10 days of the date of entry of this Order, Relief Defendant Shelie Desmond is ordered to pay to the Commission or its designated agent $110,000. C. The Commission s agreement to the suspension of part of the judgments against the Settling Defendants is expressly premised upon the truthfulness, accuracy and completeness of Settling Defendants sworn financial statements and related documents submitted to the Commission. D. The suspension of the judgment will be lifted as to any Settling Defendant if: 1. upon motion by the Commission, the Court finds that such Defendant failed to disclose any material asset, materially misstated the value of any asset, or made any other material misrepresentation or omission in the Page 23 of 34

24 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 24 of 49 sworn financial statements and related documents submitted to the Commission; or 2. such Defendant is in default on any obligation under Section VIII.A of this Order. E. If the suspension of the judgment is lifted, the judgment becomes immediately due as to that Settling Defendant in the amount specified in Subsection A above (which the parties stipulate only for purposes of this Section represents the consumer injury alleged in the Complaint), less any payment previously made pursuant to this Section, plus interest computed from the date of entry of this Order. F. Settling Defendants and Settling Relief Defendant relinquish dominion and all legal and equitable right, title, and interest in all assets transferred pursuant to this Order, as well as in any assets recovered by the court-appointed receiver before or after the date of entry of this Order, and may not seek the return of any such assets. G. The facts alleged in the Complaint will be taken as true, without further proof, in any subsequent civil litigation by or on behalf of the Commission, including in a proceeding to enforce its rights to any payment or monetary judgment pursuant to this Order, such as a nondischargeability complaint in any bankruptcy case. H. The facts alleged in this Complaint establish all elements necessary to sustain an action by the Commission pursuant to Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. 523(a)(2)(A), and this Order will have collateral estoppel effect for such purposes. Page 24 of 34

25 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 25 of 49 I. Settling Defendants and Settling Relief Defendant acknowledge that their Taxpayer Identification Numbers, which Defendants previously submitted to the Commission, may be used for collecting and reporting on any delinquent amount arising out of this Order, in accordance with 31 U.S.C J. 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, any attendant expenses for the administration of a redress fund, and to satisfy any Court-authorized payments to the courtappointed receiver, which payments shall be made promptly from the assets transferred from Marquis Bank pursuant to Subsection VIII.A.1.a.iii or from assets recovered by the court-appointed receiver on behalf of the Receivership Defendants, as defined in the PI. If a representative of the Commission decides that direct redress to consumers is impracticable, the Commission may apply any remaining money for such equitable relief (including consumer information remedies) as it determines to be reasonably related to Settling Defendants practices alleged in the Complaint. Any money not used for such equitable relief is to be deposited to the U.S. Treasury as disgorgement. Settling Defendants and Settling Relief Defendant have no right to challenge any actions the Commission or its representatives may take pursuant to this Subsection. K. No asset transfer required by this Order should be deemed a fine, penalty, forfeiture, or punitive assessment. Page 25 of 34

26 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 26 of 49 IX. ASSET FREEZE IT IS FURTHER ORDERED that, upon entry of this Order, the freeze of the Settling Defendants assets is modified to permit the payments identified in Section VIII.A. Upon satisfaction of all payments identified in Section VIII.A, the freeze of the Settling Defendants assets shall be dissolved. X. COOPERATION CLAUSE IT IS FURTHER ORDERED that Settling Defendants shall cooperate with the Commission and the court-appointed receiver in this case and in any investigation related to or associated with the transactions or the occurrences that are the subject of the Complaint or other actions brought by the court-appointed receiver. Settling Defendants must provide truthful and complete information, evidence, and testimony. Settling Individual Defendants must appear for interviews, discovery, hearings, trials, and any other proceedings that the Commission or courtappointed receiver may reasonably request upon 10 days written notice, or other reasonable notice, at such places and times as a Commission representative or the court-appointed receiver may designate, without the service of a subpoena. XI. RECEIVERSHIP IT IS FURTHER ORDERED that, upon entry of this Order, the Preliminary Injunction And Order Continuing Asset Freeze And Other Provisions Of The TRO, And Appointing A Permanent Receiver, as amended [DE 67, 156, 198] ( PI ) shall expire except as to the duties and authority of the court-appointed receiver set forth in Sections XVI.B, D-G, I, J, L, M, O, and P-R and the provisions set forth in Sections XV, XVIII, XIX, XX, XXII, XXIII, and XXIX. The court-appointed receiver must complete all duties and the PI shall expire within 365 days after the date of entry of this Order, but any party or the court-appointed receiver may request Page 26 of 34

27 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 27 of 49 that the Court extend that receiver s term for good cause. All assets recovered by the courtappointed receiver after the date of entry of this Order on behalf of any Receivership Defendant, as defined in the PI, shall be transferred to the Commission within 60 days to be used in accordance with Section VIII.J of this Order. XII. ORDER ACKNOWLEDGMENTS IT IS FURTHER ORDERED that Settling Defendants and Settling Relief Defendant obtain acknowledgments of receipt of this Order: A. Each Settling Defendant and Settling Relief Defendant, within 7 days of entry of this Order, must submit to the Commission acknowledgment of receipt of this Order sworn under penalty of perjury. B. For 5 years after entry of this Order, each Settling Individual Defendant, for any business that such Defendant, individually or collectively with any other Defendant, is the majority owner or directly or indirectly controls, and each Settling Corporate Defendant, must deliver a copy of this Order to: (1) all principals, officers, directors, and managers; (2) all employees, agents, and representatives who participate in conduct related to the subject matter of the Order; and (3) any business entity resulting from any change in structure as set forth in Section XIII, entitled Compliance Reporting. Delivery must occur within 7 days of entry of this Order for current personnel. To all others, delivery must occur before they assume their responsibilities. C. From each individual or entity to which any Settling Defendant delivered a copy of this Order, that Defendant must obtain, within 30 days, a signed and dated acknowledgment of receipt of this Order. Page 27 of 34

28 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 28 of 49 XIII. COMPLIANCE REPORTING IT IS FURTHER ORDERED that Settling Defendants make timely submissions to the Commission: A. One year after entry of this Order, each Settling Defendant must submit a compliance report, sworn under penalty of perjury. 1. Each Settling Defendant must: (a) designate at least one telephone number and an , physical, and postal address as points of contact, which representatives of the Commission may use to communicate with the Settling Defendant; (b) identify all of the Settling Defendant s businesses by all of their names, telephone numbers, and physical, postal, , and Internet addresses; (c) describe the activities of each business, including the products and services offered, the means of advertising, marketing, and sales, and the involvement of any other Defendant (which the Settling Defendant must describe if he knows or should know due to his own involvement); (d) describe in detail whether and how the Settling 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 Settling Individual Defendant must: (a) identify all telephone numbers and physical, postal, and Internet addresses, including all residences; (b) identify all business activities, including any business for which such Defendant has any ownership interest; and (c) describe in detail such Defendant s involvement in each such business, Page 28 of 34

29 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 29 of 49 including title, role, responsibilities, participation, authority, control, and any ownership. B. For 15 years following entry of this Order, each Settling Defendant must submit a compliance notice, sworn under penalty of perjury, within 14 days of any change in the following: 1. Each Settling Defendant must report any change in: (a) any designated point of contact; or (b) the structure of any entity that the Settling Defendant has any ownership interest in or directly or indirectly controls 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 Settling 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 the Settling Individual Defendant performs services whether as an employee or otherwise and any entity in which the Settling Individual Defendant has any ownership interest, and identify the name, physical address, and any Internet address of the business or entity. C. Each Settling Defendant must submit to the Commission notice of the filing of any bankruptcy petition, insolvency proceeding, or any similar proceeding by or against the Settling Defendant within 14 days of its filing. Page 29 of 34

30 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 30 of 49 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 ed to Debrief@ftc.gov or sent by overnight courier (not the U.S. Postal Service) to: Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC The subject line must begin: FTC v. Prime Legal Plans, LLC, et al., X XIV. RECORDKEEPING IT IS FURTHER ORDERED that Settling Defendants must create certain records for 15 years after entry of the Order, and retain each such record for 5 years. Specifically, each Settling Corporate Defendant and each Settling Individual Defendant for any business that such Defendant, individually or collectively with any other Defendant, is a majority owner or controls directly or indirectly, must maintain 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, and telephone numbers; job title or position; dates of service; and (if applicable) the reason for termination; Page 30 of 34

31 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 31 of 49 C. Complaints and refund requests concerning the subject matter of this Order, whether received directly or indirectly, such as through a third party, and any response; and D. All records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Commission. XV. COMPLIANCE MONITORING IT IS FURTHER ORDERED that, for the purpose of monitoring Settling Defendants and Settling Relief Defendant s compliance with this Order, including the financial representations upon which part of the judgment was suspended and any failure to transfer any assets as required by this Order: A. Within 14 days of receipt of a written request from a representative of the Commission, each Settling Defendant and Settling Relief 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 prescribed 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 Settling Defendant and Settling Relief Defendant. Each Settling Defendant and Settling Relief Defendant must permit representatives of the Commission to interview any employee or other person affiliated with any Settling Defendant or Settling Relief Defendant who has agreed to such an interview. The person interviewed may have counsel present. Page 31 of 34

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36 Case 0:12-cv RNS Document 259 Entered on FLSD Docket 12/27/2013 Page 36 of 49 APPENDIX A Telemarketing Sales Rule Pt CFR Ch. I ( Edition) PART 310 TELEMARKETING SALES RULE 16 CFR PART 310 Sec Scope of regulations in this part Definitions Deceptive telemarketing acts or practices Abusive telemarketing acts or practices Recordkeeping requirements Exemptions Actions by states and private persons Fee for access to the National Do Not Call Registry Severability. AUTHORITY: 15 U.S.C SOURCE: 75 FR 48516, Aug. 10, 2010, unless otherwise noted Scope of regulations in this part. This part implements the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C , as amended. 362 Page 1 of 14