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Federal Trade Commission v. Elite IT Partners Inc.

United States District Court, D. Utah

May 6, 2019

FEDERAL TRADE COMMISSION, Plaintiff,
v.
ELITE IT PARTNERS, INC., a Utah corporation doing business as ELITE IT HOME, and JAMES MICHAEL MARTINOS, individually and as an officer of ELITE IT PARTNERS, INC., Defendants.

          STIPULATED PRELIMINARY INJUNCTION ORDER AS TO ELITE IT PARTNERS, INC. AND JAMES MICHAEL MARTINOS

          ROBERT J. SHELBY, CHIEF DISTRICT JUDGE

         This matter comes before the Court upon the stipulation of Plaintiff, Federal Trade Commission (“FTC”) and Defendants Elite IT Partners, Inc. (“Elite IT”) and James Michael Martinos (“Martinos”) for the entry of a Preliminary Injunction against Elite IT and Martinos.[1]

         On February 25, 2019, the FTC filed its Complaint for Permanent Injunction and Other Equitable Relief 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. §§ 6101-6108, as amended, and Section 5 of the Restore Online Shoppers' Confidence Act (“ROSCA”), 15 U.S.C. §§ 8401-8405, alleging that Defendants Elite IT and Martinos have engaged in or are likely to engage in acts or practices that violate Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), the FTC's Telemarketing Sales Rule (“TSR”), 16 C.F.R. Part 310, as amended, and Section 4 of ROSCA, 15 U.S.C. § 8403. On the same day, the FTC moved ex parte for a temporary restraining order, asset freeze, appointment of a receiver, and an order to show cause why a preliminary injunction should not issue. On February 27, 2019, the Court granted the FTC's motion, and issued a temporary restraining order against the Defendants, imposing an asset freeze and appointing a temporary receiver (“TRO”). The FTC and Defendants Elite IT and Martinos have stipulated to the entry of a preliminary injunction against Elite IT and Martinos, the terms of which are set forth below.

         FINDINGS OF FACT

         A. This Court has jurisdiction over the subject matter of this case, and there is good cause to believe that it will have jurisdiction over all parties hereto and that venue in this district is proper.

         B. The FTC has sufficiently demonstrated that Defendants Elite IT and Martinos have engaged in and are likely to engage in acts or practices that violate Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), the TSR, 16 C.F.R. Part 310, and ROSCA, 15 U.S.C. § 8403, and that the FTC is therefore likely to prevail on the merits of this action.

         C. The FTC has sufficiently demonstrated that immediate and irreparable harm will result from Defendants' ongoing violations of the FTC Act, the TSR, and ROSCA unless Defendants are restrained and enjoined by Order of this Court.

         D. The FTC has sufficiently demonstrated the need for maintaining the freeze over Defendants' assets and the ancillary relief ordered below.

         E. Weighing the equities and considering the FTC's likelihood of ultimate success on the merits, a preliminary injunction order with other equitable relief is in the public interest.

         F. This Court has authority to issue this Order pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b); Federal Rule of Civil Procedure 65; and the All Writs Act, 28 U.S.C. § 1651.

         G. The FTC is an independent agency of the United States of America and no security is required of any agency of the United States for issuance of a preliminary injunction order. Fed.R.Civ.P. 65(c).

         DEFINITIONS

         For the purpose of this Order, the following definitions shall apply:

         A. “Asset” means any legal or equitable interest in, right to, or claim to any property, wherever located and by whomever held.

         B. “Billing Information” means any data that enables any person to access a customer's account, such as a credit card, debit card, checking, savings, share or similar account, utility bill, or mortgage loan account.

         C. “Charge, ” “Charged, ” or “Charging” means any attempt to collect money or other consideration from a consumer including, but not limited to, causing Billing Information to be submitted for payment, including against the consumer's credit card, debit card, bank account, telephone bill, or other account.

         D. “Corporate Defendant” means Elite IT Partners, Inc., and each of its subsidiaries, affiliates, successors, and assigns.

         E. “Defendant(s)” means Corporate Defendant and Individual Defendant individually, collectively, or in any combination.

         F. “Document” is synonymous in meaning and equal in scope to the usage of “document” and “electronically stored information” in Federal Rule of Civil Procedure 34(a), Fed.R.Civ.P. 34(a), and includes writings, drawings, graphs, charts, photographs, sound and video recordings, images, Internet sites, web pages, websites, electronic correspondence, including e-mail and instant messages, contracts, accounting data, advertisements, FTP Logs, Server Access Logs, books, written or printed records, handwritten notes, telephone logs, telephone scripts, receipt books, ledgers, personal and business canceled checks and check registers, bank statements, appointment books, computer records, customer or sales databases, and any other electronically stored information, including Documents located on remote servers or cloud computing systems, and other data or data compilations from which information can be obtained directly or, if necessary, after translation into a reasonably usable form. A draft or non-identical copy is a separate document within the meaning of the term.

         G. “Electronic Data Host” means any person or entity in the business of storing, hosting, or otherwise maintaining electronically stored information. This includes, but is not limited to, any entity hosting a website or server, and any entity providing “cloud based” electronic storage.

         H. “Individual Defendant” means James Michael Martinos.

         I. “Receiver” means the receiver appointed in Section XIII of this Order and any deputy receivers that shall be named by the receiver.

         J. “Receivership Entities” means Corporate Defendant as well as any other entity that has conducted any business related to the marketing and sale of Technical Support Products and Services, including receipt of Assets derived from any activity that is the subject of the Complaint in this matter, and that the Receiver determines is controlled or owned by any Defendant.

         K. “Technical Support Product(s) or Service(s)” means any plan, program, software, or hardware, marketed to repair, maintain, or improve a computer's performance or security, including registry cleaners, antivirus program, and computer or software diagnostic, maintenance, and repair services provided to consumers under the name “Elite IT Home.” L. “Telemarketer” means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor.

         M. “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.

         ORDER

         I. PROHIBITED BUSINESS ACTIVITIES

         IT IS THEREFORE ORDERED that Defendants, Defendants' officers, agents, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or indirectly, in connection with the advertising, marketing, promoting, or offering for sale of any goods or services, are restrained and enjoined from misrepresenting or assisting others in misrepresenting, expressly or by implication, any material fact, including, but not limited to:

         A. That Defendants have detected viruses or infections on consumers' computers that affect the security of consumers' computers and prevent access to consumers' email and other accounts;

         B. That they are part of, affiliated with, or authorized to provide services for well-known technology companies; and

         C. Any other fact material to consumers concerning any good or service, such as: the total costs; any material restrictions, limitations, or conditions; or any material aspect of its performance, efficacy, nature, or central characteristics.

         II. CONDUCT PROHIBITIONS REGARDING MARKETING

         IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or indirectly, in connection with the advertising, marketing, promoting, or offering for sale of any goods or services, are restrained and enjoined from:

         A. Using any false or misleading statement to induce any person to pay for goods or services;

         B. Violating the TSR, 16 C.F.R. Part 310, appended as Attachment A; and

         C. Violating ROSCA, 15 U.S.C. § 8403, appended as Attachment B.

         III. PROHIBITION AGAINST CHARGING OR BILLING CONSUMERS

         IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or indirectly, unless expressly authorized by the Receiver, are restrained and enjoined from Charging any person or entity for the purchase of Defendants' Technical Support Products or Services.

         IV. PROHIBITION ON RELEASE OF CUSTOMER INFORMATION

         IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, 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, are hereby restrained and enjoined from:

         A. Selling, renting, leasing, transferring, or otherwise disclosing, the name, address, birth date, telephone number, email address, credit card number, bank account number, Social Security number, or other financial or identifying information of any person that any Defendant obtained in connection with any activity that pertains to the subject matter of this Order; and

         B. Benefitting from or using the name, address, birth date, telephone number, email address, credit card number, bank account number, Social Security number, or other financial or identifying information of any person that any Defendant obtained in connection with any activity that pertains to the subject matter of this Order.

         Provided, however, that Defendants may disclose such identifying information to a law enforcement agency, to their attorneys as required for their defense, as required by any law, regulation, or court order, or in any filings, pleadings or discovery in this action in the manner required by the Federal Rules of Civil Procedure and by any protective order in the case.

         V. ASSET FREEZE

         IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, 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, are hereby restrained and enjoined from:

         A. Transferring, liquidating, converting, encumbering, pledging, loaning, selling, concealing, dissipating, disbursing, assigning, relinquishing, spending, withdrawing, granting a lien or security interest or other interest in, or otherwise disposing of any Assets that are:

1. owned or controlled, directly or indirectly, by any Defendant;
2. held, in part or in whole, for the benefit of any Defendant;
3. in the actual or constructive possession of any Defendant; or
4. owned or controlled by, in the actual or constructive possession of, or otherwise held for the benefit of, any corporation, partnership, asset protection trust, or other entity that is directly or indirectly owned, managed or controlled by any Defendant.

         B. Opening or causing to be opened any safe deposit boxes, commercial mail boxes, or storage facilities titled in the name of any Defendant or subject to access by any Defendant, except as necessary to comply with written requests from the Receiver acting pursuant to its authority under this Order;

         C. Incurring charges or cash advances on any credit, debit, or ATM card issued in the name, individually or jointly, of any Corporate Defendant or any corporation, partnership, or other entity directly or indirectly owned, managed, or controlled by any Defendant or of which any Defendant is an officer, director, member, or manager. This includes any corporate bankcard or corporate credit card account for which any Defendant is, or was on the date that this Order was signed, an authorized signor; or

         D. Cashing any checks or depositing any money orders or cash received from consumers, clients, ...


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