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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 1 of 16
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF FLORIDA
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`CASE NO.: 14-60166-Civ-SCOLA/OTAZO-REYES
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`FEDERAL TRADE COMMISSION,
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`Plaintiff,
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`v.
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`ACQUINITY INTERACTIVE, LLC, et al.,
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`Defendants.
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`STIPULATED FINAL JUDGMENT AND ORDER FOR
`PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF AS TO
`DEFENDANTS BURTON KATZ AND JONATHAN SMYTH
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`Plaintiff, the Federal Trade Commission (“FTC” or “Commission”), filed its Complaint
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`for Permanent Injunction and Other Equitable Relief (“Complaint”), for a permanent injunction
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`and other equitable relief in this matter, pursuant to Sections 13(b) and 19 of the Federal Trade
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`Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b) and 57b, and the Telemarketing and
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`Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108.
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`The Commission and Defendants Burton Katz and Jonathan Smyth (“Stipulating Defendants”)
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`stipulate to entry of this Stipulated Final Judgment and Order for Permanent Injunction and
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`Other Equitable Relief as to Defendants Burton Katz and Jonathan Smyth (“Order”) to resolve
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`all matters in dispute in this action between them.
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`NOW THEREFORE, Plaintiff and Stipulating Defendants, having requested the Court
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`to enter this Order, and the Court having considered the Order reached between the parties, IT IS
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`HEREBY ORDERED, ADJUDGED, AND DECREED as follows:
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 2 of 16
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`FINDINGS
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`The Court has jurisdiction over this matter.
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`The Complaint charges that Stipulating Defendants have participated in deceptive
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`1.
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`2.
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`acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45, by placing
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`unauthorized charges on consumers’ mobile phone bills.
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`3.
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`Stipulating Defendants neither admit nor deny any of the allegations in the
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`Complaint, except as specifically stated in this Order. Only for purposes of this action,
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`Stipulating Defendants admit the facts necessary to establish jurisdiction.
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`4.
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`Stipulating Defendants waive any claim that they may have under the Equal
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`Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through the
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`date of this Order, and agree to bear their own costs and attorney’s fees.
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`5.
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`Stipulating Defendants waive all rights to appeal or otherwise challenge or contest
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`the validity of this Order.
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`DEFINITIONS
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`For purposes of this Order, the following definitions shall apply:
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`1.
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`“Person” or “persons” includes a natural person, an organization or other legal
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`entity, including a corporation, partnership, sole proprietorship, limited liability company,
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`association, cooperative, or any other group or combination acting as an entity.
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`2.
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`3.
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`“Plaintiff” means the Federal Trade Commission (“FTC” or “Commission”).
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`“Stipulating Defendants” means Burton Katz and Jonathan Smyth, individually
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`and collectively.
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 3 of 16
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`I.
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`BAN ON PLACING CHARGES ON TELEPHONE BILLS
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`IT IS ORDERED that Stipulating Defendants are permanently restraining and enjoined
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`from billing, submitting for billing, or assisting or facilitating the billing or submitting for
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`billing, charges to any telephone bill, including but not limited to a bill for any voice, text, or
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`data service.
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`II.
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`INJUNCTION AGAINST MISREPRESENTATIONS
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`IT IS FURTHER ORDERED that, in connection with the advertising, marketing,
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`promotion, offering for sale, sale, or distribution of any product or service, Stipulating
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`Defendants, Stipulating Defendants’ officers, agents, servants, and employees, and all other
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`persons in active concert or participation with any of them, who receive actual notice of this
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`Order, whether acting directly or indirectly, are permanently restrained and enjoined from
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`making, or assisting others in making, expressly or by implication, any false or misleading
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`material representation, including representations concerning the cost, performance, efficacy,
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`nature, characteristics, benefits, or safety of any product or service, or concerning any
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`consumer’s obligation to pay for charges for any product or service.
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`III.
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`EXPRESS INFORMED CONSENT
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`IT IS FURTHER ORDERED that, in connection with the advertising, marketing,
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`promotion, offering for sale, sale, or distribution of any product or service, Stipulating
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`Defendants, Stipulating Defendants’ officers, agents, servants, and employees, and all other
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 4 of 16
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`persons in active concert or participation with any of them, who receive actual notice of this
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`Order, whether acting directly or indirectly, are permanently restrained and enjoined from
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`causing any consumer to be billed for any product or service without having previously obtained
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`the consumer’s express informed consent, and having created and maintained a record of such
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`consent.
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`IV.
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`MONETARY JUDGMENT
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`IT IS FURTHER ORDERED that:
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`A.
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`Judgment in the amount of Seven Hundred and Four Thousand, Two Hundred and
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`Forty-Four Dollars ($704,244) is entered in favor of the Commission against Defendant Burton
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`Katz as equitable monetary relief.
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`B.
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`Katz is ordered to pay to the Commission Seven Hundred and Four Thousand,
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`Two Hundred and Forty-Four Dollars ($704,244). Such payment must be made within 7 days of
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`entry of this Order by electronic fund transfer in accordance with instructions previously
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`provided by a representative of the Commission.
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`C.
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`Judgment in the amount of Seven Hundred and Four Thousand, Two Hundred and
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`Forty-Four Dollars ($704,244) is entered in favor of the Commission against Defendant Jonathan
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`Smyth as equitable monetary relief.
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`D.
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`Smyth is ordered to pay to the Commission Seven Hundred and Four Thousand,
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`Two Hundred and Forty-Four Dollars ($704,244). Such payment must be made within 7 days of
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`entry of this Order by electronic fund transfer in accordance with instructions previously
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`provided by a representative of the Commission.
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 5 of 16
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`E.
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`On or before September 8, 2014, Stipulating Defendants shall turn over to their
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`undersigned counsel a total of Seven Hundred and Four Thousand, Two Hundred and Forty-Four
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`Dollars ($704,244), which their undersigned counsel will hold in escrow for the sole purpose of
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`partially satisfying the Judgment. Undersigned counsel for Stipulating Defendants shall
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`promptly notify counsel for the FTC of receipt of said amount, and the identity of the account
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`where the funds are maintained.
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`F.
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`Stipulating Defendants relinquish dominion and all legal and equitable rights,
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`title, and interest in all assets transferred pursuant to this Order and may not seek the return of
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`any assets.
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`G.
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`The facts alleged in the Complaint will be taken as true, without further proof, in
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`any subsequent civil litigation by or on behalf of the Commission, including in a proceeding to
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`enforce its rights to any payment or monetary judgment pursuant to this Order, such as a
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`nondischargeability complaint in any bankruptcy case.
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`H.
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`The facts alleged in the Complaint establish all elements necessary to sustain an
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`action by the Commission pursuant to Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C.
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`§ 523(a)(2)(A), and this Order will have collateral estoppel effect for such purposes.
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`I.
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`Stipulating Defendants acknowledge that their Taxpayer Identification Numbers
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`(Social Security Numbers or Employer Identification Numbers), which Stipulating Defendants
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`must submit to the Commission, may be used for collecting and reporting on any delinquent
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`amount arising out of this Order, in accordance with 31 U.S.C. § 7701.
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`J.
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`All money paid to the Commission pursuant to this Order may be deposited into a
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`fund administered by the Commission or its designee to be used for equitable relief, including
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`consumer redress and any attendant expenses for the administration of any redress fund. If a
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 6 of 16
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`representative of the Commission decides that direct redress to consumers is wholly or partially
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`impracticable or money remains after redress is completed, the Commission may apply any
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`remaining money for such other equitable relief (including consumer information remedies) as it
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`determines to be reasonably related to Stipulating Defendants’ practices alleged in the
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`Complaint. Any money not used for such equitable relief is to be deposited into the U.S.
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`Treasury as disgorgement. Stipulating Defendants have no right to challenge any actions the
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`Commission or its representatives may take pursuant to this Subsection.
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`V.
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`COOPERATION WITH FTC COUNSEL
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`IT IS FURTHER ORDERED that Stipulating Defendants must fully cooperate with
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`representatives of the Commission in this case and in any investigation related to or associated
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`with the transactions or the occurrences that are the subject of the Complaint. Stipulating
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`Defendants must provide truthful and complete information, evidence, and testimony.
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`Stipulating Defendants must appear for interviews, discovery, hearings, trials, and any other
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`proceedings that a Commission representative may reasonably request upon 5 days written
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`notice, or other reasonable notice, at such places and times as a Commission representative may
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`designate, without the service of a subpoena.
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`VI.
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`PROHIBITIONS REGARDING CONSUMER INFORMATION
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`IT IS FURTHER ORDERED that Stipulating Defendants, Stipulating Defendants’
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`officers, agents, servants, and employees, and all other persons in active concert or participation
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`with any of them, who receive actual notice of this Order, are permanently restrained and
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 7 of 16
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`enjoined from directly or indirectly:
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`A.
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`Failing to provide sufficient customer information to enable the Commission to
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`efficiently administer consumer redress. If a representative of the Commission requests in
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`writing any information related to redress, Defendants must provide it, in the form prescribed by
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`the Commission, within 14 days.
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`B.
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`Disclosing, selling, renting, leasing, transferring, using, or benefitting from
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`customer information, including the name, address, birth date, telephone number, email address,
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`social security number, other identifying information, or any data that enables access to a
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`customer’s account (including a credit card, bank account, or other financial account), that any
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`Defendant obtained prior to entry of this Order in connection with the placement of charges on
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`consumers’ phone bills; and
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`C.
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`Failing to destroy such customer information in all forms in their possession,
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`custody, or control within thirty (30) days after receipt of written direction to do so from a
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`representative of the Commission.
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`Provided, however, that customer information need not be disposed of, and may be
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`disclosed, to the extent requested by a government agency or required by a law, regulation, or
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`court order.
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`VII.
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`ORDER ACKNOWLEDGMENTS
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`IT IS FURTHER ORDERED that Stipulating Defendants obtain acknowledgments of
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`receipt of this Order:
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`A.
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`Each Stipulating Defendant, within 7 days of entry of this Order, must submit to
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 8 of 16
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`the Commission an acknowledgment of receipt of this Order sworn under penalty of perjury.
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`B.
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`For 5 years after entry of this Order, each Stipulating Defendant for any business
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`that such Defendant, individually or collectively with any other Defendant, is the majority owner
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`or controls directly or indirectly must deliver a copy of this Order to: (1) all principals, officers,
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`directors, and LLC managers and members; (2) all employees, agents, and representatives who
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`participate in conduct related to the subject matter of this Order; and (3) any business entity
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`resulting from any change in structure as set forth in the Section titled Compliance Reporting.
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`Delivery must occur within 7 days of entry of this Order for current personnel. For all others,
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`delivery must occur before they assume their responsibilities.
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`C.
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`From each individual or entity to which a Stipulating Defendant delivered a copy
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`of this Order, that Stipulating Defendant must obtain, within 30 days, a signed and dated
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`acknowledgment of receipt of this Order.
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`VIII.
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`COMPLIANCE REPORTING
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`IT IS FURTHER ORDERED that Stipulating Defendants make timely submissions to
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`the Commission:
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`A.
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`One year after entry of this Order, each Stipulating Defendant must submit a
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`compliance report, sworn under penalty of perjury. Each Stipulating Defendant must:
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`1.
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`identify all telephone numbers and all physical, postal, email and Internet
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`addresses, including all residences;
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`2.
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`identify all business activities, including any business for which such
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`Defendant performs services whether as an employee or otherwise and any entity in which such
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 9 of 16
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`Defendant has any ownership interest;
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`3.
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`describe in detail such Defendant’s involvement in each such business,
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`including title, role, responsibilities, participation, authority, control, and any ownership;
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`4.
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` identify the primary physical, postal, and email address and telephone
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`number, as designated points of contact, which representatives of the Commission may use to
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`communicate with Stipulating Defendant;
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`5.
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` identify all of that Stipulating Defendant’s businesses by all of their
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`names, telephone numbers, and physical, postal, email, and Internet addresses;
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`6.
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`describe the activities of each business, including the goods and services
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`offered, the means of advertising, marketing, and sales, and the involvement of any other
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`Defendant (which Stipulating Defendants must describe if they know or should know due to their
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`own involvement);
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`7.
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`describe in detail whether and how that Stipulating Defendant is in
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`compliance with each Section of this Order; and
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`8.
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`provide a copy of each Order Acknowledgment obtained pursuant to this
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`Order, unless previously submitted to the Commission.
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`B.
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`For ten (10) years after entry of this Order, each Stipulating Defendant must
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`submit a compliance notice, sworn under penalty of perjury, within 14 days of any change in the
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`following:
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`1.
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`2.
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`any designated point of contact;
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`the structure of any entity that Stipulating Defendant has any ownership
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`interest in or controls directly or indirectly that may affect compliance obligations arising under
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 10 of 16
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`this Order, including: creation, merger, sale, or dissolution of the entity or any subsidiary, parent,
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`or affiliate that engages in any acts or practices subject to this Order;
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`3.
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`4.
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`name, including aliases or fictitious name, or residence address; or
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`title or role in any business activity, including any business for which such
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`Defendant performs services whether as an employee or otherwise and any entity in which such
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`Defendant has any ownership interest, and identify the name, physical address, and Internet
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`address of the business or entity.
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`C.
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`Each Stipulating Defendant must submit to the Commission notice of the filing of
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`any bankruptcy petition, insolvency proceeding, or any similar proceeding by or against such
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`Stipulating Defendant within 14 days of its filing.
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`D.
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`Any submission to the Commission required by this Order to be sworn under
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`penalty of perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by
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`concluding: “I declare under penalty of perjury under the laws of the United States of America
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`that the foregoing is true and correct. Executed on: ” and supplying the date, signatory’s
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`full name, title (if applicable), and signature.
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`E.
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`Unless otherwise directed by a Commission representative in writing, all
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`submissions to the Commission pursuant to this Order must be emailed to DEbrief@ftc.gov or
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`sent by overnight courier (not the U.S. Postal Service) to: Associate Director for Enforcement,
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`Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW,
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`Washington, DC 20580. The subject line must begin: FTC v. Acquinity Interactive, LLC, FTC
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`Matter No. X1223161.
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 11 of 16
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`IX.
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`RECORDKEEPING
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`IT IS FURTHER ORDERED that Stipulating Defendants must create certain records
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`for ten (10) years after entry of the Order, and retain each such record for 5 years. Specifically,
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`each Stipulating Defendant for any business that such Defendant, individually or collectively
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`with any other Defendant, is a majority owner or controls directly or indirectly, must create and
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`retain the following records:
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`A.
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`B.
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`Accounting records showing the revenues from all goods or services sold;
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`Personnel records showing, for each person providing services, whether as an
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`employee or otherwise, that person’s: name, addresses, and telephone numbers; job title or
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`position; dates of service; and, if applicable, the reason for termination;
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`C.
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`Records of all consumer complaints and refund requests, whether received
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`directly or indirectly, such as through a third party, and any response;
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`D.
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`All records necessary to demonstrate full compliance with each provision of this
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`Order, including all submissions to the Commission; and
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`E.
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`All records of any consumer’s authorization to be billed or charged for any of
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`Stipulating Defendants’ goods or services.
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`X.
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`COMPLIANCE MONITORING
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`IT IS FURTHER ORDERED that, for the purpose of monitoring Stipulating
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`Defendants’ compliance with this Order, including any failure to transfer any assets as required
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`by this Order:
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 12 of 16
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`A.
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`Within 14 days of receipt of a written request from a representative of the
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`Commission, each Stipulating Defendant must: submit additional compliance reports or other
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`requested information, which must be sworn under penalty of perjury; appear for depositions;
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`and produce documents for inspection and copying. The Commission is also authorized to
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`obtain discovery, without further leave of court, using any of the procedures prescribed by
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`Federal Rules of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 45,
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`and 69.
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`B.
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`For matters concerning this Order, the Commission is authorized to communicate
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`directly with each Stipulating Defendant. Stipulating Defendants must permit representatives of
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`the Commission to interview any employee or other person affiliated with any Stipulating
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`Defendant who has agreed to such an interview. The person interviewed may have counsel
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`present.
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`C.
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`The Commission may use all other lawful means, including posing, through its
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`representatives, as consumers, suppliers, or other individuals or entities, to Stipulating
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`Defendants or any individual or entity affiliated with Stipulating Defendants, without the
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`necessity of identification or prior notice. Nothing in this Order limits the Commission’s lawful
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`use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-
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`1.
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 13 of 16
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`October 16
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 14 of 16
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 15 of 16
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`Case 0:14-cv-60166-RNS Document 132 Entered on FLSD Docket 10/16/2014 Page 16 of 16
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