throbber
Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 1 of 14
`
`UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF NEW YORK
`
`
`
`
`FEDERAL TRADE COMMISSION,
`
` Plaintiff,
`
` v.
`
`WELLCO, INC., a corporation, and
`
`GEORGE M. MOSCONE, individually and as an
`officer of WELLCO, INC.,
`
`
` Defendants.
`
`
`
`
`
`
`
`Case No. 1:21-cv-02081-MKV
`
`STIPULATED ORDER FOR
`PERMANENT INJUNCTION AND
`MONETARY JUDGMENT
`
`Plaintiff, the Federal Trade Commission (“Commission” or “FTC”), filed its Complaint
`
`For Permanent Injunction And Other Equitable Relief (“Complaint”), for a permanent injunction,
`
`and other equitable relief in this matter, pursuant to Section 13(b) of the Federal Trade
`
`Commission Act (“FTC Act”), 15 U.S.C. § 53(b). The Commission and Defendants stipulate to
`
`the entry of this Stipulated Order for Permanent Injunction and Monetary Judgment (“Order”) to
`
`resolve all matters in dispute in this action between them.
`
`THEREFORE, IT IS ORDERED as follows:
`
`This Court has jurisdiction over this matter.
`
`FINDINGS
`
`The Complaint alleges that Defendants participated in deceptive acts or practices in
`
`1.
`
`2.
`
`violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), in connection with the advertising,
`
`marketing, distribution, and sale of television antennas and related amplifiers.
`
`3.
`
`
`
`Defendants neither admit nor deny any of the allegations in the Complaint, except as
`
`Page 1 of 14
`
`

`

`Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 2 of 14
`
`specifically stated in this Order. Only for purposes of this action, Defendants admit the facts
`
`necessary to establish jurisdiction.
`
`4.
`
`Defendants 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.
`
`Defendants waive all rights to appeal or otherwise challenge or contest the validity of this
`
`Order.
`
`DEFINITIONS
`
`For the purpose of this Order, the following definitions apply:
`
`A.
`
`“Competent and Reliable Evidence” means tests, analyses, research, studies, or other
`
`evidence based on the expertise of professionals in the relevant area, that (1) have been conducted
`
`and evaluated in an objective manner by qualified persons and (2) are generally accepted in the
`
`profession to yield accurate and reliable results.
`
`B.
`
`“Defendants” means the Individual Defendant and the Corporate Defendant, individually,
`
`collectively, or in any combination.
`
`1.
`
`2.
`
`“Corporate Defendant” means Wellco, Inc. and its successors and assigns.
`
`“Individual Defendant” means George M. Moscone.
`
`ORDER
`
`I.
`
`PROHIBITION AGAINST MISLEADING CLAIMS
`
`IT IS 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, in connection with the labeling, advertising,
`
`
`
`
`Page 2 of 14
`
`

`

`Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 3 of 14
`
`promotion, offering for sale, sale, or distribution of any product, are permanently restrained and
`
`enjoined from making, or assisting others in making, expressly or by implication, including
`
`through the use of a product name, endorsement, depiction, or illustration, any representation,
`
`about:
`
`A.
`
`the product’s absolute or relative ratings or ranking, or the product’s superiority to
`
`other products;
`
`B.
`
`the channels, cable channels, subscription channels, favorite channels, premium
`
`channels, or clear channels users of the product can or will likely receive, including the
`
`number of such channels users can or will likely receive; or
`
`C.
`
`any material aspect of the product’s performance, efficacy, nature, or central
`
`characteristics,
`
`unless the representation is non-misleading, including that, at the time such representation is
`
`made, Defendants possess and rely upon competent and reliable evidence that is sufficient in
`
`quality and quantity based on standards generally accepted in the relevant fields when considered
`
`in light of the entire body of relevant and reliable evidence, to substantiate that the representation
`
`is true.
`
`II.
`
`PROHIBITION AGAINST FALSE CLAIMS
`
`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, in connection with the
`
`labeling, advertising, promotion, offering for sale, sale, or distribution of any product, are
`
`permanently restrained and enjoined from making, or assisting others in making, any
`
`
`
`Page 3 of 14
`
`

`

`Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 4 of 14
`
`misrepresentation, expressly or by implication:
`
`A.
`
`that any endorsement is a truthful endorsement or by an actual user of such
`
`product;
`
`B.
`
`C.
`
`D.
`
`E.
`
`through the use of any endorsement of such product;
`
`that any website or other publication is an objective news report;
`
`that objective news reporters have performed independent tests of any product; or
`
`that independent tests demonstrate the effectiveness of any product.
`
`III. MONETARY JUDGMENT AND PARTIAL SUSPENSION
`
`IT IS FURTHER ORDERED that:
`
`A.
`
`Judgment in the amount of 31.82 Million Dollars ($31,820,000) is entered in favor of the
`
`Commission against Individual Defendant and Corporate Defendant, jointly and severally, as
`
`equitable monetary relief.
`
`B.
`
`Defendants are ordered to pay to the Commission Six Hundred Fifty Thousand Dollars
`
`($650,000), which, as Defendants stipulate, their undersigned counsel holds in escrow for no
`
`purpose other than payment to the Commission. Such payment must be made within 7 days of
`
`entry of this Order by electronic fund transfer in accordance with instructions previously provided
`
`by a representative of the Commission. Upon such payment, the remainder of the judgment is
`
`suspended, subject to the Subsections below.
`
`C.
`
`The Commission’s agreement to the suspension of part of the judgment is expressly
`
`premised upon the truthfulness, accuracy, and completeness of Defendants’ sworn financial
`
`statements and related documents (collectively, “financial representations”) submitted to the
`
`Commission, namely:
`
`
`
`
`Page 4 of 14
`
`

`

`Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 5 of 14
`
`1.
`
`the Financial Statement of Individual Defendant, George M. Moscone, signed on
`
`July 27, 2020, including the attachments;
`
`2.
`
`the Financial Statement of Corporate Defendant, Wellco, Inc., signed by George
`
`M. Moscone, President, CEO, and owner on July 27, 2020, including the attachments;
`
`3.
`
`the following additional documentation submitted by Defendants’ counsel to
`
`Commission counsel, Michael Ostheimer and Carl Settlemyer:
`
`a.
`
`Letter attachment to email dated August 21, 2020 from Ari Rothman and
`
`the documents referenced therein, including the loan agreement and those in the
`
`“Docs for Closing” ZIP file;
`
`b.
`
`Letter attachment to email dated September 2, 2020, from Shahin
`
`Rothermel and accompanying document titled “2019 Estimated Tax (Moscone)”;
`
`c.
`
`Email from Ari Rothman dated October 27, 2020 (5:12pm), and the
`
`attachment thereto;
`
`d.
`
`e.
`
`Email from Ari Rothman dated November 9, 2020; and
`
`Email from Ari Rothman dated December 10, 2020 (5:26pm).
`
`D.
`
`The suspension of the judgment will be lifted as to any Defendant if, upon motion by the
`
`Commission, the Court finds that Defendant failed to disclose any material asset, materially
`
`misstated the value of any asset, or made any other material misstatement or omission in the
`
`financial representations identified above.
`
`E.
`
`If the suspension of the judgment is lifted, the judgment becomes immediately due as to
`
`that 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
`
`
`
`
`Page 5 of 14
`
`

`

`Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 6 of 14
`
`payment previously made pursuant to this Section, plus interest computed from the date of entry
`
`of this Order.
`
`IV. ADDITIONAL MONETARY PROVISIONS
`
`IT IS FURTHER ORDERED that:
`
`A.
`
`Defendants relinquish dominion and all legal and equitable right, title, and interest in all
`
`assets transferred pursuant to this Order and may not seek the return of any assets.
`
`B.
`
`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.
`
`C.
`
`The facts alleged in the 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.
`
`D.
`
`Defendants acknowledge that their Taxpayer Identification Numbers (Social Security
`
`Numbers or Employer 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. § 7701.
`
`E.
`
`All money paid to the Commission pursuant to this Order may be deposited into a fund
`
`administered by the Commission or its designee to be used for equitable relief, including
`
`consumer redress and any attendant expenses for the administration of any redress fund. If a
`
`representative of the Commission decides that direct redress to consumers is wholly or partially
`
`impracticable or money remains after redress is completed, the Commission may apply any
`
`
`
`
`Page 6 of 14
`
`

`

`Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 7 of 14
`
`remaining money for such other equitable relief (including consumer information remedies) as it
`
`determines to be reasonably related to Defendants’ practices alleged in the Complaint. Any
`
`money not used for such equitable relief is to be deposited to the U.S. Treasury as disgorgement.
`
`Defendants have no right to challenge any actions the Commission or its representatives may take
`
`pursuant to this Subsection.
`
`V. 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 are permanently restrained and enjoined from directly or
`
`indirectly:
`
`A.
`
`failing to provide sufficient customer information to enable the Commission to efficiently
`
`administer consumer redress. If a representative of the Commission requests in writing any
`
`information related to redress, Defendants must provide it, in the form prescribed by the
`
`Commission, within 14 days.
`
`B.
`
`disclosing, using, or benefitting from customer information, including the name, address,
`
`telephone number, email address, social security number, other identifying information, or any
`
`data that enables access to a customer’s account (including a credit card, bank account, or other
`
`financial account), that any Defendant obtained prior to entry of this Order in connection with
`
`labeling, advertising, marketing, distribution, or sale of television antennas or amplifiers; and
`
`C.
`
`failing to destroy such customer information in all forms in their possession, custody, or
`
`control within 30 days after receipt of written direction to do so from a representative of the
`
`Commission.
`
`
`
`
`Page 7 of 14
`
`

`

`Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 8 of 14
`
`Provided, however, that customer information need not be disposed of, and may be
`
`disclosed, to the extent requested by a government agency or required by law, regulation, or court
`
`order.
`
`Order:
`
`VI.
`
`ORDER ACKNOWLEDGMENTS
`
`IT IS FURTHER ORDERED that Defendants obtain acknowledgments of receipt of this
`
`A.
`
`Each Defendant, within 7 days of entry of this Order, must submit to the Commission an
`
`acknowledgment of receipt of this Order sworn under penalty of perjury.
`
`B.
`
`For 5 years after entry of this Order, Individual Defendant for any business that
`
`such Defendant, individually or collectively with any other Defendants, is the majority owner or
`
`controls directly or indirectly, and Corporate Defendant, must deliver a copy of this Order to: (1)
`
`all principals, officers, directors, and LLC managers and members; (2) all employees having
`
`managerial responsibilities for conduct related to the subject matter of the Order and all 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 the Section titled
`
`Compliance Reporting. Delivery must occur within 7 days of entry of this Order for current
`
`personnel. For all others, delivery must occur before they assume their responsibilities.
`
`C.
`
`From each individual or entity to which a Defendant delivered a copy of this Order, that
`
`Defendant must obtain, within 30 days, a signed and dated acknowledgment of receipt of this
`
`Order.
`
`
`
`
`VII. COMPLIANCE REPORTING
`
`IT IS FURTHER ORDERED that Defendants make timely submissions to the
`
`Page 8 of 14
`
`

`

`Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 9 of 14
`
`Commission:
`
`A.
`
`One year after entry of this Order, each Defendant must submit a compliance report,
`
`sworn under penalty of perjury:
`
`1.
`
`Each Defendant must: (a) identify the primary physical, postal, and email address
`
`and telephone number, as designated points of contact, which representatives of the
`
`Commission may use to communicate with Defendant; (b) identify all of that Defendant’s
`
`businesses by all of their names, telephone numbers, and physical, postal, email, and
`
`Internet addresses; (c) describe the activities of each business, including the goods and
`
`services offered, the means of advertising, marketing, and sales, and the involvement of
`
`any other Defendant (which Individual Defendant must describe if he knows or should
`
`know due to his own involvement); (d) describe in detail whether and how that Defendant
`
`is in compliance with each Section of this Order; and (e) provide a copy of each Order
`
`Acknowledgment obtained pursuant to this Order, unless previously submitted to the
`
`Commission.
`
`2.
`
`Additionally, Individual Defendant must: (a) identify all telephone numbers and
`
`all physical, postal, email and Internet addresses, including all residences; (b) identify all
`
`business activities, including any business for which such Defendant performs services
`
`whether as an employee or otherwise and any entity in which such Defendant has any
`
`ownership interest; and (c) describe in detail such Defendant’s involvement in each such
`
`business, including title, role, responsibilities, participation, authority, control, and any
`
`ownership.
`
`B.
`
`For 10 years after entry of this Order, each Defendant must submit a compliance
`
`
`
`
`Page 9 of 14
`
`

`

`Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 10 of 14
`
`notice, sworn under penalty of perjury, within 14 days of any change in the following:
`
`1.
`
`Each Defendant must report any change in: (a) any designated point of contact; or
`
`(b) the structure of any Corporate Defendant or any entity that Defendant has any
`
`ownership interest in or controls directly or indirectly that may affect compliance
`
`obligations arising under this Order, including: creation, merger, sale, or dissolution of
`
`the entity or any subsidiary, parent, or affiliate that engages in any acts or practices subject
`
`to this Order.
`
`2.
`
`Additionally, Individual Defendant must report any change in: (a) name,
`
`including aliases or fictitious name, or residence address; or (b) title or role in any
`
`business activity, including any business for which such Defendant performs services
`
`whether as an employee or otherwise and any entity in which such Defendant has any
`
`ownership interest, and identify the name, physical address, and any Internet address of
`
`the business or entity.
`
`C.
`
`Each Defendant must submit to the Commission notice of the filing of any bankruptcy
`
`petition, insolvency proceeding, or similar proceeding by or against such Defendant within 14
`
`days of its filing.
`
`D.
`
`Any submission to the Commission required by this Order to be sworn under penalty of
`
`perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by concluding: “I
`
`declare under penalty of perjury under the laws of the United States of America that the foregoing
`
`is true and correct. Executed on: _____” and supplying the date, signatory’s full name, title (if
`
`applicable), and signature.
`
`E.
`
`Unless otherwise directed by a Commission representative in writing, all submissions to
`
`
`
`
`Page 10 of 14
`
`

`

`Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 11 of 14
`
`the Commission pursuant to this Order must be emailed to DEbrief@ftc.gov or sent by overnight
`
`courier (not the U.S. Postal Service) to: Associate Director for Enforcement, Bureau of
`
`Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington,
`
`DC 20580. The subject line must begin: FTC v. Wellco, Inc.
`
`VIII. RECORDKEEPING
`
`IT IS FURTHER ORDERED that Defendants must create certain records for 10 years
`
`after entry of the Order, and retain each such record for 5 years. Specifically, Corporate
`
`Defendant in connection with any activity subject to this Order and Individual Defendant for any
`
`business that such Defendant, individually or collectively with any other Defendants, is a majority
`
`owner or controls directly or indirectly, must create and retain the following records:
`
`A.
`
`B.
`
`accounting records showing the revenues from all goods or services sold;
`
`personnel records showing, for each person providing services, whether as an employee or
`
`otherwise, that person’s: name; addresses; telephone numbers; job title or position; dates of
`
`service; and (if applicable) the reason for termination;
`
`C.
`
`records of all consumer complaints and refund requests concerning the subject matter of
`
`this Order, whether received directly or indirectly, such as through a third party, and any
`
`response;
`
`D.
`
`all records necessary to demonstrate full compliance with each provision of this Order,
`
`including all submissions to the Commission; and
`
`E.
`
`a copy of each unique advertisement or other marketing material.
`
`IX. COMPLIANCE MONITORING
`
`IT IS FURTHER ORDERED that, for the purpose of monitoring Defendants’ compliance
`
`
`
`
`Page 11 of 14
`
`

`

`Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 12 of 14
`
`with this Order, including 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 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 Defendant. Defendant must permit representatives of the Commission to interview
`
`any employee or other person affiliated with any Defendant who has agreed to such an interview.
`
`The person interviewed may have counsel present.
`
`C.
`
`The Commission may use all other lawful means, including posing, through its
`
`representatives as consumers, suppliers, or other individuals or entities, to Defendants or any
`
`individual or entity affiliated with Defendants, without the necessity of identification or prior
`
`notice. Nothing in this Order limits the Commission’s lawful use of compulsory process,
`
`pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1.
`
`D.
`
`Upon written request from a representative of the Commission, any consumer reporting
`
`agency must furnish consumer reports concerning Individual Defendant, pursuant to Section
`
`604(1) of the Fair Credit Reporting Act, 15 U.S.C. §1681b(a)(1).
`
`X. RETENTION OF JURISDICTION
`
`IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for purposes
`
`of construction, modification, and enforcement of this Order.
`
`
`
`
`Page 12 of 14
`
`

`

`Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 13 of 14
`Case 1:21-cv-02081—MKV Document 7-1 Filed 03/12/21 Page 13 of 14
`
`X.
`
`RETENTION OF JURISDICTION
`
`IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for purposes
`
`of construction, modification, and enforcement of this Order.
`
`SO ORDERED this
`
`day of
`
`,
`
`UNITED STATES DISTRICT JUDGE
`
`SO STIPULATED AND AGREED:
`
`FOR PLAINTIFF:
`
`FEDERAL TRADE COMMISSION
`
`Wow
`
`
`
`Michael Ostheimer, Attorney
`Federal Trade Commission
`
`Washington, DC 20580
`202-326-2699 (telephone)
`202-326-3259 (fax)
`mostheimer@ftc . gov
`
`WW
`
`
`
`Carl Settlemyer, Attorney
`Federal Trade Commission
`
`Washington, DC 20580
`202-326-2019 (telephone)
`202-326-3259 (fax)
`csettlemyer@fic.gov
`
`FOR DEFENDANTS:
`
`jM Date:
`
`‘
`
`(My- _
`
`1/22/2021
`
`Ari N. Rothman, Esq.
`
`Page 13 of 14
`
`1/22/2021
`
`

`

`Case 1:21-cv-02081-MKV Document 7-1 Filed 03/12/21 Page 14 of 14
`Case 1:21-cv-02081—MKV Document 7-1 Filed 03/12/21 Page 14 of 14
`
`Venable LLP
`
`600 Massachusetts Avenue, NW
`Washington, DC 20001
`(202) 344-4220 (telephone)
`(646) 927-5599 (fax)
`ANRothman@Venable.com
`Counsel for Wellco, Inc., and George M. Moscone
`
`DEFENDANTS: Wellco, Inc., and George M. Moscone
`
`- 41/” tM Date:
`George M. Moscone, Individually
`and as an Officer of Wellco, Inc.
`
`(ZKMQQZ 9-1
`
`Page 14 of 14
`
`

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