ftc complaint v bachl servicing

8/8/2019 FTC Complaint v BACHL Servicing

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1 P l a i n t i f f , th e Federa l Trade Commission ("FTC U ), fo r i t s2 Complaint a l leges :3 1. Th e FTC br ings t h i s ac t ion under Sect ion 13(b) of the4 Federa l Trade Commission Act ("FTC Act U ), 15 U.S.C. 53(b) , to5 obta in permanent i n junc t ive r e l i e f , resc i s s ion o r reformat ion of6 con t rac t s , r e s t i t u t i o n , the refund of monies paid , disgorgement o f7 i l l -go t t en monies, and othe r equ i t ab le r e l i e f fo r Defendants ' ac t s8 o r prac t ices in v io l a t i o n of Sect ion 5(a) of the FTC Act, 15 U.S.C.9 45 (a) .

1011 2.12 U.S.C.13 53(b) .14 3 .

JURISDICTION AND VENUEThis Court has sub jec t matter j u r i sd ic t ion pursuant to 281331, 1337(a) , and 1345, and 15 U.S.C. 45(a) and

Venue i s proper in t h i s d i s t r i c t under 28 u.s.c. 15 1391(b) and (c) , and 15 U.S.C. 53(b) .16 PLAINTIFF17 4. Th e FTC i s an independent agency of the United Sta tes18 Government c rea ted by s t a tu t e . 15 U.S.C. 41 58. Th e FTC19 enforces Sect ion 5(a) of the FTC Act, 15 U.S.C. 45(a) , which20 proh ib i t s unfa i r or decept ive ac t s or prac t ices in or af fec t ing21 commerce.22 5 . The FTC i s author ized to i n i t i a t e f edera l d i s t r i c t cour t23 proceedings, by i t s own a t to rneys , to enjoin v io la t ions of the FTC24 Act and to secure such equi table r e l i e f as may be appropr ia te in25 each case , inc luding resc i s s ion or re format ion of con t rac t s ,26 r es t i t u t i on , the refund of monies pa id , and the disgorgement o f27 i l l -go t t en monies. 15 U.S.C. 53(b) and 56(a) (2) (A).28

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DEFENDANTSDefendant Countrywide Home Loans, Inc . ("CHL") i s a New

3 York co rpo ra t ion with i t s pr i nc i pa l place of bus iness in Calabasas ,4 CA.5

CHL t r a n sa c t s or has t r ansac ted business in t h i s d i s t r i c t .7. Defendant BAC Home Loans Serv ic ing , LP ("BAC Serv ic ing" ) ,

6 former ly doing business as Countrywide Home Loans Serv ic ing , LP, i s7 a Texas l imi ted pa r tne r sh ip with i t s pr i nc i pa l place o f bus ines s in8 Calabasas , CA. BAC Serv ic ing t r ansac t s or has t r ansac ted business9 in t h i s d i s t r i c t .

10 8. Defendants opera te a mortgage se rv ic ing bus iness t h a t11 se rv ices mi l l ions o f home loans annua l ly . Defendants have operated12 as a common e n t e r p r i s e while engaging in the unlawful ac t s and13 prac t i ces a l leged below. Because Defendants have opera ted as a14 common e n t e r p r i s e , each of them i s j o i n t l y and severa l ly l i a b l e fo r15 the a c t s and prac t i ces a l leged below.1617 9.

COMMERCE

At a l l t imes mater ia l to t h i s Complaint , Defendants have18 mainta ined a subs t a n t i a l course of t r ade in or a f fec t ing commerce,19 as "commerce" i s def ined in Sect ion 4 o f the FTC Act , 15 U.S.C. 20 44.2122 10.

NATURE OF ENFORCEMENT ACTIONThis enforcement ac t ion i s brought to remedy unlawful

23 ac t s and prac t i ces by Defendants in se rv ic ing mortgage loans fo r a24 p ar t i cu l a r ly vulnerab le c lass of consumers: borrowers in f i na nc i a l25 d i s t r e s s who are s t ruggl ing to keep t h e i r homes. Many of the loans26 se rv iced by Defendants are r i sky , h igh -cos t loans t ha t had been27 or ig ina ted or funded by Defendants ' paren t company, Countrywide28

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1 Financ ia l Corpora t ion ("CFC"), and i t s subs i d i a r i e s ( c o l l e c t i ve l y ,2 "Count rywide" ) . When borrowers f a l l behind on t h e i r payments ,3 Defendants ob ta in a number of d efau l t - r e l a t ed se rv ices (such as4 proper ty in spec t ions and fo rec lo su re t r u s t e e se rv ices ) by funne l ing5 the work through a panoply o f Countrywide subs i d i a r i e s . As a6 mat te r o f pr a c t i c e , Defendants and the subs id ia r i e s add a7 s u b s t a n t i a l mark-up to t h e i r a c tua l cos t s for the se rv ices and then8 charge the borrower the marked-up f ees . Defendan ts ' marked-up fees9 v i o l a t e th e mortgage c on t r a c t because they exceed the a c tua l co s t

10 of the se rv ices and are no t reasonable and approp r i a t e to pr o t e c t11 the note ho l de r ' s i n t e r e s t in the proper ty and r igh t s under the12 se c u r i t y in s t r umen t . Borrowers do not have any choice in who13 performs de f a u l t - r e l a t e d se rv ices or t he cos t o f those s e r v i c e s ,14 and they do no t have the opt ion to shop fo r those s e r v i c e s .15 11. In add i t ion , t h i s ac t ion i s brought to remedy unlawful16 ac t s and prac t i ces by Defendants in se rv ic ing loans fo r borrowers17 who a re seeking to save t h e i r homes through a Chapter 1318 bankruptcy . In connect ion wi th t hese bankruptcy cases , Defendants19 have made va r ious r epresen ta t ions to borrowers about t h e i r mortgage20 loans t ha t are f a l se o r l ack a reasonable ba s i s . Defendants a l so21 have f a i l ed to disc lose to borrowers dur ing t h e i r bankruptcy case22 when fees and escrow sho r tages and de f i c i e nc i e s have accrued on23 t h e i r loan . Af te r the bankruptcy cases have c losed and borrowers24 no longer have the pr o t e c t i on of the bankruptcy cour t , Defendants25 unf a i r l y seek to c o l l e c t those amounts, includ ing through26 fo rec lo su re a c t i ons .2728

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DEFENDANTS' BUSINESS PRACTICES2 12. Pr ior to Ju ly 1, 2008, when Countrywide was acqui red by3 Bank of America Corpora t ion , Countrywide produced hundreds of4 b i l l i o n s of d o l l a r s in mortgage loans each year . Defendants , as5 Countrywide subs i d i a r i e s , have been the mortgage se r v i c e r fo r many6 of these loans . In many ins tances , Countrywide packaged i t s loans7 i n to mortgage-backed secu r i t i e s and so ld them to inves tor s on the8 secondary market . countrywide of ten r e ta ined the r i g h t to se rv ice9 loans it se c u r i t i z e d , and Defendants have se rv iced these loans

10 pursuant to se rv ic ing agreements with the i nves to rs . Afte r Ju ly 1,11 2008, Defendants have cont inued to se rv ice mi l l ions of mortgage12 loans , includ ing tens o f thousands of loans involv ing borrowers in13 bankruptcy and fo rec losure . Defendants now do business under the14 brand name of "Bank of America Home Loans."15 13. Many of the loans serviced by Defendants are subprime or16 "nont rad i t iona l " mortgages such as pay opt ion ad jus tab le ra te17 mortgages ("ARMs"), i n t e re s t -o n ly mortgages , and loans made with18 little or no income or a s se t documentat ion. In r ecen t year s ,19 Countrywide produced an inc reas ing number of such loans , and20 Defendants ' loan se rv ic ing p o r t fo l io grew s ig n i f i can t ly . In March21 2008, p r i o r to being acqui red by Bank of America Corpora t ion ,22 Countrywide was ranked as the top mortgage se rv ice r in the United23 Sta tes and had a se rv ic ing p o r t fo l io with a balance of over $1.424 t r i l l i o n . In September 2009, a f t e r i t s acqui s i t ion of Countrywide,25 Bank of America wa s ranked as the n a t io n ' s top mortgage se r v i c e r26 with a se rv ic ing p o r t fo l io of over $2.1 t r i l l i o n .2728

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1 14. When a borrower becomes de l inquen t on a mortgage loan ,2 mortgage se rv ice rs order var ious d efau l t - r e l a t ed se rv ices t h a t are3 in tended to pr o t e c t the l e nde r ' s i n t e r e s t in the p roper ty . For4 example, a mortgage se r v i c e r may order a proper ty i n spec t ion fo r5 the purpose of ver i fy ing the occupancy s t a tu s of the home. In i t s6 mortgage se rv ic ing opera t ion , Countrywide fo l lows a so-ca l l ed7 " v e r t i c a l i n t egra t ion s t ra tegyu to generate d efau l t - r e l a t ed fee8 income. Rather than obtain d efau l t - r e l a t ed se rv ices d i r ec t l y from9 t h i rd -p a r ty vendors and charge borrowers fo r the a c tua l cos t o f

10 these se rv ices , Countrywide formed subs i d i a r i e s to ac t as middle-11 men in the defau l t se rv ices process ( "defau l t subs i d i a r i e s U ) The12 defau l t subs id ia r i e s e x i s t so le ly to generate revenues fo r13 Countrywide and do no t operate a t arms l eng th with Defendants .14 15. The scheme works as fo l lows . Defendants order de f a u l t -15 r e l a t e d se rv ices from the de f a u l t subs i d i a r i e s , which in tu rn16 obtain the se rv ices from t h i rd -p a r ty vendors . Th e de f a u l t17 subs id ia r i e s then charge Defendants a fee s ig n i f i can t ly marked up18 from the t h i rd -p a r ty vendors ' fee fo r the se rv ice , and the19 Defendants , in tu rn , a s ses s and c o l l e c t t hese marked-up fees from20 borrowers . As a r e su l t , even as the mortgage market co l l apsed , and21 more borrowers f e l l in to del inquency in r ecen t years , Countrywide22 earned subs t a n t i a l p ro f i t s by funne l ing d e f a u l t - r e l a t e d se rv ices23 through i t s defau l t su b s id i a r i e s . As s t a t ed by Countrywide in an24 October 2007 Earnings Cal l , the company's s t r a t e gy was to p r o f i t25 from d efau l t - r e l a t ed se rv ices in down t imes such as the cur ren t26 mortgage c r i s i s :2728

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1 NOw, we are f requent ly asked what th e impact of2 our se rv ic ing cos t s and earn ings wi l l be from3 increased del inquencies and [ loss] mit iga t ion4 e f fo r t s , and what happens to cos t s . And what5 we po in t ou t i s , as I wi l l now, i s t h a t6 i nc reased opera t ing expenses in t imes l i k e t h i s7 tend to be fu l ly o f f se t by increases in8 an c i l l a ry income in our se rv ic ing opera t ion ,9 gr e a t e r fee income from i tems l i k e l a t e

10 charges , and impor tan t ly from in -sourced vendor11 funct ions t h a t r epresen t p a r t of our12 d iv e r s i f i ca t io n s t r a t e gy , a c oun te r - c yc l i c a l13 d iv e r s i f i ca t io n s t ra t egy such as our bus inesses14 involved in foreclosure t ru s t ee and defau l t15 title se rv ices and proper ty inspec t ion16 se rv ices .17 (See Sta tement of David Sambol, Pres iden t , Chief Opera t ing Off ice r ,18 and Direc to r o f Countrywide Financ ia l Corpora t ion . )19 16. The mortgage cont r ac t between a l ender and borrower20 t y p i ca l ly cons i s t s of two documents: the promissory note ("Note") ,21 and the mortgage or deed of t r u s t ("Secur i ty Ins t rument") The22 mortgage cont r ac t s se rv iced by Defendants are su b s t an t i a l l y s imi la r23 to the s tandard Fannie Mae/Freddie Mac form c on t r a c t s and contain24 form language regard ing what occurs i f a borrower defau l t s on h is25 or her loan . The Secur i ty Ins t rument au tho r i zes the se rv ice r , in26 cases of de f a u l t , to :2728

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pay fo r whatever i s r ea sonab le or app r op r ia teto p r o t e c t th e note h o l d e r ' s i n t e r e s t in th ep r ope r ty and r i gh t s under th e s e c u r i t yin s t r umen t , rnc lud ing pr o t e c t i ng and /o rassess ing th e va lue o f th e pr ope r ty , andsecur ing and /o r r ep a i r i n g th e pr ope r ty .

7 The Secur i ty In s t rumen t f u r the r prov ides t ha t any such amounts8 "d i sbu r sed by" th e s e r v i c e r s h a l l become ad d i t i o n a l deb t of the9 borrower secu red by the Secur i ty In s t rumen t and s h a l l bea r i n t e r e s t

10 a t th e Note r a t e "from the date of d isbursement . " Regarding the11 payment o f fo rec lo su re fees in the even t o f de f a u l t , the Note12 prov ides t h a t th e note ho lde r :1314151617

w i l l have th e r i g h t to be pa id back by me fo ra l l o f its co s t s and expenses in enforc ing t h i sNote to th e ex ten t no t p r o h i b i t ed by app l i cab lelaw. Those expenses inc lude , f o r example,r ea sonab le a t t o r ne ys ' f ees .

18 Thus, th e mortgage co n t r ac t al lows the s e r v i c e r to pay fo r de f a u l t -19 r e l a t e d s e r v i ce s when neces sa ry o r approp r i a t e , and to be20 reimbursed by th e bor rower , bu t it does no t au tho r ize the s e r v i c e r21 to mark up th e ac t u a l c o s t of those se rv ices to make a p r o f i t .22 17. In charg ing marked-up fees fo r de f a u l t s e r v i ce s ,23 Defendants have v io l a t e d th e mortgage co n t r ac t by charg ing24 bor rowers fo r de f a u l t se rv ices t h a t exceed th e ac t u a l co s t of the25 se rv ices and t h a t a re no t r ea sonab le and appr op r ia te to p r o t e c t th e26 note ho lde r ' s i n t e r e s t in the pr ope r ty and r i g h t s under th e27 s e c u r i t y in s t r umen t .28

In ad d i t i o n , Defendants have charged

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1 borrowers fo r the performance of defau l t se rv ices , such as proper ty2 inspec t ions and title repor t s , t h a t in some ins tances were not3 reasonable and appropr ia te to pr o t e c t the note ho l de r ' s i n t e r e s t in4 the proper ty and r i g h t s under the se c u r i t y ins t rument .5 18. countrywide Fie ld Serv ices Corporat ion ("CFSC"), now6 doing business as BAC Fie ld Serv ices Corpora t ion , i s one of the7 de f a u l t subs i d i a r i e s used by Defendants in se rv ic ing borrowers '8 mortgage loans . Unt i l a t l e a s t Ju ly 1, 2008, CFSC was a subs id ia ry9 o f Defendant CHL. Defendants order p roper ty inspec t ions and

10 proper ty prese rva t ion se rv ices , such as lawn cu ts , from CFSC, which11 in tu rn orders the se rv ices from t h i rd -p a r ty vendors . Th e vendors12 charge CFSC pr i c e s for the performance of t hese s e r v i c e s , which13 pr ices CFSC then marks up in numerous ins tances by 100% or more14 before "charging" them to Defendants . Defendants then charge the15 marked-up fees to the borrower . Defendants c o l l e c t these marked-up16 fees from borrowers through var ious means, includ ing in connect ion17 with repayment p lans , r e ins ta tements , payoffs , bankruptcy p lans ,18 and fo rec losures .19 19. Defendants obtain se rv ices through other defau l t20 subs i d i a r i e s in s imi la r fash ion and then charge borrowers fees for21 de f a u l t se rv ices t h a t a re su b s t an t i a l l y marked up from the a c tua l22 c os t of the se rv ices . These other de fau l t subs i d i a r i e s are23 LandSafe Defaul t , I nc . , a l so known as LandSafe Nationa l Defaul t ,24 ("LandSafe") and ReconTrust Company, N.A. ("ReconTrust") .25 Defendants order pre - forec losure title r epor t s from LandSafe a t the26 very beginning of a foreclosure r e f e r r a l . As soon as the r epor t i s27 completed, the borrower i s b i l l ed fo r it, and Defendants send the28

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1 r epor t with th e fo rec lo su re r e f e r r a l to a fo rec lo su re a t to rney or2 t r u s t e e . In many i n s t an ces , Defendants send fo rec lo su re r e f e r r a l s3 to ReconTrust . ReconTrust a c t s as the Defendan ts ' fo rec lo su re4 t r u s t e e in non- jud i c i a l fo rec lo su re s t a t e s , such as C a l i f o r n i a .5 LandSafe h i r e s vendors to perform pre - forec losure title se rv ices6 and then " ch a r g es " . f ee s to Defendants for those se rv ices t ha t a re7 s u b s t a n t i a l l y marked up from the vendors ' pr i c e s . Likewise ,8 ReconTrust provides fo rec lo su re t r u s t e e se rv ices t h a t have been9 subs t a n t i a l l y marked up from the a c tua l cos t of the s e r v i c e s .

10 Defendants then pass on the se marked-up fees to borrowers .11 20. Defendants s e r v i ce tens of thousands o f mortgage loans12 fo r borrowers who are in Chapter 13 bankruptcy , the purpose of13 which i s to al low consumers to keep t h e i r homes and emerge from14 bankruptcy with a " f r esh s t a r t . " In connect ion wi th t hese15 bankruptcy cases and in numerous i n s t an ces , includ ing in bankrup tcy16 f i l i n g s such as proofs of claim and motions fo r r e l i e f from s t ay ,17 Defendants have made r epresen ta t ions to borrowers about t h e i r18 mortgage loans t h a t are fa l se or lack a reasonable ba s i s .19 Defendants f a i l e d to adopt adequate po l i c i e s and procedures to20 ensure the accuracy of t h e i r r e p r e s e n t a t i ons , and they used21 an t iqua ted t echnology t ha t led to numerous i naccu rac ies in22 se rv ic ing loans in bankrup tcy , includ ing payment pos t ing e r r o r s and23 the assessment of unauthor ized f ee s . Defendants a l so have f a i l e d24 to disc lose to borrowers dur ing t h e i r bankrup tcy case when fees and25 escrow de f i c i e nc i e s and shor tages have accrued on t h e i r loan .26 A f t e r the bankrup tcy case has c losed and borrowers no longer have2728

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1 th e p ro t e c t i o n of the bankrup tcy cour t , Defendants seek to c o l l e c t2 those amounts, i nc lud ing in some cases th rough fo rec losure a c t i o n s .3 VIOLATIONS OF THE FTC ACT4 21. Sec t ion 5(a) o f the FTC Act , 15 U.S .C. 45(a ) , p r o h i b i t s5 "u n fa i r or decept ive ac t s or p r ac t i ce s in or af fec t ing commerce."6 22. Misrepresen ta t ions or decept ive omiss ions of mate r ia l7 f ac t co n s t i t u t e decep t ive ac t s or p r ac t i ce s proh ib i t ed by Sect ion8 5(a) o f th e FTC Act . Acts o r p r ac t i ce s a re u n fa i r under Sec t ion 59 of the FTC Act if they cause or a re l i ke ly to cause su b s t an t i a l

10 in ju ry to consumers t h a t consumers cannot reasonab ly avoid11 themselves and t h a t i s not outweighed by coun te rva i l ing b en e f i t s to12 consumers or compet i t ion . 15 U.S .C. 45(n) .1314 23.

Count I: Misrepresentation o f Amounts OwedIn th e course and conduct of t h e i r loan se rv ic ing and

15 co l l ec t i o n , Defendants in numerous ins tances have r epresen ted ,16 d i rec t l y o r i n d i r ec t l y , express ly o r by impl i ca t ion , t h a t consumers17 a re obl iga ted to pay th e amounts sp ec i f i ed in Defendan ts '18 communica t ions fo r d e fau l t - r e l a t ed s e rv i c e s such as proper ty19 inspec t ions , title r e p o r t s , and fo rec losure t ru s t ee se r v i ces .20 24. In t ru th and in f ac t , in numerous ins tances , consumers21 a re n ot obl iga ted to pay th e amounts t h a t have been sp ec i f i ed in22 Defendants ' communica t ions fo r d ef au l t r e l a t ed se rv ices such as23 proper ty inspec t ions , title r epor t s , and fo rec losure t ru s t ee24 s e rv i c e s . Defendants inc lude in the amounts they r epresen t as owed25 fees t h a t have been marked up beyond the ac tua l cos t of the26 se rv ices and/or fees t h a t a re fo r t he performance of unnecessary or27 unreasonable se rv ices , in v i o l a t i o n of th e mortgage co n t r ac t .28

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1 25. There fore , Defendants ' represen ta t ions as s e t fo r th in2 Paragraph 23 of t h i s Compla int a re f a l s e or mis lead ing and3 co n s t i t u t e decep t ive a c t s o r p r ac t i ce s in v i o l a t i o n of Sec t ion 5(a)4 of the FTC Act, 15 U.S.C. 4S(a) .5 Count II: Unfair Assessment and Col lect ion o f Fees6 26. In th e course and conduct o f t h e i r loan se rv ic ing and7 co l l ec t i o n , Defendants in numerous i ns t ances have assessed and8 co l l ec t ed d e fau l t - r e l a t ed fees t h a t they were no t l eg a l l y9 au thor i zed to assess and c o l l e c t pursuan t to the mortgage c o n t r a c t .10 27. Defendants ' ac t ions cause o r a re l i k e ly to cause11 s u b s t a n t i a l i n j u ry to consumers t h a t consumers cannot reasonab ly12 avoid t hemselves and t h a t i s no t outweighed by c o u n t e r v a i l i n g13 b en e f i t s to consumers or compet i t ion .14 28. There fore , Defendants ' p r ac t i ce s as desc r ibed in15 Paragraph 26 above co n s t i t u t e u n fa i r ac t s o r p r ac t i ce s in v i o l a t i o n16 o f Se c t io n 5 of th e FTC Act, 15 U.S.C. 45(a) and 45(n) .1718 29.

Count III : Decept ive Claims in Bankruptcy Servic ingIn the course and conduct o f se rv ic ing loans in

19 bankruptcy , Defendants in numerous i ns t ances have made20 represen ta t ions about d i f f e r e n t aspec t s o f consumers ' lo a n s ,21 i nc lud ing amounts owed fo r p r e - p e t i t i o n a r rea rage and the amount22 and de l inquency s t a t u s o f p o s t - p e t i t i o n payments .23 30. In t ru th and in f ac t , in numerous ins tances , th e24 represen ta t ions s e t fo r t h in Paragraph 29 are f a l s e o r mis lead ing25 o r Defendants d id not have a reasonab le b a s i s fo r th e26 represen ta t ions a t th e t ime th e represen ta t ions were made.2728

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1 31. Therefore , the making of th e r ep resen ta t ions as s e t for th2 in Paragraph 29 o f t h i s Complaint co n s t i t u t e s a decep t ive ac t or3 prac t ice in or af fec t ing commerce in v i o l a t i o n of Sect ion 5(a) o f4 th e FTC Act, 15 U.S.C. 45(a ) .56

Count IV: Unfair Collect ion o f Hidden Bankruptcy Fees32. In numerous ins tances , Defendants have fa i led t o d i sc lose

7 adequate ly to borrowers dur ing t h e i r bankruptcy case when fees and8 escrow d ef i c i en c i e s and shor t ages have accrued on t h e i r l oan .9 Afte r th e bankruptcy case has closed and borrowers no longer have

10 the pro tec t ion of the bankruptcy cour t , Defendants seek to co l l ec t11 those amounts, inc luding through fo rec losure ac t ions .12 33. Defendants ' ac t ions cause or are l i ke ly to cause13 s u b s t an t i a l i n ju ry to consumers t h a t consumers cannot reasonably14 avoid themselves and t h a t i s not outweighed by coun te rva i l ing15 b en e f i t s t o consumers or compet i t ion.16 34. There fore , Defendants ' p r ac t i ce s as desc r ibed in17 Paragraph 32 above co n s t i t u t e unfa i r ac t s or p rac t i ce s in v io la t ion18 of Sect ion 5 of th e FTC Act, 15 U.S.C. 45(a) and 45(n) .1 9 CONSUMER INJURY20 35. Consumers have suf fe red and w i l l cont inue to s u f fe r21 s u b s t an t i a l i n ju ry as a r e s u l t of Defendants ' v io la t ions of the FTC22 Act. In add i t ion , Defendants have been un jus t ly enr i ched as a23 r e su l t of t h e i r unlawful ac t s or p rac t i ce s . Absent i n junc t ive24 r e l i e f by t h i s Court , Defendants a re l i ke ly to cont inue to i n ju re25 consumers, reap unjus t enr ichment , and harm the publ ic i n t e r e s t .262728

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12 36.

THIS COURT'S POWER TO GRANT RELIEFSect ion 13(b) of the FTC Act, 15 U.S.C. 53(b) , empowers

3 t h i s Court to gran t i n junc t ive and such othe r r e l i e f as the Court4 may deem appropr ia te to h a l t and redres s v io la t ions of any5 provis ion of law enforced by the FTC. The Court , in the exe rc i se6 o f i t s equ i tab le j u r i s d i c t i o n , may award an c i l l a ry r e l i e f ,7 i nc lud ing r e sc i s s i o n or reformat ion of con t rac t s , r es t i t u t i on , the8 refund o f monies pa id , and the disgorgement o f i l l - g o t t e n monies,9 to prevent and remedy any v io la t ion of any prov is ion o f law

10 enforced by th e FTC.11 PRAYER FOR RELIEF12 Wherefore, P l a i n t i f f FTC, pursuant to Sect ion 13(b) o f the FTC13 Act, 15 U.S.C. 53(b) , and th e Cour t ' s own equ i tab le powers,14 reques ts t h a t th e Cour t :15 A. Ente r a permanent in junct ion to preven t fu tu re v i o l a t i o n s16 of the FTC Act ;17 B. Award such r e l i e f as the Court f inds necessary to redres s18 in jury to consumers resu l t ing from Defendants ' v i o l a t i o n s of the19 FTC Act, i nc lud ing but no t l imi t ed to , r e sc i s s i o n or re format ion o f20 con t rac t s , r e s t i t u t i o n , the refund of monies pa id , and the21 disgorgement of i l l - g o t t e n monies; and22 C. Award P l a i n t i f f the cos t s o f br ing ing t h i s ac t ion , as23 wel l as such othe r and add i t iona l r e l i e f as the Court may determine24 to be j u s t and proper .25262728

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1 Dated: June 7, 201023

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Respec t fu l ly submi t t ed ,WILLARD K. TOMGenera l Counsel~ ~ ~ . L u ~ o r r i s Heather AllenLynet te Hotchkisslmorr is@ftc .gov; ha l len@ftc .qov;lho tchk iss@ftc .govFedera l Trade Commission600 Pennsylvania Avenue, N.W.Washington, D.C. 20580Tel : (202) 326-3224Fax: (202) 326-3768

~ ~ ~ -Jo n D. Jaco s (Local Counsel). " cobs@ftc. ovCa i f o rn i a Bar No. 134154Federa l Trade Commission10877 Wilsh i re Blvd . , S te . 70 0Los Angeles, CA 90024Tel : (310) 824-4343Fax: (31 0 ) 8 2 4 - 4 3 8 0At torneys fo r P l a i n t i f fFedera l Trade Commission

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