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Federal Trade Commission v. Mobe Ltd.

United States District Court, M.D. Florida, Orlando Division

November 4, 2019

FEDERAL TRADE COMMISSION, Plaintiff,
v.
MOBE LTD., MOBEPROCESSING.COM, INC., TRANSACTION MANAGEMENT USA, INC., MOBETRAINING.COM, INC., 9336-0311 QUEBEC INC., MOBE PRO LIMITED, MOBE INC., MOBE ONLINE LTD., MATT LLOYD PUBLISHING.COM PTY LTD., MATTHEW LLOYD MCPHEE, SUSAN ZANGHI and INGRID WHITNEY, Defendants.

          REPORT AND RECOMMENDATION

          DENIEL C. IRICK, UNITED STATES MAGISTRATE JUDGE.

         This cause comes before the Court for consideration without oral argument on the following motion:

MOTION: RECEIVER'S AMENDED MOTION TO APPROVE SETTLEMENT WITH MATTHEW LLOYD MCPHEE AND RELATED ENTITIES (Doc. 222)
FILED: September 6, 2019
THEREON it is RECOMMENDED that the motion be GRANTED.

         On June 4, 2018, the Federal Trade Commission (the FTC), brought this action against several Defendants - including MOBE Ltd. and its related entities (collectively, MOBE), Matthew Lloyd McPhee, and others - for alleged violations of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a). Doc. 1 (the Complaint). In the Complaint, the FTC alleged, in sum, that Defendants operated a fraudulent internet business education program called “My Online Business Education, ” or the “MOBE” program, through which Defendants claimed they would reveal a “simple 21-step system that will show consumers how to quickly and easily start their own online business and make substantial income.” Doc. 1 at 2. The FTC further alleged that contrary to Defendants' representations, “the vast majority of consumers who join the MOBE program and purchase . . . costly MOBE memberships lose money.” Id. at 3. According to the FTC, Defendants defrauded thousands of consumers who collectively paid Defendants over $125, 000, 000.00 based on misrepresentations by Defendants concerning the MOBE program. Id. at 3-4.

         Contemporaneous with the filing of the Complaint, the FTC also moved - pursuant to Federal Rule of Civil Procedure 65(b) - for a temporary restraining order, asset freeze, other equitable relief, and an order to show cause why a preliminary injunction should not issue against Defendants. Doc. 3. At the same time, the FTC made an application for a temporary receiver. Doc. 6. The next day, the Court granted the FTC's motions, issued a temporary restraining order, and appointed Mark J. Benet as temporary receiver (the Receiver). Doc. 13 (the TRO).

         Among other things, the TRO (i) enjoined the Defendants from violating Section 5(a) of the FTC Act, (ii) enjoined the Defendants from transferring, liquidating or otherwise encumbering or disposing of any of their assets, and (iii) appointed the Receiver as the temporary receiver of the "Receivership Entities." The TRO has been converted into a series of agreed preliminary injunctions, containing essentially the same terms as were contained in the TRO. See Doc. 94 (stipulated preliminary injunction pertaining to Russell W. Whitney); Doc. 95 (stipulated preliminary injunction pertaining to Susan Zanghi); Doc. 107 (stipulated preliminary injunction pertaining to McPhee and the MOBE Defendants).

         Under the Order Approving Revised Stipulated Preliminary Injunction (Doc. 107, the Preliminary Injunction), the Court directed the Receiver to accomplish the following:

B. Take exclusive custody, control, and possession of all Assets and Documents of, or in the possession, custody, or under the control of, any Receivership Entity, wherever situated.
C. Conserve, hold, manage, and prevent the loss of all Assets of the Receivership Entities, and perform all acts necessary or advisable to preserve the value of those Assets. The Receiver shall assume control over the income and profits therefrom and all sums of money now or hereafter due or owing to the Receivership Entities. The Receiver shall have full power to sue for, collect, and receive, all Assets of the Receivership Entities and of other persons or entities whose interests are now under the direction, possession, custody, or control of, the Receivership Entities. Provided, however, that the Receiver shall not attempt to collect any amount from a consumer if the Receiver believes the consumer's debt to the Receivership Entities has resulted from the deceptive acts or practices or other violations of law alleged in the Complaint in this matter, without prior Court approval. . . .
* * *
L. Institute, compromise, adjust, appear in, intervene in, defend, dispose of, or otherwise become party to any legal action in state, federal or foreign courts or arbitration proceedings as the Receiver deems necessary and advisable to preserve or recover the Assets of the Receivership Entities, or to carry out the Receiver's mandate under this Order, ...

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