these - Krebs on Security

Case
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D ECLAR ATIO N O F M IC H AEL B.G O LD STEIN
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PURSUANT TO 28U.S.C.j 1746
1,M ichaelB.Goldstein,hereby state that1have personalknowledge ofthe factsas sct
forth below. Ifcalled as aw itness,Icould and would testify as follows:
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1.
lam acitizenoftheUnitedStatesandam overeighteen(18)yearsofage.1am a
FederalTradeInvestigatorC%investigatorl')fortheFederalTradeCommission(EiFTC''or
çbcommission').Iam presently assigned to theEnforcementDivision oftheFTC'SBureau of
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Consum erProtection in W ashington,D .C. M y work addressis 600 Pelm sylvaniaA venue, N .W .,
M -8102B,W ashington,D .C.20580. A san investigatorw ith the FTC , m y dutiesinclude
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researching and investigating possible violationsoftheFTC A ctand violationsoffederalcourt
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ordersobtained by the Com m ission. Ihave been an investigatorwith the FTC sinceA pril20l0.
D uring thattim e,lhave investigatcd live separate m atters involving the unauthorized billing of
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consum eraccounts. ln addition,lhave investigated,orparticipated in the investigation of, eight
otherm attersthatinvolved m erchantsengaged in,orsuspected ofengaging in,deceptive
m arketing practices.
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2.
ln April2012, IbecameaCertitiedFraudExami
ner(ç:CFE'').Thiscertificationis
aw arded by the Association ofCertified Fraud Exam iners. To becom e a CFE,1had to passan
exam whichtestedfoursubjectareas:(1)fraudpreventionanddeterrence;(2)fraudulent
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nancialtransactions'
,(3)fraudinvestigations;and(4)Iegalelementsoffraud.
3.
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Iwasassigned to w ork on the Com m ission'sinvestigation ofIdealFinancial
Solutions,Inc.(ttIdeal'');AscotCrossing,LLC (ttAscotCrossing''l;BracknellShore,Ltd.
(tçBracknellShorel'l;ChandonGroup,lnc,(trhandonGroup''),
'FiscalFitness,LLC (tTiscal
Fitness'l;Avanix,LLC (tGAvanix'');StevenL.Sunyich(éfsteven Sunyich''orç%steveSunyichl'l;
.
M elissaSunyichGardner(tGsunyichGardner'l;ChristopherTolman Sunyich(sçchrisSunyich'l;
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M ichaelEdwin Stmyich (çtM ichaelSunyich''orttM ikeSunyich,''l;Shawn Steven Stmyich
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(ttshawnSunyich''l;andKentBrown(çtBrown'')(collectivelytiDefendants'') Steven Sunyich,
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Chris Sunyich,M ichaelSunyich,Shawn Sunyich,Sunyich Gardner,and Brow n are collectively
referred to as'tthe individualdefendants.''
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4.
A spartofm y investigation,Ireceived and reviewed a variety ofdocum ents. As
detailed in the sectionsbelow ,these docum ents show thatD efendantsobtain consum erbank and
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creditoard aoootmtinformation andusetbatinfonnation tomakedebitsfrom consum eraccounts
orcharge consum ercreditcards. A sdiscusscd in the tW nalysis''section below ,the evidence that
lhave reviewed indicate thatDefendantsm ake thcse debitsorchargeswithoutthe consum ers'
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consent.
5.
ln thisdeclaration,Ifirstdescribe tlze toolsand sottrcesthatIused to collectand
preserve evidencerelated to tlzis investigation. In the section cntitled tfstructtlre ofthe Schem e
41,
,,
and BusinessForm ations, Ipresentevidence show ing the layersofbusiness form ationsand
othcrstepsD efendants used to attem ptto distancethem selves from the schem e. ln the section
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entitled çbDefcndants'Billing Campaigns,':lprovideevidenceshowinghow Dcfendants
organized and implem ented theircam paignsto debitand charge consum er tinancialaccounts. ln
t<tlefimdants'Cllargeback and Return Ratesr''lpresentevidence sbowingthe largenm nbersof
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chargesand debitsthatDefendantsm ade to consum eraccountsmld the subsequentchargebacks
on creditcards and retum son ACH debitsand rem otely-created checks. Ialso presentevidence
ofindustry standards forchargebacks and rettm zrates. In the section entitled çf onsum er
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Com plaints,''lpresentevidence ofthe volum e ofconsum ercom plaints theFTC has received
regardingthedefendantsfrom consumers,theBetterBusinessBureau($tBBB''),andother1aw
enforcem entagencies. Finally,in the section entitled tt
A nalysisr''Ianalyze the evidence
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presented and dem onstrate how itshow sthatdefendantsare engaged in a scheme to defraud
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consumers
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1.
D ESCR IPTIO N OF INV ESTIG ATIV E TO O LS AND SO UR CES O F EV ID EN CE
A . A dobe AcrobatPro 9 W eb Capture Tool
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ln conducting m y investigation,Icaptured evidence from the lnternetusing a soûw are
program called A dobc A crobatPro 9 to record single w ebpages,orentirew ebsites,asthey
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existed ontheday oftherecording.Adobe'sprogram ,whilehaving otherfunctions,alsohasa
toolthatconvertswebpagesorwebsitesintopollabledocumentformat(itpdf')files.
B. TeleportPro W eb Capture Tool
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7.
Ialsoused asoftwareprogram called TeleportPro to capturecertain websites.Tcleport
Pro downloadsand savesa11the filesthatwould norm ally bedownloaded by a w ebsitevisitor.
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Thewebsitecanthenbeviewedasitexistedatthetimeofthecapture.
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. Domai
nNameDatabaseatDomaintools.com
8' lobtainedinformationfrom ada/bascofdomainnamesmaintainedbyDomainTools,
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LLC atwww.domaintools.com.Bywayofbackground,everywebsitehasauniquedomain
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name(/.e.,Golladdy.com).Thatdomainnameisleasedforacontractedperiodoftimefrom the
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registrarto the registrant. The D omainfoolsdatabase allow susersto identify a dom ain nam e,s
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currentandformerregistrarsandrcgistrants, IntemetProtocoladdress('CIPaddress''),and
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adm inistrative and technicalcontactsforthe w cbsite. Thisinfonnation isreferred to asa dom ain
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name's**whois record.'' In addition to obtaining the whois record fora dom ain nam e,thcw ebsite
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also allowsusersto conductareverseIP addresssearch, TheresultsofareverseIP address
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search show w hatotherw ebsitesordom ain nam cs arehosted on the sam e server. lused the
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D omain-foolsdatabase to obtain thewhoisrecordsforw ebsitesaffiliated w ith Defendants.
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D. Consum er SentinelCom plaints
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Iobtainedinformation from ConsumerSentinel,a consum ercomplaintdatabase owned
and adm inistered by tlze FTC. This databasc receives consumercom plaintsfrom hvo m ain
sources. One source isconsum erswho dircctly contactthe FTC, by m ail,telephone,orthrough
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theFTC'Swebsite(www,ftc.gov).TheothersourceistheFTC'Spartnershipwithother1aw
enforcem entagenciesand consum erprotection organizations around the w orld. Iused the
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Consum erSentineldatabase to obtain consum ercom plaintsfiled againstD efendants. 1havenot
attached copicsofconsum ercom plaintsto thisdeclaration. The complaints,however,willbe
kepton file atthe FTC and can bc m ade available forexam ination, copying,orboth ata
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reasonabletimeandplace.
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Better Business Bureau Com olaints
n e BBB isan umbrella organization ofnum erousregionalBBBS
. Each r
egionalBBB
collectsconsum ercom plaintson the businesseslocated in theirrcspective regions. Forexam ple,
the BBB ofNevada collectsand addressesa1lcomplaintsagainstN evadabusinesses, regardless
ofthe location ofthe com plaining consum er. W hen a consum ersubm itsa com plaintto the BBB
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againstabusiness,the regionalBBB w illthen send a copy ofthe complaintto the business and
ask forthatbusinessto respond to the allegations. A spartofthe investigation into the
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defendants,the FTC obtained consum ercomplaints, supporting documents,andDefendants'
responsesfrom tbe BBBSofN evada and U tah. lhave notattached these com plaintsto this
declaration. Thecom plaints,how ever,willbe kepton tile atthe FTC and can be m ade available
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forexamination, copying,orboth ata reasonable tim e and place
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F. CivilInvestizativeD em ands
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Spurredby consumercomplaintsrelatcd to Defendantsaction
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FTC staffdrafted and the
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CommissionissuedCivillnvestigativeDemands(itC1Ds'')tobanks, creditcard com panies,
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website registrars,teleconm zunicationscompanies, and otherentities.Aspartofmy
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nvestigation,lreviewed the docum entsreceived in response to these ClD s.
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G.PublicRecords
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FTC Staffsentrequeststo theNevada Secretary ofStateforofficialrecordsofbusiness
entities fonned in N evada, Ireview ed the docum ents thattheFTC receivcd in response to these
requests.
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13.
BusinessentitiesinNevadaareformed by tiling eitherSW rticlesofIncorporation''or
'çArticlesofO rganization''w ith theN evada Secretazy ofState. These docum ents listthe
registered agent'snam e and address, nam e and address oftlw inuop oratoror organizer, and tile
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nam esand addresses ofany directors,officers, m anagers,orm em bers. Therealer,registered
entities subm itan Es
A nnualList''to the Secretary ofState, w ith the sam e inform ation, noting any
changes. lreceived and review ed certified copiesofD efendants'business lilingsw ith thc
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Secretary ofSl te. A dditionally, Ivisited the N evada Secretary ofState w ebsite alzd obtained
business entity registration datafortllose Defendants'entities forwhich the FTC did notreceive
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certit-iedcopies.WmcandcorrectcopiesofpertinentexcerptsofDefendants'slingswiththe
Secretar.vo
fstate,areappendedheretotzâ'AttachmentA.
l4.
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FTC Staffalso requested from Clark County, Nevada certitied copiesofthe registrations
oftictitiousbusinessnam esin thatcounty. lreviewed thecertitiedcopiesoftheseregistrations
thatthe FTC received in response to the request. ln addition,lrevieweddocumentsdownloaded
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[email protected]
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from thecountywebsiteathtss.
'//aivitals.co.clark.nv.us/Webpllnternet/,which listed other
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fictitiousnamesregistered by Defendants, butforw hich theFTC had notreceived certified
copies. TrueandcorrectcopiesofDefendants'hlingswithClarkCountyaswellasadditional
downloaded documentsare appended hereto asA ttachm entB .
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15.
ln additionson D ecember20,2012,l obtained and reviewed records from the website of
the Utah Division ofCorporationsand Com m ercialCode atsectlre.utah.gov/bes. Tm c and
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correctcopiesofrecordsdownloadedfrom theUtahstatewebsiteareappendedheretoas
Attachm entC.
16.
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Ialso obtained rccordsaboutIdealfrom the federalSecurities and Exchange Com m ission
(;dSEC'').Accordingtothesedocuments,Idealisapublicly-tradedcompanyandfilescertain
reports with the SEC,w hich m aintainsa publicly available database called the Electronic Data
Gathering,Analysis,andRetrievalSystem (K6EDGAW')thathousesrequiredcompany
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subm issions. On D ecem ber 13,2012 and January 9,2013,laccessed EDGA R from m y FTC
computeranddownloadedselectlilingssubmittedbyldealtotheSEC.Fmeandcorrectcopies
ofldeal'
sSECjllingsareappendedheretoaszd
l//ccàlaea/D.
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II.
STRUCTU RE O F TH E SC H EM E AND BU SINESS FO RM ATIO N S
17.
Asdetailed in subsectionsA ,C,and D bclow ,theD efendantsformed dozensof
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businessesto handletheoperationalrequirementsoftheirscheme.They alsoregistered multiple
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fictitiousnam es,orDBAS,forthesebusinesses.' See supra,AttachmentB. Som e ofthese
entities and DBA Sbecam e the front,orpublic face,ofthe schem e,acquiring consum erfinancial
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accountinformation from leadproviders, opening m erchantaccountsw ith paym entprocessors,
1Fictitiousnamesaresom etim esreferredteDBAS,w hich standsfor'r oing BusinessAs.''TheStateofNevada
requiresbusinessesto registerDBASw ith thecountyin which thebusinessislocated. Inaddition,toobtaina
merchantaccount,paym entprocessorsandbankstypicallyrequirebusinessestoIistontlleirapplicationany DBAS
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thatwillbeusedtobillcustomers.
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taking consum ers'money by debiting theirbank accountsorcharging theircreditcards,and
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respondingtoconsumercomplaints.Seeinfra,SectionsI11andIr
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q Defendantsusedvariations
ofthe tictitiousnam es form any ofthebilling descriptorsplaced nextto debits orchargeson
consum ers'bank and creditcard statem entsorto lillin thettpay to the Orderof'line on the
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remotelycreatedchecks(6çRCCs'').Seeinfra,s'
cc/fgnx11andfff.
l8.
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D efendantsalso took num erousstepsto scparate and shield the operationalbusinesses
andthe individualdefendantsfrom thefrontcompaniesand fictitiousnam es.Thesesteps
included using over50 differentbilling descriptors,hundredsofwebsites,auto-fonvarding of
email,over30differentaddresses,over50phonenumbers(manyofwhichweretoll-free
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telephonenumbersto handleconsum ercomplaints), andinternetprivacy services.Seeinfra,
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Section II.B.
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A . The Corporate Defendants and IdealFinanclalgs Subsidiaries
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L IdealFinancial
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19.
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ldeal,a N evadacorporation,was initially form ed in 1993 asJaguarGam ing Corporation.
Thedocumentsappeartoshow thatSteve Sunyich becamePresidentand DirectorinJuly 2004.
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ln A ugust2004,JaguarGam ing Corporation changed its nam e to ldealFinancialSolutions,Inc.
and m erged w ith a com pany called ldealFinancialSolutions Corporation. Seesupra,
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AttachmentA.
20.
On February 27,2009,ldealliled its AnnualList. Thistiling listed theofficers as Steven
Sunyich,Chris Sunyich and Brow n. The addressforallofthe ofticerswaslisted as 5940
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Rainbow Boulevard,LasV egas,N evada, Seesupra,Attachmenta1
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2l.
Thc AnnualListGled on January l3,2012 listed defendants Steven Stm yich, Chris
Sunyich,and non-defendantScottM anson asofticers. The sam e 5940 Rainbow Boulevard
addresswasagain listed forallofthe officers. See supra, AttachmentA.
22.
According to itsSEC filings,Idealw as located at906 N 1400 W estStreet, St.George,
Utah. Seesupra,AttachmentD .
23.
ln its filingsw ith the SEC,Idealnam estbe following companiesas its subsidiaries:Ascot
Crossing;Chandon Group;BracknellShore;DebtElim ination System s, LLC;U S DebtRelief,
LLC;MoneyM astery,LLC;USDebtAssistanceCoI.
p.;lW B Services(aSt.Kittscorporation);
FinancialFitness,LLC;Debtto W ea1th,LLC (aSt,Kittslimited liability company);Debtto
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W ealth,LLC (Nevada);IdealGoodness,LLC;andDollarsW est,LLC.Seesupra,Attachment
D.
24.
ln addition,D efendantshave established em ailaccounts forA vanix, BracknellShore,
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Chandon Group,D ebtto W ealth,FiscalFitness,Funding Guarantee,N ewportSails, Shaw
Shank,and M em bership Carethatautom atically fonvard to otherIdealem ailaccounts. Thus,
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any em ailsentto those accountsw ould be sentto and accessed by employeesofldeal..4 true
and correctcor-vofGoDadd.v'
sEmailforwarding IistisappendedheretoasAttachmentE.
25.
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ln itsSEC tilings,ldealstates thatitsellsto consum ersi4a suite ofonline, subscription-
based software solutionsfordebtelim ination,cash m anagem ent,billpaym entand w ealth
creation.''SeeAttachmentD. Idealalsostatcsonitswebsite(idealjài.com)thatitsellsfinancial
m anagem enteducation and toolsto consum er. Icapm red idcalfsiacom on June 28, 2012 using
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Adobe'sw eb capture function. ldealregistered thisw ebsiteon Decem ber22, 2001. Tm c and
accuratecopiesofpertinentpagesofideal
fsi.com anddomainnameregistrationinformationare
appended hereto asA ttachm entF.
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26. Atidealjki.com,ldealidentitiesIlxenderAssistanceasoneofitsbrands.A consumer
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declarationand otherconsum ercomplaintsstate thattheirbank accountsw eredebited for
IlaendcrAssistance(oravariation,suchasILenderAssist)withoutauthorization.SeeExhibit4,
DeclarationofchristaAllen;seealso,Section F.
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27.
A ccording to inform ation produced in responseto a C1D by lncontact,a
telecommunicationsm ovider,ldealobtainedtelepiloneserdcefor(S8B)881-1070,zltrueand
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correctcopyoflhcontact'
sMarch21,2012emailtoFTC staffcontaining ascreenshotofthe
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subscriberinformationfor888-881-1070isappendedheretoasAttachmentG.Thisnumbcris
thecontactnumberprovidedonDefendants'membershipcarenet.com.Seeinfra,paragraphs81
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through85.Itisalsothecontactnumberprovided on Defendants'website
Ibuildw ealthclub,com . Icaptured the website Ibuildwealthclub.com on Septem ber20,2011. .?1
trueandcorrectcopyofthewebsitecaptureisappendedheretoasAttachmentH.PaulCurrie
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and Chandon registered the dom ain nam e m em bershipcare.neton Februaly 4,2009,and the
domainnameibuildwealthclub.com onAugust25,2009.Seeinfra,AttachmentK.
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28.
A ccording to a fonnerem ployee ofldeal,Defendantsused ldealto hire em ployeesfora
telephonecallccnterusedfortheirbillingcampaigns.SeeExhibit23,DeclarationbyJqffrey
RussellStevens.
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29.
Accordingtoan October2010 SEC tiling,Idealalso acquiresconsumerinformation for
its campaignsfrom XM Brands and otherfirm sthatprovide consum erinfonnation. These firm s
areoften called leadproviders.Accordingtoldeal,ççgdjuringthefirstquarterof2010,over82%
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ofournew clientrevenuewastheresultofcustom ersreferred tousby XM Brands.'' See supra,
AttachmentD . X M Brands isa lead providersued by Florida and North Dakota fortm authorizcd
billing.Trueandcorrectcopiesofthecomplaintjiledagainatxu byNorthDakota,andthe
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pressreleaseby theStateofFloridaregaraingitssuitagainstvkr
u areappendedheretoas
Attachm ent1.
30.
ldealprovided theaddress5940 S.Rainbow Blvd. LasVegas,Nevadain itsstate
businessfilings. O n D ecem ber20,2012,Ivisited davincivirtual.çwm . According to the
website,inadditiontoprovidingvirtualofficeservices,DavinciVirtualOftices(6tDaVinci',)isa
CommercialM ailReceivingAgency(6tCMllA'')orddmaildrop.''Davincioffersavarietyof
businessservices,indudingmailreceiptand mailfonvarding. llooked up D av inci'slistof
addressesin Nevada. Thewebsiteidentitiedthe5940 S Rainbow Blvd.addressasam aildrop
.
owncdbyDavinciVirtualOftkes..?ltrueandcorrectcfwy'ofthewebsitecaptureof
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davincivirtual.com komepage,andNevada address Iistings isappended hereto asAttachm entJ.
BracknellShore
31.
D efendantsform ed BracknellShore,Ltd.,a subsidiary ofIdeal, in N evada on M ay 8,
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2008. On M arch 4,2009,the AnnualListshow ed M ike Sunyich asthe solem anagerin the
InitialListofM anagers,w ith an addressat 1812 W estSunsetBoulevard, Suite l-323,Las
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Vegas,N evada. M ike Sunyich hasrem ained asthe sole m anagerthrough Septem ber23, 20tl.
Bracknell'sregistered agentis listed as Spiegel& Utrera, P.A.located atl785 EastSahara
Avenue,Suite490,LasVegas,Nevada.Seesupra,AttachmentA.
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32.
According to aform eremployeeofIdeal,BracknellpaysthewagesofIdeal'semployces.
b'
eeExhibit23.Declarationt
kf-fcy/-cy RussellStevens.
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AnilwestigatorfortheUtahDivisionofConsumerProtectiontçsutahilwestigators'')
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interviewed M ichaelStm yich and KentBrown on June 7, 2012. During thatinterview ,M icbael
Stmyieh and Brown statedtbatBracknellconducted customersen iceforAvanix, one oftlle
Defendants'frontcompanies. SeeExhibit2,DeclarationofGlenMinson.
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34.
Bracknellalso registered tiDebtto W ealth''and iicasb Savers''as tictitiousnam esin
Clark County,Nevada. See supra, Attachm entB.
Aceording to docum entsobtained by the Utah investigators, Bracknellisphysically
located in an office building at908 N .1400 W . St.George,Utah.SeeExhibit2,Declarati
onof
Glen M nson.
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36.
Chandon Group
Chandon G roup,lnc.,a subsidiary ofldeal, wasincorporated in Nevada on January 6,
2009.TheInitialListofM anagerslisted an individualnamedPaulCunieasthesoleofficer. On
O ctober 21,2011,Shawn Sunyich waslistcd as the sole ofticerofthe company, w ith an addrcss
at1238 W est300 North,St.G eorge,Utah. The com pany's addresson the initiallistwasanother
Dav incim aildrop at8670 W estCheyenne Avenue, LasVegas,N evada, O n February 8,2012,a
subsequenttiling listed the sole ofticerasnon-defendantKristiStm yich. Seesupra,Attachment
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37.
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According to docum entsfrom GoD addy.com ,Chandon registered m any ofthe dom ain
nam esused in the schem e and purchased em ailauto-forwarding and otherinternetservices. .4
trueandcorrectcopy ofdomainnamespurchasedby Chandonkom GoDaddyisappended
hereto tu A ttachmentK .
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38.
SuatirstBank produced docum ents ia response to a CID thatshow thatChandon
processed consum erdebitstbrough Elitc D ebitand SunFirstBank. lwilldiscussthese debitsin
moredetailin the section ofthisdeclaration titled Chargeback.sandReturnRates. Sec invtba,
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Section IP:
39.
Chandon registered fictitiousnames,includingttDebt2W ealtb,''tïinsta-caslz,''lçshort-
term -funding,''Sçlend quick,''tûeasy casllnetw orko''4:17a'
yday loan security,''tûilendernehvork,''
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ttilendernetwork 10l,''Sçilenderassistance,''i<extra cash network,'' and vtPaym entsecurity''w ith
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Cl
ark County,N evada. See supra,AttachmentB.
iv.
40.
AscotCrossing
D efendantsform ed A scotCrossing,LLC,a subsidiary ofIdeal,on M ay 8,2008. O n
*
M arch 4,2009,the InitialListofM anagers wastiled,nam ing Sunyich Gardnerasthe sole
m anager,with an addressat2925 EastRiggsRoad,Suite 8-207,Chandler,A rizona. Spiegel&
*
Utrerawaslistedastheregistered agent.ThelastAnnualListobtinedby theFTC,filed onJuly
25,20ll,listed non-defendantBrian Jensen asthe solem anager. The corporateaddresslisted is
the Davincim aildrop at5940 Rainbow Boulevard,Suite 3010,LasV egas,N evada. See supra,
@
Attachment,,1.
41. AccordingtodocumentssubmittedbyLandmark Clearing,Inc.(stlwandmark''),in
response to a CID,AscotCrossing processed consum erdebitsthrough Landm ark and Fifth Third
@
Bank. Idiscussthese debitsin m oredeu ilin the section ofthis declaration titled ChargebacB
andReturnRates.Seeinfra,SectionJI''L
*
42.
Bank docum entsproduced by U S Bank to the FTC in response to a C1D show thatin
September2011,AscotCrossing madehundredsofsmallpaymentsofarotmd $0.03and $0.04
each. Itappearsthatthese paym entsw ere refundsto hundredsofconsum erdebitsm ade for
@
Defendants'Funding Assurance,PaymentAssistance,andPaymentProtcction campaigns.I
discussthesecampaignsintheDefendants'Billing CampaignsandDefendants'Chargebach
andReturnRatessectionsbelow.Seeinfra,SectionsIII andlv.TherecordsproducedbyUS
*
Bank arevoluminous, and asa result,Ihave notattached them to thisdeclaration. n ey w illbe
kepton lileatthe FTC and w illbe m ade available forexam ination,copying,orb0th ata
reasonable tim e and placc.
*
FTC 1
Page 15 of698
*
PX1 at 12
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43.
*
These bank recordsalso show thatA scothasused proceeds from Defendants'cam paigns
to pay hundredsofthousandsofdollarsto lntegrity Lead Group
,
LLC,a Grm thatprovides
consum erinform ation,also know n in m arketing asa lead provider. Forexam ple,in D ecem ber
2011,VoltagePay,apaymentproccssor,madesix depositstotaling $518,878 intoaChandon
@
1
Group account.W ithin days,Defendantstransferred a1lbut$500 into otheraccountsheld by
!
1
I
ChandonGroup and oneheld AscotCrossing, which paid lntegrityLead Group $141,000from
+
thataccountthatsam e m onth. lcaptured thewebpagesforIntegrity Lead Group,LLC,and
VoltagePayonJatmary2,2013.TrueandcorrectcopiesoftheIntegrit
yLeadGroup and
Voltage Pay websites,aswellas the Decem ber2011 bank statem ents showingpaym ents to these
@
entities,are appended hereto asAttachm entL.
44.
A scotregistered fictitious nam es,including ç:extra cash netw orksy''$:866-291-7782 frce
up cash,''::866-285-3741createw ealth,''::866-237-2006 Build w ealth,'':f866-235-144l debt
@
frce,'':1866-233-7344 debtzwealth'''çbtargetdebt5.''ttpaym entassurancc,''and ttpayday loan
assurances''w ith Clark County,N evada. See supra,AttachmentB.
@
45.
According to Ideal'sSEC filings,A scotCrossing leased oftice space at902 N . 1400 W .
Street,St.George,Utah,w hich isnextdoorto,and in the sam ebuilding as, ldeal'saddressat
906 N .1400 W .Streetand in the sam e sm alloftice building asBracknellShore'sphysical
*
addressof908 N .l400 W .Street. See supra,AttachmentD .
n
46.
*
FiscalFitness
FiscalFitness,LLC ,w asorganized on June 23, 2010 in N evada by non-defendantillsie
Sanchez.Non-defendantBenjaminLarsentttLarsen''lwasthesolenamedmember.Hereported
hisaddressasthe Davincim aildrop at8670 W estCheyenne Avenue,LasV egas,Nevada. See
*
FTC 1
Page 16 of698
*
PX1 at 13
i
*
Case
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113
47
supra,Attachm entA . Larsen w aschieffinancialofticcrofIdealfrom Novem ber2009 to A ugust
*
20ll. Seesupra,Attachm entD .
47.
O n N ovem ber23,2010,Larsen'snam e was rem oved asa m emberofFiscalFitness, and
the sole listed m em berbecam e non-defendantBrian Godfrey,w ith an addressat5544 N ine M ile
@
Road,M aryville,Tennessee. ln a subsequentfiling on July 28,2011,the registered agent's
addresswaslisted as 1489 W estW ann SpringsRoad //1l0,LasVegas,N evada. See supra,
*
Attachment,1.
48. FifthThirdBankandNACHA-IeElectronicPaymentsAssociation(SCNACHA'')
produced docum ents in response to a ClD showing thatFiscalFitnessprocessed consum erdebits
@
through PaymentDataSystemsand Fifth Third Bank. IdiscussFiscalFitness'sactivitiesin
greaterdetailinDefendants'BillingCampaignsandDefendants'Chargebaclœ andAc/z/rz/Rates
sectionsbelow.Seeinfra,SectionsII1andSection1V.
@
49.
FiscalFim essregistered fictitiousnam es,including ttFiscalFitness CD s,''ttEasy Cash
N etworking,''fdpayday Loan Alliance,''ç'Funding A ssurance ''and çipaymentAlliance,''with
*
Clark Cotmty,N evada. See supra,AttachmentB.
:
;
PL
50.
,
@
ayjvsaj;r
Avanix,LLC,wasform ed in N evadaon February 8,2012,with K adin Hannig asthe sole
listed oflicer.On Febrtlm'
y l3,2012,thefirstAnnualListreplacedHannig with Kaysha
Sarldberg,at4:220North200East,UsAgsicq.''Avanix,LLC,waslistedastheregisteredagent,
at219 Redlield Parkway,# 204,Reno,N V 89509,anotherDav incim aildrop. A few days
*
before on February 8,2012,H annig leased tlle m ailclrop and instructed D avincitbata1lm ailbe
,
fonvarded to 929 W .SunsetBlvd,#2l-143,St.G eorge,U T 84770. Seesupra,Attachm entA.
*
FTC 1
Page 17 of698
@
PX1 at 14
I
l
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*
51.
*
According to the U tah investigators,this929 W . SunsetBlvd //21-143 addressisa
m ailbox provided by Neighborhood PostalCenters,
l
ï
alsoaCMRA ormaildrop.Documents
l
!
produced to the Utah investigatorsby the CM RA on A ugust11 2011 show thatM ichaelSunyich
,
@
!
lcased thism ailbox from Neighborhood PostalCenterforBracknellShore, LLC. M ichael
!
I
I
SunyichlistedToniLemond, K entBrown and Steve Sunyich asauthorizedtoreceivem ailfrom
thismaildrop,SeeExkibit2,DeclarationofGlenMinson.
*
52.
Avanix registered fictitiousnam csused in the schem e, including,'<A.vanix Lending,''
eipay A vanixj''(tROlA vanix>''fïlwoan Avanix'''içM oney M em berHU B N''and ESAV Lendfast,''
w ith Clark County,N evada. See supra, Attachm entB.
@
53.
IdiscussAvanix'sactivitiesingreaterdetailinDefendants'BillingCampaignssedion
below.Seeinfra,Section111.
B. The IndividualD efendants
*
L
54.
*
55
.
Steven Sunyich
Steven Sunyich isthe chiefexecutive officerofldeal. See supra,Attachm entD .
,
74
The recordsfrom U .S.Bank indicatc thatSteve Sunyich isa signatory to atleast-M of
D efendants'accountsatU .S.Barzq including accountsheld by ldeal, A scotCrossing,and
Chandon Group as wellasIdeal'ssubsidiariesand affiliates, including D ebtto W ea1th,LLC,
@
IdealGoodncss,LLC,Shaw Shank,LLC,IW Bclub.com,US DebtRelietllnc.,and W ea1th
Fitness,LLC.Trueandcorrectcopiesofthesignaturecardsfrom Ll5'
.Bankareappended
hereto tzaAttachm entM .
*
56
l
;
In 2007 theU tah Division ofSecuritiesissued a cease and desistorder againstSteve
,
Sunyich and hisdaughter,DefendantM elissa Sunyich Gardner, finding thatthey had defrauded
an investorby making m isrepresentations ofm aterialfactand om itting to state m aterialfacts in
@
FTC 1
Page 18 of698
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PX1 at 15
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47
*
connectionwiththeofferandsaleofasecurity.W /m eandcorrectcopyoftheCeaseandDesist
*
O rder isappended hereto as Attachm entN .
iL
57.
M ichaelSunyich
Ideal'swebsite,idealfsi.com ,IistsM ichaelSunyich asthe Vice PresidentforCustom er
@
Retention atIdeal. Seesupra,Attachm entF. M ichaelSunyich is also listed an ofticer of
BracknellShore. See supra,Attachment-z
1.
*
58.
According to aformeremployee,M ichaelSunyich managesDefendants'callcenter
located in St.G eorge,Utalz,overseeing em ployeesand training them . See Exhibit23,
DeclarationoflefjbeyRussellStevens.
@
59
.
He isalso a signatory to atleastone accountatU S Bank held by A scotCrossing.See
supra,Attachmenlg X ,
UL
*
60.
christophersunyich
ChristopherSunyich islisted as Ideal'sPresidenton the Idealfsi.com website. See supra,
AttachmentF. He is listed asIdeal's Secretary on theN evada State flings. See supra,
@
Attachment,4,
61.
1 j'
ln addition,he is signatory to atleast
ofDefcndmlts'accountsatUS Bank,including
accotmts held by ldeal,A scotCrossing,and Chandon Group as wellasldeal'ssubsidiaries and
*
affiliates,including Debtto W ealth,LLC,IdealGoodness,LLC,Shaw Shank,LLC,
IW Bclub,com ,US D ebtRelicf,Inc.,and W ea1th Fitness,LLC. See supra,AttachmentM
62.
*
A S partoftheirinvestigation into D efendants,Utah investigatorsobtained an em ailfrom
FocusCommunications, LLC (6Tocus''),a51-1
,
11thatoperatescallcentersforDefendantsinUtah,
lowa,E1Salvador,and thePhilippines. D efendants had contracted w ith Focusto conductcall
centertasks.Seeinfra,paragraph109.Emailsobtainedfrom Focusshow thatChrisStmyich
*
F'TC 1
Page 19 of698
*
PX1 at 16
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47
*
directed the activitiesofthe Foouscallcenterson behalfofD efendants. Seeirfra,.
dttachment
*
KK
.
E
*
iv.
63.
KentB rown
Ideal's SEC filings listK entBrow n asthe ChiefOperating O fticerofldeal. Seesupra
Attackm entD . Defendants listed Brow n asan ttauthorized contact''forA scotCrossing in
A scot'sapplication to Landm ark forpaym entprocessing sea ices. Seeinfra,AttachmentDD.
@
Finally,when aUtah investigatorinterviewedBrown,Brown intoduced himselfasthecontroller
forBracknellShore.SeeExhibit2,Declaration c!fGlenn M inson.
64.
@
Brown is also signatory to atleast30 ofD efendants'accountsatU S Bank, including
accountsheldby Ideal, A scotCrossing,arld Chandon Group aswellasldeal's subsidiariesand
affiliates,including D ebtto W ea1th,LLC,Ftmding Guarantee, LLC,ldealG oodness,LLC,Shaw
Shank,LLC,lW Bclub,com,US DebtReliefllnc.,and W ealth Fitness,LLC See supra,
.
*
Attachm entM
v.
*
65.
M elissa Sunyich Gardner
M elissaSunyichGardneristheownerofAscotCrossingand Defendants'aftiliate
Funding Guarantee,LLC. See supra, Attachmentad.
66,
*
She provided a custom crtestim onialon Ideal'swebsite, Ibuildwealth.corn. Seesupra
AttachmentH.
67.
ln 2007,the U tah Division ofSecurities fotm d thatshe and hcrfatherhad defrauded an
investorby m aking m isrepresentations ofm aterialfactand om itting to state m aterialfactsin
*
colm ection with the offerand sale ofa security. Seesupra,AttachmentSL
*
FTC 1
*
Page 20 of698
PX1 at 17
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47
*
vL
*
68.
Shawn Sunyich
Shawn Sunyich stated thathe was the DirectorofBusinessD evelopm entforIdealon a
w ebsite entitled linkedin. On January 2,20l3, Icaptured Shawn Sunyich'slinkedin [email protected]
*
trueandcorrectcopyofthecaptureqfSkawn5'l/zy)J/c/7's linkedinpage isappended hereto fzç
.
.
A ttachm ent0 . Shawn Sunyich w asalso listed asthe President, Secretary,Treasurer,and
Director ofChandon G roup from January 20l1to January 2012 in DefedantsN evada State
*
lilings. Seesupra,AttachmentA.
C. D efendants'Affiliates
I
I
i
:
69.
In addition to thesix (6)corporateDefcndantsandIdeal'sother10 subsidiaries,
[email protected]
Defendmlts, theiremployees,or,in one case,a spouse ofan em ployee created atleast8 other
com panies aswell,including N ewportSails, LLC,Fluidity,LLC,Shaw Shank,LLC , Bunker
H illsidepLLC,Funding Guarantee,LLCSN ew line Cash, LLC,W ealth Fim ess,LLC,and Zeal
*
Funding,LLC. See in-h.
a 70to80.
70.
*
N ew portSails,LLC,wasfonned on M ay 7, 2010. On tbe form ation docum ent,tlle sole
m anageris listed asPaulCurrie at7327 Ristoro Street, LasVegas,N evada. The InitialListof
M anagers,filed on N ovem ber23, 2010,listsan individualnam ed Sharon M grtin asthe sole
m anagerand Spiegel& Utrera asthe registered agent. An am endm entto the Articlesof
*
Organization,filed on June 3,201l,replaced PaulCttrrie w ith Sunyich GardnerasM anaging
Member. Trueandcorrcc/copiesofNewportSails,LLC,jilingswiththeStateofNevadaare
appended hereto asAtttwhm entP .
@
71.
Sharon M artin w asan Eçadm inistrative assistanf'employed by A scotCrossing. Seeinfra
AttachmentDD .
*
FTC 1
Page 21 of698
*
PX1 at 18
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72.
I
!
I*
!
N ew portSailsprocessed consum erdebitsthrougb tw o separatc paym entprocessors. l
di
scussN ewportSailsin m ore detailin the scction ofthis declaration titled Chargebackçand
Return Rates. See in-fba,Section fpL
73.
*
Fluidity,LLC,was form ed on July 28,2011 and expired on October29, 2012. Steven
Sunyich and M ichaelSunyichweremanagers.M ichaelSunyich isalso theregistered agentat
953 N .1950 W .Street,St.G eorge,UT 84770. On Decem ber27, 2012,Ivisited the Utah
*
Secretary ofState website,captured the Iisting forFluidity, LLC,anddownloaded acopy oftheir
ArticlesofOrganization.Fm candcorrectcopiesoftheUtahStateIistingandArticlest?f
OrganizationforFluidity,LLC areappendedheretoasAttachmentQ.
@
74.
Shaw Shank,LLC,was form ed on M ay 7,2012. Non-defendantBenjaminLarsenwas
nam ed tlle only m anaging m emberuntillle w asreplaced by non-defendantRob D ablon
November23,2010.Tmcandcorrectcopiesofshaw Shank,LLc'
shlingswiththeStateof
*
Nevada are appended hereto asA ttachm entR . Dahlisa shareholderofldealand wasan officer
untilatleastFebruary 20l1. See supra, Attachm entD ;see also supra, Attachtnent-4.
*
75,
Shaw Shank processed consum erdebitsthrough a paym cntprocessors. 1discussShaw
Shank in m ore detailin the section ofthisdeclaration titled Chargebacksand Return Rates. See
infra,Section1V.
*
76.
BunkerHillsidc,LLC,wasfonned June23,2010and dissolved on June30,2011.Teri
Bunkeristhe only nam ed managing m em ber. On D ecem ber27,2012, Ivisited theN evada
Secretary ofStatew ebsite and captured the listing forBunkerHillside, LLC ..
?1 /m c and correct
*
copyoftheBunkerH illside, LLC,listing isappendedheretoasAuachmentS.Bunkerwaslisted
an Idealshareholderin Ideal'sN evada State filings, See supra,AttachmentA. The evidence
alsoshowsthatsheisanemployeeofIdeal.SeeinfraAttachmentDD.
*
FTC 1
Page 22 of698
*
PX1 at 19
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*
77.
*
D efendantsform ed Funding Guarantee,LLC on June 2, 20ll,nam ing Sunyich Gardner
as the only ofticerand Steven Sunyich asthe registered agent.
;
i
Truetwé.
/correctcopiesof
Funding Guarantee, LLC,hlingsobtainedh'
om theNevadaSecretar.vofstateareappended
hereto asAttqchm entT.
*
78.
D efendantsformed N ewline Cash,LLC,on N ovem ber l8, 2011. Steven Stmyich w as
listed asthe registered agent. Richard Gardner,an Idealshareholder, w asthe only listed
*
manager.SeeAttachmentA,Ideal'
sNevadaStatejllings.Thecompany'sbusinesslicense
expired on Novem ber30,2012, O n D ecem ber27, 2012,Ivisited the Nevada Secretary ofState
website and captured the listing forNewline Cash, LLC.4trueandcorrectcopyoftheNewline
@
Cash, f.f,c,Iisting is appended hereto asA ttachm entU.
79.
W ealth Fitness,LLC,form ed on January 4, 2010. N on-dcfendantKathryn Sunyich w as
listed as the sole m em bcr, Itappearsfrom m y research thatKathryn is Steven Sunyich'swife.
*
The com pany wasdissolved on October 5, 201l./1trueandcorrectcopyoftheWeaIthFitness,
LLC,jilingsobtainedfrom theNevadaSecretaty ofstateareappendedheretoasAttachmentF.
*
80.
ZealFunding Services,LLC,form ed on M arch 2, 2012.OnAugust29,lvisited theUtah
Secretary ofStatew ebsite and obtaincd corporate inform ation forZealFunding Services. On
Novem ber21,2012,Attom ey General's Oflice,State ofA rkansasshared docum entsw ith the
@
FTC thatshowedJaredMosherasGeneralManager.Trueandcorrectcopiest?fZealFunding
Setwices,LLC,entrieson the Utah Secretar.vofstatewebsite,acitationi
ssuedby UtahDivision
ofconsumerProtection,anddocumentsobtainedk om theStateofArkansas,areappendedas
*
AttachmentIF. M osherisalso an employce atIdeal. Sec Exhibit23
, De
clarationofleyrey
RussellStevens. H e is a signatory on atleasttwo A scotCrossing bank accotm ts. See supra,
AttachmentM .
*
FTC 1
Page 23 of698
@
PX1 at 20
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*
81.
*
In addition to the companiesand l'
egistered tictitiousnam es discussed above, D efendam s
developed an tmregistered DBA oalled M emb:rsllip Care orM em bersbipcare.net.
!
Josh RodgersofttM em bership Care''and ççM em bershipcare,nd''responded to consum ers
com plaining to the BBB thatthe following com paniesorD BASm ade unauthorized debitsfrom
@
their accounts'
.Funding A ssurance, Avanix Lending,Paym entProtection,and Paym ent
Assistance. Rodgerstypically respondcd tothesecomplaintsby asserting thatçigrlecordsshow
*
that(theconsumer),orsomeonerepresentingthemselvestobehim,contactedAvanixLending
(orFundingAssurance,PaymentProtection,etc.)andprovidedthebillinginformationand
authorization necessal'y forhisaccountto be charged.'' lhavenotattached these com plaintsto
@
thisdeclaration,butthey m'
e on file atthe FTC and can be m ade available forexam ination,
copying orboth ata reasonable tim e and place.
83.
@
On Febnmry 4,2009,Currie,on behalfofChandon G oup, registered thedom ain nam e
m em bershipcareanet. On February 23,2009,Stevt Sunyieh, on behalfofldeal,purchased tbe
Dom ain by Proxy anonym ous registration service form em bersbipeare.net. True and correct
*
copiesofmembershl
pcare.netdomainnameregistrationandononymousregistrationservice
purchase are appended hereto asA ttachmentX
84.
*
On Septem ber20,2011, Icaptured thew ebsite atthe addressm em bershipcare.net,a one-
page site thatstated,tûYourclub serdcesare m anaged by m em bershipcare,net.
M em bershipcare.nethasa relationship with service providersto ensure thatquality servicesare
provided to consum ersv'' The site doesnotdetailw hatclub servicesorw hich service providers
*
they referto.n etelephonenumberlisted on thewebsite is888-88l-1070. A true and correct
copyofthemembershi
pcare.netwc;captureisappendedheretoasAttackmentl'.
*
FTC 1
*
Page 24 of698
PX1 at 21
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*
85.
O n M arch 21,2012,theFTC received docum entation on thetelephone num ber888-881-
*
1070 f
i
show thatthecustomerforthisnumberisldeal,and thatthcprima!y customercontactisSteve
*
rom Incontact,the telecom m unicationscom pany thatleases thisnumber, Its records
Sunyich,located at l58 W 1600 S,Suite l00, St.George,UT.Seesupra,AttachmentG
D.
86.
@
AdditionalA ddresses.Billint D escriptorssW ebsites,and Telephone
Num bersUsed Bv D efendantsin their Sclzem e
In the paragraphsbelow,Idiscusthe num erousdifferentaddresses, billing descriptors,
websites,andtdephonenumbersthatDefendantsusedfortheirscheme.
i.
@
.
87.
A ddresses
ThechartatAttachmentZ below showsaddressesusedby theDefendants, in whatway it
wasused,and w hatIcould determ ine,through investigation, waslocatedatthataddress,M ost
oftheaddrcsses used by the Defendants are CM llA S, orm aildrops. A CM RA isaprivately-
@
owned businessthatisIicensedby theU.S.PostalServieetoacceptand fom ard mailonbehalf
ofindividualsorbusinesses. Thisallow sDefendantsto provide paym entprocessors, banks,state
agencies,web dom ain registrars,and otherthird partiesw ith an addressw ithoutm aintaining a
#
Physicallocation. 1created AttachmentZ from inform ation thatIcollected by reviewing the
records attached to thisdeclaration,websitesthatlcaptured, and otherrecordsproduced by
banksand telecom m unication companiesto the FTC in response to a CID. Ihave notatlached
*
alloftheserecordsto thisdeclaration. They are on tile atthe FTC,and can be m ade available
forexam ination,copying orboth ata reasonabletim e and placc.
*
ii.
88.
Billing Descriptors
W hen a m erchantbillsa consum erthrough tlze ACH system , orthrough theuse ofRCCS,
the nam e thatappearson the consum er'sbank statem entin association w ith the charge, orthe
*
namethatappearsontheSipay totheOrderof'lineon theRCC, isknown asthe billing
FTC 1
*
Page 25 of698
PX1 at 22
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*
descriptor, Defendantshave used over50 differentbilling descriptors. Attachm entze contains
*
a listofthe billing descriptorsused by the D efendantsthatIcollected by review ing the records
attached tothisdeclaration aswellasconsumercomplaintsand recordsproducedby NACHA to
@
theFTC in responseto aCID.lhavenotattached a11ofthcserecordstothisdeclaration. They
are on Gle atthe FTC,and can bem ade available forexam ination,copying orboth ata
reasonable tim e and place.
*
iii.
89.
W ebsites
Defendantshaveregistered274 websitedomainnamesthrough PaulCurrieand Chandon
G roup. SeeAttachmentK . Form any ofthese websites,D efendantspurchased GoDaddy's
@
Privacy registration sel-vices, D om ainsby Proxy. W ithouta proxy service,the registration
information(includingthercgistrantnameandcontactinformation)forawebsiteisreadily
available on the internet. The FTC obtained D efendants'dom ain nam e and privacy registration
*
inform ation through C1D sto GoDaddy.com ,LLC and itsprivacy registration company Dom ains
By Proxy,LLC. Attachm entBB containsdocum entsobtained from D omainsBy Proxy,
*
showingDefcndants'purchasesofprivacy registration formany ofthosedom ain names
ptlrchased in Attachm entK .
i
I
1
iv.
Telephone N um bers
(
*
90,
Defendantsopened accountswith multipletelecommunicationslirmstoacquirephone
num bers, By review ing the docum entsattached to thisdeclaration aswellasothercaptured
w ebsites,consum ercom plaints,and docum entsproduccd to the FTC by banks and
*
telecom m unicationscom pmzies,lhave created a listofover49 phone num bers connected to
D efendantsaspartoftheirschem e. Ihave notattached allofthese recordsto thisdeclaration.
They are on lile atthe FTC,and can bem ade available forexam ination, copying orboth ata
*
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reasonable tim e and place.Attachm entCC contains a listofphonenum bersconnccted to
*
Defendants.
111.
91.
D EFEN DAN TS'BILLING CAM PA IG N S
A sdetailed in theparagraphsbelow,Defendantsusetheirfrontcom paniesto establish
*
m erchantaccountsto subm itconsum eraccountinform ation to paym entprocessorsand take
m oney from consum erbank accountsand chargc consum ercreditcards. By using front
*
companies,Defendantsmakeitmoredifticultforconsumersand law enforcementto discover
thcirinvolvem entin billing cam paigns. In this section,lprovide exam plesofthesebilling
cam paignsbelow,including theD ebt2 W ealtlz,Funding A ssurance,and A vanix campaigns.
@
Eighteen consum ershaveprovided theFTC with declarationsrelated to D efendants'billing
cam paigns.
A. TheD ebt2 W eaIth Cam oaien
*
92.
According to docum entsproduced by Landm ark to the FTC in response to to a CID ,
AscotCrossing contracted withLandmark in2010 toprocessACH debitsandRCCS(listcdas
@
Check21services),tmderthefictitiousnameDebt2W ealth.U.S.Banksen'edastheprocessing
bank.In A scotCrossing'sapplication foram erchantaccountwith Landm ark,Sunyich Gardner
I
I
--
,,
--lu
1
instnlcted Landmark towrite Dcbt2W ea1th onthe
E*
July 7,2010 em ailto Landmark from athird-party brokerregarding AscotCrossing's
!
y totheorderot--lineofaccs,In a
application,thebrokerlabelsA scotCrossing asm arketing partner,IdealFslasfultillm ent,
M embershipCareascustomerservice,andDebt2W ea1thasDBA. Trueandcorrectcopiesof
*
Ascot'
sagreementand applicationwith Landmark,
andluandmark'
sJu% 7,2010emailare
appended hereto asAttachm entb D .
*
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*
93.
*
Stm yich Gardnersigned allthe docum entsforthe application asthe ownerofA scot.
S
unyich Gardnerand Brown signed asauthorized contactsforthismerchantaccount. Seesupra,
Attachm entDD .
94.
*
O n M arch 2,2009,Currie,on behalfofChandon G roup, rcgistered the dom ain nam es
debttowealthclub.com and debtzw ealthclub.com . On A pril24, 2010,Cunie,again on behalfof
Chandon Group,registered thedom ain nam e debttow ealthllc.com . See supra,AttachmentK . On
@
thesam edatesastheirrespectiveregistrations,CuniepurchasedDomainsbyProxy privacy
registration foreach dom ain nam e. Seesupra,AttachmcntBB. D efendantslisted the dom ain
nam e contactsfordebtzwealthclub.com and debttowealthclub.com as Steven Sunyich and Ideal
@
Financial. Defendants listed tlle dom ain nam e contactsfordebttow ealthllc com asSteven
.
Stmyich and AscotCrossing. These contactsw ould notbe readily available to the public
because ofthe Dom ainsby Proxy privacy service.
Trueandcorrectcopiesofthedomain
*
informationfordebttowealthclub.com,debtzwealthclub.com,anddebttowealtllc.com are
appended hereto asAttachm entEE .
@
95.
On January 24a20l2,lcaptured debttowealthllc.com .Thiswebsite containsthe
representation thateiouraverageclientisableto putanextra$200to $800 back in theirpocket
every m onthl'' Tlzew ebsite,however, doesnotofferadvice directly, The website contains no
*
telephonecontactinformation,[email protected],4trueand
correctcopyofthedebttowealthllc.com wcd?capturej.
&appendedheretoasAttachmentFF.
96.
*
According to docum entsprovided to the FTC by SunFirstBank in response to a CID ,
Chandon Group also processed debitsunderthe billing descriptor
,
D ebt2 W ealth. A scot
Crossing and Chandon Group subm itted thousandsofconsum eraccountsto Landm ark Clearing
*
I
[email protected]
I
FTC 1
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and Elite Debitforpaym entforDebt2 W ea1th purchases, ldiscussthisin m ore detailbelow in
*
the section efthisdeclaration titled ChargebacH and Return Rates. See supra,s'
cc/jtpa 1V.
97.
@
1have found no evidence thatD efendants'purported D ebt2 W ealth custom ersreceived
any productor services in cxchange forthe charges,w ith one exception. A form erem ployee of
ldealstatesthatwhile working forIdealhe answ cred 50-60 callsa day from consum ers
com plaining ofunauthorized charges,butonly tive callersreceived a product, in thiscase som e
.
linancialcounselingthatwaspartoftheççDebt2 W ealth program .'' He explained thateven these
t'ive callershad called initially aboutan unauthorizcd debitand only agrced to the counseling
aqerhe offered itto them . See Exhibit23, Declarationofleffrey RussellStevens.
@
B TheFundineAssuranceCam paien
98.
In 2011,FiscalFitnesscontracted with Paym entData Systcm stoprocessACH debits and
RCCS,tmderthe fictitiousnam eFunding A ssurance. Fifth ThirdBank wastheprocessing bank.
*
99,
Currie,on behalfofChandon,registered fundingassurance,com on April27,20ll, See
supra,AttachmentK.
*
100. D efendants subm itted approxim ately 126,183FundingAssurancesdebitstoPayment
Data System s,lnc.forpaym ent. Idiscussthis in m ore detailbelow in the section ofthis
declarationtitledChargebackaandReturnRates.Seeinka.Section.
JFL
@
l01. TheFTC'SConsumerSentineldatabasecontains224 consumercomplaintsagainst
Funding Asstlrance.M ostofthesecomplaintsallegetlzatFunding Assurancewithdrew $30 from
the consum er's bank accolm twithoutauthorization. lhave notattached these com plaintsto this
#
declaration. Thecomplaintsare on file atthe FTC
,
and can be m ade available forexam ination,
copying orboth ata reasonable tim e and place.
*
FTC 1
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102. The FTC obtained 194 consum ercom plaintsfrom the BBB ofSouthern N evada against
@
F
,
unding A ssurance. The BBB scontactforFunding A ssurance wasJosh Rodgerss ataD av inci
m aildrop at1489 W estW arm SpringsRoad,#1l0,LasV egas, N evada. The telephone num ber
*
w as 855-779-1942. Rodgers'signature line listed M em bership Care. Attachm ent GG isa
sample consum ercom plaintto the BBB and businessresponse showing how Defendants
representedthemselves..?1/m eandcorrectcopy ofthesampleBBBfunding assurance
*
complaintisappended hereto asA ttachm entG G . lhavenotattachedtheotherBBB complaints
to this declaration. Thecom plaintsare on file atthe FTC , and can be m ade available for
cxam ination,copying orboth ata reasonable tim e mzd place.
@
l03,
FTC staffreceived docum entspursuantto a CID from Paym entD ata System s, an ACH
third-partysender,whoprocessedfundingassurance(andotherproducts)paymentsfor
D efendants. Thisdocum entdescribesthefunding assuranceproductas, ttaw ebsite thathelps
*
consum erslocate an appropriatepay day lenderto offerthem a loan. The m erchanthasa one-
timefeeof$30fortheloanapplication.'' .?1trueandcorrectcopyofthePaymentDataSystems
*
docum ents are appended hereto asAttachm entH H .
l04. lhave found no evidence thatthe consumers charged forD efendants'Ftm ding A ssttrance
received any producterservices in exchange forthe fee.
@
C. TheAvanix Lendine Cam paien
105. The Utah D ivision ofConsum erProtection conducted an invcstigation into Avanix arld
obt ined num erous docum entsdetailing thiscampaign. FTC staffobtained these docum ents
#
from G len M inson,an investigatorforthe U tah D ivision ofConsum erProtection
.
106. OnFebruary 14,2012,justfourdaysafterAvmlix,LLC wasfoundedbyKadinHannig
Lseeinfra,Attachmenta4),SteveSunyichregisteredthedomainnamePayAvanircom.On
*
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February 15,2012,Steve Sunyich registered 1he dom ain nam eAvanixllccom . On M arch 1,
@
2012 Steve Sunyich registcred the dom ain nam esA vanixlending.com
,
,
Loanavanir com ,and
RoiAvanircom . Fora11five ofthese websites,Defendantslisted PaulCurrie and Chandon asthe
registrant,technical,adm inistrative and billing contact. Defendantslisted thc contactaddress as
*
a D avincim aildrop at8670 W estCheyenne Avenue, LasVegas,N evada m aildrop, Either
Steve Stmyich orPaulCuniepurchased the D om ains by Proxy privacy service forthesc
*
w ebsites. n e GoD addy and D omainsby Proxy docum ents suggesteither Sunyich orCunie.
TrueandcorrectcopiesoftheAvanixdomainnameregistrations,andDomainsbyPrivacy
servicepurchases are appended hereto asAttachm entI1.
#
107.
Docum entsproduced to the FTC by NA CH A show thatfourofthe fictitiousnam es
registered by Avanix,including A vanix Lending,Loan A vanix,Pay Avanix, and ROIA vanix,
m atch billing descriptorsused forACH transactionsprocessed tllrough Bay Cities Bank. These
*
'
docum entsare in the fonn ofspreadshectsand whose production was notprompted specitically
forthisinvestigation. The spreadsheetsarcon tile atthe FTC, and can be m adeavailable for
;
@
exam ination,copying orboth atareasonable tim e and place
.
l08. NoneoftheAvanixwebsites(Avanixllc.com,Avanixlending.com,PayAvanircom,
:
RoiAvanircom and Loanzjvanircomjarecurrentlyoperational.However,onApril17,2012,an
@
investigatorfrom theUtah DivisionofConsumerProtection captureda copy of
A
vanixlwending.com. Thewebsiteofferspayday orcash advanceloans. Anothercapture ofthe
I
i
:
:
ftlllapplicationpagewascompletedonJune28,2012.Thce'contactus''pagegivesanemail
@
address,
i
i
[email protected],tileaddressRedfieldParkway#204,Reno,Nevada89509,
i
and the telephonenum ber855-771-7075. The address, though lacking a streetnum ber,appears
:
!
tobetheDavincimaildrop thatHannig leased A trueandcorrectcopy ofthe
i
:
.
*
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i
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Avanixlending.com webcapturesobtainedkom theUtah investigationareappendedheretotwç
Attachm entJJ.
109. FocusServices,LLC (4Tocus'')providedcustomerserviceforconsumercallsaboutthe
A vanix cam paign. Em ails obtained from Focusthrough the Utah investigation show Chris
Sunyich([email protected])andnon-defendantMikeBetts(email
[email protected] [email protected] ideal/nancial.
us)ooordinatingthe
AvanixcampaignwithFocusemployees.Trueandcorrectcopiesofemailsreceivedfrom the
Utah investigationareappendedheretoasxzlfzccllzaca/-#r /x m
1l0. Focusm aintainscallcentersin Utah,Iow a, Illinois,lndia,ElSalvador,and the
Philippincs. On D ecem ber28,2012,1visited Focus'w ebsite and captured thepage show ing
theircallcenterlocationsusing Adobe'sw eb capture function. -4fm candcorrectcopy ofmy
captureofthefocusIocationpageisappendedheretoasAuachmentLL.
A July 6,2012 emailbetween Focusem ployeesreceived througllthe Utab investigation
discussing Avanix callsreceived by Focus'sPhilippine callcentershow sthe telephone num bers
@
associated with each billing descriptor:Pay Avanix,855-231-2622.
,Loan Avanix, 855-899-7123,
.
ROlAvanix,855-287-2005;Avanix Lending,855-771-7075. ..4trueandcorrectcopyoft
heJuly
6,2012 emailis appended hereto asA ttachm entM M .
@
Focus'regionaldirectorofoperationinE1Salvador,BenjaminM arkland,statedinan
emailGtlhavereceivedlittletoknowtsic)communicationsduringmyAvanixdays,butIdidhave
somefrom ldeal(Samethingjustdifferentnamel,''adtrueandcorrectcopy oftheemailfrom
@
Focusregionaldirectorisappended hereto asAttachmentNN.
@
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1l3. Focusalso producednumerousïtskype''chatsam ong M ikeBetts3BriannaLarsen(the
DirectorforClientRelationsforFocus)andCassieFlammer(DirectorofIntemationalQuality
andTrainingforFocus).
114. In one tfskype''chatbetween M ike Bettsand Cassie Flam m eron January l7,2012,Betls
tellsFlammerthattûwearebilling 13000micro transactions.$0.05 sophoneshould startringing
thisaftem oon to tomorrow. $30transactionswillstal'
t4 daysfrom today.''Flam merresponds,
CKOK w e havereps rcady and w aiting,oncc we startseeing som e volum e we'llstartthetraining
foradditionalreps.Thanksforthe headsup.''Bettsresponds,'çyou should expectto st'
m getting
about1000 callsa day ramping up to about4000 by Friday orM onday.'' Flamm er,ttperfect.'' ,
4
trueandcorrectcopyoftheJanuary17,2012xkyrcchatisappendedheretoasvd
l///c/zalezz .k k'
j
l15, Focus docum ents show thatBracknellwasresponsible forpaying Focus fortheir
services../
1Jm candcorrectcopy t?faFocusinvoicetoBracknellisappendedheretoas
A ttachm entPP.
ll6. On Augustl5,2012,lplaced and recorded an undercovertelephone callto 855-7717075,a conuctnum berfound provided atavanixlending.com. Pretending to be a custom er
calling to com plain aboutan unauthorized debitby Avanix,Ispoke w ith an individualw ho
identified herselfasM arcie. She stated thatAvanix obtained m y inform ation because som eone
applied fora loan online w ith m y bank accountinform ation. She described A vanix ass<tinancial
tools and resourcesdesigned to putup to l0 percentofyourgrossm onthly incom e back in your
pocket.'' She then referred m e to the escalationsdepartm ent.
ll7. Atthe escalationsdepartm ent,lspoke w ith an individualnam ed Barry. H e inform ed m e
thathe w orked forA vanix. W hen lasked whatothercom paniesm ightbebehind Avanix,hc
denied thatthere w ere any. Contrary to M arcie'sdescription,Barry described Avanix asa
FTC 1
Page 33 of698
PX1 at 30
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1
I
*
payday loan application senrice. H estated that, tçgtlhere'sabout20differentwebsitesthatweget
41.
1
applicationsfrom.W ehave75lendersthatwe-weworkwithtogetyouapproved.,,
118 Afterthecallended,Idownloaded therecordingto anFTC computerand sentittoa
1
1
I
l
.
@
transcri
ptionsenice.A/mcandcorrectcopyt?
fthetranscri
ptionofthe.
4?
zp/:/15,2012
1
.
undercovercallisappendedheretoasAttachmentQQ.
119. On July 31,2012,the FTC received from the BBB 89 consum ercomplaintsaboutAvanix
@
andthebusinessresponses.Defendantsresponded to a11BBB complaintsthrough Josh Rodgers
ofM embership Care and an Idealem ployee. On som e occasions, Rodgerssigned w ith the em ail
address,[email protected]BB as219
#
Redfield Parkway< Suite204, Reno,N evada. D efendantsdid notshare w ith eithertheconsum er
orthe BBB the tnle identity ofthe ownership ofAvanix. a4f
mcandcorrectcopy ofasample
Avanà consumercomplaintand business response is appended hereto asAttachm entRR.
*
120. TheFTC'SConsum er Sentineldatbase contains 125 consum ercomplaintsagainst
A vanix,Pay A vanix,Avanix Lending, and RO IA vanix. These consum erscomplained thatthese
*
companieshadwithdrawneither$14.95,$31,96,or$34.95 outoftheirbarlk accountwithout
authorization. Ihave notattached these com plaintsto this declaration. 80th the BBB and
Consum erSentinelcomplaints are on lile attheFTC , and can be m ade available for
@
exam ination,copyingorbothatareasonabletimeand place.
121. An insiderwho worked ata Focuscallcenteransw ering consum ercallsaboutA vanix
corroboratestbatnum erous consum ers com plained,recounting thatvirtually every consum erwas
#
Stlm
risedand angcred by theunexpected debit. See Exihibit24
,
DeclarationofLisaBierl
y.
122. Consum ers'com plaintsand the insider'sreportisfurthercorroborated by a telephonic
survey,performed by theFTC undermy supervision,ofcallsmadeto oneofthephonenumbers
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*
listed on consum erbank statem entsnextto an A vanix billing descriptor. In respellse to a request
*
f
rom theFTC,thetelecommunicationscompany lncontactprovided mewith recordsofthe
27,349 phone callsm ade betw een M arch 7,2012 and July 9,2012 to the phone numberfound
w ith Avanix'sbilling descriptor. FTC staffrem oved a11duplicate num bers and allrecords that
@
I
contained N evada,U tah,and toll-free area code numbers,leaving 9,457 uniquenum bers. A
I
!
random sam ple w asthen draw n using M icrosoftexcel.
@
!
;
123, Undermy supervision,an FTC paralegalconductedatelephonesurvey from therandom
sam ple. She called 318 telephone num bers,and reached 85 individualconsum ers. Ofthose 85
consum crs,62 agreed to participate in the survey. Ofthose 62, 43 consum ersrem em bered
#
placingatelephone callto theAvanix number Ofthose 43 consum ers,40 slted thatthey had
.
called aboutan unauthorized debt,onestated thathe had authorized the debt, and two callcrs
stated thatthey could notrem em berwhetherthey had authorized it.
*
124. Ken Kelly,an econom istin theFTC'S Bttreau ofEconom ics, interpreted the resultsofthe
survey and estim ated thatm orc than 97 % ofthe consum ersw ho called thatphone numbercalled
*
aboutunauthorizeddebits.SeeExhibit3,DeclarationofDr.KennethH Kell
y.
125. lhave found no evidence thatDefendants'pum orted A vanix custom ersreceived any
productorservices in exchange forthe debits.
@
D. OtherCam paizns
126. Defendantshaveperpetuated othercam paignsaswell,som e ofwhich are discussed
im m ediately below and others in the section ofthis declaration titled Chargebacka andReturn
*
Rates. See supra,Section IF.
127. For exam ple,consum ershavc reported to the FTC thattheirbank accountsw ere debited
w ithouttheirauthorization foraproductcalled llwenderAssistance. ln Section V ofthis
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declaration,Idiscussthe num berofcom plaintsfound in Consum erSentinelagainst
Il
- ender
Assistance. The idealfsi.com website,identifiesILenderAssistance asone ofldeal's
çèbrands.'' See supra,Attachm entF.
128.
@
Defendantsw ebsites suggestthatthey have rtm additionalcam paigns. Forexam ple,
Currie on behalfofChandon registered paym entassurancelol.com and paym entalliancelol.com
on Fcbrtlar,y 3,2011,paym entassistancelol.com on Fcbruary 9, 2011,and
@
fundingguarantee.com on April27,2011.Seesupra,AttachmentK Currie also purchased
.
D om ainsBy Proxy anonym ousregistration serviceforthese sites. See supra.Attachm entBB.
129. O n January 24,2012,lcaptured paym entassurancelol.com and paym entalliancclol.com
#
using Adobe'sweb capturefunction. Thesew ebsites arevirtually identicaland purportto offer
consumersaninsurancepolicyagainstdefaulton aloan- a$30prcmium would providea
consum er$79 in coverageifthey missed aloanpayment. Paymentassurancelolcom lists a
.
*
contactnum berforcancellationsof877-256-0463 in the term sand conditionspage.
Paym entalliancelol.com listsa contactnum bcrforcancellationsof866-237-3990 in the term s
*
andconditionspage.
130. On Septem ber20,2011,1captured the website, fundingguarantee.com ,using Adobe's
web capture function. Thiswebsitepurported to offerthe service ofassistance in finding a short-
*
term loan,aswellasgeneralfinancialadvice.
131. On Septem ber23,201l,lcaptured paym entassistancelol.com using A dobc'sw eb
capt-ure function. This website also offered a sim ilarfon'
n ofinsurance to
*
paym cntalliancelol.com aad paym enu ssttrancelol.com . ltprovidcd a contactnum berof866-
I
235-768l,and stated thatthe ow nerofthe w ebsite waslicensed by Ftm ding Guarantee, LLC .
Tmcandcorrectcopiesofthepaymentassurancelol.com,paymentalliancelol.com,
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*
fundingguarantce.com,andpaymentassistancelol.com webcapturesareappendedheretoas
@
A ttachm entSS.
15?.
DEFENDAN TK CH AR GEBA CK AN D RETUR N R ATES
A . The Pavm entProcessine Svstem s
@
l32, The inform ation thatIprovide in thissubsection dluw sfrom m y experience asan
investigator,m y training asa Certified Fraud Exam iner,and m y independentresearch into the
paym cntprocessing system s.
D cbitsto consum eraccounts are processed through the ACH N etwork. Thisnetwork is
adm inistered by N ACHA ,formally called the NationalA utom ated Clearinghouse Association.
The network providesforthe interbank clearing ofelectronicpaym ents forGnancialinstim tions.
Forconsum erssthe ACH N ehvork allowsfordebitsand creditsto theirbank accounts.
l34. TheFederalResen'e,andthcprivatelynm ElectronicPaymentsNetwork(t<EPN''),actas
centralclearing facilitiesthrough which financialinstitutionsprocessA CH entries. n ese
institutionsare known as ACH operators. Tbepm y thatinitiatestlw ACH entry isknow n asthe
originator and the party whose accountreceives theentry is known asthereceiver. ln m ost
consum ercases,the m erchantisthe originator,and the consum eristhe receiver. The bank
through which the originatorproccssesitsentries isthe OriginatorDepository Financial
lnstitution(4ûODF1'').Thcreceiver'sbankthatholdsthcconsumer'saccountisknownasthe
ReceiverDepositoryFinanciallnstitution(<ûRDF1'').
135. ln orderto access the A CH N etw ork,a m erchantm ustobtain a m erchantaccountw ith an
ODFI. Frequently,the m erchantdoesnothave a directrelationship w itb theOD FI, butw orks
through a third-party sender,also refcrred to asa paym entprocessor.
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136. ln orderto take m oney from a consum er's account, the m erchantsubm itsconsum er
@
accountinform ation to a paym entprocessor,which subm itsA CH entriesto the ODFI. Ifthere is
a problem with the entry,the entry m ay be ççreturned.''In thatcase, the dcbitorcreditisnot
*
m ade,orisreversed. W hen an A CH entry isreturned, itisgiven areturn code. A n R01 code is
forinsufficientfunds;R02,R03,and R04 relateto non-existentaccounts;R05, R07,and R 10
indicatethatthereceiverconteststheauthorization oftheentry
.
.
137. A high numberofreturnsmay indicatefraud.Asaresult,NACHA andtheACH
operatorsm onitorreturns. How ever,they can only identify m erchantsby theirbilling descriptor
and associated ODFIand do notusually have a directrelationship w ith the merchant. Thus,ifa
#
Particularbillingdescriptorhasaconsistently high retum rate, N ACHA can orderthatthe ODFI
suspend the originatororthird-pa:ty sender.See NA CHA Operating RulesAppendix 10, subpart
10.4.7.6.
@
138. NA CH A provided the FTC w ith statisticsdetailing the average return rates forthe entire
A CH network form erchantsfor20l1and the second quarterof20l2. In 20ll,the average total
@
remrnrate(foranyreason)foramerchantwhooriginatedACH debitentrieswasl.52%.The
averagerate of unauthorized returnsw as 0.0384, In the second quartcrof2012, tbe average total
refurn ratew as l.44% ,and 0.03% forunauthorized retum s. ..4trueandcorrectcopyoftheACH
@?
averagereturn rateschartsisappended heretoasAttachmentTT.
139. Regulatory institutions,banks,and creditcard networksmonitorthe paym entnetworks
forsignsofunlaw fulbilling and penalizepaym entprocessorsand m erchants thatdraw large
#
num
bersofconsum ercom plaintsorsigniticantrates ofretum ed debits
,
checks,and creditcard
charges. These penaltiesm ay include the term ination ofthe m erchantaccount. To avoid
tennination,m erchants,in an attem ptto m aintain theschem e foraslong aspossible, m ay refund
*
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*
som e consum erswho filecom plaintswith law enforcem entagencies,the BBB,orcom plain
*
di
rectly to Defendants.
140. As stated above,Defendantsalso accessed consum eraccountsthrough theuse ofthe
check system and rem otely created checks,orRCCS. RCCSare processed through the clearing
@
system likcpaperchecks. Inlegitimatetransactions,merchantsuseRCCSwhen theconsumeris
notpresentand notable to physically sign a check. n e m erchantobtainsthe consumer's bank
@
accountand routing num bers. The m erchantoran agentforthe m erchantcreatesthc draft. In
place ofthe signam re ofthe account-holder,the RCC generally bearsa statem entthatthe
custom erauthorized the w ithdrawal.
#
l4l. Thc check system hasno centralgovem ing body like NA CHA . The m erchantcreates
and subm itsthe RCC to itsdepository bank like an actualcheck. The m erchant'sbank then
sendsthe RCC to thc consum er'sbank forpaym ent. H owever,asthe Defendantsdid, m erchants
@
w illfrequently use a paym entprocessorto processRCCS. The Defendants scnd thebilling
inform ation to tllepaym entprocessor,wllo in turn createsa papercopy ofa check oran
*
electronic file containing an im age ofthe check. TheRCCSareprocessedthrough merchant
accountsheld by the paym entprocessor.
142. Atothertim es,Defendantsused the creditcard system to processconsum erpaym ents. ln
@
thissystem,the creditcard associations,etg.Visa,M astercard,actasthcgovcrningbodies,as
w ellas theclearing-houses forM nsactions. ln thecreditcard system , banksarc known as
acquiringbanks(themerchants'banks)andissuingbanks(theconsumers'banks).Thesebanks
*
are m em bersofthe creditcard associations. n em erchant'sbank,oracquiring bank, processes
tlw m ercbant'spaym ents. The consum er'sbank, orissuing bank,sendspaym entto the acquiring
*
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*
PX1 at 36
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I
I
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*
bank and billsthe consum er.A s in the ACH system ,m erchants willfrequently work through
*
thirdparties,knownasIndependentSalesOrganizations(<<ISO,,).
143. Returns in the creditcard system arereferred to aschargebacks,and occurfora variety of
reasons including invalid accountinform ation and a reversalofthe charge because ofa consum er
@
com plaint. 80th Visa alld M astercard havem onitoring program sform erchantswhose
chargeback ratesaretoo high.lfthe m erchantdoes notbring the chargeback rate dow n, the
.
paymentprocessororprocessing bankmay tenninateitsm erchantaccount. VisaandM astercard
have slightly differentform ulas. However, underboth formulas,a 1% rate ofchargebacksto
transactionsw illbring a m erchantunderm onitoring.
@
144
n eFTC obtained evidenceofthevolum eand return infonnation for some of
D efendants'cam paignsand m crchantaccountsfrom NA CH A, paym entprocessors,and banks in
response to CID. Ireview ed these docttm entsand presentevidence ofD efendants'cam paigns
@
below,organized according to the particularpaym entprocessororISO thatthe Defendantsused
foreach cam paign.
+
145. Each ofthese exam plesbelow isonly onew indow on thepaym entprocessing side of
D efendants'schem e and thusdoes notprovidethe w holepicture. These docum ents were
oblined through otherinvcstigations conducted by the FTC. Given the close relationship
@
between merchantsandpaymentprocessors,wedccidedthatitwould compromisethe exparte
nattlre ofthe investigation to send CIDsto Defendants'paym entprocessors. Therefore,these
exam plesrepresentallofthe evidence the FTC hasofDefendant'schargeback and retul.
n rates.
@
*
I
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*
A . Pavm entsProcessed throueh Litle& Co
*
146
.
The FTC received docum entsrelated to D efendants from the paym entprocessorLitle &
Co,LLC ($ûLitle'').DefendantsprocessedconsumercreditcardchargesthroughLitlein2009
and 2010.
*
147. According to anagreementbehveen ldealand Litle signedby ChrisSunyich onM ay 6,
2.009,Litlc added D ebtElim ination System s, LLC (an Idealsubsidiary)to ldeal'smcrchant
.
accotmt.Trueandaccuratecopiesoftheprocessingapplication,r/:'/cmanagementreport,and
applicationamendmentofMay6,2009areappendedheretoasAttachmentUU.Underthe
nam elBuildW ealth,D ebtElim ination System sconducted 251,389 transactionsthrough Litle in
#
2009witb atotaldollaramountof$7,53û,525.90.Thisaddsup toan averageof$29.95 per
transaction. IBuildW ealth'schargeback rate in 2009 was5.948% .
148. On Decem ber l5,2009,D ebtElim ination System sbegan using thenam eIW BCIUb. ln
@
2010,lW Bclub corducted a totalof219,400 transactionsthrough Litle w ith a total4ollar
amountof$8,161,732.90.Thisaverages$37.20pertransaction. n e chargeback rate for2010
@
was 12.312% . This inform ation is stored in a large spreadsheet. Thisspreadshcetwillbekept
on file attheFTC and w illbe m ade available forexam ination, copying,orboth,ata reasonable
I
E
@
tim e and place.
B. Paym entsProcessed throuah EliteDebitand SunfirstBank
149. The FTC also obtained docum ents from SunFirstBank show ing thatChandon Group
processed consum erpaym entsthrough SunFirstBank from M ay through July 2010, using the
P
descriptorD ebt2W ealtll.Cbandon did nothave adirectrelationship w ith SunFirst, butused a
paym entprocessorcalled Elite D ebit,lnc.
*
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*
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l50, The docum ents include daily tracking reportsfrom A prilthrough July 2010 forpaym ents
*
m ade through Elite Debitand SunFirst. The reports appcarto be created by SunFirstand sentby
em ailto Elite Debit. Each reportincludesthe nam e ofthe com pany, tictitiousbusinessnam e,
@
numberofitem s deposited and theirtotaldollaram ount, and numberofreturns. A sstated on the
report,the return item sdo notcorrespond to the sam e day'sdeposited item s, butany rettlrns
receivedthatday.ChandonandDebt2W ealth(listedasitslictitiousbusinessname)firstappear
*
on the M ay 28thdaily tracking report.
Iadded up the raw num bersprovided by SunFirst. The numberofitem s Chandon/D ebt2
W ealth processed through Elite Debitw as l8,654. n etotaldollaram ountprocessed was
*
$663>400 Theavcragetransactionwas$35.56.Thetotalnumberofitemsreturned duringthis
.
period w as l1,556.
152. SunFirstaddsa return rate colum n to the July 7th daily tracking reportand lists
*
Chandon'sretum rate as 63% . A note atthe top ofthe chartstates, t
Gltjhesereturnratesare
currentthrough July '/th''im plying thatthisrate is fora1ltransactions and notspecific to the date
@
ofthereport.TrueandcorrectcopiesofsunFirst'
sdailytrackingreportsjbom Mtzv28 to July
.
l2,2010 are appended àcrc/o asAttachm entF'F .
l53. Atsom e point,Suntirst's Board ofDirectors directed thatChandon/D ebt2 W ealth's
@
merchantaccountbeclosed.adtrueandcorrectcopy ofsunFirst'
saccountclosurelettertoElite
D ebitisappended hereto asA ttachm entH'
'1F.
C. Pavm entsProcessed throueh Landm ark and FirstBank ofD elaware
*
l54. In M arch 2011,tlw FTC obtained interrogatory answ ersand docum ents from the
paym eatprocessorLandm ark Clearing,lne.,including A scotCrossing'sapplication fora
*
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*
m erchantaccount.Thescinterrogatories and docum entsshow thatLandm ark wasapaym ent
*
processorforA scotCrossing from August15,2010 to M arch 4,2011.
155. Sunyich Gardnersigncd the application as the ow ner ofA scotCrossing,and Brown
signed asthe teCOO .'' A scotCrossing provided a m ailing addressof 1055 W Red Cliffs,#C-
@
525,W ashington,Utah,and a physicaladdressatthc 8670 W estCheyerm e Avenue,LasVegas,
N evada m aildrop. AscotCrossing told Landm ark thatitsold çteducationalsoftware- financial
*
solutionsto reduce debt,increase cash flow ,build w ealth.''
l56. Thenam e ofthe com pany waslisted as AscotCrossing, LLC DBA Debt2 W ealth. The
custom erservice departm entwas listed asM em bership Care. Seesupra,Attachm ent.4.4.
*
l57
.
A ccording to the docum ents,Landm ark processed A CH and RCC transactionsfor
Defendants
.
.
158. During the six and a halfm onth tim e period from August2010 to M arch 2011, Ascot
subm itted 13,156 transactionsto Landm ark,and ofthose, Landm ark subm itted 13,153 to First
Bank ofD elawareforprocessing. 7,l43 ofthose w ere rem nzed by the rcceiving bank. Thus,the
@
com pany's totalreturn rate during thatperiod w ith Landm ark w as54.31% . The dollaram ountof
thetransactionssubmittcd was$394,590.00,andthedollaramountoftheretum swas
$214,290.00.Theaveragetransactionwas$30.A trueandcorrectcopyoflmndmark'
sanswer
@
to theFTC 'sinterrogatoriesisappendedkeretoasAttachmentX Y.
D. Paym entsProcessed throueh Autom ated Electronic C heckina
159. Anotherpaymentprocessor,AutomatedElectronicChecking($tAEC'')providedtheFTC
*
W
ith documentsrel
atedtotheirclientNewportSails,LLC tçtNewpolf'l.Asstatedinparagraph
70 above,N ewportSails isa businessentity created by D efendants.
@
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*
l60. In N ewportSail'sapplication to A EC fora m erchantaccount,D efendantslisted Newport
#
Sail,sm ailing addressas 1055 Red Cliff#C-525,W ashington
,
Utah,mzd the streetaddressas
2300 W cstSahara Avenue,//800,LasV egas,N evada. An individualnam ed Sharon M artin, an
@
adm inistration assistantemployed by A scotCrossing,w aslisted asthe authorized rcpresentative
,
[email protected] membershipcare.net.Seesupra,Attachment-4.4.The
custom erscrvice telephonenum berw as listed as888-881-1070. A spreviously noted in
.
paragraph 27 above,thistelephonenumberisownedby SteveStmyichand ldealFinancial
Solutions. See supra,AttachmentG.
161. In the m erchantapplication,Defendantslisted New portSail'sD BA asCash Club
*
System . D efendantsdescribed tlze productto be sold as'çeducationalsoftware- tinancial
solutionsto reduce debt,increase cash llow and build w ealth.'' .,4t
rueandcorrectcopy of
Newport'smerchantapplicationtoAEC isappended kereto asA ttachm entFF.
@
162. A m ong the AEC docum entsare recordsofl,309 ACH debittransactionsthatA EC
conducted forNewportSailsfrom September27to Novemberl,2010. Ofthosetransactions,
@
794 w ere rem rned. The retttrn rateis60.66% forthese transactions. The docum entalso show s
thatthedebitamotmtforeverytransaction was$30,exceptforonedebitin theamountof
$83.90.Thisinformation isstored in alargespreadsheet.Thisspreadsheetwillbekeptonfileat
*
the FTC,and willbemadeavailableforexamination,copying,orboth,atareasonabletimeand
place.
E. Pavm ents Processed T hrouah Pavm entData Svstem sand Fiftb Third Bank
.
*
l63,
The FTC obtained docum ents from NA CHA and Fifth Third Bank showing that
D efendantshad processed consum erpaym entsthrough FiRh Third Bank. Defendantsdid not
*
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have a directrelationship w ith Fifth Third,butused the paym entprocessorPaym entDa1
*
S
ystem s.
164. The firstdocum entdetailing return rateinform ation relatesto N ewportSailsand liststhat
itoperatesunderthe tictitious nam esPaym cntProtection and EZ Protection Plan. The docum ent
@
listsSunyich G ardnerasthe principalofN ewportSails,and Brown asthe contact. Brown's
[email protected] idealfsi,com.Theaddressislistedas2300W est
*
Sahara#800,LasVegas,Nevada 89102.According tothedocument,ITM T Protection''isthe
descriptortm derwhich consum ersw ere billed. N ewportSailsm ade 206,454 debits from A ugust
1,20llto Septemberl,2011,totaling $3,028,064,Thepcrcentageoftransactionsthatwere
@
returned asunauthorizedwas2.9% . Seesupra,AttachmentH H .
165. The nextdocumentconcernsD efcndants'company Shaw Shank,LLC. A n individual
nam ed Rob Dahlislisted as theprincipalmld ToniLem ond islisted as the contact. Lem ond's
*
[email protected]'saddressisaDavincimail
drop at9190 D ouble Diam ond Parkw ay,Reno,N evada 89521. According to the docum ent,
*
C%PM T Assislnce''isthedescriptorunderwhich Shaw Shankdebited consumers. Shaw Shank
m ade 203,832 debits from A ugust 1,2011 to Septem ber 1,2011, totaling $2,948,127.The
percent ge oftransactionsthatw ere returned asunauthorized w as2.8% . See supra,Attachment
*
HH .
166. The nextdocum entconcem sFiscalFitness. Thisdocum entlists an individualnam ed
Brian Godfrey astheprincipaland contact,and lists Godfrey'sem ailaddressas
*
[email protected] idealfsicom . The company,s addrcssisa D av incim aildrop at 1489 W estW arm
.
SpringsRoad,Suite 110,H enderson,N evada,89521. A ccording to thedocum ent,tT unding
Assul-ance''isthe descriptortm derw hich consum ersw ere billed. FiscalFitnessm ade 126,183
@
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debitsbetweenAugustl,20lland Septcmber30,2011,totaling $1,618,037.26.Thepercentage
*
oftransactionsthatwere returned asunauthorized was2.71$. SeeSupra,AttachmentHH .
167. The nextdocum entconcernsN ewline Plus,LLC, Thisdocum entlistsan individual
nam ed ChrisPallante asthe principaland contact,and listsPallante'semailaddressas
*
[email protected] cebuglobaltel.com.Thecompany'saddressislistedas1111DesertLaneSuite
#2241,LasV egas,N V 89102. According to the docum ent,çr irectFunds''isthe descriptor
*
underwhichconsumerswerebilled.NewlinePlusmade79,100 debitsbehveen August1,2011
and September1,2011,tohling $1,808,465.Thepercentageoftransactionsthatwerereturned
asunauthorized w as3.97% . See Supra,AttachmentHH .
@
168
.
A 1lfotlrdocum ents describe the com panies'busincssin an identicalfashion:itfhe
m erchantoffersa w ebsite thathelps consum erslocatean appropriate pay day lenderto offer
them aIoan.Themerchanthasaone-timefeeof$30 forthcloan application.''Thedocuments
[email protected]
!
describingNewportSails,Shaw Shank,andNewlinePlusalso add anadditionalproduct,payday
i
loan paym entinstmance.
*
l69. A docum entsigned Novem ber23,2011and generated by Fifïh Third Bank forN ACH A
implied thattheNewportSails,Shaw Shank FiscalFitness,and NewlinePlusaccountshadbeen
terminated:K'InJuly2011PaymentsDataPaymentDataSystems)startedoriginatingonbehalf
@
oftheoriginatorsidentifiedbyNACHA gDefendants'companiesjwhichresultedinthem
exceeding the 1% unauthorized return ratethreshold allowed by NA CHA . W e have isolated this
to 5 originatorsand they are no longeroriginating ACH entriesthrough Paym ents Data.''True
*
andcorrectcopiesofNvlCHA 'sIettertoF4
#/?ThirdBankandBankresponseareappended
hereto asAttachm entzz.
@
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*
V.
*
l70.
C O NSU M ER CO M PLAIN TS
On Novem ber28 and 30,2012,1conducted a search forconsum ercomplaintson the
FTC 'S Consum erSentineldatabase. lsetthe date param etersfrom Novem ber2009 to
1
!
I
1
*
'
;
N ovem ber2012. Isearched separately forsomeofthebusinessnamesandbilling descriptors
thatm y investigation revealed Defendantshad used in theirscheme,assetforth below . Finally,
lreview ed allcom plaintsresponsive to m y searchesand discarded complaintsthatw ere not
*
abouttheDefendants.ldidnotsearch forçiDebt2 W ealth''orur ebttoW ealth,''becausethese
tennsare com m only used by com paniesotherthan Defcndants'.
171. M y search forA scotCrossing resulted in lconsum crcom plaint,subm itted to the FTC on
@
M arch 2,2010.
172. M y search fora1lconsum ercom plaintsm ade againstA vanix,including Avanix Lending,
Loan Avanix,Pay Avanix,and RO IA vanix,discovered 125 results.
*
l73. M y search forconsum crcom plaintsagainsttfchandon G roup''discovered 19 results.
l74. M y search forconsum ercom plaintstiled againsttEEZ Loan Protection''discovered 25
results.
*
175. M y search forconsum er com plaintsfiled againstG:EZ Protection Plmf'discovcred 3
results.
@
l76. M y search forconsumercomplaintstiled againsttiFunding Assurance''discovered 224
results.
177. M y search forconsum ercom plaintst'
iled againstttFunding Guarantee''discovered 13
*
ts.
resu l
178. M y search forconsum ercom plaintsliled againstftldealFinancialSolutions''discovered
15 results.
*
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*
!
179. M y search forconsum ercom plaints filed againstéûldealW ealth Builder''discovered 18
*
ts,
resu l
180. M y search forconsum ercomplaints filed againstIlender,including those filed against
IlenderN etworkt
lIlenderA ssistance,IlenderAssistant,Ilender.net>and Ilender.com ,discovered
*
35 rcsults.
l8l. M y search forconsum ercom plaints filed againstLoanAppFee discovered 2 rcsults.
*
l82. M y searchforconsumercomplaintstiledagainstçbM cmbcrship Carc''discovercd73
results,
183. M y search forconsum er com plaintsfiled against%spaym entA ssistance''discovered 59
@
results.
184. M y search forconsum ercom plaintsfiled againstiûpaym entProtection''discovered 210
results.
@
l85
.
M y search forconsum ercom plaintsfiled againsttr ebtto W ealth Club''and s<D ebt2
W calth Club''discovercd 20 results.
l86. In toul,lfound 842 consum ercom plaintsin the Consum erScntineldatabasethathad
*
been tiled againstD efendants. G iven the large num berofbilling descriptorsused by Defendants
in theircam paigns,itislikely thatthe database containsm ore complaintsthatthose thatIhave
@
identified here.Thecomplaintswillbckepton tile,and willbemade availableforexamination,
copying orboth ata reasonabletim c and place.
VI.
@
187.
ANA LY SIS
D efendantsare engaged in the unauthorized debiting and billing ofconsum erbank and
creditcard accounts. lbase this opinion on m y review ofthc evidence setforth in this
declaration;m y experienceinvestigating m erchants who have engaged in deceptive marketing,
*
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*
and particularly m erchantsw ho have engaged in unauthorized billing ofconsum crs'accounts'
,
*
and m y training as a Certified Fraud Exam iner. ldiscuss som e ofthe evidencc bclow upon
which Ibased myopinion.
l88. First,thenum berofcom plaintsreceived by theFTC againstcntities ow ned orcontrolled
@
by Defendantsand theresultsofthetelephonicsurvcy indicatethatDefendantsareengaged in
unlawfulactivity. In m y exporience,842 com plaintsfound in one investigation isunusually
*
high.Though each casediffers,acasewith morethan 100 consum ercomplaintssuggeststhat
deceptive or unfairacts exist. M oreover,mostvictim sofconsum erfraud do notcomplain to the
FTC. Thus,itislikely thatthenum berofconsum ervictim s isgreaterthan the num berof
*
complaints.
189. Second,these com plaintsare very consistent. A side from the few com plaintsthatlack
enough detailto determ inc the issue the consum erisaddressing,almosta1lofthe complainants
*
and survey respondents expressthatthey w erebilled orm oney w asrem oved from theiraccount
w ithoutauthorization. The am ountofthe transaction isconsistentaswell. A lm osta1lofthe
*
consumersstatethatapproximately $30waswithdrawn from theiraccount.Theconsistencyof
the consumers'accountsbolsterstheircredibility. M oreover, insidersw orking forldealand
Focuscorroborate thatno consum ersauthorized the transactionsinitiated by D efcndaatsor
*
wanted theirproducts.
190. n ird,the D efendants'use oflargenum bers ofbilling descriptors suggestsan unfair
billing schem e,especially becausetheirproductofferings were very sim ilar. Forinstance,
*
thoughAv
anixhadfive(5)differentbillingdescriptors,theydidnotappeartoreflectdifferent
products. Unlike a legitimate com pany thathasan interestin building a reputation orbrand for
itsproductofferings,D efendants'actionsare consistentwith an enterprise thatw antsto disavow
*
FTC 1
Page 49 of698
*
PX1 at 46
Case
Case2:13-cv-00143-JAD-GWF
2:13-cv-00143-JAD-GWF Document
Document171-1
3-4 Filed
Filed
01/28/13
03/19/14Page
Page
5247
ofof
113
47
*
any connection w 1t11itsproductsand evade m onitoring and sanctions by tllepam entprocessing
!*
oversightbodies.
191. Fourth,the D efendants'use ofR CCS,when considered irllightofthe otherevidence,
@
indicatesthatDefendantswork to avoid m onitoring by paym entprocessing oversightbodies
.
M oreover,in m y experience,btlsinessesengaged in fraud cormnonly useR CCSto avoid
detection.
@
192. Fihh,Defendantsusemultiplebtksinessentities,maildrops,phonenumbers,em ail
addresses,and websites,common techniquesemployedby fraudstersto evadedetectionby1aw
enforcement.Unlawfulenterprisesusesuchfrontcompanies(andrelatedaddresses,email,
@
websites
,
andphonenumbers)toseparateeachdefendantfrom thewholeofthescheme,andto
giveeachpartplatlsibledeniabilityin theentemrise'sactivities.
193. SLX'A DefendM ts'hightotalreturnmtes,tmautllorizedretllrnrates,andchargebackrates
@
m'esigniticmltlyabovewhatisnormalforlegitimatebusitzess.n eseratesareconsistentw1t11an
entem rise thatsubm itscorsstuners'bank and creditcard inform ation forpam entw ithout
*
autholization.
194. Irlm y opinion,the evidence putforth hlthisdeclaration dem onstratesthatD efendantsare
engaged in the fraudulentdebiting alld charging ofconsum erbnnk accountsand creditcards
@
withoutconsum erauthorization.
Ideclareunderpenaltyofperjurythattheforegoingistrueandcorrect.
@
''- '
Date:2% /# a:/..
,
'
'
'
M ichaelB.G oldstei
@
FTC 1
Page 50 of698
*
PX1 at 47