Chance Edward Gordon d/b/a Gordon & Associates, Abraham Michael Pessar et al.

Documents in this case

• Complaint · July 2012 · 24 p.
• Order · Dec. 2012 · 31 p.
• Stipulation · Feb. 2013 · 26 p.
• Order · July 2013 · 14 p.
• Order · Dec. 2016 · 2 p.

Case summary

The Consumer Financial Protection Bureau announced actions to halt two alleged mortgage loan modification scams it believes ripped-off thousands of struggling homeowners across the country. In total, these operations took in more than $10 million by charging consumers for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages.

Complaint (July 2012)

PDF of this document (24 pages)

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KENT MARKUS, OH Bar #16005 ais ‘ Enforcement Director CLERK US. DISTRICT COURT.» LAURA SCHNEIDER, NY Bar #2715449

(Phone: 202-435-7311)

(Email: [email protected]) _ UL | CRYSTAL R. SUMNER, CA Bar #261435 Lc caruasanreemerch (Phone: 202-435-7549) CENTHAL DISTRICT OF GALIFORM

(Email: [email protected])

CARMEN L. CHRISTOPHER, CA Bar #231508 (Email: [email protected]) Consumer Financial Protection Bureau

1700 G Street NW

Washington, DC 20552

Fax: (202) 435-7722

KENT KAWAKAML, CA Bar #149803 — Local Counsel (Phone: 213-894-4858)

(Email: [email protected])

United States Attorney’s Office

Central District of California - Civil Division

300 North Los Angeles Street, Room 7516

Los Angeles, CA 90012

Fax: (213) 894-2380

Attorneys for Plaintiff Consumer Financial Protection Bureau

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

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and also d/b/a Gordon & Associates, The Law Offices of Chance E. Gordon, The Law Offices of C. Edward (FILED UNDER SEAL) Gordon, The C.E.G. Law Firm, National Legal Source, Resource Law Center, Resource Law Group, and Resource Legal Group;

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The Gordon Law Firm, P.C., a professional corporation;

Abraham Michael Pessar, an individual;

Division One Investment and Loan, Inc., a corporation, and also d/b/a Division One Business Solutions, D1 Companies, Division One, Division 1, Home Savers National, D1 Marketing Solutions, and Relief Council; and

Processing Division, L.L.C., a limited liability company, and also d/b/a Qualification Intake Department, Division One, The Relief Network, and Relief Network;

Defendants.

Plaintiff, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”), alleges:

1.

The Bureau brings this action under (1) Sections 1031(a), 1036(a), 1054, and 1055 of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a), 5564, and 5565; and (2) Section 626 of the Omnibus Appropriations Act, 2009, as amended by Section 1097 of the CFPA, 12 U.S.C. § 5538, and the Mortgage Assistance Relief Services Rule, 16 C.F.R. Part 322 (“MARS Rule”), recodified as Mortgage Assistance Relief Services, 12 C.F.R. Part 1015 (collectively, “Regulation O”). Defendants have violated the CFPA and Regulation O in connection with the marketing and sale of their mortgage assistance relief services. JURISDICTION AND VENUE 2.

This Court has subject-matter jurisdiction over this action because it is “brought under Federal consumer financial law,” 12 U.S.C. § 5565(a)(1), presents a

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federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345.

3.

Venue is proper in this District under 28 U.S.C. §§ 1391(b) and (c), and 12 U.S.C. §§ 2614 and 5564(f).

PLAINTIFF 4.

Plaintiff Bureau is an independent agency of the United States charged with regulating the offering and provision of consumer financial products or services under Federal consumer financial laws. 12 U.S.C. § 5491(a). The Bureau’s regulatory authority extends to the provision of financial advisory services to consumers, which constitute consumer financial products or services. 12 U.S.C. §§ 5481(5); 5481(15)(A)(viii). Financial advisory services include services to assist consumers with debt management or debt settlement, modifications to the terms of any extension of credit, or foreclosure avoidance. 12 U.S.C. § 5481(15)(A)(viii); see also id. § 5481(5). The Bureau is authorized to take appropriate enforcement action to address violations of Federal consumer financial law, including the CFPA and Regulation O. See 12 U.S.C. §§ 5511(c)(4); 5512(a); 5564(a).

5.

Section 1036(a) of the CFPA, 12 U.S.C. § 5536(a), prohibits unfair, deceptive, or abusive acts or practices, or other violations of Federal consumer financial law, by any covered person or service provider. Regulation O requires mortgage assistance relief providers to make certain disclosures, prohibits such providers from making certain representations, and prohibits such providers from collecting a fee until the consumer has executed a written agreement with their lender or servicer incorporating the offer of mortgage assistance relief services obtained by the mortgage assistance relief provider.

6.

The Bureau is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the CFPA and Regulation O, and to secure such relief as may be appropriate in each case, including rescission or reformation of contracts,

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the refund of moneys paid, restitution, and disgorgement or compensation for unjust enrichment. 12 U.S.C. §§ 5531, 5564(a) and (b), and 5565. DEFENDANTS 7.

Defendant Chance Edward Gordon (“Gordon”) is an individual who, acting alone or in concert with others, and through his interrelated companies described below, has engaged in the offering or providing of mortgage assistance relief services, as defined in Regulation O (16 C.F.R. § 322.2, recodified as 12 C.F.R. § 1015.2), including but not limited to loan modifications and foreclosure relief services. Defendant Gordon has also operated and continues to operate businesses that offer to provide or provide mortgage assistance relief services. His businesses include, but are not limited to, National Legal Source, Resource Law Center, Resource Law Group, Resource Legal Group, Gordon & Associates, The Law Offices of Chance E. Gordon, The Law Offices of C. Edward Gordon, and The C.E.G. Law Firm (collectively, “Gordon Entities”) and The Gordon Law Firm, P.C. At all times material to this complaint, acting alone or in concert with others, Defendant Gordon has directly participated in the acts and practices set forth in this complaint. At all times material to this complaint, Gordon transacts or has transacted business in the Central District of California.

8.

Defendant The Gordon Law Firm, P.C. (“Gordon Law Firm”) is a California professional corporation owned, directed, and/or controlled by Defendant Gordon with a last known physical business address at 5455 Wilshire Boulevard, Suite 2010, Los Angeles, California 90036. At all times material to this complaint, Gordon Law Firm transacts or has transacted business in the Central District of California. 9.

Defendant Abraham Michael Pessar (“Pessar”) is an individual who, acting alone or in concert with others, and through his company described below, has engaged in the offering or providing of mortgage assistance relief services, as defined in Regulation O (16 C.F.R. § 322.2, recodified as 12 C.F.R. § 1015.2), including but not limited to loan modification and foreclosure relief services. Defendant Pessar has also

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operated and continues to operate businesses that offer to provide or provide mortgage assistance relief services. His businesses include, but are not limited to, Division One Investment and Loan, Inc., and Processing Division, L.L.C. At all times material to this complaint, acting alone or in concert with others, Defendant Pessar has directly participated in the acts and practices set forth in this complaint. In connection with the matters alleged herein, Pessar transacts or has transacted business in the Central District of California.

10.

Defendant Division One Investment and Loan, Inc., d/b/a Division One Business Solutions, D1 Companies, Division One, Division 1, Home Savers National, and D1 Marketing Solutions, Relief Council (“Division One Investment”) is a California corporation owned, directed, and/or controlled by Defendant Pessar with a last known physical business address at 5455 Wilshire Boulevard, Suite 2005, Los Angeles, California 90036. At all times material to this complaint, Division One Investment transacts or has transacted business in the Central District of California. 11.

Defendant Processing Division, L.L.C., d/b/a Qualification Intake Department, Division One, The Relief Network, and Relief Network (“Processing Division”) is a California limited liability company owned, directed, and/or controlled by Defendant Pessar with a last known physical business address at 5455 Wilshire Boulevard, Suite 1814, Los Angeles, California 90036. At all times material to this complaint, Processing Division transacts or has transacted business in the Central District of California.

12.

At all times material to this complaint, Gordon Law Firm, Division One Investment, and Processing Division (collectively, “Corporate Defendants”) have operated as a common enterprise while engaging in the violations of Federal consumer financial law set forth below. The Corporate Defendants have conducted the business practices described below through an interrelated network of companies that have common business functions, employees, and office locations. Moreover, the Corporate

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Defendants have also commingled funds and shared marketing materials. Because the Corporate Defendants have operated as a common enterprise, each of them is jointly and severally liable for the acts and practices alleged below. Defendants Gordon (who also operates through the Gordon Entities) and Pessar are the sole owners of the Corporate Defendants that comprise the common enterprise.

SUMMARY OF COMPLAINT 13.

Since at least early 2010, Gordon (including the Gordon Entities), Gordon Law Firm, Pessar, Division One Investment and Processing Division (collectively “Defendants”) have engaged in an ongoing, unlawful mortgage relief scheme that preys on financially distressed homeowners nationwide by falsely promising a loan modification in exchange for an advance fee. Defendants attract distressed homeowners via websites, mailers, and phone calls, deceptively promising substantial relief from unaffordable mortgages and foreclosures. Defendants promise a substantial reduction in the homeowners’ mortgage payments in exchange for an advance fee ranging from $2,500 to $4,500. Rather than helping homeowners modify their mortgage loans or avoid foreclosure, Defendants dupe distressed homeowners into paying thousands of dollars based on false promises and misrepresentations. Indeed, Defendants provide little, if any, meaningful assistance to modify homeowners’ mortgage loans or prevent foreclosure. 14.

As part of the scheme, Defendants gain consumers’ confidence by misrepresenting affiliation with government entities in direct mail solicitations sent to consumers. For example, one solicitation Defendants sent states at the top of the solicitation in large, capitalized font “NOTICE OF HUD RIGHTS.” Defendants also make or have made representations on the telephone in the initial sales pitch to consumers that Defendants are the government, are affiliated with the government, or that they are “sponsored” by a government grant.

15.

During the initial calls and interactions with homeowners, Defendants promise homeowners substantial reductions in homeowners’ mortgage payments and

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interest rates in exchange for an upfront fee. To entice homeowners into this arrangement, Defendants represent to consumers that the firm has successfully obtained a large number of modifications in the past and are one of the best firms at obtaining loan modifications.

16.

Defendants typically require consumers to sign paperwork indicating that the consumer’s upfront payment is for Defendants’ “Pre-Litigation Monetary Claims Program” (“Pre-Litigation Program”). Defendants’ Pre-Litigation Program purportedly provides the homeowner with a detailed legal analysis of illegal conduct engaged in by their particular lender, often called a “forensic audit.” At the same time, Defendants purport to provide loan modification services for free under the guise of pro bono legal services. Defendants, however, tell consumers that failure to make a payment will result in an inability to process the consumer’s paperwork and to submit the documents, including the loan modification documents that are purportedly prepared pro bono, to the lender. Defendants’ bifurcated business model involving a fee-based “forensic audit” and pro bono “legal services” is specifically designed to avoid the mandates of laws such as MARS and Regulation O that prohibit advance fees and deception by mortgage relief operations like those run by Defendants.

17.

In reality, Defendants do little or nothing to assist consumers. Rather, Defendants direct consumers to avoid interactions with their lender and to stop making their mortgage payments. While Defendants fail to take any meaningful action, many consumers enter foreclosure or lose their properties. 18.

In numerous instances, consumers who paid Defendants’ fee have suffered significant economic injury, including foreclosure and the loss of their properties. GOVERNMENT MORTGAGE ASSISTANCE 19.

Numerous mortgage lenders and servicers have offered certain borrowers the opportunity to modify loans that have become unaffordable. Many of these loan modification programs have expanded dramatically as lenders have increased

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participation in the federal government's "Making Home Affordable" program, a plan to stabilize the U.S. housing market and help millions of Americans reduce their monthly mortgage payments to more affordable levels. The Making Home Affordable program includes the Home Affordable Modification Program, to which the federal government has committed up to $75 billion to keep significant numbers of Americans in their homes by preventing avoidable foreclosures. While Defendants rely on references to the Making Home Affordable program to market their services, they are not connected with the program and are not affiliated or otherwise associated with, or endorsed, sponsored, or approved by, the United States government in any way. DEFENDANTS’ BUSINESS ACTIVITIES 20.

Since at least early 2010, Defendants, acting alone or in concert with others, have engaged in a course of conduct to offer or provide to homeowners mortgage assistance relief services, including mortgage loan modification, foreclosure relief services, and forensic audit services.

21.

To induce consumers to purchase their services, Defendants have disseminated or caused to be disseminated advertisements for mortgage assistance relief services. Defendants market their services using direct mail solicitations that solicit inbound calls from homeowners. Defendants also market their services via outbound telephone calls and Internet websites to consumers throughout the United States who are in financial distress, behind on their mortgage loans, or in danger of losing their homes to foreclosure.

Defendants’ Deceptive Direct Mail Solicitation 22.

As part of the scheme, Defendants send direct mail solicitations to financially distressed homeowners throughout the United States to convince consumers to call Defendants to inquire about Defendants’ purported loan modification services. 23.

In numerous instances, Defendants’ direct mail solicitations contain images and language representing an affiliation with government entities and a toll-free phone

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number to call for help. The solicitations tell consumers that previous attempts have been made to contact them and urge consumers to call the listed toll-free number before the deadline for the “Stimulus Program” occurs.

24.

For example, one direct mail solicitation Defendants sent to consumers states that it is a “Notice of HUD Rights” and refers to “Stimulus Programs HAM[P] or HARP” and 2% interest rates for which the consumer may qualify:

The Washington, D.C., address provided in this solicitation is actually a UPS Store mailbox. Defendants do not otherwise have a business presence in Washington, D.C. Indeed, this address appears to be designed solely to deceive consumers into believing that Defendants have an affiliation with Washington, D.C.-based government entities. 25.

The reverse side of the direct mail solicitation indicates that applicants have a high likelihood of “qualifying” for mortgage loan modification and foreclosure

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prevention services, stating: “It’s a fact: 84% OF ALL HOME MORTGAGES MAY QUALIFY even if you think your situation is hopeless.” 26.

In numerous instances, consumers call the toll-free number with the belief they are calling the Department of Housing and Urban Development (“HUD”) or a HUDaffiliated entity for loan assistance. Instead, consumers reach Defendants. 27.

Some of Defendants’ direct mail solicitations refer to the Making Home Affordable Program and include the consumer’s loan amount, a reference number, an indication that the consumer is “pre-qualified,” and an estimated reduction amount. 28.

For example, one direct mail solicitation Defendants sent to consumers states:

29.

Defendants’ direct mail solicitations fail to disclose in a clear and prominent manner that that (1) Defendants’ company is not associated with the government, nor approved by the government or consumer’s lender; (2) even if the consumer uses Defendants’ service the consumer’s lender may not agree to modify the loan; and (3) if Defendants tell a consumer to stop paying their mortgage, that the consumer could lose his or her home and damage his or her credit rating.

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Defendants’ Deceptive Sales Scheme 30.

Consumers who respond to Defendants’ marketing efforts have home mortgage loans, and typically are having difficulty making their monthly payments. 31.

Consumers who call the toll-free numbers listed on the postcards or who receive outbound telemarketing calls speak with Defendants’ telephone sales representatives.

32.

In numerous instances, Defendants promise to obtain loan modifications that will substantially lower consumers’ monthly mortgage payments or interest rates in exchange for an advance fee.

33.

In numerous instances, Defendants lead consumers to believe that Defendants are affiliated with a government entity or that a government entity referred Defendants to the consumer. In some cases, Defendants represent that they are the government or that they are “sponsored” by a government grant and are thus affiliated with a government agency.

34.

In numerous instances, Defendants tell consumers that Defendants have special expertise in modification with mortgage lenders and that they have proven prior success in obtaining loan modifications from the consumers’ specific lenders. 35.

In numerous instances, Defendants represent that Defendants will obtain a specific reduction in consumers’ mortgage interest rates or payment amounts. In many cases, Defendants promise a specific rate reduction to 2%. 36.

In numerous cases, Defendants claim they can prevent foreclosures or that the modification process will stay lenders’ ability to foreclose. Defendants make such representations even to those consumers who inform Defendants that their lenders have previously denied modifications or sent foreclosure notices. 37.

In numerous instances, Defendants discourage consumers from communicating directly with their lenders. Defendants tell consumers (including

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consumers who receive foreclosure notices) not to contact their lenders and claim Defendants will handle all communications with consumers’ lenders. 38.

In numerous instances, Defendants encourage consumers to stop making mortgage payments, and in some instances tell consumers that delinquency will demonstrate the consumers’ hardship to the consumers’ lenders. In those instances, Defendants do not disclose that if consumers stop making mortgage payments they could lose their home and damage their credit rating.

39.

In numerous instances, Defendants tell consumers that Defendants are a law firm or are affiliated with a law firm that specializes in obtaining loan modifications and that this specialized knowledge and expertise will ensure Defendants’ success in obtaining loan modifications for consumers.

40.

In numerous instances, typically in subsequent calls or emails, Defendants introduce their Pre-Litigation Program to consumers. Defendants claim their “Pre- Litigation Program” will provide homeowners with a detailed analysis of illegal conduct engaged in by their particular lender to be used as leverage to improve the outcome of negotiating a loan modification with the consumer’s lender. In numerous instances Defendants instruct consumers to sign a Pre-Litigation Agreement or a Fee Agreement that states consumers’ payment of an upfront fee is for Defendants’ forensic audit services.

41.

Defendants generally charge a fee ranging from $2,500 to $4,500. Defendants typically tell consumers that they must make the first payment, usually onethird of Defendants’ fee, before Defendants will begin to provide their services. Defendants’ Websites 42.

Defendants maintain or have maintained numerous websites including: reliefcouncil.org, thereliefnetwork.org, prelitlaw.com, resourcelawgroup.com, resourcelawcenter.com, resourcelegalgroup.com, and nationallegalsource.com. Defendants’ websites permit consumers to submit personal information online to request

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a call-back or submit an email address to subscribe to a newsletter. The websites indicate that the businesses are located at the same address as the Gordon Law Firm. 43.

In numerous instances, Defendants’ websites fail to disclose that the entity is not associated with the United States government and that their service is not approved by the government or the consumer’s lender.

44.

In numerous instances, Defendants’ websites fail to disclose that even if consumers use the modification service, their lender may not agree to change their loan. Defendants Do Not Obtain the Promised Modification and Cause Consumer Injury 45.

In numerous instances, Defendants fail to obtain a loan modification, substantially reduce consumers’ mortgage payments, or stop foreclosure. 46.

In numerous instances, after consumers pay Defendants’ requested advance fees, Defendants fail to conduct forensic audits. 47.

In numerous instances, after consumers have paid their fees, Defendants fail to answer or return consumers’ telephone calls and emails and fail to provide updates about the status of Defendants’ purported communications with lenders. When consumers are able to reach Defendants, Defendants generally assure consumers that Defendants are working with the consumers’ lenders and that the lenders will not foreclose on the consumers’ homes while processing their applications for a loan modification.

48.

Consumers often encounter difficulty in obtaining requested refunds from Defendants. In many instances, consumers only receive refunds after making complaints to or threatening to complain to entities such as the Better Business Bureau, the State Bar of California, or law enforcement authorities. In many instances, Defendants do not provide any refund or refund an amount substantially less than consumers paid. 49.

In numerous instances, consumers who paid Defendants’ fees suffer significant economic injury, including foreclosure and the loss of their properties.

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Role of Individual Defendant Gordon 50.

Defendant Gordon, acting individually or in concert with others, has engaged in the offering or providing of mortgage assistance relief services. Gordon is the sole owner of the Gordon Law Firm.

51.

Defendant Gordon also personally registered numerous fictitious business names used by Defendants to solicit consumers, including National Legal Source, Resource Law Center, Resource Law Group, Resource Legal Group, Gordon & Associates, The Law Offices of Chance E. Gordon, The Law Offices of C. Edward Gordon, and The C.E.G. Law Firm.

52.

Defendant Gordon registered and pays for website domains used by Defendants to market their services, many of which use his fictitious business names. Defendant Gordon also pays for telephone and facsimile numbers used to perpetrate the scheme, and pays Defendants’ telemarketer employees. He is the signatory on contracts and fee agreements executed with many consumers. Defendant Gordon is also the authorized signatory for the Gordon Law Firm bank accounts. 53.

Defendant Gordon is licensed to practice law in the state of California only. Role of Individual Defendant Pessar 54.

Defendant Pessar, acting individually or in concert with others, has engaged in the offering or providing of mortgage assistance relief services. Pessar is the sole owner for Defendants Division One Investment, and Processing Division. 55.

Defendant Pessar is the registrant and billing contact for website domains used by Defendants to market their services. He is the account holder and pays for the telephone numbers used by Defendants to conduct their telemarketing and pays Defendants’ telemarketer employees. He also pays for telephone and facsimile numbers used by the Gordon Law Firm. Additionally, Defendant Pessar, on behalf of his company Defendant Processing Division, registered the business name Qualification Intake Department – the named entity on Defendants’ postcards. Defendant Pessar is

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also the authorized signatory for the Defendants Division One Investment and Processing Division bank accounts.

VIOLATIONS OF THE CFPA 56.

Sections 1031 and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1)(B), prohibit covered persons from engaging “in any unfair, deceptive, or abusive act or practice.” Section 1036(a)(3) of the CFPA, 12 U.S.C. § 5536(a)(3), further prohibits any person from “knowingly or recklessly provid[ing] substantial assistance to a covered person or service provider in violation of the provisions of section 1031 . . . and notwithstanding any provision of [Title X], the provider of such substantial assistance shall be deemed to be in violation of that section to the same extent as the person to whom such assistance is provided.”

57.

Defendants are “covered person[s]” and “service provider[s]” within the meaning of the CFPA, 12 U.S.C. §§ 5481(6) and 5481(25). COUNT I 58.

In numerous instances, in connection with the offering or provision of mortgage assistance relief services, Defendants, either acting alone or in concert with others, represent, directly or indirectly, expressly or by implication, that consumers will or likely will obtain mortgage loan modifications that substantially reduce consumers’ mortgage payments or interest rates, or help consumers avoid foreclosure. 59.

In truth and in fact, Defendants generally do not obtain for consumers mortgage loan modifications that substantially reduce consumers’ mortgage payments or interest rates, and generally do not help consumers avoid foreclosure. 60.

Therefore, Defendants’ representations as set forth in Paragraph 58 are false and misleading and constitute a deceptive act or practice in violation of Sections 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536.

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COUNT II 61.

In numerous instances, in connection with the offering or provision of mortgage assistance relief services, Defendants, either acting alone or in concert with others, represent, directly or indirectly, expressly or by implication, that consumers will or likely will obtain mortgage loan modifications that substantially reduce consumers’ mortgage payments or interest rates as a result of a forensic audit provided by Defendants.

62.

In truth and in fact, Defendants generally do not obtain for consumers mortgage loan modifications that will make consumers' mortgage payments substantially more affordable as a result of a forensic audit provided by Defendants. 63.

Therefore, Defendants’ representations as set forth in Paragraph 61 are false and misleading and constitute a deceptive act or practice in violation of Sections 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536.

COUNT III 64.

In numerous instances, in connection with the offering or provision of mortgage assistance relief services, Defendants, either acting alone or in concert with others, represent, directly or indirectly, expressly or by implication, that Defendants are the United States government or are affiliated with, endorsed or approved by, or otherwise associated with the United States government. 65.

In truth and in fact, Defendants are not affiliated with, endorsed or approved by, or otherwise associated with the United States government. 66.

Therefore, Defendants’ representations as set forth in Paragraph 64 are false and misleading and constitute a deceptive act or practice in violation of Section 1036 of the CFPA, 12 U.S.C. § 5536.

REGULATION O 67.

In 2009, Congress directed the Federal Trade Commission (“FTC”) to prescribe rules prohibiting unfair or deceptive acts or practices with respect to mortgage

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loans. 2009 Omnibus Appropriations Act, Public Law 111-8, Section 626, 123 Stat. 524, 678 (Mar. 11, 2009), as clarified by the Credit Card Accountability Responsibility and Disclosure Act of 2009, Public Law 111-24, Section 511, 123 Stat. 1734, 1763-64 (May 22, 2009). Pursuant to that direction, the FTC promulgated the MARS Rule, 16 C.F.R. Part 322, all but one of the provisions of which became effective on December 29, 2010. The remaining provision, Section 322.5, became effective on January 31, 2011. The CFPA § 1097, 12 U.S.C. § 5538, transferred rulemaking authority over the MARS Rule to the Bureau, which recodified the Rule as 12 C.F.R. Part 1015, and designated it “Regulation O.” The Bureau has authority to enforce Regulation O pursuant to the CFPA § 1097 and § 1054, 12 U.S.C. §§ 5538, 5564.

68.

Regulation O defines “mortgage assistance relief service” as “any service, plan, or program, offered or provided to the consumer in exchange for consideration, that is represented, expressly or by implication, to assist or attempt to assist the consumer with . . . [n]egotiating, obtaining, or arranging a modification of any term of a dwelling loan, including a reduction in the amount of interest, principal balance, monthly payments, or fees . . . .” 16 C.F.R. § 322.2(i)(2), recodified as 12 C.F.R. § 1015.2. This provision also encompasses “‘forensic audits’ and other services in which the provider purports to review, and identify potential errors in, loan documents or documents sent by a consumer’s lender or servicer in order to avert foreclosure or obtain concessions from the lender or servicer.” Mortgage Assistance Relief Services; Final Rule, 75 Fed. Reg. 75, 100 n.110 (December 1, 2010) (discussion of Section 322.2 Definitions). 69.

Regulation O defines “mortgage assistance relief service provider” as “any person that provides, offers to provide, or arranges for others to provide, any mortgage assistance relief service,” other than the dwelling loan holder, the servicer of a dwelling loan, or any agent or contractor of such individual or entity. 16 C.F.R. § 322.2(j), recodified as 12 C.F.R. § 1015.2.

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70.

Defendants are “mortgage assistance relief provider[s]” engaged in the provision of “mortgage assistance relief services” as those terms are defined in Regulation O. 16 C.F.R. § 322.2(j), recodified as 12 C.F.R. § 1015.2. 71.

Regulation O prohibits any mortgage assistance relief service provider from representing, expressly or by implication, that a consumer cannot or should not contact or communicate with his or her lender or servicer. 16 C.F.R. § 322.3(a), recodified as 12 C.F.R. § 1015.3(a).

72.

Regulation O prohibits any mortgage assistance relief service provider from misrepresenting, expressly or by implication, the likelihood of negotiating, obtaining, or arranging any represented service or result. 16 C.F.R. §§ 322.3(b)(1)-(2), recodified as 12 C.F.R. §§ 1015.3(b)(1)-(2).

73.

Regulation O prohibits any mortgage assistance relief service provider from failing to place a statement in every general commercial communication disclosing that (i) the provider is not associated with the government and its service is not approved by the government or any lender, and (ii) in cases where the provider has represented, expressly or by implication, that consumers will receive certain services or results, a statement disclosing that the lender may not agree to modify a loan, even if the consumer uses the provider’s service. 16 C.F.R. §§ 322.4(a)(1)-(2), recodified as 12 C.F.R. §§ 1015.4(a)(1)-(2).

74.

Regulation O prohibits any mortgage assistance relief service provider from failing to place a statement in every consumer-specific commercial communication (i) confirming that the consumer may stop doing business with the provider or reject an offer of mortgage assistance without having to pay for the services, (ii) disclosing that the provider is not associated with the government and its service is not approved by the government or any lender, and (iii) in cases where the provider has represented, expressly or by implication, that consumers will receive certain services or results, disclosing that

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the lender may not agree to modify a loan, even if the consumer uses the provider’s service. 16 C.F.R. §§ 322.4(b)(1)-(3), recodified as 12 C.F.R. §§ 1015.4(b)(1)-(3). 75.

Regulation O prohibits any mortgage assistance relief service provider, in cases where the provider has represented that the consumer should temporarily or permanently discontinue payments on a dwelling loan, from failing to clearly and prominently state in close proximity to any such representation that the consumer could lose his or her home and damage his or her credit rating if the consumer stops paying the mortgage. 16 C.F.R. § 322.4(c), recodified as 12 C.F.R. § 1015.4(c). 76.

Regulation O prohibits any mortgage assistance relief service provider from requesting or receiving payment of any fee or other consideration until the consumer has executed a written agreement between the consumer and the consumer’s loan holder or servicer that incorporates the offer that the provider obtained from the loan holder or servicer. 16 C.F.R. § 322.5(a), recodified as 12 C.F.R. § 1015.5(a). 77.

Pursuant to the CFPA, § 1097, 12 U.S.C. § 5538, a violation of Regulation O constitutes an unfair, deceptive, or abusive act or practice under the CFPA, in violation of Sections 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536. VIOLATIONS OF REGULATION O COUNT IV 78.

In numerous instances, since the effective dates of the MARS Rule, in connection with the offering or provision of mortgage assistance relief services, Defendants, either acting alone or in concert with others, ask for or receive their payment before consumers have executed a written agreement between the consumer and the loan holder or servicer that incorporates the offer obtained by Defendants, in violation of Regulation O, 16 C.F.R. § 322.5(a), recodified as 12 C.F.R. § 1015.5(a). COUNT V 79.

In numerous instances, since the effective dates of the MARS Rule, in connection with the offering or provision of mortgage assistance relief services,

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Defendants, either acting alone or in concert with others, fail to make the following disclosures:

a. in all general commercial communications – i. “[Name of Company] is not associated with the government, and our service is not approved by the government or your lender,” in violation of Regulation O, 16 C.F.R. § 322.4(a)(1), recodified as 12 C.F.R. § 1015.4(a)(1); and ii. “Even if you accept this offer and use our service, your lender may not agree to change your loan,” in violation of Regulation O, 16 C.F.R. § 322.4(a)(2), recodified as 12 C.F.R. § 1015.4(a)(2); b. in all consumer-specific commercial communications – i. “You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us [insert amount or method for calculating the amount] for our services,” in violation of Regulation O, 16 C.F.R. § 322.4(b)(1), recodified as 12 C.F.R. § 1015.4(b)(1);

ii. “[Name of company] is not associated with the government, and our service is not approved by the government or your lender,” in violation of Regulation O, 16 C.F.R. § 322.4(b)(2), recodified as 12 C.F.R. § 1015.4(b)(2); and iii. “Even if you accept this offer and use our service, your lender may not agree to change your loan,” in violation of Regulation O, 16 C.F.R. § 322.4(b)(3), recodified as 12 C.F.R. § 1015.4(b)(3); and c. in all general commercial communications, consumer-specific commercial communications, and other communications in cases where

Page 22

Defendants have represented, expressly or by implication, in connection with the advertising, marketing, promotion, offering for sale, sale, or performance of any mortgage assistance relief service, that the consumer should temporarily or permanently discontinue payments, in whole or in part, on a dwelling loan, clearly and prominently, and in close proximity to any such representation that “[i]f you stop paying your mortgage, you could lose your home and damage your credit rating,” in violation of Regulation O, 16 C.F.R. § 322.4(c), recodified as 12 C.F.R. § 1015.4(c). COUNT VI 80.

In numerous instances, since the effective dates of the MARS Rule, in connection with the offering or provision of mortgage assistance relief services, Defendants, either acting alone or in concert with others, represent, expressly or by implication, that a consumer cannot or should not contact or communicate with his or her lender or servicer, in violation of Regulation O, 16 C.F.R. § 322.3(a), recodified as 12 C.F.R. § 1015.3(a).

COUNT VII 81.

In numerous instances, since the effective dates of the MARS Rule, in connection with the offering or provision of mortgage assistance relief services, Defendants, either acting alone or in concert with others, misrepresent, expressly or by implication, material aspects of their services, including, but not limited to: a. Defendants’ likelihood of obtaining a modification of mortgage loans for consumers that will substantially reduce consumers’ mortgage payments, in violation of Regulation O, 16 C.F.R. § 322.3(b)(1), recodified as 12 C.F.R. § 1015.3(b)(1);

b. Defendants’ likelihood of obtaining a modification of mortgage loan for consumers that will substantially reduce consumers’ mortgage payments as a result of a forensic audit provided by Defendants, in violation of

Page 23

Regulation O, 16 C.F.R. § 322.3(b)(1), recodified as 12 C.F.R. § 1015.3(b)(1); and c. Defendants’ affiliation with, endorsement or approval by, or otherwise association with the United States government, a governmental homeowner assistance plan, or any Federal, State, or local governmental agency, unit, or department, in violation of Regulation O, 16 C.F.R. § 322.3(b)(3)(i), (ii), and (iii), recodified as 12 C.F.R. §§ 1015.3(b)(3)(i), (ii), and (iii).

CONSUMER INJURY 82.

Consumers have suffered and will continue to suffer substantial injury as a result of Defendants’ violations of the CFPA and Regulation O. In addition, Defendants have been unjustly enriched as a result of their unlawful acts or practices. Absent injunctive relief by this Court, Defendants are likely to continue to injure consumers, reap unjust enrichment, and harm the public interest. THIS COURT’S POWER TO GRANT RELIEF 83.

The CFPA empowers this Court to grant any appropriate equitable relief including, without limitation, permanent or temporary injunction, rescission or reformation of contracts, the refund of moneys paid, restitution, disgorgement or compensation for unjust enrichment, and monetary relief, to prevent and remedy any violation of any provision of law enforced by the Bureau. 12 U.S.C. §§ 5538(a) and 5565(a).

PRAYER FOR RELIEF 84.

Wherefore, Plaintiff Consumer Financial Protection Bureau, pursuant to Sections 1054 and 1055 of the CFPA, 12 U.S.C. §§ 5564 and 5565, and the Court’s own equitable powers, requests that the Court:

a. Award Plaintiff such preliminary injunctive and ancillary relief as may be necessary to avert the likelihood of consumer injury during the pendency

Page 24

oOo Oo sa DN mr BPW NY

wo wo NM YP KN NY NY WM NY YF HH FF Fe FPF Re Re ee ao yn HF WN FP OOo I DN A FP WH NY FS ©

of this action, and to preserve the possibility of effective final relief, including but not limited to a temporary restraining order, a preliminary injunction, an order freezing assets, immediate access, and appointment

of a receiver;

. Enter a permanent injunction to prevent future violations of the CFPA

and Regulation O by Defendants;

. Award such relief as the Court finds necessary to redress injury to

consumers resulting from Defendants’ violations of the CFPA and Regulation O, including but not limited to rescission or reformation of contracts, the refund of moneys paid, restitution, and disgorgement or

compensation for unjust enrichment; and

. Award Plaintiff the costs of bringing this action, as well as such other and

additional relief as the Court may determine to be just and proper.

Dated: July 17, 2012 Respectfully Submitted,

Kent Markus Enforcement Director

or AA—$—$_

Laura Schneider

(Phone: 202-435-7311)

(Email: Laura.Schneider @cfpb.gov) Crystal R. Sumner

(Phone: 202-435-7549)

(Email: [email protected]) Carmen L. Christopher

(Email: [email protected]) Consumer Financial Protection Bureau 1700 G Street NW Washington, DC 20552 Fax: 202-435-7722

Page 25

0 WANN On FP WY NY KF

NO NO NO NBO ND WN KN NN NO KF KF KF KF KF Fr RP ORF FS on NWN Or BP WN KF CO UO WAN ND Aa BPW NY KF CO

Attorneys for Plaintiff Consumer Financial Protection Bureau

Order (Dec. 2012)

PDF of this document (31 pages)

Page 26

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CONSUMER FINANCIAL PROTECTION BUREAU, Plaintiff, v.

CHANCE GORDON, et al., Defendants.

No. CV 12-6147 RSWL (MRWx) PRELIMINARY INJUNCTION In a November 16, 2012 Minute Order, the Court concluded that plaintiff Consumer Financial Protection Bureau (“CFPB” or “Bureau”), was entitled to a Preliminary Injunction in the action it commenced pursuant to: (1) Sections 1031(a), 1036(a), 1054, and 1055 of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a), 5564, and 5565; and (2) Section 626 of the Omnibus Appropriations Act, 2009, as amended by Section 1097 of the CFPA, 12 U.S.C. § 5538, and the Mortgage Assistance Relief Services Rule, 16 C.F.R. Part 322, recodified as 12 C.F.R. Part 1015 (“Regulation O”). The Court’s conclusion that the issuance of a Preliminary Injunction is warranted followed the Court’s entry of a Temporary Restraining Order (“TRO”), asset freeze, and appointment of a Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 1 of 31 Page ID #:2798

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-2temporary receiver on July 18, 2012. Consistent with the Court’s November 16, 2012 Minute Order, the Court issues the following Preliminary Injunction: 1.

This Court has jurisdiction over the subject matter of this case and over all the parties hereto, and venue in this district is proper; 2.

There is good cause to believe that Defendants (a) Chance Edward Gordon (“Gordon”), an individual also d/b/a Gordon & Associates, The Law Offices of Chance E. Gordon, The Law Offices of C. Edward Gordon, The C.E.G. Law Firm, National Legal Source, Resource Law Center, Resource Law Group, and Resource Legal Group; (b) The Gordon Law Firm P.C., a California professional corporation; (c) Abraham Michael Pessar (“Pessar”), an individual; (d) Division One Investment and Loan, Inc., d/b/a Division One Business Solutions, D1 Companies, Division One, Division 1, Home Savers National, D1 Marketing Solutions and Relief Council (“Division One Investment”), a corporation; and (e) Processing Division, L.L.C., a limited liability company, and also d/b/a Qualification Intake Department, Division One, The Relief Network, and Relief Network (collectively “Defendants”), have engaged and are likely to continue to engage in acts or practices that violate section 1036 of the CFPA, 12 U.S.C. § 5536, and Regulation O, 12 C.F.R. Part 1015, and that the Bureau is therefore likely to prevail on the merits of this action; 3.

There is good cause to believe that immediate and irreparable damage to the Court’s ability to grant effective final relief for consumers in the form of monetary restitution and disgorgement or compensation for unjust enrichment will occur from the transfer, dissipation, or concealment by Defendants of their assets or business records unless Defendants continue to be restrained and enjoined by Order of this Court; 4.

Good cause existed for appointing a temporary receiver over The Gordon Law Firm P.C., Division One Investment and Loan, Inc., and Processing Division, L.L.C. (“Receivership Defendants”) and permitting the Bureau access to Defendants’ business premises at the discretion of the Receiver. The Court now concludes that the receivership should be wound-down consistent with the terms of this Preliminary Injunction. Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 2 of 31 Page ID #:2799

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-3- 5.

Good cause exists to continue an asset freeze and the other equitable relief ordered herein;

6.

Weighing the equities and considering the Bureau’s likelihood of ultimate success on the merits and the likelihood of irreparable harm in the absence of preliminary relief, the balance of hardships favors the Bureau, and a Preliminary Injunction with an asset freeze and other equitable relief is in the public interest; and 7.

No security is required of any agency of the United States for issuance of a restraining order. Fed. R. Civ. P. 65.

ORDER DEFINITIONS For the Purposes of this Order, the following definitions shall apply: 1.

“Assets” means any legal or equitable interest in, right to or claim to any real, personal, or intellectual property owned or controlled by, or held, in whole or in part for the benefit of, or subject to access by any Defendant, wherever located, whether in the United States or abroad, including, but not limited to, chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, contracts, mail or other deliveries, shares of stock, commodities, futures, inventory, checks, notes, accounts, credits, receivables (as those terms are defined in the Uniform Commercial Code), funds, cash, and trusts, including but not limited to any trust held for the benefit of any Defendant, any of the Individual Defendants’ minor children, or any of the Individual Defendants’ spouses, and shall include both existing Assets and Assets acquired after the date of entry of this Order; 2.

“Corporate Defendants” means The Gordon Law Firm P.C., Division One Investment and Loan, Inc., and Processing Division, L.L.C., individually, collectively, or in any combination, and each of them by whatever names each might be known; 3.

“Defendants” means the Individual Defendants and all of the Corporate Defendants, individually, collectively, or in any combination, and each of them by whatever names each might be known.

Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 3 of 31 Page ID #:2800

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-4- 4.

“Document” and “Electronically Stored Information” are synonymous in meaning and equal in scope to the usage of the terms in Rule 34(a) of the Federal Rules of Civil Procedure and include but are not limited to: i.

The original or a true copy of any written, typed, printed, electronically stored, transcribed, taped, recorded, filmed, punched, or graphic matter or other data compilations of any kind, including, but not limited to, letters, email or other correspondence, messages, memoranda, paper, interoffice communications, notes, reports, summaries, manuals, magnetic tapes or discs, tabulations, books, records, checks, invoices, work papers, journals, ledgers, statements, returns, reports, schedules, files, charts, logs, electronic files, stored in any medium; and ii.

Any electronically created or stored information, including but not limited to electronic mail, instant messaging, videoconferencing, SMS, MMS, or other text messaging, and other electronic correspondence (whether active, archived, unsent, or in a deleted items folder), word processing files, spreadsheets, databases, unorganized data, document metadata, presentation files, and sound recordings, whether stored on any cell phones, smartphones, flash drives, personal digital assistants (“PDAs”), cards, desktop personal computer and workstations, laptops, notebooks and other portable computers, or other electronic storage media, backup disks and tapes, archive disks and tapes, and other forms of offline storage, whether assigned to individuals or in pools of computers available for shared use, or personally owned but used for work-related purposes, whether stored on-site with the computer used to generate them, stored offsite in another company facility, or stored, hosted, or otherwise maintained off-site by a third party; and computers and related offline storage used by Defendants or Defendants’ Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 4 of 31 Page ID #:2801

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-5participating associates, which may include persons who are not employees of the company or who do not work on company premises. 5.

“Electronic Data Host” means any person or entity that stores, hosts, or otherwise maintains electronically stored information. 6.

“Financial institution” means any bank, savings and loan institution, credit union, or any financial depository of any kind, including, but not limited to, any brokerage house, trustee, broker-dealer, escrow agent, title company, commodity trading company, or precious metal dealer.

7.

“Individual Defendants” means Chance Edward Gordon and Abraham Michael Pessar, individually, collectively, or in any combination, and each of them by any other names by which they might be known.

8.

“Material fact” means any fact that is likely to affect a person’s choice of, or conduct regarding, goods or services.

9.

“Mortgage assistance relief product or service” means any product, service, plan, or program, offered or provided to the consumer in exchange for consideration, that is represented, expressly or by implication, to assist or attempt to assist the consumer with any of the following:

i.

stopping, preventing, or postponing any mortgage or deed of trust foreclosure sale for the consumer’s dwelling, any repossession of the consumer’s dwelling, or otherwise saving the consumer’s dwelling from foreclosure or repossession;

ii.

negotiating, obtaining, or arranging a modification of any term of dwelling loan, including a reduction in the amount of interest, principal balance, monthly payments, or fees;

iii.

obtaining any forbearance or modification in the timing of payments from any dwelling loan holder or servicer on any dwelling loan; iv.

negotiating, obtaining, or arranging any extension of the period of time within which the consumer may (i) cure his or her default on a dwelling Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 5 of 31 Page ID #:2802

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-6loan, (ii) reinstate his or her dwelling loan, (iii) redeem a dwelling, or (iv) exercise any right to reinstate a dwelling loan or redeem a dwelling; v.

obtaining any waiver of an acceleration clause or balloon payment contained in any promissory note or contract secured by any dwelling; or vi.

negotiating, obtaining, or arranging (i) a short sale of a dwelling, (ii) a deed in lieu of foreclosure, (iii) or any other disposition of a dwelling loan other than a sale to a third party that is not the dwelling loan holder.

The foregoing shall include any manner of claimed assistance, including, but not limited to, auditing or examining a consumer’s mortgage or home loan application.

10.

“Person” means an individual, partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, or other entity. 11.

“Receivership Assets” means and includes any Asset of any Receivership Defendant, as defined above, including both existing Assets and Assets acquired after the date of entry of this Order, and includes any Assets held by a third party, whether a party to the above-referenced action or not.

12.

“Receivership Estate” means and includes the estate of the Receivership Defendants created by this Order, and as may be modified or expanded by subsequent orders of this Court, including but not limited to all Receivership Assets as defined herein, regardless of whether such Receivership Assets are held by any Defendant or Individual Defendant, or third party not presently a party to the above-referenced action. 13.

“Receivership Defendants” means The Gordon Law Firm P.C., Division One Investment and Loan, Inc., and Processing Division, L.L.C., and their successors, assigns, affiliates, or subsidiaries, individually, collectively, or in any combination, and each of them by whatever names each might be known, provided that the Receiver has reason to believe they are owned or controlled in whole or in part by any of the Defendants. Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 6 of 31 Page ID #:2803

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-7- 14.

“Receiver” or “Temporary Receiver” shall mean Robb Evans and Associates. 15.

The words “and” and “or” shall be understood to have both conjunctive and disjunctive meanings as necessary to make the applicable phrase or sentence inclusive rather than exclusive.

I.

PROHIBITED REPRESENTATIONS IT IS THEREFORE ORDERED that Defendants and their successors, assigns, officers, agents, servants, employees, independent contractors and attorneys, and those persons in active concert or participation with any of them who receive actual notice of this Order by personal service, facsimile transmission, email, or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering for sale, sale, or performance of any mortgage assistance relief product or service, are hereby restrained and enjoined from falsely representing, or from assisting others who are falsely representing, expressly or by implication, any of the following:

A.

That any Defendant or any other person:

1.

will or likely will obtain for consumers mortgage loan modifications that substantially reduce consumers’ mortgage payments or interest rates or help consumers avoid foreclosure;

2.

as a result of a forensic loan audit, will or likely will obtain mortgage loan modifications for consumers that substantially reduce consumers’ mortgage payments or interest rates; and 3.

is the United States government or is affiliated with, endorsed or approved by, or otherwise associated with the United States government.

B.

The degree of success that any Defendant or any other person has had in performing any mortgage assistance relief service; Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 7 of 31 Page ID #:2804

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-8- C.

The nature of any Defendant’s or any other person’s relationship with any mortgage loan holder or servicer, or other secured or unsecured lender; D.

The amount of time it will take or is likely to take to obtain or arrange a renegotiation, settlement, modification, or other alteration of the terms of any secured or unsecured debt, including but not limited to the modifications of any term of a consumer’s home loan, deed of trust, or mortgage, including any recapitalization or reinstatement agreement; or E.

The cost of any Defendants’ service including that there will be no charge for all or a portion of such service.

II.

DISCLOSURES REQUIRED BY AND REPRESENTATIONS PROHIBITED BY REGULATION O IT IS FURTHER ORDERED that Defendants and their successors, assigns, officers, agents, servants, employees, independent contractors, and attorneys, and those persons in active concert or participation with any of them who receive actual notice of this Order by personal service, facsimile transmission, email, or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering for sale, sale, or performance of any good or service, are hereby restrained and enjoined from engaging in, or assisting others in engaging in, the following conduct:

A.

Representing, expressly or by implication, that a consumer cannot or should not contact or communicate with his or her lender or servicer, in violation of 12 C.F.R. § 1015.3(a);

B.

Failing to make the following disclosure clearly and prominently in all general and consumer-specific commercial communications: “[Name of Company] is not associated with the government, and our service is not approved by the government or your lender,” in violation of 12 C.F.R. §§ l015.4(a)(1), 1015.4(b)(2);

Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 8 of 31 Page ID #:2805

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-9- C.

Failing to make the following disclosure clearly and prominently in all general and consumer-specific commercial communications: “Even if you accept this offer and use our service, your lender may not agree to change your loan,” in violation of 12 C.F.R. §§ 1015.4(a)(2), 1015.4(b)(3); D.

Failing to make the following disclosure clearly and prominently in all consumer-specific commercial communications: “You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us [insert amount or method for calculating the amount] for our services.” For the purposes of this section, the amount “you will have to pay” shall consist of the total amount the consumer must pay to purchase, receive, and use all of the mortgage assistance relief services that are the subject of the sales offer, including but not limited to, all fees and charges, in violation of 12 C.F.R. § 1015.4(b)(1);

E.

Failing, in all general commercial communications, consumer-specific commercial communications, and other communications in cases where any Defendant or person has represented, expressly or by implication, in connection with the advertising, marketing, promotion, offering for sale, sale, or performance of any mortgage assistance relief service, that the consumer should temporarily or permanently discontinue payments, in whole or in part, on a dwelling loan, to place clearly and prominently, and in close proximity to any such representation the following disclosure: “If you stop paying your mortgage, you could lose your home and damage your credit rating,” in violation of 12 C.F.R. § 1015.4(c); and F.

Any other conduct in violation of 12 C.F.R. § 1015 et seq. Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 9 of 31 Page ID #:2806

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-10- III.

PROHIBITION ON COLLECTION OF ADVANCE FEES IT IS FURTHER ORDERED that Defendants and their successors, assigns, officers, agents, servants, employees, independent contractors, and attorneys, and those persons in active concert or participation with any of them who receive actual notice of this Order by personal service, facsimile transmission, email, or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering for sale, sale, or performance of any mortgage assistance relief service, are hereby restrained and enjoined from asking for or receiving payment before consumers have executed a written agreement between the consumer and the loan holder or servicer that incorporates the offer obtained by Defendants. IV.

PRESERVATION OF RECORDS AND TANGIBLE THINGS IT IS FURTHER ORDERED that Defendants and their successors, assigns, officers, agents, servants, employees, independent contractors, and attorneys, and those persons in active concert or participation with any of them who receive actual notice of this Order by personal service, facsimile transmission, email, or otherwise, whether acting directly or through any entity, corporation, subsidiary, division, affiliate, or other device, are hereby enjoined from destroying, erasing, mutilating, concealing, altering, transferring, or otherwise disposing of, in any manner, directly or indirectly, any Documents or records that relate to the business practices, or business or personal finances of any Defendant, or other entity directly or indirectly under the control of any Defendant. V.

DISABLEMENT OF WEBSITES IT IS FURTHER ORDERED that Defendants and their successors, assigns, officers, agents, servants, employees, independent contractors, and attorneys, and those persons in active concert or participation with any of them who receive actual notice of this Order by Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 10 of 31 Page ID #:2807

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-11personal service, facsimile transmission, email, or otherwise, whether acting directly or through any entity, corporation, subsidiary, division, affiliate, or other device, shall: A.

Immediately do whatever is necessary to ensure that any Internet website used by Defendants for the advertising, marketing, promotion, offering for sale, sale, or performance of any mortgage assistance relief service, including but not limited to www.reliefcouncil.org, www.thereliefnetwork.org, www.prelitlaw.com, www.resourcelawgroup.com, www.resourcelawcenter.com, www.resourcelegalgroup.com, and www.nationallegalsource.com, containing statements, representations, or omissions prohibited by Sections I and II of this Order cannot be accessed by the public;

B.

Prevent the destruction or erasure of any Internet website used by Defendants for the advertising, marketing, promotion, offering for sale, sale, or performance of any mortgage assistance relief service, by preserving such website in the format in which it is maintained currently; and C.

Immediately notify in writing counsel for the Bureau of any other Internet website operated or controlled by any Defendant not listed in Subsections V.A. above.

VI.

SUSPENSION OF INTERNET DOMAIN NAME REGISTRATIONS IT IS FURTHER ORDERED that Defendants and their successors, assigns, officers, agents, servants, employees, independent contractors, and attorneys, and those persons in active concert or participation with any of them who receive actual notice of this Order by personal service, facsimile transmission, email, or otherwise, whether acting directly or through any entity, corporation, subsidiary, division, affiliate, or other device, shall suspend the registration of any internet website used by Defendants for the advertising, marketing, promotion, offering for sale, sale, or performance of any mortgage assistance relief service, and containing statements, representations, or omissions prohibited by Sections I and II of Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 11 of 31 Page ID #:2808

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-12this Order, including, but not limited to www.reliefcouncil.org, www.thereliefnetwork.org, www.prelitlaw.com, www.resourcelawgroup.com, www.resourcelawcenter.com, www.resourcelegalgroup.com, and www.nationallegalsource.com, and provide immediate notice to counsel for the Bureau of any other Internet domain names registered or controlled by any Defendants.

VII.

ASSET FREEZE IT IS FURTHER ORDERED that except as specified below, Defendants and their successors, assigns, officers, agents, servants, employees, independent contractors, and attorneys, and all persons directly or indirectly under the control of any of them, including any financial institution, and all other persons in active concert or participation with any of them who receive actual notice of this Order by personal service, facsimile, email, or otherwise, are hereby restrained and enjoined from directly or indirectly: A.

Selling, liquidating, assigning, transferring, converting, loaning, hypothecating, disbursing, gifting, conveying, encumbering, pledging, concealing, dissipating, spending, withdrawing, or otherwise disposing of any Asset that is:

1.

in the actual or constructive possession of any Defendant; or 2.

in the actual or constructive possession of, or owned or controlled by, or subject to access by, or belonging to, any corporation, partnership, trust or other entity directly or indirectly owned, managed or controlled by any Defendant;

B.

Opening, or causing to be opened, any safe deposit box, commercial mail box, or storage facility belonging to, for the use or benefit of, controlled by, or titled in the name of any Defendant, or subject to access by any Defendant; C.

Incurring charges or cash advances on any credit card, stored value card, debit card or charge card issued in the name, singly or jointly, of any Defendant or Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 12 of 31 Page ID #:2809

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-13any other entity directly or indirectly owned, managed, or controlled by any Defendant;

D.

Obtaining a personal or secured loan; or E.

Cashing any checks from consumers, clients, or customers of any Defendant. IT IS FURTHER ORDERED that except as specified below, the Assets affected by this Section shall include: (a) all Assets of each Defendant as of the time this Order is entered, and (b) those Assets obtained or received after entry of this Order that are derived, directly or indirectly, from the actions alleged in the CFPB’s Complaint. This Section does not prohibit transfers to the Temporary Receiver or to the Court’s registry, nor does it prohibit the Repatriation of Foreign Assets, as specifically required in Section X of this Order.

Provided however, that upon entry of this Order, the freeze of the following accounts shall be dissolved and no longer subject to the provisions of the Asset Freeze: 1.

Account in the name of Division One Investment and Loan, Inc. at Wells Fargo, Account Number xxxxxx5971;

Account in the name of Division One Investment and Loan, Inc. at Wells Fargo, Account Number xxxxxx9816;

3.

Account in the name of Division One Investment and Loan, Inc. at Wells Fargo, Account Number xxxxxx0768; and 4.

Account in the name of Division One Investment and Loan, Inc. at Wells Fargo, Account Number xxxxxx1335.

The CFPB and Pessar agree that no further funds will be released for any purpose, including living expenses or attorneys’ fees, while this Preliminary Injunction is in place. IT IS FURTHER ORDERED that upon entry of this Order, the Receiver shall release Pessar’s personal Sony computer to him.

Also provided however, that Gordon may dissipate a maximum of $2,500 per month for necessary and reasonable living expenses from whatever income Gordon received after Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 13 of 31 Page ID #:2810

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-14entry of the TRO, or may obtain after the entry of this Preliminary Injunction, that is not derived, directly or indirectly, from the actions alleged in the CFPB’s Complaint. VIII.

RETENTION OF ASSETS AND RECORDS BY FINANCIAL INSTITUTIONS AND OTHER THIRD PARTIES IT IS FURTHER ORDERED that, except as otherwise ordered by this Court, any financial or brokerage institution, business entity, electronic data host, Internet or “e-currency” payment processor, or person served with a copy of this Order, or who otherwise has actual or constructive knowledge of this Order, that holds, controls, or maintains custody of any account, Document, or Asset of, on behalf of, in the name of, for the benefit of, subject to withdrawal by, subject to access or use by, or under the signatory power of any Defendant or other party subject to Section VII above, or has held, controlled, or maintained any such account, Document, or Asset at any time since January 1, 2010, shall:

A.

Hold, preserve, and retain within such person’s control, and prohibit the withdrawal, removal, alteration, assignment, transfer, pledge, hypothecation, encumbrance, disbursement, dissipation, conversion, sale, liquidation, or other disposal of such account, Document, or Asset held by or under such person’s control, except as directed by further order of the Court or as directed in writing by the Temporary Receiver regarding accounts, Documents, or Assets held in the name of or benefit of any Receivership Defendant; B.

Provide the Receiver, the Receiver’s agents, the Bureau, and the Bureau’s agents immediate access to Documents, including those electronically stored, hosted, or otherwise maintained on behalf of Defendants for forensic imaging or copying;

C.

Deny access to any safe deposit box, commercial mail box, or storage facility belonging to, for the use or benefit of, controlled by, or titled in the name of Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 14 of 31 Page ID #:2811

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-15any Defendant, or subject to access by any Defendant or other party subject to Section VII (Asset Freeze) above;

D.

Provide to counsel for the Bureau and the Receiver, within fourteen (14) days, a sworn statement setting forth:

1.

Information sufficient to identify each account or Asset titled in the name, individually or jointly, or held on behalf of or for the benefit of, subject to withdrawal by, subject to access or use by, or under the signatory power of any Defendant or other party subject to Section VII above, whether in whole or in part;

2.

the balance of each such account, or a description of the nature and value of such Asset, as of the close of business on the day on which this Order is served;

3.

the identification of any safe deposit box, commercial mail box, or storage facility belonging to, for the use or benefit of, controlled by, or titled in the name of any Defendant, or subject to access by any Defendant or other party subject to Section VII above, whether in whole or in part; and 4.

if the account, safe deposit box, or other Asset has been closed or removed, the date closed or removed, the balance on said date, and the name or the person or entity to whom such account or other Asset was remitted;

E.

Provide to counsel for the Bureau and the Receiver, within twenty-one days after being served with a request, copies of all Documents pertaining to such account or Asset, including but not limited to originals or copies of account applications, account statements, signature cards, checks, drafts, deposit tickets, transfers to and from the accounts, all other debit and credit instruments or slips, currency transaction reports, 1099 forms, and safe deposit Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 15 of 31 Page ID #:2812

Page 41

-16box logs; provided that such institution or custodian may charge a reasonable fee; and IT IS FURTHER ORDERED that the accounts subject to this provision include: (a) all Assets of each Defendant deposited as of the time this Order is entered, and (b) those Assets deposited after entry of this Order that are derived from the actions alleged in the CFPB’s Complaint. This Section does not prohibit transfers to the Temporary Receiver or to the Court’s registry, nor does it prohibit the Repatriation of Foreign Assets, as specifically required in Section X of this Order.

IT IS FURTHER ORDERED that the Bureau is granted leave, pursuant to Fed. R. Civ. P. 45, to subpoena Documents immediately from any financial or brokerage institution, business entity, electronic data host, or person served with a copy of this Order that holds, controls, or maintains custody of any account, Document, or Asset of, on behalf of, in the name of, for the benefit of, subject to withdrawal by, subject to access or use by, or under the signatory power of any Defendant or other party subject to Section VII above, or has held, controlled, or maintained any such account, Document, or Asset at any time since January 1, 2010, and such financial or brokerage institution, business entity, electronic data host or person shall respond to such subpoena within the time required by law after service. IX.

CONSUMER CREDIT REPORTS IT IS FURTHER ORDERED that pursuant to Section 604(a)(1) of the Fair Credit Reporting Act, 15 U.S.C. § 1681b(a)(1), the Bureau may obtain credit reports concerning any Defendant, and that, upon written request, any credit reporting agency from which such reports are requested shall provide them to the Bureau. X.

REPATRIATION OF FOREIGN ASSETS IT IS FURTHER ORDERED that, within thirty days following the service of this Order, each Defendant shall:

Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 16 of 31 Page ID #:2813

Page 42

-17- A.

Provide counsel for the Bureau and the Receiver with a full accounting of all Assets, accounts, and Documents outside of the territory of the United States that are held either: (1) by Defendants; (2) for their benefit; (3) in trust by or for them, individually or jointly; or (4) under their direct or indirect control, individually or jointly;

B.

Transfer to the territory of the United States all Assets, accounts, and Documents in foreign countries held either: (1) by Defendants; (2) for their benefit; (3) in trust by or for them, individually or jointly; or (4) under their direct or indirect control, individually or jointly; and C.

Provide the Bureau access to all records of accounts or Assets of the Corporate Defendants and Individual Defendants held by financial institutions located outside the territorial United States by signing the Consent to Release of Financial Records attached to this Order as Attachment C. IT IS FURTHER ORDERED that all repatriated Assets, accounts, and Documents are subject to Section VII of this Order.

XI.

NONINTERFERENCE WITH REPATRIATION IT IS FURTHER ORDERED that Defendants and their successors, assigns, officers, agents, servants, employees, independent contractors, and attorneys, and those persons in active concert or participation with any of them who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, are hereby restrained and enjoined from taking any action, directly or indirectly, which may result in the encumbrance or dissipation of foreign Assets, or in the hindrance of the repatriation required by the preceding Section X of this Order, including, but not limited to:

A.

Sending any statement, letter, fax, email or wire transmission, or telephoning or engaging in any other act, directly or indirectly, that results in a determination by a foreign trustee or other entity that a “duress” event has Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 17 of 31 Page ID #:2814

Page 43

-18occurred under the terms of a foreign trust agreement until such time that all Assets have been fully repatriated pursuant to Section X of this Order; or B.

Notifying any trustee, protector, or other agent of any foreign trust or other related entities of either the existence of this Order, or of the fact that repatriation is required pursuant to a court order, until such time that all Assets have been fully repatriated pursuant to Section X of this Order. XII.

RECEIVERSHIP PROVISIONS IT IS FURTHER ORDERED that Robb Evans & Associates LLC, 11450 Sheldon Street, Sun Valley, CA 91352-1121, shall continue as Temporary Receiver ("Temporary Receiver") to wind down the affairs and marshal the records and assets of the Receivership Defendants. The Temporary Receiver shall be the agent of this Court and solely the agent of this Court in acting as Temporary Receiver under this Order. The Temporary Receiver shall be accountable directly to this Court. The Temporary Receiver shall comply with all laws and Local Rules of this Court governing federal equity receivers, including but not limited to Local Rules 66-1 through 66-5.1 and Local Rule 66-8, and is authorized and directed to: A.

Take any and all steps that the Temporary Receiver concludes are appropriate to wind down the Receivership Defendants.

B.

Continue to exercise full control over the Receivership Defendants and continue to collect, marshal, and take custody, control, and possession of all the funds, property, premises, accounts, documents, mail, and other assets of, or in the possession or under the control of the Receivership Defendants, wherever situated, the income and profits therefrom, and all sums of money now or hereafter due or owing to the Receivership Defendants, with full power to collect, receive, and take possession of all goods, chattels, rights, credits, monies, effects, lands leases, books and records, limited partnership records, work papers, and records of accounts, including computer-maintained information, contracts, financial records, monies on hand in banks and other Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 18 of 31 Page ID #:2815

Page 44

-19financial institutions, and other papers and documents of other individuals, partnerships, or corporations whose interest are now held by or under the direction, possession, custody, or control of the Receivership Defendants ("Receivership Estate");

C.

Continue to have full control over the management and personnel of the Receivership Defendants, including the authority to remove, as the Temporary Receiver deems necessary or advisable, any director, officer independent contractor, employee, or agent of the Receivership Defendants from control of, management of, or participation in the affairs of the Receivership Defendants. D.

Make payments and disbursements from the Receivership Estate that are necessary or advisable for carrying out the directions of, or exercising the authority granted by, this Order. The Temporary Receiver shall apply to the Court for prior approval of any payment of any debt or obligation incurred by the Receivership Defendant prior to the date of entry of the temporary restraining order in this action, except payments that the Temporary Receiver deems necessary or advisable to secure and liquidate assets of the Receivership Defendant, such as rental payments or payment of liens; E.

Continue to perform all acts necessary or advisable to prevent unauthorized transfer, withdrawal, or misapplication of Receivership Assets; F.

Continue to maintain accurate records of all receipts and expenditures made as Temporary Receiver;

G.

Continue to defend, compromise, adjust, or otherwise dispose of any or all actions or proceedings instituted in the past or in the future against the Temporary Receiver in its role as Temporary Receiver, or against the Receivership Defendant, as the Temporary Receiver deems necessary and advisable to carry out the Temporary Receiver's mandate under this Order; Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 19 of 31 Page ID #:2816

Page 45

-20- H.

Continue to maintain bank accounts created as designated depositories for funds of the Receivership Defendant, and make all payments and disbursements from the Receivership Estate from such an account; I.

Continue to perform all incidental acts that the Temporary Receiver deems to be advisable or necessary, which includes retaining, hiring, or dismissing any employees, independent contractors, or agents;

J.

Continue to cooperate with reasonable requests for information or assistance from any state or federal law enforcement agency; K.

Continue to store documents and records of the Defendants relating to these proceedings by keeping such documents and records in a secure locked storage facility or the Temporary Receiver's locked facility until entry of a final and non-appealable judgment, and continuing to provide the Bureau with access to such documents and records upon reasonable request and notice, and to provide Defendants with access upon reasonable request or upon order of the Court. The purpose of this access shall be to inspect, inventory, and copy any and all Documents and records or in the possession of the Temporary Receiver, provided that those Documents and property are not removed from the custody and control of the Temporary Receiver. The Temporary Receiver shall have the discretion to determine the time, manner, and reasonable conditions of such access. After entry of a final and non-appealable judgment, the Temporary Receiver shall dispose of or arrange for the disposal of the stored records as it sees fit, provided that to safeguard the privacy of consumers, records containing personal financial information shall be shredded, incinerated, or otherwise disposed of in a secure manner; L.

Dispose of, or arrange for the disposal of, the records of the Receivership Defendant that are not related to this action or that the Temporary Receiver deems appropriate to release to Defendants, except that prior to disposing of any such records belonging to Defendants the Temporary Receiver shall offer Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 20 of 31 Page ID #:2817

Page 46

-21the Defendants the opportunity to retrieve the documents. If the Defendants fail to make arrangements within 14 days of the Temporary Receiver's offer, the Temporary Receiver is authorized to dispose of such documents as it sees fit, provided that to safeguard the privacy of consumers, records containing personal financial information shall be shredded, incinerated, or otherwise disposed of in a secure manner;

M.

Perform all acts necessary to protect, conserve, preserve, and prevent waste or dissipation of the non-liquid assets until their sale; and N.

Sell the non-liquid assets without further order of the Court, including any remaining office equipment and furniture, with the exception of the office furniture in suites 2105, 2111, and 2118 at 5454 Wilshire Boulevard, Los Angeles, CA, which the Temporary Receiver has released to the Defendants, provided that if the Defendants fail to remove such equipment and furniture by a date set by the Temporary Receiver, the Temporary Receiver is authorized to dispose of such equipment and furniture as it sees fit. Provided however, that upon entry of this Order, the Temporary Receiver shall relinquish control of Suite 915 at 5455 Wilshire Boulevard, Los Angeles, CA 91210 to Defendant Division One Investment and Loan, Inc. to engage in real estate transactions that are outside the scope of mortgage assistance relief services subject to Regulation O. Defendant Division One Investment and Loan, Inc. will be solely responsible for payment of utilities and rent for Suite 915 as of the date that possession is released to Defendant Division One Investment and Loan, Inc.

XIII.

COOPERATION WITH TEMPORARY RECEIVER IT IS FURTHER ORDERED that:

A.

To the extent not already done pursuant to the TRO issued in this case, Defendants, and their successors, assigns, officers, agents, directors, servants, employees, salespersons, independent contractors, attorneys, and corporations, Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 21 of 31 Page ID #:2818

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-22and all other persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division, or other device, or any of them, shall fully cooperate with and assist the Temporary Receiver. Defendants' cooperation and assistance shall include, but not be limited to:

1.

Providing any information to the Temporary Receiver that the Temporary Receiver deems necessary to exercising the authority and discharging the responsibilities of the Temporary Receiver under this Order, including but not limited to allowing the Temporary Receiver to inspect Documents and Assets and to partition office space; 2.

Providing any username or password and executing any documents required to access any computer or electronic files in any medium, including but not limited to electronically stored information stored, hosted or otherwise maintained by an electronic data host; and 3.

Advising all persons who owe money to the Receivership Defendant that all debts should be paid directly to the Temporary Receiver. B.

Defendants and their successors, assigns, officers, directors, agents, servants, employees, attorneys, and all other persons or entities directly or indirectly, in whole or in part, under their control, and all other persons in active concert or participation with who receive actual notice of this Order by personal service or otherwise, shall not interfere in any manner, directly or indirectly with the custody, possession, management, or control by the Temporary Receiver of Assets and Documents, and are hereby restrained and enjoined from directly or indirectly:

1.

Transacting any of the business of the Receivership Defendant; 2.

Destroying, secreting, erasing, mutilating, defacing, concealing, altering, transferring or otherwise disposing of, in any manner, directly Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 22 of 31 Page ID #:2819

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-23or indirectly, any Documents or equipment of the Receivership Defendant, including but not limited to contracts, agreements, consumer files, consumer lists, consumer addresses and telephone numbers, correspondence, advertisements, brochures, sales material, sales presentations, Documents evidencing or referring to Defendants' services, training materials, scripts, data, computer tapes, disks, or other computerized records, books, written or printed records, handwritten notes, telephone logs, "verification" or "compliance" tapes or other audio or video tape recordings, receipt books, invoices, postal receipts, ledgers, personal and business canceled checks and check registers, bank statements, appointment books, copies of federal, state or local business or personal income or property tax returns, photographs, mobile devices, electronic storage media, accessories, and any other Documents, records or equipment of any kind that relate to the business practices or business or personal finances of the Receivership Defendant or any other entity directly or indirectly under the control of the Receivership Defendant;

3.

Transferring, receiving, altering, selling, encumbering, pledging, assigning, liquidating, or otherwise disposing of any Assets owned, controlled, or in the possession or custody of, or in which an interest is held or claimed by, the Receivership Defendant, or the Temporary Receiver;

4.

Excusing debts owed to the Receivership Defendant; 5.

Failing to notify the Temporary Receiver of any Asset, including accounts, of a Receivership Defendant held in any name other than the name of the Receivership Defendant, or by any person or entity other than the Receivership Defendant, or failing to provide any assistance or Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 23 of 31 Page ID #:2820

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-24information requested by the Temporary Receiver in connection with obtaining possession, custody, or control of such Assets; 6.

Failing to create and maintain books, records, and accounts which, in reasonable detail, accurately, fairly, and completely reflect the incomes, Assets, disbursements, transactions and use of monies by the Defendants or any other entity directly or indirectly under the control of the Defendants;

7.

Doing any act or refraining from any act whatsoever to interfere with the Temporary Receiver's taking custody, control, possession, or managing of the Assets or Documents subject to this Receivership; or to harass or to interfere with the Temporary Receiver in any way; or to interfere in any manner with the exclusive jurisdiction of this Court over the Assets or Documents of the Receivership Defendant; or to refuse to cooperate with the Temporary Receiver or the Temporary Receiver's duly authorized agents in the exercise of their duties or authority under any Order of this Court; and 8.

Filing, or causing to be filed, any petition on behalf of the Receivership Defendant for relief under the United States Bankruptcy Code, 11 U.S.C. § 101 et seq., without prior permission from this Court. XIV.

COMPENSATION FOR TEMPORARY RECEIVER IT IS FURTHER ORDERED that the Temporary Receiver and all personnel hired by the Temporary Receiver as herein authorized, including counsel to the Temporary Receiver and accountants, are entitled to reasonable compensation for the performance of duties pursuant to this Order, and for the cost of actual out-of-pocket expenses incurred by them, from the Assets now held by or in the possession or control of, or which may be received by, the Receivership Defendant. The Temporary Receiver shall not increase the hourly rates used as the bases for such fee applications without prior approval of the Court. Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 24 of 31 Page ID #:2821

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-25- XV.

RECEIVER'S FINAL REPORT AND DISBURSEMENT IT IS FURTHER ORDERED that:

A.

No later than forty-five (45) days from the entry of this Order, the Temporary Receiver shall file and serve on the parties a report and accounting ("the Final Report") to the Court that details the steps taken to dissolve the Receivership estate. The Final Report must include an accounting of the Receivership estate's finances and total assets and a description of what other actions, if any, must be taken to wind down the Receivership. Included with the Final Report, the Temporary Receiver shall file its final application for payment of compensation and expenses associated with its performance of its duties as Temporary Receiver. The only remaining responsibility of the Temporary Receiver after the Court's approval of the Final Report shall be the storage and access to documents as provided Section XI.L.

B.

The Receiver shall mail copies of the Final Report to all known creditors of the Receivership Defendant with a notice stating that any objections to paying any assets of the Receivership Defendant to satisfy the Temporary Receiver's costs and expenses must be submitted to the Court and served by mail upon the Temporary Receiver and the parties within thirty (30) days of the mailing of the Final Report.

C.

The Court will review the Final Report and any objections to the report and absent a valid objection, will issue an order directing that the Temporary Receiver:

1.

Pay the reasonable costs and expenses of administering the Receivership, including compensation of the Temporary Receiver and the Temporary Receiver's personnel authorized by Section XIII of this Order or other orders of this Court and the actual out-of-pocket costs incurred by the Temporary Receiver in carrying out its duties; and Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 25 of 31 Page ID #:2822

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-26- 2.

Pay all remaining funds into the Court's registry.

XVI.

TEMPORARY RECEIVER'S BOND/LIABILITY IT IS FURTHER ORDERED that no bond shall be required in connection with the appointment of the Temporary Receiver. Except for an act of gross negligence, the Temporary Receiver and the Professionals shall not be liable for any loss or damage incurred by any of the Defendants, their officers, agents, servants, employees, independent contractors, and attorneys or any other person, by reason of any act performed or omitted to be performed by the Temporary Receiver and the Professionals in connection with the discharge of his or her duties and responsibilities. XVII.

PROHIBITION ON RELEASE OF CONSUMER INFORMATION IT IS FURTHER ORDERED that, except as required by a law enforcement agency law, regulation or court order, Defendants, and their successors, assigns, officers, agents, servants, employees, independent contractors, and attorneys, and all other persons in active concert or participation with any of them who receive actual notice of this Order by personal service or otherwise, are restrained and enjoined from disclosing, using, or benefitting from consumer information, including the name, address, telephone number, email address, social security number, other identifying information, or any data that enables access to a consumer's account (including a credit card, bank account, or other financial account), of any person which any Defendant obtained prior to entry of this Order in connection with any mortgage assistance relief product or service.

XVIII.

STAY OF ACTIONS IT IS FURTHER ORDERED that:

A.

Except by leave of this Court, during pendency of the Receivership ordered herein, Defendants and all other persons and entities are hereby stayed from taking any action to establish or enforce any claim, right, or interest for, Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 26 of 31 Page ID #:2823

Page 52

-27against, on behalf of, in, or in the name of, the Receivership Defendant, any of their subsidiaries, affiliates, partnerships, Assets, Documents, or the Temporary Receiver or the Temporary Receiver's duly authorized agents acting in their capacities as such, including, but not limited to, the following actions:

1.

Commencing, prosecuting, continuing, entering, or enforcing any suit or proceeding, except that such actions may be filed to toll any applicable statute of limitations;

2.

Accelerating the due date of any obligation or claimed obligation; filing or enforcing any lien; taking or attempting to take possession, custody, or control of any Asset; attempting to foreclose, forfeit, alter, or terminate any interest in any Asset, whether such acts are part of a judicial proceeding, are acts of self-help, or otherwise; 3.

Executing, issuing, serving, or causing the execution, issuance or service of, any legal process, including, but not limited to, attachments, garnishments, subpoenas, writs of replevin, writs of execution, or any other form of process whether specified in this Order or not; or 4.

Doing any act or thing whatsoever to interfere with the Temporary Receiver taking custody, control, possession, or management of the Assets or Documents subject to this Receivership, or to harass or interfere with the Temporary Receiver in any way, or to interfere in any manner with the exclusive jurisdiction of this Court over the Assets or Documents of the Receivership Defendant;

B.

This Section XVIII does not stay:

1.

The commencement or continuation of a criminal action or proceeding; 2.

The commencement or continuation of an action or proceeding by the State Bar of California to enforce its police or regulatory power; Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 27 of 31 Page ID #:2824

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-28- 3.

The commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power;

4.

The enforcement of a judgment, other than a money judgment, obtained in an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power; or 5.

The issuance to a Receivership Defendant of a notice of tax deficiency; and C.

Except as otherwise provided in this Order, all persons and entities in need of documentation from the Temporary Receiver shall in all instances first attempt to secure such information by submitting a formal written request to the Temporary Receiver, and, if such request has not been responded to within thirty (30) days of receipt by the Temporary Receiver, any such person or entity may thereafter seek an Order of this Court with regard to the relief requested.

XIX.

MONITORING IT IS FURTHER ORDERED that agents or representatives of the Bureau may contact Defendants directly or anonymously for the purpose of monitoring compliance with this Order, and may tape record any oral communications that occur in the course of such contacts.

XX.

NOTIFICATION OF BUSINESS ACTIVITIES IT IS FURTHER ORDERED that:

A.

Defendants are hereby preliminarily enjoined from directly or indirectly creating, operating, or exercising any control over any business entity, including any partnership, limited partnership, joint venture, sole proprietorship or corporation, without first serving on counsel for the Bureau a Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 28 of 31 Page ID #:2825

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-29written statement disclosing the following: (1) the name of the business entity; (2) the address and telephone number of the business entity; (3) the names of the business entity's officers, directors, principals, managers and employees; and (4) a detailed description of the business entity's intended or actual activities.

B.

Individual Defendant shall notify the Commission at least seven (7) days prior to affiliating with, becoming employed by, or performing any work for any business that is not a named Defendant in this action. Each notice shall include his new business address and a statement of the nature of the business or employment and the nature of his duties and responsibilities in connection with that business or employment.

XXI.

DEFENDANTS' DUTY TO DISTRIBUTE ORDER IT IS FURTHER ORDERED that Defendants shall immediately provide a copy of this Order to each affiliate, subsidiary, division, sales entity, successor, assign, officer, director, employee, independent contractor, client company, electronic data host, agent, attorney, spouse, and representative of Defendants and shall, within three (3) calendar days from the date of entry of this Order, provide counsel for the Bureau with a sworn statement that: (a) confirms that Defendants have provided copies of the Order as required by this Section and (b) lists the names and addresses of each entity or person to whom Defendants provided a copy of the Order. Furthermore, Defendants shall not take any action that would encourage officers, agents, directors, employees, salespersons, independent contractors, attorneys, subsidiaries, affiliates, successors, assigns, or other persons or entities in active concert or participation with Defendants to disregard this Order or believe that they are not bound by its provisions.

Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 29 of 31 Page ID #:2826

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-30- XXII.

CORRESPONDENCE WITH PLAINTIFF IT IS FURTHER ORDERED that, for the purposes of this Order, because mail addressed to the Bureau is subject to delay due to heightened security screening, all correspondence and service of pleadings on Plaintiff shall be sent either via electronic submission or via overnight delivery to:

Laura Schneider Consumer Financial Protection Bureau 1700 G Street, NW, ATTN: 1750 PA Washington, DC 20552 ATTN:

Office of Enforcement [email protected] with a copy to:

Kent Kawakami - Local Counsel, CA Bar # 149803 United States Attorney's Office Central District of California - Civil Division 300 North Los Angeles Street, Room 7516 Los Angeles, CA 90012 [email protected] XXIII.

SERVICE OF THlS ORDER IT IS FURTHER ORDERED that copies of this Order may be served by facsimile transmission, email, personal or overnight delivery, or U.S. Mail, by agents and employees of the Bureau or any state or federal law enforcement agency or by private process server, upon any financial institution or other entity or person that may have possession, custody, or control of any Documents or Assets of any Defendant, or that may otherwise be subject to any provision of this Order. Service upon any branch or office of any financial institution shall effect service upon the entire financial institution. Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 30 of 31 Page ID #:2827

Page 56

-31- XXIV.

RETENTION OF JURISDICTION IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes of construction, modification, and enforcement of this Order, including but not limited to any disputes pertaining to the Temporary Receiver and whether or not such disputes arise before or after the Temporary Receiver's discharge. DATED: November 16, 2012 _________________________________ Percy Anderson UNITED STATES DISTRICT JUDGE Case 2:12-cv-06147-RSWL-MRW Document 76 Filed 11/16/12 Page 31 of 31 Page ID #:2828

Stipulation (Feb. 2013)

PDF of this document (26 pages)

Page 57

Case 2:12-cv-06147-RSWL-MRW Document 102 Filed 02/01/13 Page 1of26 Page ID dhse 2:12-cv-06147-RSWL-MRW Docufrisht!§8-1 Filed 01/25/13 Page 1 of 29 Page ID

#:3709 1|| KENT MARKUS, OH Bar #16005 ) Enforcement Director LAURA SCHNEIDER, NY Bar #2715449 3|| (Phone: 202-435-7311) (Email: [email protected]) 4|}| CRYSTAL R. SUMNER, CA Bar #261435 (Phone: 202-435-7549) 5 (Email: [email protected]) 6|| JAMES MEADE, DC Bar #414732 (Phone: 202-435-9202) 7\| (Email: [email protected]) Consumer Financial Protection Bureau 8|/ 1700 G Street NW 9 Washington, DC 20552 || Fax: (202) 435-7722 KENT KAWAKAMI, CA Bar #149803 — Local Counsel 11}| (Phone: 213-894-4858) (Email: [email protected]) 12|' United States Attorney’s Office © 13 Central District of California - Civil Division 300 North Los Angeles Street, Room 7516 14]| Los Angeles, CA 90012 15 Fax: (213) 894-2380 16 Attorneys for Plaintiff Consumer Financial Protection Bureau 18 UNITED STATES DISTRICT COURT 19 CENTRAL DISTRICT OF CALIFORNIA 3 Consumer Financial Protection Bureau, {| Case No. CV12-6147-RSWL (MRWx) 3 Plaintiff, STIPULATED FINAL JUDGMENT V. AND ORDER FOR PERMANENT 23 Chance Edward Gordon, ef al., INJUNCTION AND SETTLEMENT 4 Defendants. OF CLAIMS AS TO DEFENDANTS ABRAHAM MICHAEL PESSAR, 25 DIVISION ONE INVESTMENT 26 AND LOAN, INC., AND PROCESSING DIVISION, L.L.C.

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ase 2:12-cv-06147-RSWL-MRW Docutietit 98-1 Filed 01/25/13 Page 2 of 29 Page ID

i

Plaintiff, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”), commenced this civil action on July 18, 2012, pursuant to: (1) Sections 1031(a), 1036(a), 1054, and 1055 of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a), 5564, and 5565; and (2) Section 626 of the Omnibus Appropriations Act, 2009, as amended by Section 1097 of the CFPA, 12 U.S.C. § 5538, and the Mortgage Assistance Relief Services Rule, 16 C.F.R. Part 322, recodified as 12 C.F.R. Part 1015 (“Regulation O”), by filing a Complaint for preliminary and permanent injunctive relief, rescission or reformation of contracts, the refund of monies paid, restitution, disgorgement of ill-gotten monies, and other relief for Defendants’ acts or practices in violation of the CFPA and Regulation O in connection with the marketing and sale of mortgage assistance relief services. The Bureau and Defendants Abraham Michael Pessar, Division One Investment and Loan, Inc., and Processing Division, L.L.C. (collectively “Settling Defendants”) hereby stipulate to this Final Judgment and Order for Permanent Injunction and Settlement of Claims (“Order”).

FINDINGS

By stipulation of the parties and being advised of the premises, the Court finds:

1. This is an action by the Bureau instituted under Sections 1031(a), 1036(a), 1054, and 1055 of the CFPA, 12 U.S.C. §§ 5531(a), 5536(a), 5564, and 5565; and Regulation O, 16 C.F.R. Part 322, recodified as 12 C.F.R. Part 1015. The Complaint seeks permanent injunctive relief and monetary relief for the Settling Defendants’ alleged acts or practices in violation of the CFPA and Regulation O as alleged therein. The

Bureau has the authority under the CFPA and Regulation O to seek the relief it has

requested, 2. The Complaint states a claim upon which relief can be granted against the Settling Defendants.

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ase 2:12-cv-06147-RSWL-MRW Docufheht 98-1 Filed 01/25/13 Page 3 of 29 Page ID

3. This Court has jurisdiction over the subject matter of this case and has jurisdiction over the Settling Defendants. Venue in the Central District of California is proper.

4. The Bureau and the Settling Defendants stipulate and agree to entry of this Order, without trial or final adjudication of any issue of fact or law, to settle and resolve all matters in dispute arising from the conduct of the Settling Defendants alleged in the Complaint to the date of entry of this Order. This settlement does not settle and resolve any matters not alleged in the Complaint. The Settling Defendants have consented to entry of this Order without admitting or denying any of the allegations set forth in the Complaint, other than admitting the jurisdictional facts.

5. The Settling Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order. The Settling Defendants also waive any claim that they may have held under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. Each settling party shall bear its own costs and attorneys fees.

6. This action and the relief awarded herein are in addition to, and not in lieu of, other remedies as may be provided by law, including both civil and criminal remedies.

7. Entry of this Order is in the public interest.

DEFINITIONS

For the purposes of this Order, the following definitions shall apply:

1. “Assets” means any legal or equitable interest in, right to or claim to any

real, personal, or intellectual property, wherever located, including, but not limited

to, chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, contracts, mail or other deliveries, shares of stock, commodities, futures, inventory, checks, notes, accounts, credits, receivables (as those terms are defined in the Uniform Commercial Code), funds, trusts, and all cash.

2. “Assisting others” includes, but is not limited to:

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2.

or other evidence based on the expertise of professionals in the relevant area, that

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a. performing customer service functions including, but not limited to,

receiving or responding to consumer complaints;

b. formulating or providing, or arranging for the formulation or provision of, any advertising or marketing material, including, but not limited to, any telephone sales script, direct mail solicitation, or the text of any Internet website, email, or other electronic communication;

c. formulating or providing, or arranging for the formulation or provision of, any marketing support material or service, including but not limited to, web or Internet Protocol addresses or domain name registration for any Internet websites, affiliate marketing services, or media placement services;

d. _ providing names of, or assisting in the generation of, potential customers;

e. performing marketing, billing, or payment services of any kind; and f. acting or serving as an owner, officer, director, manager, or principal of any entity.

“Competent and reliable evidence” means tests, analyses, research, studies,

has been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.

3.

equal in scope to the definitions of the term in section 1002(5) and (15) of the

“Consumer financial product or service” is synonymous in meaning and

CFPA, and, subject to applicable restrictions contained in the CFPA, includes but

is not limited to:

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ase 2:12-cv-06147-RSWL-MRW Docutielit 33-1 Filed 01/25/13 Page 5 of 29 Page ID 13713 a. extending credit and servicing loans, including acquiring, purchasing,

selling, brokering, or other extensions of credit (other than solely extending commercial credit to a person who originates consumer credit transactions); b. providing real estate settlement services or performing appraisals of real estate or personal property;

C. collecting, analyzing, maintaining, or providing consumer report information or other account information, including information relating to the credit history of consumers, used or expected to be used in connection with any decision regarding the offering or provision of a consumer financial product or service; and , d. collecting debt related to any consumer financial product or service. 4. “Debt relief product or service” means any product, service, plan, or program represented, expressly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt or obligation, including but not limited to a tax debt or obligation, between a person and one or more creditors or debt collectors, including but not limited to, a reduction in the balance, interest rate, or fees owed by a person to a creditor or debt collector. 5. “Defendants” means Chance Edward Gordon, The Gordon Law Firm, P.C., Abraham Michael Pessar, Division One Investment and Loan, Inc., and Processing Division, L.L.C., individually, collectively, or in any combination, and each of them by whatever names each might be known. , 6. “Document” and “Electronically Stored Information” are synonymous in meaning and equal in scope to the usage of the terms in Rule 34(a) of the Federal Rules of Civil Procedure and include but are not limited to writings, drawings, graphs, charts, photographs, audio and video recordings, computer records, and other data compilations from which the information can be obtained and translated,

if necessary, through detection devices into reasonably usable form.

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7. “Federal homeowner relief or financial stability program” means any program (including its sponsoring agencies, telephone numbers, and Internet websites) operated or endorsed by the United States government to provide relief to homeowners or stabilize the economy, including but not limited to: a. the Making Home Affordable Program;

b. ‘the Financial Stability Plan;

C. the Troubled Asset Relief Program and any other program sponsored or operated by the United States Department of the Treasury; d. the HOPE for Homeowners program, any program operated or created pursuant to the Helping Families Save Their Homes Act, and any other program sponsored or operated by the Federal Housing Administration; e. any program sponsored or operated by the United States Department of Housing and Urban Development (“HUD”), the HOPE NOW Alliance, the Homeownership Preservation Foundation, or any HUD-approved housing counseling agency;

f. the claims: program mandated by the February 2012 settlements entered into by state attorneys general, the federal government, and five mortgage servicers (www.nationalmortgagesettlement.com); or g. the Independent Foreclosure Review program mandated by the April 2011 settlements entered into by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Office of Thrift Supervision, and fourteen mortgage servicers (www.IndependentF oreclosureReview.com).

8. “Material fact” means any fact that is likely to affect a person’s choice of, or conduct regarding, goods or services.

9. “Mortgage assistance relief product or service” means any product, service,

-plan, or program, offered or provided to the consumer in exchange for

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@ase 2:12-cv-06147-RSWL-MRW Docuitient€$8-1 Filed 01/25/13 Page 7 of 29 Page ID

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consideration, that is represented, expressly or by implication, to assist or attempt to assist the consumer with any of the following: a. stopping, preventing, or postponing any mortgage or deed of trust foreclosure sale for the consumer’s dwelling, any repossession of the consumer’s dwelling, or otherwise saving the consumer’s dwelling from foreclosure or repossession;

b. negotiating, obtaining, or arranging a modification of any term of dwelling loan, including a reduction in the amount of interest, principal balance, monthly payments, or fees;

Cc. obtaining any forbearance or modification in the timing of payments from any dwelling loan holder or servicer on any dwelling loan; d. negotiating, obtaining, or arranging any extension of the period of time within which the consumer may (i) cure his or her default on a dwelling loan, (ii) reinstate his or her dwelling loan, (iii) redeem a dwelling, or (iv) exercise any right to reinstate a dwelling loan or redeem a dwelling; e. obtaining any waiver of an acceleration clause or balloon payment contained in any promissory note or contract secured by any dwelling; or f. negotiating, obtaining, or arranging (1) a short sale of a dwelling, (ii) a deed in lieu of foreclosure, or (iii) any other disposition of a dwelling loan other than a sale to a third party that is not the dwelling loan holder. The foregoing shall include any manner of claimed assistance, including, but not limited to, auditing or examining a consumer’s mortgage or home loan application. 10. “Person” means an individual, partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative

organization, or other entity.

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11. “Related Consumer Action” means a private-damages action brought against Settling Defendants by or on behalf of one or more consumers based on substantially the same facts as alleged in the Complaint in this action.

12. “Settling Defendants” means Abraham Michael Pessar, Division One

Investment and Loan, Inc., and Processing Division, L.L.C, and their successors,

assigns, affiliates, or subsidiaries, and each of them by whatever names each might

be known. ,

13. “Temporary Receiver” means Robb Evans & Associates, 11450 Sheldon

Street, Sun Valley, CA 91352-1121.

14. The words “and” and “or” shall be understood to have both conjunctive and

disjunctive meanings as necessary to make the applicable phrase or sentence

inclusive rather than exclusive.

ORDER I.

BAN ON MORTGAGE ASSISTANCE AND DEBT RELIEF . PRODUCTS AND SERVICES

IT IS HEREBY ORDERED that the Settling Defendants, whether acting directly or through any other person, are permanently restrained and enjoined from:

A. Advertising, marketing, promoting, offering for sale, or selling any mortgage

assistance or debt relief product or service; and _

B. Assisting others engaged in advertising, marketing, promoting, offering for

sale, or selling any mortgage assistance or debt relief product or service.

Provided, that sections I.A. and B. shall not prohibit the actions of any Settling Defendant that is licensed or registered as a real estate broker or real estate agent, in accordance with State law, to the extent that such Settling Defendant: (1) acts as a real estate agent or broker for a buyer, seller, lessor, or lessee of real property; (2) brings

together parties interested in the sale, purchase, lease, rental, or exchange of real

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ase 2:12-cv-06147-RSWL-MRW Documneti 8-1 Filed 01/25/13 Page 9 of 29 Page ID 13717

property; (3) negotiates, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental or exchange of real property (other than in connection with the provision of financing with respect to any such transaction); or (4) offers to engage in any activity, or act in any capacity, described in subparagraphs (1), (2), or (3) above. II.

PROHIBITED MISREPRESENTATIONS RELATING TO CONSUMER FINANCIAL PRODUCTS OR SERVICES | IT IS FURTHER ORDERED that the Settling Defendants and their officers, agents, servants, employees, and attorneys, and those persons in active concert or participation with any of them who receive actual notice of this Order by personal service, facsimile transmission, email, or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering for sale, sale, or performance of any consumer financial product or service, are hereby permanently restrained and enjoined from: A. Misrepresenting, or assisting others in misrepresenting, expressly or by implication, any material fact, including but not limited to: 1, The terms or rates that are available for any loan or other extension of credit, including but not limited to:

a) Closing costs or other fees;

b) The payment schedule, the monthly payment amount(s), or other payment terms, or whether there is a balloon payment; interest rate(s), annual percentage rate(s), or finance charge(s); the loan amount, the amount of credit; the draw amount, or outstanding balance; the loan term, the draw period, or maturity; or any other term of credit;

c) The savings associated with the credit;

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7 f) That the credit does not have a prepayment penalty or that no 8 prepayment penalty and/or other fees. or costs will be incurred if the 9 consumer subsequently refinances; and | 10 g) That the interest rate(s) or annual percentage rate(s) are fixed 11 rather than adjustable or adjustable rather than fixed; 12 2. Any person’s ability to improve or otherwise affect a consumer’s 13 credit record, credit history, or credit rating or ability to obtain credit; 14 3. That any person can improve any consumer’s credit record, credit 15 history, or credit rating by permanently removing negative information from 16 the consumer’s credit record, credit history, or credit rating, even where such 17 information is accurate and not obsolete; 18 4. Any aspect of any consumer financial product or service, including 19 but not limited to, the amount of savings a consumer will receive from 20 purchasing, using, or enrolling in such consumer financial product or 21 service, or the reduction or cessation of collection calls; 22 5. Any aspect of the terms of any refund, cancellation, exchange, or 23 repurchase policy, including but not limited to, the likelihood of a consumer 24 obtaining a full or partial refund, or the circumstances in which a full or 25 partial refund will be granted to the consumer; 26 6. That a consumer will receive legal representation; 28 10

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7. That any person providing a testimonial has purchased, received, or used the specific consumer financial product or service; 8. That the experience represented in a testimonial of the consumer financial product or service represents the person’s actual experience resulting from the use of the consumer financial product or service under the circumstances depicted in the advertisement; 9, The total costs to purchase, receive, or use, or the quantity of, the consumer financial product or service, including that there will be no charge for all or a portion of such service;

10. That any person is affiliated with, endorsed or approved by, or otherwise connected to any other person, government entity, any federal homeowner relief or financial stability program, public, non-profit, or other non-commercial program, or any other program; 11. Any material restriction, limitation, or condition to purchase, receive, or use the consumer financial product or service; and 12. Any material aspect of the performance, efficacy, nature, or characteristics of the consumer financial product or service. B. Advertising or assisting others in advertising credit terms other than those | terms that actually are or will be arranged or offered by a creditor or lender; and ¢. Advising a customer that the customer cannot or should not contact, communicate with, or make payments to the customer’s lender or servicer. Il.

SUBSTANTIATION FOR BENEFIT, PERFORMANCE, AND EFFICACY CLAIMS IT IS FURTHER ORDERED that the Settling Defendants and their officers, agents, servants, employees, and attorneys, and those persons or entities in active concert

or participation with any of them who receive actual notice of this Order by personal

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Case 2:12-cv-06147-RSWL-MRW Docuriient 86-1 Filed 01/25/13 Page 12 of 29 Page ID 1 |/service, facsimile transmission, email, or otherwise, whether acting directly or through 2 || any corporation, subsidiary, division, or other device, in connection with the advertising, 3 ||marketing, promotion, offering for sale, or sale of any consumer financial product or 4 || service are hereby permanently restrained and enjoined from making any representation 5 || or assisting others in making any representation, expressly or by implication, about the 6 || benefits, performance, or efficacy of any consumer financial product or service, unless, at 7 || the time such representation is made, the Settling Defendants possess and rely upon 8 || competent and reliable evidence that substantiates that the representation is true. 9 , IV.

10 COOPERATION WITH BUREAU COUNSEL 11 IT IS FURTHER ORDERED that the Settling Defendants shall, in connection 12 || with this action or any subsequent investigation or litigation related to or associated with 13 ||the transactions or occurrences that are the subject of the Bureau’s Complaint, cooperate 14 || in good faith with the Bureau, and appear at such places and times as the Bureau shall 15 |}reasonably request, after written notice, for interviews, conferences, pretrial discovery, 16 ||review of documents, and for such other matters as may be reasonably requested by the 17 || Bureau. If requested in writing by the Bureau, the Settling Defendants shall appear and 18 || testify at any trial, deposition, or other proceeding related to or associated with the 19 || transactions or the occurrences that are the subject of the Complaint, without service of a 20 || subpoena. | 21 V.

22 PROHIBITION ON DISCLOSING CUSTOMER INFORMATION 23 IT IS FURTHER ORDERED that the Settling Defendants and their officers, 24 || agents, servants, employees, and attorneys, and those persons in active concert or 25 || participation with any of them who receive actual notice of this Order by personal 26 || service, facsimile transmission, email, or otherwise, whether acting directly or through 28 12

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ase 2:12-cv-06147-RSWL-MRW Docurelt 36-1 Filed 01/25/13 Page 13 of 29 Page ID

any corporation, subsidiary, division, or other device, are permanently restrained and enjoined from:

A. Disclosing, using, or benefitting from customer information, including the name, address, telephone number, email address, social security number, other identifying information, or any data that enables access to a customer’s account (including a credit card, bank account, or other financial account) of any person that any Settling Defendant obtained prior to entry of this Order in connection with the advertising, marketing, promotion, offering for sale or sale of any mortgage assistance relief service or any debt relief service; and B. _ Failing to dispose of such customer information in all forms in their possession, custody, or control within thirty (30) days after entry of this Order. Disposal shall be by means that protect against unauthorized access to the customer information, such as by burning, pulverizing, or shredding any papers, and by erasing or destroying any electronic media, to ensure that the customer information cannot practicably be read or reconstructed. Provided, however, that prior to destroying any customer information, Settling Defendants must disclose such information to the Bureau; and Further provided, that that prior to destroying any customer information, Settling Defendants may disclose such information to the extent requested by a government agency or required by a law, regulation, or court order. VI.

PROHIBITION ON COLLECTING ACCOUNTS IT IS FURTHER ORDERED that Settling Defendants, and their officers, agents, servants, employees, attorneys, and all other persons in active concert or participation with them who receive actual notice of this Order by personal service, facsimile transmission, email, or otherwise, whether acting directly or through any corporation,

subsidiary, division, or other device, are hereby permanently restrained and enjoined

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Case 2:12-cv-06147-RSWL-MRW. DocumhettS8-1 Filed 01/25/13 Page 140f 29 Page ID

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from attempting to collect, collecting, selling, or assigning, or otherwise transferring any right to collect payment from any consumer who purchased or agreed to purchase mortgage assistance relief products or services from Defendants. . Vil.

ORDER TO PAY CIVIL-MONEY PENALTY IT IS FURTHER ORDERED that: , A. — By reason of the alleged violations of law, and because of the Settling Defendants’ demonstrated inability to pay a higher amount, and taking into account such other matters as justice may require, pursuant to section 1055(c) of the CFPA, 12 U.S.C. §5565(c), Settling Defendants shall pay a total civil-money penalty of one dollar ($1).

B. Within ten (10) days of the Court’s entry of this Order, Settling Defendants shall pay the one dollar ($1) civil-money penalty in the form of a wire transfer to the Bureau or to such agent as the Bureau may direct, and in accordance with wiring instructions to be provided by counsel for the CFPB, in accordance with section 1017(d) of the CFPA, §12 U.S.C. 5497(d). C. The civil-money penalty paid pursuant to this Order shall be deposited in the Civil Penalty Fund of the Bureau. Payments from the Civil Penalty Fund may be made to victims of activities for which civil penalties have been imposed under the Federal consumer financial laws, including eligible victims of activities of the Defendants alleged in the Complaint.

Vill.

JUDGMENT FOR EQUITABLE MONETARY RELIEF IT IS FURTHER ORDERED that:

A. A judgment for equitable monetary relief and damages is hereby entered in favor of the Bureau and against the Settling Defendants, jointly and severally, in the amount of ten million dollars ($10,000,000); provided, however, that full

payment of this judgment shall be suspended upon satisfaction of the obligations

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set forth in subparagraphs B through D of this section, and subject to Sections IX and X of this Order.

To partially satisfy the judgment as set forth in subsection A above, Settling

Defendants hereby grant to the Bureau all rights and claims they have to their frozen assets currently in the possession, custody, or control of the Temporary Receiver (“Pessar Funds”), and shall forfeit any rights to the Pessar Funds in the

Receivership Estate, including but not limited to:

1. Funds that were previously held in Account Number XXXXX3561 at JP Morgan Chase Bank in the name of DAE Holdings, L.L.C., which amount is approximately $200,000; ,

2. Funds that were previously held in Account Number XXXXX9166 at JP Morgan Chase Bank in the name of Processing Division, L.L.C., which amount is approximately $110,626.74;

3. Funds that were previously held in Account Number XXXXX3948 at JP Morgan Chase Bank in the name of Processing Division, L.L.C., which amount is approximately $2,719.22;

4, Funds that were previously held in Account Number XXXXX8769 at JP Morgan Chase Bank in the name of Processing Division, L.L.C., which amount is approximately $3.44;

5. Funds that were previously held in Account Number XXXXX2511 at JP Morgan Chase Bank in the name of Attorney Marketing Services, Inc., which amount is approximately $3,766.83;

6. Funds that were previously held in Account Number XXXXX3955at JP Morgan Chase Bank in the name of Nation Source, L.L.C., which amount is approximately $11,568.65;

is

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C.

Temporary Receiver shall within ten (10) days of the Court’s authorization of

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7. Funds that were previously held in Account Number XXXXX1036at JP Morgan Chase Bank in the name of Empire Legal, which amount is approximately $92.37;

8. Funds that were previously held in Account Number XXXXX7975 at

JP Morgan Chase Bank in the name of Attorney Marketing Services, Inc.;

9, Funds that were previously held in Account Number XXXXX1132at JP Morgan Chase Bank in the name of Empire Legal;

10. Funds that were previously held in Account Number XXXXX9078at JP Morgan Chase Bank in the name of Empire Legal;

11. Funds that were previously held in Account Number XX6209 with Meracord in the name of Empire Legal, which amount is approximately $3,329.16;

12. Funds from the JP Morgan Chase Cashier’s Check #43329471 addressed to Division One Investment & Loan, Inc., which amount is $1,850;

13. Funds obtained from the sale by the Temporary Receiver of furniture and office equipment located at 5455 Wilshire Boulevard, Suites 2005, 2011, 2012, and 2025, Los Angeles, CA 91210, which amount is approximately $4,653.19;

14. - Funds obtained from the sale by the Temporary Receiver of the 2004 Lamborghini Coupe with Vehicle Identification Number ZHWGU11M54LA01816, which amount is approximately $55,000; and 15. Any other funds held by or deposited into the Court Registry by the Temporary Receiver.

In partial satisfaction of the judgment as set forth in subsection A above, the

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payment of fees and expenses to the Temporary Receiver, wire transfer the remaining Pessar Funds to the Bureau or to such agent as the Bureau may direct. Provided that, in the event that all or a portion of the Pessar Funds have been deposited into the Court Registry at the time the Court enters this Order, such funds shall be transferred from the Court Registry to the Bureau. D. — Any Pessar Funds received by the Bureau in partial satisfaction of the judgment in subsection A above shall be deposited into a fund or funds administered by the Bureau or its agent in accordance with applicable statutes and regulations to be used for redress for consumers injured by the activities of Defendants alleged in the Complaint, including, but not limited to, refunds of moneys, restitution, damages or other monetary relief, and any attendant expenses for the administration of any such redress.

1. Settling Defendants shall cooperate fully to assist the Bureau in _ identifying consumers who should receive redress and in what amount. 2. If the Bureau determines, in its sole discretion, that redress to consumers is wholly or partially impracticable or if funds remain after redress is completed, the Bureau may apply any remaining funds for such other equitable relief (including consumer information remedies) as determined to be reasonably related to Defendants’ practices alleged in the Complaint. Any funds not used for such equitable relief shall be deposited in the U.S. Treasury as disgorgement. Settling Defendants shall have no right to challenge the Bureau’s choice of remedies under this Section, and shall have no right to contest the manner of distribution chosen by the Bureau.

3. The judgment for equitable monetary relief and damages is solely remedial in nature and is not a fine, penalty, punitive assessment, or

forfeiture.

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2 OTHER MONETARY PROVISIONS 3 IT IS FURTHER ORDERED that:

4 A. Inthe event of any default on Settling Defendants’ obligation to make 5 payment required by this Order, interest, computed pursuant to 28 U.S.C. § 1961, 6 as amended, shall accrue on any outstanding amounts not paid from the date of 7 default to the date of payment, and shall immediately become due and payable. 8 B. The Settling Defendants shall relinquish all dominion, control, and title to 9 the funds paid to the fullest extent permitted by law. The Settling Defendants shall 10 make no claim to or demand for return of the funds, directly or indirectly, through 11 counsel or otherwise. , 12 C. The Settling Defendants agree that the facts as alleged in the Complaint filed 13 in this action shall be taken as true without further proof in any bankruptcy case or 14 subsequent civil litigation pursued by the Bureau to enforce its rights to any 15 payment or money judgment pursuant to this Order, including but not limited to a 16 nondischargeability complaint in any bankruptcy case. Settling Defendants further 17 agree that the facts alleged in the Complaint establish all elements necessary to 18 sustain an action by the Bureau pursuant to Section 523(a)(2)(A) of the Bankruptcy 19° Code, 11 U.S.C. § 523(a)(2)(A), and that this Order shall have collateral estoppel 20 effect for such purposes.

21 -D. — In accordance with 31 U.S.C. § 7701, Settling Defendants, unless they have 22 already done so, shall furnish to the Bureau their taxpayer identifying numbers, 23 which shall be used for purposes of collecting and reporting on any delinquent 24 amount arising out of this Order. ) 25 E. — Pursuant to Section 604(a)(1) of the Fair Credit Reporting Act, 15 U.S.C. 26 § 168lb(a)(1), any consumer reporting agency may furnish a consumer report 28 18

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Case |2:12-cv-06147-RSWL-MRW Document 102 Filed 02/01/13 Page 19 of 26 Page ID Clase 2:12-cv-06147-RSWL-MRW Docurtierit 6-1 Filed 01/25/13 Page 19 of 29 Page ID 1 concerning any Settling Defendant to the Bureau, which shall be used for purposes 2 of collecting and reporting on any delinquent amount arising out of this Order. 3 F, _—_ Settling Defendants shall not seek or accept, directly or indirectly, 4 reimbursement or indemnification from any source, including but not limited to 5 payment made pursuant to any insurance policy, with regard to any monetary 6 relief, whether in the form of equitable monetary relief, damages, or a civil-money 7 penalty, that Settling Defendants pay pursuant to this Order, regardless of whether 8 any civil-money penalty amounts or any part thereof are added to the Civil Penalty 9 Fund or otherwise used for the benefit of consumers. 10 G. Settling Defendants shall not claim, assert, or apply for a tax deduction or 11 tax credit with regard to any federal, state, or local tax for any monetary relief, 12 whether in the form of equitable monetary relief, damages, or a civil-money 13 penalty, that Settling Defendants pay pursuant to this Order, regardless of whether 14 any civil-money penalty amounts or any part thereof are added to the Civil Penalty 15 Fund or otherwise used for the benefit of consumers. 16 X.

17 RIGHT TO REOPEN 18 IT IS FURTHER ORDERED that the Bureau’s agreement to, and the Court’s 19 || approval of, this Order is expressly premised on the truthfulness, accuracy, and 20 || completeness of Settling Defendants’ financial statements and supporting documents 21 || submitted to the Bureau on or about July 24, 2012, December 17, 2012, and December 22 ||21, 2012, which Settling Defendants assert are truthful, accurate, and complete. If, upon 23 ||; motion by the Bureau, the Court finds that any of the Settling Defendants have failed to 24 || disclose any material asset or the financial statement of any Settling Defendant contains 25 ||any material misrepresentation or omission, including materially misstating the value of 26 || any asset, then this Order shall be reopened and the Court shall terminate the suspension 27 || of the monetary judgment entered in Section VII. The Court, without further 28 19

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Case f:12-cv-06147-RSWL-MRW Document 102 Filed 02/01/13 Page 20 of 26 Page ID Case 2:12-cv-06147-RSWL-MRW Docuretit 86-1 Filed 01/25/13 Page 20 of 29 Page ID 1 || adjudication, shall reinstate the judgment entered in Section VIII of this Order and the 2 || full amount of ten million dollars ($10,000,000) will become immediately due and 3 || payable less any amounts paid to the Bureau pursuant to Section VIII of the Order. 4 Provided, however, that in all other respects this Order shall remain in full force 5 || and effect unless otherwise ordered by the Court; and, provided further, that proceedings 6 ||instituted under this provision would be in addition to, and not in lieu of any other civil or 7 || criminal remedies as may be provided by law, including any other proceedings that the 8 || Bureau may initiate to enforce this Order. For purposes of this Section, Settling 9 || Defendants waive any right to contest any of the allegations in the Complaint. 10 Upon any reinstatement of the monetary judgment pursuant to this Section, the 11 || Court shall make an express determination that the monetary judgment shall be 12 ||immediately due and payable. The Bureau shall be entitled to interest on the judgment, 13 ||computed from the date of entry of this Order, at the rate prescribed by 28 U.S.C. § 1961, 14 ||as amended, on any outstanding amounts not paid. The Bureau shall be permitted to 15 || execute on the judgment immediately after the suspension is lifted and engage in 16 || discovery in aid of execution.

17 XI.

18 LIFTING OF ASSET FREEZE 19 IT IS FURTHER ORDERED that upon entry of this Order, the freeze of Settling 20 || Defendants’ assets pursuant to the Stipulated Preliminary Injunction entered on 21 || November 16, 2012, shall be dissolved upon payment of the judgment pursuant to 22 || Section VII of this Order.

23 XI.

24 ORDER ACKNOWLEDGMENTS 25 IT IS FURTHER ORDERED that Settling Defendants provide and obtain 26 || acknowledgments of receipt of this Order:

28 20

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Case|P:12-cv-06147-RSWL-M RW Document 102 Filed 02/01/13 Page 21 of 26 Page ID Case 2:12-cv-06147-RSWL-MRW Docuniertt $8.1 Filed 01/25/13 Page 21 of 29 Page ID 1 A. Each Settling Defendant within seven (7) days of entry of this Order, must 2 submit to the Bureau an acknowledgment of receipt of this Order sworn under 3 penalty of perjury.

4 ‘B. For five (5) years after entry of this Order, Settling Defendant Abraham 5 Michael Pessar, for any business that he, individually or collectively with any other 6 Defendant, is the majority owner or directly or indirectly controls, and each 7 Settling Defendant, must deliver a copy of this Order to: (1) all principals, 8 officers, directors, and managers; (2) all employees, agents, and representatives 9. who participate in conduct related to the marketing of any financial good or 10 service; and (3) any business entity resulting from any change in structure as set 11 forth in the Section titled Compliance Reporting. Delivery must occur within 12 seven (7) days of entry of this Order for current personnel. To all others, delivery 13 must occur before they assume their responsibilities. 14 C. From each individual or entity to which a Settling Defendant delivered a 15 copy of this Order, that Settling Defendant must obtain, within thirty (30) days, a 16 signed and dated acknowledgment of receipt of this Order and provide such 17 records to the Bureau in accordance with Section XIII of this Order. 18 XIII.

19 COMPLIANCE REPORTING 20 IT IS FURTHER ORDERED that in order to monitor compliance with the 21 || provisions of this Order:

22 A. — One hundred and eighty (180) days after entry of this Order, each Settling 23 Defendant must submit a. compliance report to the Bureau, sworn under penalty of 24 perjury. ;

25 1, Each Settling Defendant must: (a) designate at least one telephone 26 number and an email, physical, and postal address as points of contact, 27 which representatives of the Bureau may use to communicate with the 28 21

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must submit a compliance notice, sworn under penalty of perjury, within fourteen

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Settling Defendant; (b) identify all of that Settling Defendant’s businesses

by all of their names, telephone numbers, and physical, postal, email, and

~ Internet addresses; (c) describe the activities of each business, including the

products and services offered, the means of advertising, marketing, and sales, and the involvement of any other Defendant (which Settling Defendant Pessar must describe if he knows or should know due to his own involvement); (d) describe in detail whether and how that Settling Defendant is in compliance with each Section of this Order; and (e) provide a copy of each Order Acknowledgment obtained pursuant to this Order, unless previously submitted to the Bureau;

2. Additionally, Settling Defendant Abraham Michael Pessar must: (a) identify all telephone numbers and all email, Internet, physical, and postal addresses, including all residences; (b) identify all titles and roles in all business activities, including any business for which such Settling Defendant performs services whether as an employee or otherwise and any entity in which such Settling Defendant has any ownership interest; and (c) describe in detail such Settling Defendant’s involvement in each such business, including title, role, responsibilities, participation, authority, control, and any ownership.

For ten (10) years following entry of this Order, each Settling Defendant

(14) days of any change in the following:

1. _—_ Each Settling Defendant must report any change in: (a) any designated point of contact; or (b) the structure of the corporate Settling Defendants or any entity that any Settling Defendant has any ownership interest in or directly or indirectly controls that may affect compliance

obligations arising under this Order, including: creation, merger, sale, or

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dissolution, or the sale of all or substantially all of the assets, of a Settling Defendant or any such entity or any subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order. 2. Additionally, Settling Defendant Pessar must report any change in: (a) name, including aliases or fictitious name, or residence address; or (b) title or role in any business activity, including any business for which such Settling Defendant performs services whether as an employee or otherwise and any entity in which such Settling Defendant has any ownership interest, and identify its name, physical address, and Internet address, if any. C. Each Settling Defendant must submit to the Bureau notice of the filing of any bankruptcy petition, insolvency proceeding, or any similar proceeding by or against such Settling Defendant within fourteen (14) days of its filing. D. — Any submission to the Bureau required by this Order to be sworn under penalty of perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by concluding: “I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on:___” and supplying the date, signatory’s full name, title (if applicable), and signature.

E. — Unless otherwise directed by a Bureau representative in writing, all submissions to the Bureau pursuant to this Order must be emailed to [email protected] or sent by commercial overnight courier (not the U.S.

Postal Service) to:

Assistant Director for Enforcement Consumer Financial Protection Bureau 1700 G Street, NW, ATTN: 1750 PA Washington, DC 20552

ATTN: Office of Enforcement

The subject line must begin: RE: CFPB v. Gordon, et al.

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XIV.

RECORDKEEPING

IT IS FURTHER ORDERED that the Settling Defendants must create certain records for ten (10) years after entry of the Order, and retain each such record for five (5) years after its creation. Specifically, each Settling Defendant for any business involving consumer financial products or services in which that Settling Defendant, individually or collectively with any other Defendants, is a majority owner or directly or indirectly controls, must maintain the following records:

A. Accounting records showing the revenues from all consumer financial

products or services, all costs incurred in generating those revenues, and the

resulting net profit or loss;

B. Personnel records showing, for each person providing services, whether as

an employee or otherwise, that person’s: name, addresses, and telephone numbers;

job title or position; dates of service; and, if applicable, the reason for termination;

C. Customer files showing the names, addresses, telephone numbers, dollar

amounts paid, and the quantity and description of goods or services purchased;

D. Complaints and refund requests, whether received directly or indirectly, such

as through a third party, and any response;

E. All records necessary to demonstrate full compliance with each provision of

this Order, including all submissions to the Bureau; and

F. A copy of each advertisement or other marketing material related to the

marketing of any consumer financial product or service.

XV.

COMPLIANCE MONITORING.

IT IS FURTHER ORDERED that, for the purpose of monitoring Settling

Defendants’ compliance with this Order, including the financial representations upon

which part of the judgment was suspended:

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A. Within fourteen (14) days of receipt of a written request from a representative of the Bureau, each Settling Defendant must: submit additional compliance reports or other requested information, which must be sworn under penalty of perjury; appear for depositions; and produce documents for inspection and copying. The Bureau is also authorized to obtain discovery, without further leave of court, using any of the procedures prescribed by Federal Rules of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 45, and 69. B. For matters concerning this Order, the Bureau is authorized by this Order to communicate directly with each Settling Defendant. Settling Defendants must permit representatives of the Bureau to interview any employee or other person affiliated with any Settling Defendant who has agreed to such an interview. The person interviewed may have counsel present.

The Bureau is authorized by this Order to use all other lawful means, including posing, through its representatives, as consumers, suppliers, or other individuals or entities, to Settling Defendants or any individual or entity affiliated with Settling Defendants, without the necessity of identification or prior notice. Nothing in this Order limits the Bureau’s lawful use of compulsory process, pursuant to 12 C.F.R. § 1080.6.

XVI.

RETENTION OF JURISDICTION IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for

purposes of construction, modification, and enforcement of this Order.

XVII.

IT IS FURTHER ORDERED that pursuant to Fed. R. Civ. P. 54(b), there is no

just reason for delay, and the Clerk of the Court shall immediately enter this Order as a

final order.

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= age°2:42-cv-06147-RSWL:MRW. Document 102~ Filed 02/01/13 Page 26 of 26° Page ID Catle 2:12-cv-06147-RSWL-MRW Docurfieni?98-1 Filed 01/25/13 Page 26 of 29 Page ID _

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7 James Meade

| ce Attoene ys tor Plaintiff

. 9. Consumer F Financial Protection Bureau

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23 ler 1s SO ORDERED, this _ € day of fons » Oierat o'clock om.

26 United States District Judge

Order (July 2013)

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Order (Dec. 2016)

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Consumer Financial Protection Bureau, Plaintiff, v.

Chance Edward Gordon, et al.

Defendants.

Case No. CV12-6147-PA (MRWx) ORDER ENTERING FINAL JUDGMENT AGAINST CHANCE E. GORDON Courtroom 9A Hon. Percy Anderson On April 14, 2016, the Ninth Circuit affirmed in part, and vacated and remanded in part, the Final Judgment and Permanent Injunction (Dkt. No. 188) entered by this Court. Specifically, the Ninth Circuit ordered this Court to consider whether it was appropriate to include in the Judgment against defendant Chance Gordon (“Gordon”) “money that Gordon earned in the time period prior to the enactment or effectiveness of Regulation O and the relevant portions of the CFPA.” The Ninth Circuit upheld the remainder of the Final Judgment and Permanent Injunction and issued its Mandate on August 1, 2016. On December 12, 2016, this Court determined that Gordon and his related entities collected $8,606,280.86 in fees after the December 29, 2010 effective date of Regulation O (Dkt. No. 215).

Therefore, after consideration of the briefs, exhibits, memoranda of the parties, and the entire record in this matter, the Court enters the following Final Judgment Order against Gordon, which incorporates by reference the Court’s July 26, 2013 Final Judgment and Permanent Injunction against Gordon (Dkt. No. 188). IT IS HEREBY ORDERED that:

A. A judgment for equitable monetary relief is entered in favor of the Bureau and against Gordon in the amount of $8,606,280.86.

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B. Within 10 days of this Order, Gordon must pay to the Bureau, by wire transfer to the Bureau or to the Bureau’s agent, and according to the Bureau’s wiring instructions, $8,606,280.86 in full satisfaction of the judgment as ordered in Paragraph A. The monetary judgment set forth in this section is immediately due and payable upon entry of this order and is enforceable against any asset owned by, on behalf of, for the benefit of, or in trust by or for Gordon. C. Any funds received by the Bureau in satisfaction of this judgment will be deposited into a fund or funds administered by the Bureau or to the Bureau’s agent according to applicable statutes and regulations to be used for redress for injured consumers, including, but not limited to, refund of moneys, restitution, damages, or other monetary relief, and for any attendant expenses for the administration of any such redress. If the Bureau determines, in its sole discretion, that redress to consumers is wholly or partially impracticable, or if funds remain after redress is completed, the Bureau will deposit any remaining funds in the U.S. Treasury as disgorgement. Gordon will have no right to challenge any actions that the Bureau or its representatives may take under this Section.

All provisions of the Final Judgment and Permanent Injunction (Dkt. No. 188) other than the amount stated in Paragraph F of that order remain in effect. IT IS SO ORDERED:

Dated: December 19, 2016 ___________________________ United States District Judge Case 2:12-cv-06147-PA-MRW Document 217 Filed 12/19/16 Page 2 of 2 Page ID #:8267